Posted on July 6, 2016
The Mined Lands Act directs the Bureau of Land Management to issue regulations governing mining on public lands for, inter alia, “the protection of the interests of the United States, . . . and for the safeguarding of the public welfare.” More recently, the Federal Lands Policy Management Act specifically directs the BLM to take environmental issues into account in promulgating regulations governing the use of federal lands, that is, to manage federal lands in a way,
That will protect the quality of scientific, scenic, historical, ecological, environmental, air and atmospheric, water resource, and archeological values,
Last year, acting under these statutory authorities, the BLM issued regulations governing fracking on federal lands, which required federal lessees to disclose chemicals in their fracking fluids and to take measures to prevent well leakage. This week, the Federal District Court for the District of Wyoming struck down these regulations as exceeding BLM’s authority to regulate mining on public lands. The Court purported to find this result under the Chevron step I analysis, i.e., finding specific congressional intent that the Bureau of Land Management does not have authority to protect groundwater on public lands. Despite the broad statutory authorities cited above, the Court found that the Energy Policy Act of 2005, which specifically exempted fracking from EPA regulation under the Safe Drinking Water Act, evidenced Congressional intent that no federal agency has jurisdiction to regulate fracking activities, even on federal lands.
This ruling ignores the obvious difference between EPA regulation to protect groundwater generally under the Safe Drinking Water Act and actions by the BLM to protect the United States’ own properties that are subject to federal leases. FLPMA specifically directs BLM to take measures to protect ecological interests in managing federal lands, and it seems inappropriate for a federal court to second guess BLM’s balance between resource extraction and groundwater protection. The United States in general has very broad authority to regulate activities on its own land, and Congress’ decision to exempt fracking on private lands from EPA regulation can’t possibly be read as specific Congressional intent to preclude BLM from protecting groundwater on lands owned by the United States. On another level, this decision reflects a concerning trend towards judicial activism tearing down the Obama administration’s invocation of statutory authorities to advance environmental protection in the face of a hostile Congress – witness the Supreme Court’s stay of EPA’s Clean Power Plan, and the Sixth Circuit’s stay of the Clean Water Rule.
Environmental law got its start when courts, like the Second Circuit in Scenic Hudson Preservation Conference v. Federal Power Commission, read broad statutory grants of regulatory authority to include environmental protection. This decision by the District of Wyoming departs from that tradition. The BLM plans to appeal.
Posted on June 24, 2015
The State of Texas took swift action to block a municipality seeking to limit fracking. In response to a 59 to 41% vote of its citizens, in November 2014, the City of Denton adopted an ordinance banning the well completion activity of hydraulic fracturing or fracking, which involves the high pressure injection of water, with proppants and small amounts of chemicals, into tight formations thousands of feet below surface to create and prop open fractures that facilitate the flow of oil and gas.
Hours after the ordinance’s adoption, the Texas General Land Office and Texas Oil & Gas Association filed suit in Denton County district court, seeking to declare the ban invalid. They argued that the ordinance intruded on powers granted by the legislature to the Railroad Commission of Texas and the Texas Commission on Environmental Quality and thus was preempted by state law. On May 18, 2015, before the court could rule on the law suit, Texas Governor Greg Abbott signed into law House Bill 40, which removes the authority of Denton and all other Texas municipalities to regulate not only fracking, but also all other oil and gas operations. On June 17, 2015, in recognition of House Bill 40, Denton’s City Council voted to amend its ordinance by repealing it in its entirety.
In seeking to reconcile the interests of those concerned with state government intruding on local rule with the interests of mineral owners and their lessees concerned with intrusive governmental restrictions on the use of their property, House Bill 40’s approach arguably was solomonesque. In just 3 pages, the bill allowed cities, under certain circumstances, to regulate above ground activities related to oil and gas operations, but barred them from regulating oil and gas operations per se, reserving that regulation to the state.
House Bill 40 declares that oil and gas activities are subject to the exclusive jurisdiction of the state, but clarifies that municipalities may adopt an ordinance that regulates above ground activities related to oil and gas operations, including ordinances governing fire and emergency response, traffic, lights, or noise, or imposing reasonable setback requirements. The statute requires, however, that such an ordinance be “commercially reasonable,” not effectively prohibit an “oil and gas operation” conducted by a reasonably prudent operator, and not otherwise be preempted by state or federal law. The statute defines the quoted terms. It also creates a presumption that an ordinance is considered prima facie to be commercially reasonable if it has been in effect for 5-years and has allowed oil and gas operations to continue during that period.
The stated concerns of the Denton ordinance generally related not to fracking, but rather to the above ground impacts of the oil and gas activities it facilitated, that is, things like traffic, lights, noise, and safety concerns. The Denton ordinance did express concern with the potential for contamination of drinking water aquifers, but studies, including EPA’s recently released draft assessment on fracking, generally have shown that concern to be related more to oil and gas activities generally than to the subsurface migration of contaminants associated with fracking per se.
Even in fossil energy friendly Texas, fracking can be controversial. The new state statute allows municipalities to address above ground effects related to oil and gas operations, subject to certain limits to be more fully fleshed out, but reserves to the state the power to regulate oil and gas operations per se. This approach preserves local authority over things that arguably mattered most to the citizens of Denton, while preserving regulation of oil and gas development by the agencies that have historically regulated them.
Posted on June 23, 2015
On June 4, 2015, the U.S. Environmental Protection Agency released a draft “Assessment of the Potential Impacts of Hydraulic Fracturing for Oil and Gas on Drinking Water Resources,” which finds no evidence that hydraulic fracturing activities have led to widespread, systemic impacts on drinking water supplies. According to the draft assessment, between 2000 and 2013, there were an estimated 9.4 million people living within one mile of a well that was hydraulically fractured. The draft assessment supports the assertion that state agencies, as the primary regulator of oil and gas development in the United States, are effectively governing hydraulic fracturing activities by the industry.
Initially announced by USEPA in March 2010, the study has a broad scope. USEPA reviewed each stage of the “hydraulic fracturing water cycle” – including water acquisition, chemical mixing, well injection, flowback and produced water recapture, and wastewater treatment and disposal – to assess for any widespread, systemic impacts on the quality or quantity of drinking water resources. The agency also used an expanded definition of drinking water resources that includes currently undrinkable saline aquifers that might be desalinated for consumptive use in the future.
Although the draft assessment acknowledged that hydraulic fracturing could potentially contaminate drinking water resources, USEPA found that the actual occurrences of such impacts were “small compared to the number of hydraulically fractured wells.” The risks related to hydraulic fracturing activities identified in the draft assessment included: water withdrawal in times of low availability; spills of fracturing fluids and produced water; fracturing directly into underground drinking water resources; below ground migration of liquids and gases; and inadequate treatment and discharge of wastewater.
The draft assessment noted that the primary means of disposing of wastewater from hydraulic fracturing activities conducted in the United States is underground injection wells. However, one notable exception to this finding is in the Marcellus shale play, where USEPA found that most wastewater is reused by industry. The high percentage of reuse and recycling of wastewater in the Marcellus shale play is a practice that industry has long asserted is a valuable means of reducing the amount of freshwater needed for well development activities.
USEPA is expected to publish a final assessment after the completion of a notice and comment period, which is currently open and concludes on August 28, 2015, and a review of the draft assessment by the Science Advisory Board Hydraulic Fracturing Research Advisory Panel. The Panel has scheduled a public meeting to conduct a review of the draft assessment from October 28 to October 30, 2015, and teleconferences to discuss the draft assessment on September 30, October 1, and October 19, 2015.
Posted on November 6, 2014
Ozone is the quintessential ambient pollutant. It is the result of complicated chemical reactions involving NOx and VOCs, sunlight, humidity and temperature. It is primarily an urban pollutant, because that is where most of the NOx and VOCs are emitted, but it is also a regional challenge particularly in the eastern U.S.
The Uintah Basin of eastern Utah is the quintessential Western U.S. Empty Quarter. It is sparsely populated and windswept, and is a high-altitude desert. It is home to the Ute Indian Tribe, and the greater part of the Basin is Indian Country for purposes of environmental regulation, meaning EPA – not the State of Utah – has regulatory authority. The Basin is home to extensive reserves of oil, gas, oil shale and oil sands.
If the Basin is a dry, windy environment, then why have ambient ozone levels spiked dramatically in the Basin the last few years, during the winter, no less? It turns out that ozone is not only created during hot muggy summer days, but when VOCs build up during winter inversions with a lot of sun and snow. Periodic winter high pressure systems trap the VOCs and the ozone appears. EPA has classified the Basin as “unclassifiable” for ozone and has denied an administrative petition to classify the area as nonattainment. That denial is currently under review at the D.C. Circuit.
So where is this aberrant ozone coming from? Although oil and gas has been produced in the Basin for decades, the fracking boom has swept into Eastern Utah with a vengeance, and the number of wells and associated facilities has mushroomed. Utah DEQ, EPA Region 8, the counties, the Tribe, NGOs and the operators are jointly working on strategies to mitigate the problem, including newly promulgated state rules requiring retrofit of existing wells with equipment to reduce VOCs. These efforts are complicated, however, by the jurisdictional differences over air issues as between Utah DEQ and EPA and the results are sometimes a bit clumsy. But all of the stakeholders see the need to address the ozone issue proactively, and the end result will hopefully be a model for addressing similar issues in North Dakota, western Wyoming and Western Colorado.
Posted on November 4, 2014
Over 30 earthquakes jolted the area in and around the City of Azle, Texas —20 miles north of Fort Worth—last November through January. In response to citizen concerns, the Texas House Committee on Energy Resources created a Subcommittee on Seismic Activity to investigate whether there was a link between earthquakes and increased oil and gas production and disposal wells. On August 12, the Railroad Commission of Texas, with support from both the Texas oil and gas industry and environmental groups, proposed rules that would require companies to do a seismic survey before obtaining permits for new oil and gas disposal wells—so-called Class II injection wells. On October 28, 2014, the Railroad Commission unanimously voted to finalize that proposal.
Presently, the state has more than 3600 active commercial injection wells used for the disposal of oil and gas wastes. The rules require applicants for new oil and gas disposal wells to provide additional information, including logs, geologic cross-sections, and structure maps for injection well in an area where conditions exist that may increase the risk that fluids will not be confined to the injection interval. Those conditions include, among other things, complex geology, proximity of the base rock to the injection interval, transmissive faults, and a history of seismic events in the area as demonstrated by information available from the USGS. The rules also clarify that the Railroad Commission may modify, suspend, or terminate a permit if fluids are not confined to the injection interval, that is, if it poses a risk of seismic activity. The effect of these rules will be not only to regulate oil and gas disposal activities to address potential seismic effects, but also to generate data that may be useful in determining whether and to what extent to further regulate those activities. The rules also may serve as a model for other states concerned about the seismic effects of oil and gas waste disposal.
Posted on September 26, 2013
“Shoot first, ask questions later” is how Congressman Chris Stewart described EPA’s efforts to link groundwater contamination to hydraulic fracturing. Stewart is the Chair of the Environmental Subcommittee of the House Committee on Science, Space and Technology, chairing the July 24 hearing on “Lessons Learned: EPA’s Investigations of Hydraulic Fracturing.” Specifically at issue was the EPA’s investigation in Pavillion, Wyoming.
In December, 2011, the EPA issued a “draft” report which concluded that hydraulic fracturing in the Pavillion, Wyoming gas field had caused pollution of the deep drinking water aquifer. The draft report was based upon sample results from two EPA monitor wells and was issued without peer review or stakeholder input.
There were serious flaws with EPA’s work. For starters, EPA failed to complete the monitor wells according to its own guidelines. Annular sealants were not properly installed, allowing cement to impact the water quality. A landowner’s complaint that EPA had an anti-freeze leak during drilling operations was not disclosed in the draft report. EPA exposed the wellbores to painted low-carbon steel casing and welding materials, which are known to contain various organic and metal compounds, yet the report inaccurately stated that stainless steel casing had been used. Moreover, several of the constituents which the EPA attributed to hydraulic fracturing fluids (e.g. glycols, 2-butoxyethanol and phenols) are known to be associated with the high pH cement that the EPA used to complete the wells. The bottom line is that the EPA’s own operations introduced the contaminants that it blamed on hydraulic fracturing fluids.
Subsequent testing by the USGS was unable to verify the EPA’s results. The USGS was unable to find some of the compounds that EPA claimed were present, and other constituents were found at significantly lower levels. The USGS was unable to sample one of the two wells due to improper well construction.
The EPA has now walked away from its flawed study, turning the entire investigation over to the State of Wyoming. The EPA has stated that the draft report will not be peer reviewed or finalized, and that the results will not be used in its national hydraulic fracturing study. Nevertheless, the EPA’s handling of Pavillion has cast doubt over the EPA’s national investigation of hydraulic fracturing intended to develop regulatory policy for unconventional reserves, causing Chairman Stewart to conclude, “given EPA’s rush to judgment in Wyoming…we should question whether the Agency’s ongoing study is a genuine, fact-finding, scientific exercise, or a witch-hunt to find a pretext to regulate.”
Posted on March 7, 2013
One of the many controversies surrounding hydraulic fracturing involves the protection of trade secrets in an evolving regulatory environment hungry for more information about every aspect of operations. Regulators, litigants and the public press for disclosure of the composition of hydraulic fracturing fluids while manufacturers and operators resist full disclosure to protect proprietary formulas believed to be valuable secrets.
In a pre-rulemaking decision draft of hydraulic fracturing regulations released on December 18, 2012, California addressed the tension between protecting trade secrets and the public's right to obtain information under California's Public Records Act ("Act"). Under the draft regulations, operators are not required to disclose the chemical composition of hydraulic fracturing fluid prior to drilling. After fracking, operators must disclose the chemicals in their fracturing fluid by chemical family and by percent of the fluid. Disclosure of precise chemicals and formulas is not required. Operators must also provide contact information for the person or entity that possesses the information withheld as a trade secret.
The California draft regulations reflect a national trend. Alaska, however, bucks this trend with draft regulations released in December which require full disclosure of each fluid additive type by chemical name, CAS registry number and concentration. The issue is far from resolved and we can certainly expect more regulation and litigation.
Posted on February 19, 2013
Oil and gas development has traditionally been regulated by the states, and the majority of the states with viable shale reserves have adopted laws or regulations that directly address hydraulic fracturing. However, several local governments have responded to concerns over potential health and environmental impacts by banning hydraulic fracturing within their jurisdictions. To date, local bans have been enacted in Colorado, Maryland, New Jersey, New York, North Carolina, Ohio, Pennsylvania, and West Virginia. In several cases these local bans have been challenged as being preempted by comprehensive state regulation of oil and gas development. While there is very little appellate case law addressing the legality of local bans, two preemption cases are currently on appeal in New York. Norse Energy Corp. USA v. Town of Dryden, No. 2012-1015 (N.Y. App. Div.); Cooperstown Holstein Corp. v. Town of Middlefield, No. 2012-1010 (N.Y. App. Div.). In each case, the local trial court upheld a local ban on hydraulic fracturing, finding that preemption language in the state’s Oil, Gas, and Solution Mining Law (“OGSML”) did not apply to local land use regulations.
Appellant natural gas developers rely primarily on the OGSML’s preemption provision, arguing that its broad language was intended to preempt all local ordinances and regulations related to oil and gas development unless they are directed toward local roads or real property taxes. They also emphasize the broad scope of DEC’s oil and gas regulations which go beyond regulating how oil and gas development is conducted and also address spacing requirements and other limitations on where oil and gas development can occur. Thus, they assert that any local ordinance that limits where hydraulic fracturing can occur is superseded by the OGSML. The natural gas developers also argue that under implied preemption principles and New York’s constitutional limits on home rule authority, local governments cannot prohibit hydraulic fracturing because such regulations are in direct conflict with the OGSML’s provisions that dictate where oil and gas development can occur. Finally, the natural gas developers argue that the trial court’s reliance on supersedure provisions from other statutes was misplaced due to key differences in the language of the supersedure provisions as well as the relatively broader scope of DEC’s regulatory authority under the OGSML.
In contrast, the towns of Dryden and Middlefield assert that local prohibitions on hydraulic fracturing can be harmonized with the OGSML and its preemption provision. They argue that the local bans on hydraulic fracturing were not enacted for the purpose of regulating natural gas development, but instead are part of comprehensive land use plans designed to protect the public health, safety, and general welfare of the local community. Because the purpose of the prohibitions are not to “regulate” natural gas development, the towns contend that the prohibitions are not subject to the OGSML’s preemption provision. Instead, they argue that such local bans can be harmonized with the OGSML by limiting the OGSML’s well spacing and setback provisions to those areas where oil and gas development is otherwise permitted. Further, the towns argue that the trial court properly relied on earlier cases interpreting the supersedure provisions of the Mined Lands Reclamation Law (“MLRL”). The towns assert that the supersedure provisions in the MLRL and OGSML are substantially similar and, therefore, should be given similar effect. Thus, the towns assert that the prior cases that upheld local ordinances banning mining practices that were subject to regulation under the MLRL are binding precedent here.
Oral argument has been scheduled for March 21, 2013 and a final decision is not expected for several months, at the earliest. However, these cases will be closely watched in other jurisdictions where local bans on hydraulic fracturing have been enacted and where additional litigation is expected. Given the diversity among state laws addressing both home rule authority and oil and gas development, the legality of local bans on hydraulic fracturing is likely to remain a hotly debated issue for several years to come, particularly as oil and gas development using hydraulic fracturing continues to expand to new shale reserves around the country.
Posted on October 31, 2012
When hydraulic fracturing “exploded” in Pennsylvania and Ohio to unlock the huge reservoirs of natural gas buried thousands of feet below surface in the deep shale formations, the initial environmental concerns focused on the potential for contamination of drinking water supplies from the “fracking” fluids and methane, and from the induced seismicity from the disposal of the waste brines into the underground injection wells.
While those concerns remain, new issues have surfaced. In Ohio’s Utica shale play, the deep wells typically consume 5,000,000 or more million gallons of water for the hydraulic fracturing and well completion. Beginning in June, a number of political subdivisions and water districts saw the energy industry’s needs for water as a wonderful business opportunity. For example, the Muskingum Watershed Conservancy District, whose eighteen counties cover 20 percent of Ohio, reportedly contracted with one exploration and production company to sell millions of gallons of water from one of its reservoirs in eastern Ohio. The City of Steubenville signed a five year contract to supply as much as 700,000 gallons a day from a reservoir that holds water from the Ohio River. Newspaper reports at the time mentioned monthly payments to Steubenville on the order of $120,000. The Buckeye Water District enjoyed a seven-month windfall of $24,000 per month for sales of water to a large drilling firm. Even the Ohio Department of Natural Resources weighed possible plans to grant drilling companies access to state-held reservoirs, lakes and streams.
But the public announcement of these water supply contracts produced significant public backlash. The reaction to the plans of the Muskingum Watershed Conservancy District, for example, prompted a reversal of the sales, and lead to a moratorium pending completion of an independent water availability study by the U.S. Geological Survey and an updating of the District’s water supply plan with input from the new study. Low stream flows in the Susquehanna River watershed in Pennsylvania lead the Susquehanna River Basin Commission to suspend 57 approved water withdrawals by gas drillers and other industrial users.
Perhaps in response to the public outcry over the potential impact on water resources, the Ohio General Assembly passed wide-ranging legislation to deal with the growth of shale gas exploration in Ohio. One of the features of that bill requires drillers to disclose their water source and the likely volume of water for well completion.
The link to that legislation is here:
In another piece of legislation, the Ohio General Assembly adopted a measure to regulate the withdrawal of water from the Lake Erie watershed, effectively precluding the use of Lake Erie watershed waters for hydraulic fracturing in the counties where the drilling is occuring because they are outside the watershed.
The legislation on the use of Lake Erie water can be found at this link:
Even with these safeguards, groups like the National Wildlife Federation urge the adoption of even stronger rules on the use of water for hydraulic fracturing. With the projected exponential growth of shale gas drilling, there will be continuing efforts to regulate the use of water, and the encouragement for water recycle and reuse, for hydraulic fracturing.
Posted on October 23, 2012
The technique known as hydraulic fracturing (“fracking”), especially in the context of developing natural gas, continues to generate controversy, legal fees and emotion. The question remains as to whether the technique itself presents any unusual risk to the environment or natural resources. What is clear, however, is the political significance of fracturing and the challenges that our polarized, political dialog presents to achieving a rational result in or from the fracturing debate.
On the federal side, the Administration has taken steps in order to represent to voters that the President has done what he could to see that hydraulic fracturing occurs in a manner that does not threaten the environment. Concrete steps are taking place in three Agencies.
- BLM has issued draft regulations relating to fracturing activities taking place on federal lands. The proposal drew thousands of comments and no action is likely until well after the election.
- EPA issued draft guidance proposing to regulate hydraulic fracturing under the UIC program. This proposal also resulted in thousands of comments, all but precluding any chance that EPA will be in a position to act until well after the election.
- EPA is continuing its study into the possible connection between hydraulic fracturing and underground sources of drinking water. A partial report reflecting some retrospective analysis is due before year end, but the meat of the report will not be available until 2014.
- EPA continues to pursue its general investigation into the way fracturing occurs through its investigation into 9 fracturing companies. EPA has proposed to publish information reflecting well densities and chemical use relatively soon.
- EPA has reviewed and is continuing to review petitions filed by environmental organizations seeking to force the Agency to take steps to regulate fracturing under various regulatory programs, including TSCA. EPA has denied some of the relief sought, but is collecting information under some and beginning its evaluation of others.
- At the regional level, EPA has engaged in studies when citizen pressure has suggested a connection between fracturing and contaminated drinking water. This has proven to be an area where EPA has not maintained consistency or scientific integrity. The agency’s work at Dimmock, Pavillion and elsewhere has resulted principally in controversy and criticism, and has done little to advance the state of knowledge about fracturing.
- DOE Secretary Chu has been an Administration spokesman for White House efforts to coordinate the many federal entities that seem to be working on fracturing issues. His role has been above the weeds and the fact that a Secretary charged with overseeing national energy policy, if there is one, is the Administration’s front man, appears to be a bone to those suggesting the sole interest of the President is in making energy development more difficult.
- Within DOA, the Forest Service has sent mixed signals with respect to whether fracturing is viewed as posing risks to other resources. While several forests have adopted plans anticipating the development of resources within their jurisdiction, including by fracturing, the George Washington National Forest plan remains under review, having proposed to ban fracturing in its initial draft release.
- The USGS recently has entered the fray in connections with published concerns linking fracturing and increased seismic activity. Preliminary indications suggest the true focus of such efforts may be long term injection wells, rather than transient fracturing activities, but there is more to follow on this topic.
The federal role in the fracturing debate also has occurred in courts. Environmental interest groups recently have begun to raise fracturing activities in a number of lawsuits challenging the adequacy of the environmental reviews conducted in connection with federal leases. Many such cases are making their way through the courts, and are being watched for the decisions..
In his public statements, the President, of course, has been careful to promote the safe development of natural gas resources, including by fracturing. He has offered what generally have been viewed as favorable statements in his state of the union address, and more recently in his remarks at the Democratic National Convention. Of course none of those favorable comments has slowed any of the developments noted above, nor were the President’s remarks necessarily inconsistent with such action.
There is much resistance to the above federal efforts from states, and from industry which has had decades of experience accommodating state regulators in connection with drilling and developing wells. States too have been active, to varying degrees, with some devising thoughtful programs balancing the needs of developers with the concerns of some members of the public. The politicization of the issue also has reached the states, however, and nowhere is it more in evidence than in the glacial SGEIS process that has been under way for years, with no regulations on the horizon. There also have been intrastate efforts directed at fracturing by the Susquehanna River and Delaware River Basin Commissions, with the former moving forward with water management programs while the latter has, by default, banned fracturing until a compromise is agreed upon among the member sovereign constituencies.
And – don’t expect the controversy and misunderstandings surrounding fracturing to disappear soon. In addition to a small scale advocacy film last year, Hollywood is entering the fray with a major film slated for release in the not-too-distant future. Television already has managed to capitalize on the drama fracturing offers in more than one series.
Things will change after the election. Stay tuned to find out how.
Posted on August 17, 2012
In an effort to inject (no pun intended) regulatory certainty into the permitting of underground injection wells used in oil and gas hydraulic fracturing (HF) operations, on May 10, EPA issued draft guidance for HF operators utilizing diesel fuels in their injection process. EPA did not initially consider HF to be covered by its Safe Drinking Water Act (SDWA) Underground Injection Control (UIC) program. EPA's view changed as the result of a number of court decisions which concluded that HF activities are subject to that program. In 2005, the Energy Policy Act revised the SDWA definition of underground injection was modified to exclude from UIC regulation the underground injection of fluids or propping agents other than diesel fluids used in HF operations related to oil, gas and geothermal production activities. This exclusion has, understandably, proven to be controversial, at least in part because there is no one definition of what constitutes "diesel fuel". The EPA draft guidance attempts to bring clarity to the definition of what constitutes a diesel fuel, by examining whether the injectate is included in one of six identified chemical abstracts and whether the fluid is commonly referred to as "diesel fuel". The draft guidance also touches upon other issues associated with HF operations including which activities are covered by the UIC program and the management of wells over their operational lifetime.
The comment period for the draft guidance closed on July 9, and the guidance, when finalized, will apply only to those jurisdictions in which the EPA directly implements the UIC program (fourteen states and territories and most tribal lands). The guidance, along with proposed requirements for HF on public lands published almost contemporaneously (77 Fed. Reg. 27691; May 11, 2012), signal an intention of the federal government to bring certainty to a very uncertain and controversial issue, and to impact a rapidly expanding industry which has previously been subject primarily to state and local regulation.
Posted on June 21, 2012
The development of natural gas shale formations, such as the Marcellus and the Utica in Pennsylvania, Ohio and West Virginia, requires reliable sources of water for hydraulic fracturing that makes gas extraction from tight shale possible. In Pennsylvania―a state with relatively plentiful ground and surface water sources―there are water sourcing challenges presented by various regulatory frameworks as well as withdrawal limitations in sensitive headwater areas of the state that coincide with current oil and gas activities.
One alternative to using fresh water for hydraulic fracturing is the use of water supplies affected by acid mine drainage (AMD), which are also plentiful in Pennsylvania. While the use of AMD by the oil and gas industry offers many potential benefits, operators are reluctant to become entangled in long-term liabilities created by the current legal framework for such pre-existing contamination.
Recognizing the need to encourage the treatment of abandoned AMD, Pennsylvania adopted the Good Samaritan Act, 27 Pa. Cons. Stat. §§ 8101 et seq., in 1999 to provide liability relief for various stakeholders, volunteers and watershed groups to undertake cleanup efforts of pre-existing contamination from AMD. One recent legislative proposal would amend the Act to allow relief from liability for the use of mine drainage, mine pool water, or treated mine water for the development of a gas well. This amendment, which has bi-partisan support in the Pennsylvania legislature, provides relief from third party claims as well as enforcement under various liability schemes.
On a parallel track, the Pennsylvania Department of Environmental Protection (PADEP) has been investigating means by which it could encourage the use of AMD by oil and gas operators. See PADEP’s draft White Paper: Utilization of AMD in Well Development for Natural Gas Extraction, November 2012. PADEP is engaging in ongoing discussions with stakeholders regarding possible processes and solutions for the treatment, storage, and liability issues associated with such an undertaking.
At the federal level, the United States Environmental Protection Agency (EPA) has developed a Good Samaritan Initiative to protect volunteers from liability for the remediation of drainage from abandoned hard rock mines. EPA’s program, however, does not encompass coal mine drainage, which is the primary source of AMD in Pennsylvania. Short of legislative changes to the Clean Water Act or CERCLA to protect operators from potential liability, an expansion of EPA’s initiative to encourage the use of AMD for hydraulic fracturing in Pennsylvania would provide greater confidence to the oil and gas industry that both state and federal agencies are willing to provide appropriate relief to encourage the use of AMD.
While it seems like a win-win-win for the environment, industry and the Commonwealth, it remains to be seen if workable solutions will be found to encourage the use of AMD while limiting long-term liability related to that use.