FEDERAL ROLE IN REGULATING HYDRAULIC FRACTURING

Transcription

1 McGinnis Lochridge & Kilgore, LLP FEDERAL ROLE IN REGULATING HYDRAULIC FRACTURING Historical Antecedents and Current Developments Bruce M. Kramer

2 Historical Antecedents Federal Oil Conservation Board 1926 Brainchild of Herbert Hoover Role of Henry L. Doherty Federal statutory unitization law FDR refused to appoint new members Mineral Leasing Act 2

3 Federal Environmental Revolution Decade of the 1970 s NEPA of 1969 Clean Air Act Amendment of 1970 Federal Water Pollution Control Act Amendments of 1972 Safe Drinking Water Act of 1974 Guiding principle Cooperative federalism 3

4 Safe Drinking Water Act Pub.L. No , 86 Stat (1974) (codified as amended at 42 U.S.C. 300h et seq.) Two principal strategies Designation of aquifers as sole or principal sources of drinking water Underground injection control (UIC) program fs 4

5 Safe Drinking Water Act Classification Scheme Class I Hazardous, Industrial or Municipal Wastes Class II Oil and Gas Fluids Class III Mining Operations Class IV Hazardous/Radioactive (Prohibited) Class V All Other Injection Wells 5

6 Safe Drinking Water Act Oil and Gas Related Litigation Phillips Petroleum v. U.S., 803 F.2d 545 (10 th Cir. 1986) Extension of SDWA to Native American lands ARCO Oil & Gas v. EPA, 14 F.3d 1431 (10 th Cir. 1993) Injection of wastes incident to carbon dioxide production requires Class I permit Chevron deference to EPA interpretation 6

7 The LEAF Decisions Legal Environmental Assistance Found. v EPA, 118 F.3d 1467 (11 th Cir. 1997) (LEAF I) Legal Environmental Assistance Found. v. EPA, 276 F.3d 1253 (11 th Cir. 2001), reh g en banc denied, 34 Fed. App x. 392 (11 th Cir. 2002), cert. denied, 527 U.S. 989 (2009) (LEAF II) 7

8 The LEAF Decisions LEAF I EPA approves Alabama UIC program Hydraulic fracturing operations in Black Warrior Basin (CBM) not regulated EPA determines that hydraulic fracturing is not an underground injection applying principal function test Chevron deference approach followed 8

9 The LEAF Decisions LEAF I Statutory definition of underground injection unambiguous/ the subsurface emplacement of fluids by forcing them into cavities and passages in the ground through a well. 42 U.S.C. 300h(d)(1) Fracing is not an exempt drilling operation 9

10 The LEAF Decisions LEAF II EPA did not quickly respond to LEAF I Alabama does not want to issue individual permits for hydraulic fracturing operations Alternative demonstration provision 42 U.S.C. 300h 4(a) LEAF claims fracing not within categories for which 300h 4(a) allows such programs Chevron deference applied 10

11 EPA Response Ongoing National Energy Policy Development Group Study CBM development,hydraulic fracturing and groundwater pollution some of the subjects of the Study (May 2001) EPA Study Evaluation of Impacts to Underground Sources of Drinking Water by Hydraulic Fracturing of Coalbed Methane Reservoirs (June 2004) 11

12 EPA Response Memorandum of Agreement Signed Dec. 12, 2003 Voluntary agreement Elimination of diesel fuel in hydraulic fracturing fluids injected into CBM production wells in underground sources of drinking water (USDWs) Required EPA to publish its then ongoing study which EPA did in June

13 EPA Response EPA Study Survey of extant literature Limited to CBM operations involving hydraulic fracturing Stranding of frac fluids in receiving formations a concern No evidence linking groundwater/drinking water contamination to hydraulic fracturing operations 13

14 Energy Policy Act of 2005 (EPACT) Hydraulic fracturing exclusion: The term underground injection (A) means the subsurface emplacement of fluids by well injection; and (B) excludes (i) the underground injection of natural gas for purposes of storage; and (ii) the underground injection of fluids or propping agents (other than diesel fuels) pursuant to hydraulic fracturing operations related to oil, gas, or geothermal production activities. Amends 42 U.S.C. 300h(d). 14

15 2009 Congressional Efforts Fracturing Responsibility and Awareness of Chemicals Act (FRAC Act) Bring hydraulic fracturing operations under aegis of SDWA Public disclosure of chemical constituents of frac fluids Disclosure of specific chemical formulae to EPA, state or medical personnel in the event of a medical emergency 15

16 EPA Study House Appropriations Committee requests additional EPA studies (2009) March 2010 EPA announces new study of hydraulic fracturing operations February 2011 EPA issues Draft Plan to Study Potential Impacts of Hydraulic Fracturing on Drinking Water Resources Seven case studies 16

17 EPA Study 2011 Draft Plan Cradle to grave study 2 wells 7 test wells geographically dispersed Water lifecycle study Water acquisition Chemical mixing Well injection Flowback and produced water Wastewater treatment and waste disposal 17

18 EPA Study December 2012 Interim Progress Report Follows 2011 Draft Study Ongoing research projects 18 Existing Data Evaluation Modeling/Scenario Evaluation Laboratory Studies 18

19 EPA Study Emphasis is on impact, if any, on drinking water supplies Draft report Due to be published in 2014 Final report No specific deadline Expected to be published by end of

20 BLM California Study Center for Biological Diversity v. Jewell, 937 F.Supp.2d 1140, 2013 WL (N.D.Cal.) Triggered by BLM Lease Sale in Monterey Shale 2 leases As to NSO Leases, NEPA requirements must be followed Aug 2, 2013 Notice of Intent to conduct Full EIS on Monterey Shale leases 20

21 BLM California Study 284,000 acres/ Impact of allowing fracturing and/or acidizing operations Independent, statewide science review of oil and gas drilling impacts California Council on Science & Technology will be lead agency in conducting science review 21

22 BLM California Study Science review will undoubtedly serve as basis for comprehensive EIS No moratoria on APD s in area Public Scoping Period ended Oct. 4 22

23 BLM Response April 2011 Announcement Regional meetings Bismarck, ND Little Rock, AR Denver, CO 23

24 BLM Response Proposed Regulations Issued May 2013 Three primary subjects Chemical disclosure Well construction Flowback water Open, lined pits allowed Closed loop system 24

25 Secretary of Energy Advisory Board (SEAB) Created by Presidential action March 30, 2011 Shale Gas Production Subcommittee Members, John Deutch, Stephen Holditch, Fred Krupp, Kathleen McGinty, Susan Tierney, Daniel Yergin, Mark Zoback 90 Day Time period for reporting 25

26 SEAB Shale Gas Production Subcommittee Interim Report August 18, 2011 Emphasis on risk management/best management practices Shale gas is a game changer No conclusion as to cost/benefit analysis in shale gas development Objectives/ Recommendations 26

27 SEAB Objectives 1. Public dissemination of information STRONGER/Ground Water Protection Council 2. 27

28 Contact Information BRUCE M. KRAMER McGinnis Lochridge & Kilgore, LLP 1111 Louisiana, Suite 4500 Houston, TX (713)