CONTROLLING THE LOCAL IMPACTS OF HYDROFRACKING May 2015 White Paper for Discussion Statement of Purpose: Horizontal gas exploration is an ongoing enterprise in many states. Based on our research, federal and state regulations, combined, will leave many local impacts of drilling operations unaddressed. This governance gap is a call on local governments to adopt standards and practices to supplement state and federal requirements. In the absence of sound models for tackling these impacts, many local governments will not adopt responsible protections or will simply ban hydrofracking. It is the purpose of this white paper to explore the need for technical assistance to local governments and to outline broadly the best practices that local governments can adopt to ensure that they responsibly address the otherwise ungoverned impacts of hydrofracking. Together with a number of experienced stakeholders, the Land Use Law Center at Pace Law School (Land Use Law Center) and two entities at Yale University: the Yale Climate and Energy Institute (YCEI) and the Yale Center for Environmental Law & Policy (YCELP), have undertaken this initiative. Together, these research centers intend to carry out a long-­‐term project that will engage industry representatives, regulators, scientists, and local leaders in a process of identifying unregulated local impacts and developing sound local planning, regulatory, and non-­‐regulatory practices that localities can adopt. This white paper begins by briefly summarizing positive and negative local impacts of hydrofracking. It then presents the extent of federal and state regulations; discusses possible local strategies; explains preemption of local authority by state government; and ends with a few examples of local land use efforts in various states that address the impacts of hydrofracking. Each section of this white paper also presents the questions that the project partners asked of participants in a workshop held in December 2013 and summary responses to these questions that arose from discussion at the initial workshop. A number of the answer summaries presented below refer to a “crisis mode” for local governments. This situation arises when a local government is faced with the prospect of new hydrofracking operations, but is unprepared for the substantial responsibilities that come with new industry. When a crisis mode arrives, a local government may resolve to ignore the impending changes, which can result in negative community and environmental impacts, or the government may resolve to prohibit the new fracking activity entirely, which can result in avoided local economic benefits as well as broader energy and, potentially, environmental benefits. The aim of this project, therefore, is to provide local governments with the tools and preparation they need to avoid crisis mode—allowing mitigation of costs and realization of benefits. Identification of Local Impacts: 1 Understanding the Dynamic Life Cycle of Hydrofracking: The impact of hydrofracking on a community is unlike other economic development activities in some important respects, mainly due to the distinct phases of the process and the distinct impacts it creates as the cycle progresses. Hydrofracking includes the following phases: Pre-­‐Drilling: Securing leases, set-­‐up and design Infrastructure Build-­‐Out: Pad construction, road creation and expansion, pipe lines, etc. Drilling: Extraction/Distribution Maintenance Depletion and Decommissioning Summarizing the Impacts of Hydrofracking: 1 ●
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Local-­‐scale impacts from unconventional oil and gas drilling span all stages of development and manifest in both positive and negative ways for affected communities. Positive impacts from hydrofracking operations often relate to increased economic opportunity. Payments for drilling rights, leases, and royalties may inject significant new revenue in a community. Gas development typically increases local employment, particularly in services, trucking, and heavy equipment operation. Property values may rise, both because of new resource value and increasing population and economic activity. This economic boom may be accompanied by increases in tax revenue and intergovernmental transfers. In some cases, communities may also experience such benefits from oil and gas operators as improved road maintenance and increased local charitable donations. Hydrofracking development may also negatively impact the local environment, the social and economic characteristics of a community, and local health and safety. Potential environmental impacts range from water pollution to water depletion; from air pollution and dust to visual blight and noise; and from habitat fragmentation to increased erosion. Gas development brings a surge in truck traffic that may cause deterioration of local roads. The economic boom and population influx accompanying development may overwhelm local services and infrastructure, such as waste disposal, water treatment, schools, courts, and jails. Environmental damage may also adversely affect property values and farmland preservation. Spills and other accidents at well sites may threaten local health, while emergency services required to respond to such accidents may be stretched beyond capacity because of a gas development boom. December Workshop and Panel Discussion: 1 See also the more detailed list of potential and documented impacts available from the Pace Land Use Law Center or Yale Center for Environmental Law & Policy. 2 Based on a workshop conducted by the Land Use Law Center, YCEI, and YCELP at Pace Law School on December 5, 2013 and a panel discussion held the next day at the Land Use Law Center’s annual land use conference, the project partners posed several questions; summaries of participants’ responses are in bold below: General Discussion Questions: ● Does the federal government sufficiently regulate the impacts at each phase of development? o Federal regulation is less rigorous than state law; EPA, under the Clean Air Act, adopted methane and volatile organic compound emission standards to be implemented by April 2015. o Legal action by the local government can invite preemption and takings challenges; federal inaction, or limited action, risks forcing local governments to do things they can’t, leading to lawsuits. ● Do state governments sufficiently regulate impacts? o Every state varies, and there is no best or most strict regulation; general recommendations intended for all states are potentially unhelpful because every state’s relationship to its local governments is different. o State ability to pay for monitoring and maintenance is also varied. o Maryland state regulation focuses on the pace and scale of fracking to mitigate the dramatic boom and bust cycles. ▪ Attempts to control the pace, however, may bring significant industry opposition, as well as takings claims. ▪ One way to regulate the pace would be through ancillary permitting (i.e. regulating other things necessary to fracking such as housing), which is happening in North Dakota. ▪ Another way might be to use the endangered species act to create seasonal permitting restrictions. ● Do local governments have authority to regulate the impacts that state and federal governments inadequately regulated? o The worst, most common impacts to focus on are truck accidents and leakage/spills (according to a Resources for the Future Study)2. o Santa Fe community reacted strongly against fracking nearby; local officials brought in experts to provide guidance and diffuse the tense atmosphere: ▪ City officials were fearful of banning fracking due to the potential takings claim and legal action that could potentially bankrupt them, so they invited a coalition, including industry, to consider other options. ▪ Santa Fe’s multidisciplinary approach employed a land use lawyer, land use planning firm, oil and gas attorney, petroleum engineer, geologist, hydrologist, county legal staff. 2 Nathan Richardson et al., The State of Shale Gas Regulation, RES. FOR THE FUTURE (June 2013), http://www.rff.org/rff/documents/RFF-­‐Rpt-­‐StateofStateRegs_Report.pdf 3 Even though the industry left negotiations, the City persisted and created a regulation that would help avoid preemption and lawsuits. ▪ Although the ordinance has not been tested, it involves the following elements: prohibition of open pit storage, mandating closed-­‐loop systems, mandating baseline water quality testing, mandating disclosure of fracking process, mandating use of fresh water and sand as only fracking fluid compounds o Administrative processes involving local land use board review and approval protocols might be preferable to the zoning process for oil and gas because it is less prone to lawsuits by virtue of being longer (city officials can extend the process). ● How to get information regarding local impacts and best practices to localities? o Since local governments tend to be overwhelmed by permitting applications and paperwork, strategies for dealing with hydrofracking and notifying local officials of the type of assistance they can ask for would be very helpful. o A checklist of local impacts that are backed by facts would be very useful ▪ This checklist might include the importance of communities to have a comprehensive plan. o Local governments need baseline studies and information on existing conditions in order to regulate, but they don’t have the funds to commission those studies. o Local governments need help with strategies for post-­‐development phase (such as a bond, in the case the industry leaves). o Developing a basis for fees is important; many local governments make up the fees, they don’t know how much they can ask for. o Potential benefit of a government liaison appointed to work with local government designees to promote trust and share information, minimize the amount of time required to gain familiarity with what other communities in the state are doing. A collection of common information could make a big difference in how a local government decides to proceed. This may also be beneficial in helping communities set priorities to provide overall guidance. o County planners might also be a great conduit for information since they hold regional training sessions. (Raymond Stolinas, the Director of Planning in Bradford County, PA is cited as a good resource for this) ▪
Extent and Reach of Federal Regulation: The current federal regulatory system is both fragmented and incomplete. This section identifies aspects of hydrofracking that are covered by federal regulations and highlights many of the gaps and shortcomings in that coverage. The Clean Air Act (“CAA”), the Clean Water Act (“CWA”), the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), the Endangered Species Act (“ESA”), the National Environmental 4 Policy Act (“NEPA”), the Resource Conservation and Recovery Act (“RCRA”), the Safe Drinking Water Act (“SDWA”), and Toxic Substance Control Act (“TSCA”) nominally cover aspects of the hydrofracking lifecycle. However, these statutes all contain exemptions, limitations, or nuances that make them either ineffectual or irrelevant to specifically local concerns. A. Generally The federal government regulates fracking relatively lightly, leaving the majority of regulation to “a patchwork of state policies.”3 There is no federal licensing requirement for fracking operations, and only a few other federal approvals are required to run a fracking operation.4 The need for federal regulation may be triggered if the fracking operation risks harm to an endangered species; will result in a discharge to surface waters or a pretreatment facility; will result in underground injection of wastewater for disposal; or involves the transport of hazardous chemicals.5 It is not uncommon, however, for fracking operations to avoid regulation under many of these provisions.6 Further, if the operation requires no federal approvals, then it is not necessary to secure ancillary federal regulations; for example, obtaining certification from the state under the Clean Water Act.7 1. Clean Air Act (“CAA”): The Clean Air Act aims to decrease air pollution, but until recently the CAA did not regulate fracking directly. In 2012, the Environmental Protection Agency instituted new rules regulating the release of methane and hazardous air pollutants. They require new source performance standards for industrial categories that cause, or significantly contribute to, air pollution that may endanger health and welfare.8 The rules regulate volatile organic compound (VOC) emissions from gas wells, storage tanks, and other equipment, and leaking components at onshore natural gas processing plants.9 Among other things, oil and gas wells must now have equipment (“green completions”) able to capture escaping volatile organic compound emission.10 The final rule was published in the Federal Register in August 2012 and took effect on October 15, 2012.11 2. Clean Water Act (“CWA”): 3 Emily C. Powers, Fracking and Federalism: Support for an Adaptive Approach That Avoids the Tragedy of the Regulatory Commons, 19 J.L. & POL’Y 913, 940-­‐41 (2011). 4 David B. Spence, Federalism, Regulatory Lags, and the Political Economy of Energy Production, 161 U. PA. L. REV. 431, 477 (2013). 5 Id. at 477-­‐78. 6 Id. 7 Id. 8 Overview of Final Amendments to Air Regulations for the Oil and Natural Gas Industry, U.S. EPA (Apr. 17, 2012), http://www.epa.gov/airquality/oilandgas/pdfs/20120417fs.pdf. 9 Oil and Natural Gas Sector: New Source Performance Standards and National Emission Standards for Hazardous Air Pollutants Reviews, 77 Fed. Reg. 49490, 49492 (Aug. 16, 2012) (to be codified at 40 C.F.R. Parts 60, 63). 10 Spence, supra note 4, at 433. 11 Oil and Natural Gas Sector: New Source Performance Standards and National Emission Standards for Hazardous Air Pollutants Reviews, 77 Fed. Reg. at 49490. 5 The Clean Water Act is the primary federal law governing the pollution of surface water.12 Passed in 1972, it enacted effluent limitations and standards governing the discharge of pollutants into waters of the United States.13 In order to implement these standards, the CWA requires that point sources—both private facilities and publicly owned treatment works (POTWs)—that discharge into these waters obtain a permit pursuant to the National Pollutant Discharge Elimination System (NPDES).14 These permits are either issued by the EPA, or by states and/or tribes that have adopted a water program approved by the EPA.15 States operating under an EPA-­‐approved permit program now issue most NPDES permits.16 NPDES permits generally contain “effluent limitations” that impose restrictions on the quantity or concentration of pollutants that may be discharged.17 The limitations are set on a technology-­‐based floor centered on available control technology: either “best available technology” for toxic or non-­‐conventional pollutants18 or “best conventional technology” for a limited number of “conventional pollutants” (pH, biological oxygen demand, total suspended solids, fecal coliform, and grease).19 New sources, meaning sources that commenced construction after promulgation of national standards, are subject to “new source performance standards” representing “best available demonstrated technology” and are applicable to all pollutants.20 EPA Regulates Direct Discharge of Wastewater from Fracking Sites EPA has interpreted its national effluent limitation for oil and gas extraction to apply to wastewater emitted from fracking in shale formations as well as sandstone gas facilities, but has concluded that coalbed methane is excluded. EPA has established a national effluent limitation for oil and gas extraction point source categories, and the applicable regulation states that “there shall be no [on-­‐site direct] discharge of wastewater pollutants into navigable waters from any source associated with production, field exploration, drilling, well completion, or well treatment.”21 There is an exception for wastewater that is of good enough quality for use in agricultural and wildlife propagation.22 12 Kevin J. Garber & Jean M. Mosites, Flowback – Recycling, Reuse, Treatment and Disposal Issues, 32 ENERGY & MINERAL L. FOUND. § 9.02 (2011). 13 Obold, Leading by Example: The Fracturing Responsibility and Awareness of Chemicals Act of 2011 as a Catalyst for International Drilling Reform, 23 COLO. J. ENVTL. L. & POL’Y 473, 485-­‐86 (2012). These limits are generally either technology-­‐based or water quality-­‐based. Garber & Mosties, supra note 12. 14 33 U.S.C. § 1311(a) (2012); 33 U.S.C. § 1342 (2012); see also Obold, supra note 13, at 486. 15 Obold, supra note 13, at 486. 16 Jeffrey M. Gaba, Flowback: Federal Regulation of Wastewater from Hydraulic Fracturing, 39 COLUM. ENVTL. L. 251, 283 (2014) 17 Gaba, supra note 16, at 283. 18 33 U.S.C. 1342(b)(1)(a) (2012). 19 Id. at 1342(b)(2). 20 33 U.S.C. § 1316(2) (2012). 21 40 C.F.R. § 435, subpt. C (2014); 40 C.F.R. § 435.32 (2014). 22 Natural Gas Extraction – Hydraulic Fracturing, U.S. EPA, http://www2.epa.gov/hydraulicfracturing#wastewater (last visited Nov. 8, 2014). 6 EPA has taken the position that the wastewater from fracking in shale formations falls within the national effluent limitation,23 as do tight sandstone gas facilities.24 However, EPA has concluded that fracking in coalbeds to produce coalbed methane is not subject to these same requirements.25 Overall, there are no universal standards for the disposal of wastewater discharged from natural gas activities.26 As a result, some shale gas wastewater is transported to publicly owned treatment works (POTWs), or private centralized waste treatment facilities (CWTs), which may not be properly equipped to treat this type of wastewater.27 CWA Fails to Regulate Sub-­‐Surface Activities The majority of hydraulic fracturing’s water risk is underground, through injection of fracking fluid to stimulate the well or through underground injection of produced wastewater. However, the Clean Water Act has not been a successful vehicle for policing underground operations. 28 This is because the actual surface discharge of fracking wastewater is the only action potentially subject to regulation. But again, some of the most salient concerns about fracking stem from the injection of chemicals underground as part of the extraction process and into the wells themselves.29 For example, a common method of wastewater disposal is injection underground in specialized wells.30 Scaling Back Regulations In some respects, there has been a scaling back of fracking regulations under the CWA since 1987. In that year, Clean Water Act amendments passed to exempt oil and gas exploration, production, and processing operations from permitting requirements.31 Then, in 2005, Congress exempted onshore oil and gas facilities from stormwater permitting requirements under the Clean Water Act. 32 23 Notice of Final 2010 Effluent Guidelines Program Plan, 76 Fed. Reg. 66,286, 66,293 (Oct. 26, 2011) (“Unlike coalbed methane extraction, however, shale gas extraction is now subject to effluent guidelines for the Oil and Gas Extraction Point Source Category.”). 24 Unconventional Extraction in the Oil and Gas Industry, U.S. EPA, http://water.epa.gov/scitech/wastetech/guide/oilandgas/unconv.cfm (last updated Aug. 7, 2014). 25 Notice of Final 2010 Effluent Guidelines Program Plan, 76 Fed. Reg. at 66,293. 26 Natural Gas Extraction – Hydraulic Fracturing, supra note 22. 27 Id. 28 Obold, supra note 13, at 486. 29 John Craven, Fracking Secrets: The Limitations of Trade Secret Protection in Hydraulic Fracturing, 16 VAND. J. ENT. & TECH. L. 395, 408 (2014). 30 Inessa Abayev, Hydraulic Fracturing Wastewater: Making the Case for Treating the Environmentally Condemned, 24 FORDHAM ENVTL. L. REV. 275, 300 (2013). 31 Id. 32 Sandra Zellmer, Treading Water While Congress Ignores the Nation’s Environment, 88 NOTRE DAME L. REV. 2323, 2359-­‐60 (2013). See also 33 U.S.C. § 1362(24) (2006) (“The term ‘oil and gas exploration, production, processing, or treatment operations or transmission facilities' means all field activities or operations . . . including activities necessary to prepare a site for drilling and for the movement and placement of drilling equipment, whether or not such field activities or operations may be considered to be construction activities.”); 42 U.S.C. § 300h(d)(1)(B)(ii) (2012) (excluding from the SDWA definition of underground 7 Recent Strengthening of Regulations However, there has been some strengthening of fracking regulations more recently, in light of the 2009 ruling in NRDC v. EPA. In that case, the Ninth Circuit vacated EPA’s rule that stormwater runoff was exempted from regulation as part of the 2005 Energy Policy Act.33 As a result of that decision, oil and gas construction activities discharging storm water contaminated only by sediment must now obtain an NPDES permit, as long as the well pad and access road are one acre or larger in size.34 Further, in 2013 EPA proposed a rule to set standards for wastewater discharges produced by natural gas extraction, while discontinuing rulemaking for coalbed methane extraction given its decreased cost-­‐effectiveness and prominence.35 On September 16, 2014, EPA published its Final 2012 and Preliminary 2014 Effluent Guidelines Program Plan for review and comment, and comments closed on November 17, 2014.36 EPA will evaluate the comments and then prepare a Final 2014 Plan.37 3. Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”): CERCLA was created to authorize cleanup of contaminated properties and make a cost recovery action available for litigants.38 The following elements may establish a cost recovery action under CERCLA: (1) The defendant is a “responsible party;” (2) hazardous injection “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”). 33 NRDC v. EPA, 526 F.3d 591 (9th Cir. 2008). 34 Thomas W. Merrill & David M. Schizer, The Shale Oil and Gas Revolution, Hydraulic Fracturing, and Water Contamination: A Regulatory Strategy, 98 MINN. L. REV. 145, 200 (2013). See also Michael Lauffer, Impact of NRDC v. EPA (9th Cir. 2008) 526 F.3d 591 on the Regulation of Storm Water Discharges of Sediment from Oil and Gas Construction Activities, STATE WATER RES. CONTROL BOARD (Feb. 18, 2009), http://www.swrcb.ca.gov/water_issues/programs/stormwater/docs/public_oil_gas_memo021809.pdf. One potential tool to regulate fracking through the Clean Water Act may be through the portion of the Act that allows permit writers to develop specific technology-­‐based limitations on pollutants in fracking wastewater based on “best professional judgment” (BPJ). These limitations involve an exercise of the permit writer’s judgment in establishing permit limits appropriate to the facility. Gaba, supra note 16, at 303-­‐04. There are two circumstances under which permit writers may set best professional judgment limitations on pollutants: First, BPJ could be invoked if there are no promulgated national standards applicable to the permittee. This would be the basis for establishing BPJ limits on discharge from coalbed methane facilities. The second is if pollutants are not specifically regulate under the national standards, which could form the basis for imposing additional technology-­‐based limits on the discharge of fracking wastewater from private centralized wastewater treatment facilities. Id. 35 Natural Gas Extraction – Hydraulic Fracturing, supra note 22 36 Effluent Guidelines Plan, U.S. EPA, http://water.epa.gov/scitech/wastetech/guide/304m/ (last visited Dec. 17, 2014). 37 Id. Clean Water Act section 304(m) directs EPA to develop a plan for the issuance of new regulations, or revision of existing regulations, for categories of industrial wastewater discharges. On a biennial cycle, EPA publishes a preliminary plan for public comment and then a final plan. EPA is publishing both the Final 2012 Plan with the Preliminary 2014 Plan in order to help get back on schedule with its biennial planning cycle. Id. 38 Sean Joyner, Superfund to the Rescue? Seeking Potential CERCLA Response Authority and Cost Recovery Liability for Releases of Hazardous Substances Resulting from Hydraulic Fracturing, 28 J. CONTEMP. HEALTH L. & POL’Y, 111, 129 (2011). 8 substances are disposed of at a “facility;” (3) there is a “release” or threatened release of hazardous substances into the environment;39 or (4) the release causes the incurrence of “response costs.”40 A CERCLA response action is thus available where hazardous substances, resulting from a federally permitted release, have contaminated the surface water, soil, or groundwater.41 CERCLA Exemption for Natural Gas Under CERCLA, the definition of “hazardous substance” includes hazardous chemicals or substances included in the Toxic Substances Control Act, except for petroleum. This exception also includes crude oil, or “any fraction thereof.”42 The exemption applies to “natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel.”43 In Wiltshire Westwood Assoc. v. Atl. Richfield Corp., the Ninth Circuit reasoned that constituent parts of gasoline must also be excluded, or the exclusion would be meaningless.44 These constituents have been interpreted to include any distillation of petroleum, including diesel fuel and the compounds (such as benzene, toluene, ethybenzene, and xylene) that make up diesel.45 CERCLA allows “[a]ny injection of fluids or other materials authorized under applicable State law for the purpose of stimulating or treating wells for the production of crude oil, natural gas, or water, for the purpose of . . . recovery of crude oil or natural gas.”46 As a result, the underground injection of fluids for fracking is a federally permitted release under CERCLA section 101(10)(I), as long as the release is permitted at the state level.47 It is then exempt from CERCLA liability.48 Lingering Questions However, there remains a debate over the limits of fracking fluid exemptions from cleanup liability.49 The EPA has used its authority under section 104(e) of CERCLA to investigate water that is possibly contaminated with fracking fluids.50 And, although petroleum and gas are excluded, if multiple hazardous substances (including diesel) are inextricably mixed together and petroleum cannot be separated from the other chemicals, courts have held that liability would attach to the entire site.51 39 Under CERCLA, a “release” is “any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, estaping, dumping, or disposing into the environment.” 42 U.S.C. 9601(22) (2012). 40 United States v. Alcan Aluminum Corp., 964 F.2d 252, 258-­‐59 (3d Cir. 1992). 41 Id. at 141. 42 42 U.S.C. § 9601(14)) (2012). 43 Id. 44 No. CV 87-­‐2210-­‐RMT (JRX), 1987 WL 49256, at *1 (C.D. Cal. Oct. 15, 1987), aff'd, 881 F.2d 801 (9th Cir. 1989). 45 Joyner, supra note 38, at 130. 46 Id.; see also Joyner, supra note 38, at 139-­‐40. 47 42 U.S.C. § 9601(10) (2012). 48 Joyner, supra note 38 at 133-­‐34. 49 Craven, supra note 29, at 410 50 Id. at 410 51 Joyner, supra note 38, at 133-­‐34. 9 4. Endangered Species Act (“ESA”) and Migratory Bird Treaty Act: In 2012, a United States Geological Survey (USGS) report documented that shale gas and coalbed methane natural gas extraction practices between 2004 and 2010 in two Pennsylvania counties 52 “create[d] potentially serious patterns of disturbance on the landscape.”53 This is particularly germane to the ESA because increases in disturbances to habitat, and especially forest habitat due to forest fragmentation, cause edge effects. If this occurs, an increase in edge forest and a substantial decrease in the interior forest harm flora and fauna.54 If a species is listed as endangered, federal agencies are prohibited from authorizing, funding or carrying out actions (including issuing permits) that ‘destroy or adversely modify’ its critical habitats.55 The ESA applies to private and public property, and proscribes both direct and indirect harms to listed species.56 As a result, ESA has a broad reach and leads to extensive liability. It can effectively limit local impacts of hydraulic fracturing—but only if a listed species is present.57 The Migratory Bird Treat Act also holds shale gas operators liable for any harm to protected species, and these operators must ensure that gas development facilities—such as surface pits and drilling rigs—do not harm members of protected species.58 5. National Environmental Policy Act (“NEPA”): The National Environmental Policy Act was established in 1969 and is a regulatory program that requires government organizations to consider the environmental impacts of federal agency programs through environmental impact statements (EIS).59 The Energy Policy Act of 2005, however, created a “rebuttable presumption” that oil and gas operations fall under a “categorical exception to the normal procedural requirements.”60 To rebut this presumption, a citizen bringing a suit must meet the high standard of “extraordinary circumstances warranting a full NEPA review.”61 Thus, in only rare circumstances would NEPA apply to fracking operations, and even then, the operation would have to include federal actors or support in order to trigger NEPA and would then have to be sufficiently “extraordinary” to rebut the statutory exemption. In any case, while NEPA review could provide substantial information on certain fracking activities, it provides more in the way of transparency and review than of actual local level safeguards. 52 Kalyani Robbins, Awakening the Slumbering Giant: How Horizontal Drilling Technology Brought the Endangered Species Act to Bear on Hydraulic Fracturing, 63 CASE W. RES. L. REV. 1143, 1154 (2013) 53 Id. 54 Id. 55 Endangered Species Act, 16 U.S.C. § 1536(a)(2) (2012). 56 Robbins, supra note 52, at 1151. 57 Id. 58 16 U.S.C. § 703-­‐12 (2012). 59 Craven, supra note 29, at 410. 60 Id. See also Energy Policy Act of 2005, Pub. L. No. 109-­‐58, § 390, 119 Stat. 594 (2005). 61 Craven, supra note 29, at 410. 10 6. Resource Conservation and Recovery Act (“RCRA”): RCRA is a command-­‐and-­‐control statute that regulates hazardous waste from “cradle to grave” and according to stringent standards and procedures.62 Although oil and gas production and waste was included in RCRA when it was passed in 1976, in 1980 Congress granted a temporary exemption to “exploration and production” oil and gas wastes, and directed EPA to study whether these wastes should be regulated under RCRA.63 EPA found that the regulation of oil and gas wastes was unwarranted, due to the costs that would be imposed on oil and gas producers, and asserted that state regulation of oil and gas wastes was generally adequate.64 Today, under the identification of waste provision (Subtitle C) of RCRA, the waste generated from oil and gas operations is not subject to federal hazardous waste regulation.65 However, the agency did recognize that some oil and gas exploration and production wastes were hazardous, and that some state regulations were lacking. Instead of regulating the wastes itself, EPA provided funding to the Interstate Oil and Gas Compact Commission (IOGCC) to review state regulations.66 7. Safe Drinking Water Act (“SDWA”): The Safe Drinking Water Act was passed in 1974 to regulate the nation’s drinking supply in order to protect public health 67 and “take steps to establish standards and ensure compliance with ‘national health-­‐based standards for drinking water to protect against both naturally-­‐occurring and man-­‐made contaminants that may be found in drinking water.’”68 Instead of federal agencies implementing their regulations, states may also apply to the EPA for “primacy,” or the authority to implement the EPA’s standards within an individual jurisdiction.69 If a state elects this option, it must submit an Underground Injection Control (UIC) proposal to EPA that meets the EPA’s minimum requirements.70 The Underground Injection Control program regulates both the initial injection of fracking fluid and post-­‐
62 Craven, supra note 29, at 409-­‐10. 63 James R. Cox, Revisiting RCRA’s Oilfield Waste Exemption as to Certain Hazardous Oilfield Exploration and Production Wastes, 14 VILLANOVA ENVTL. L.J. 1, 3 (2003). 64 Id. at 5. 65 Craven, supra note 29, at 409. EPA exempted oil and gas from oversight in 1980, after a study concluded that oil and gas exploration and production wastes did not regulate regulation under RCRA. This conclusion was not based on the idea that the wastes did not contain hazardous constituents, but that existing state and federal programs adequately addressed management of these wastes and classifying oil and gas wastes as hazardous would result in increased administrative burdens. Gaba, supra note 16, at 271-­‐73. In 1988, EPA acknowledged that the exemption was “unwarranted.” Cameron Jefferies, Unconventional Bridges over Troubled Water – Lessons to Be Learned from the Canadian Oil Sands as the United States Moves to Develop the Natural Gas of the Marcellus Shale Play, 33 ENERGY L.J. 75, 99 (2012). 66 Hannah L. Wiseman, Regulatory Adaptation in Fractured Appalachia, 21 VILLANOVA ENVTL. L.J. 229, 245-­‐46 (2010). 67 Obold, supra note 13, at 282. 68 Abayev, supra note 30, at 297-­‐98. 69 Id. at 296-­‐97. 70 Obold, supra note 13, at 482. 11 fracking injection of wastewater. EPA retains the right to take responsibility back from a state if it determines that the state UIC program violates the SDWA.71 Fracking may impact drinking water in two primary ways. The first is when fracking fluid is injected to stimulate the well, and the second is when flowback wastewater is disposed in underground injection wells. The SDWA regulates neither. SDWA Does Not Regulate Injection of Materials into Wells Between 2000 and 2005, the EPA conducted a study and found that the “injection of certain extraction materials into coalbed methane wells posed ‘little or no threat to underground sources of drinking water.”72 As a result of EPA’s study, Congress passed the Energy Policy Act of 2005, which excluded most fluids used in the initial fracking injection from regulation under the Act—even though the study focused on coalbed methane.73 These amendments effectively “exempt[] fracking from compliance with underground injection control because the fracking fluids no longer require a permit.74 The only exception to the fracking exemption is when diesel fuel is used as a fluid to initially inject into a recovery well.75 In that instance, EPA does have authority to regulate the underground injection of diesel fuel through the Underground Injection Control program.76 This means that any service company that performs hydraulic fracturing using diesel fuel must receive prior authorization through the applicable UIC program.77 Broadly, Wastewater Is Covered Under the SDWA, but Not Fracking Wastewater Generally, wastewater is subject to minimum federal standards as set forth under the SDWA and the Clean Water Act. 78 Part C of the SDWA covers the protection of underground drinking water sources, and requires EPA to establish and publish 71 42 U.S.C. § 300h (2012). 72 Angela C. Cupas, The Not-­‐So-­‐Safe Drinking Water Act: Why We Must Regulate Hydraulic Fracturing at the Federal Level, 33 WM. & MARY ENVTL. L. & POL’Y REV. 605, 608-­‐09 (2009). The battle over regulation of fracking through the Safe Drinking Water Act began in 1997, when the Legal Environmental Assistance Foundation, Inc. (LEAF) filed a petition asking EPA to withdraw its approval of Alabama’s underground injection program. Although EPA’s draft study noted that over ten chemicals associated with hydraulic fracturing (and nine of those exceeded the regulatory standard), the final draft removed calculations regarding most of these chemicals. Id. at 614. 73 Energy Policy Act of 2005, sec. 322, Pub. L. No. 109-­‐58, 119 Stat. 594. See also Abrahm Lustgarten, Former Bush EPA Official Says Fracking Exemption Went Too Far; Congress Should Revisit, PROPUBLICA (Mar. 9, 2011), http://www.propublica.org/article/former-­‐bush-­‐epa-­‐official-­‐says-­‐fracking-­‐exemption-­‐went-­‐too-­‐far (describing the motivation behind the exemption). 74 Craven, supra note 29, at 407-­‐08. 75 L. Poe Leggette et al., EPA’s Efforts, 33 ENERGY & MINERAL L. FOUND. § 22.13, sec. 5 (2012). See also Class II Wells – Oil and Gas Related Injection Wells, U.S E.P.A., http://water.epa.gov/type/groundwater/uic/class2/index.cfm (last accessed Dec. 17, 2014). 76 Regulation of Hydraulic Fracturing Under the Safe Water Drinking Act, U.S. EPA, http://water.epa.gov/type/groundwater/uic/class2/hydraulicfracturing/wells_hydroreg.cfm (last accessed Dec. 17, 2014). 77 Id. 78 Abayev, supra note 30, at 298. 12 regulations that set minimum requirements and restrictions for underground injections nationwide.79 These include standards for inspection, monitoring, recordkeeping, and reporting requirements.80 Because Part C of the SDWA was specifically amended to exempt “any underground injection for the . . . recovery of oil or natural gas,”81 wastewater is not regulated by SDWA either. The “Safe Drinking Water Act only requires the EPA to create a national maximum contaminate level when the contaminate may have an adverse effect on the health of persons. . . . [T]here is a substantial likelihood that [it] will occur in public water systems . . . . [Such regulation] is in the sole judgment of the Administrator [whether] regulation of such contaminant presents a meaningful opportunity for health risk reduction.”82 This implies that there is flexibility for the types of contaminants covered by the SDWA, but also a great deal of authority upon the Administrator to determine which substances might be covered. Future Steps In 2009, Congress asked the Environmental Protection Agency to revisit the impact of hydraulic fracturing on the environment and safe drinking water.83 As of October 2014, EPA has not yet completed that study.84 Other Possibilities for Regulation under SDWA The remaining source of regulatory authority in the SDWA rests with EPA’s emergency powers: Under section 1431 of the SDWA, EPA has the power to issue emergency orders if a contaminant in an underground source of drinking water may present an imminent and substantial endangerment to the health of persons.85 However, this provision applies ex post and would not protect water supplies prior to observing negative human-­‐health effects.86 8. Toxic Substances Control Act (“TSCA”): Under the Toxic Substances Control Act, EPA requires companies to report their use and production values of certain chemical substances.87 The reporting requirements apply to companies that manufacture and/or import a chemical substance listed on the TSCA 79 Obold, supra note 13, at 482. See also 42 U.S.C. §§ 300h-­‐300h-­‐8 (2012). 80 Craven, supra note 29, at 407-­‐08. 81 Safe Water Drinking Act, 40 C.F.R. Part 144 (2005). 82 42 U.S.C. § 300g-­‐1 (2012). See also Angela C. Cupas, The Not-­‐So-­‐Safe Drinking Water Act: Why We Must Regulate Hydraulic Fracturing at the Federal Level, 33 WM. & MARY ENVTL. L. & POL’Y REV. 605, 606 (2009) (emphasis added). 83 Obold, supra note 13, at 487. 84 See Office of Research and Development, Study of Potential Impacts of Hydraulic Fracturing on Drinking Water Resources: Progress Report, U.S. EPA (2012) http://www2.epa.gov/hfstudy/study-­‐potential-­‐impacts-­‐
hydraulic-­‐fracturing-­‐drinking-­‐water-­‐resources-­‐progress-­‐report-­‐0. 85 42 U.S.C. § 300i(a) (2012). Craven, supra note 29, at 407-­‐08. 86 Craven, supra note 29, at 407-­‐08. 87 L. Poe Leggette et al., supra note 75. See also Hydraulics Fracturing Chemicals and Mixtures, U.S. EPA, http://yosemite.epa.gov/opei/rulegate.nsf/byRIN/2070-­‐AJ93 (last accessed Oct. 17, 2014). 13 Inventory and is not otherwise exempt. 88 In 2014, EPA recently promulgated a new rule that will require the inclusion of inorganic chemical substances (which are utilized in shale gas development) in the reporting requirements.89 Moreover, EPA lowered the chemical volume that must be included in reported records—
from 100,000 pounds to 25,000 in one calendar year.90 Some chemicals used in natural gas extraction are still exempt from reporting, including petroleum process streams and liquefied petroleum gas.91 EPA also agreed to propose rules under sections 8(a) and 8(d) of the Act, requiring regulated parties to disclose information on “chemical substances and mixtures used in hydraulic fracturing.” 92 They would also require regulated entities (manufacturers, processors, and commercial distributors) to disclose the health and safety studies respecting the substances.93 As a result, some commentators see the burden of compliance falling on service companies as opposed to oil and gas well operators.94 Advanced notice of proposed rulemaking was published in the Federal Register in 2014 and closed in August 2014.95 This would create a new degree of transparency but, as with many other aspects of the federal regime, would not control on-­‐the-­‐ground operations. Promising Developments On March 20, 2015, the Secretary of the Interior released final standards96 that will “improve safety and help protect groundwater by updating requirements for well-­‐bore integrity, wastewater disposal and public disclosure of chemicals.”97 It will also include measures to target where oil and gas leasing occurs, and protect areas deemed too “special” to drill in. Specifically, key provisions of the rule include improved protection of groundwater supplies by requiring a certification of well integrity and strong cement barriers between the wellbore and water zones through which the wellbore passes; increased transparency by requiring companies to publicly disclose chemicals used in hydraulic fracturing to the Bureau of Land Management within 30 days of completing fracturing operations; higher standards for interim storage of recovered waste fluids from hydraulic fracturing to mitigate risks to air, water, and wildlife; and measures to lower the risk of cross-­‐well 88 Leggette et al., supra note 82, sec. 4. 89 Id. 90 Id. 91 Id. 92 See Hydraulic Fracturing Chemicals and Mixtures, 79 Fed. Reg. 28664 (proposed on May 19, 2014). 93 Leggette et al., supra note 75, sec. 4. 94 Id. 95 See Hydraulic Fracturing Mixtures and Chemicals, supra note 87. 96 Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands, 80 Fed. Reg. 16128 (Mar. 26, 2015) (to be codified at 43 C.F.R. pt. 3160). 97 Jessica Kershaw, Interior Department Releases Final Rule to Support Safe, Responsible Hydraulic Fracturing on Public and Tribal Lands, BUREAU OF LAND MGMT., (Mar. 20, 2015) http://www.blm.gov/wo/st/en/info/newsroom/2015/march/nr_03_20_2015.html. 14 contamination with chemicals and fluids used in the fracturing operation by increasing disclosure requirements to the BLM. 98 The rule, which will come into effect in June 2015, applies only to land managed by the Bureau of Land Management, so it is limited to development on public and tribal lands. Yet this development represents a significant step forward in federal regulation of hydraulic fracturing. As Secretary of Interior Sally Jewell noted, “Current federal well-­‐drilling regulations are more than 30 years old and they simply have not kept up with the complexities of today’s hydraulic fracturing operations.”99 Hopefully, these regulations mark the beginning of a federal effort to close the regulation gaps exposed here. Reporting of Chemical Usage Under the Emergency Planning and Community Right-­‐to-­‐Know Act (EPCRA) operators must maintain material safety data sheets for certain chemicals that are stored at the drilling site above threshold quantities.100 However, oil and gas operators are not required to prepare annual toxic chemical release forms, because the oil and gas industry is not one of the listed industries under EPCRA.101 Further, although EPCRA requires that operators must provided the data sheets to local emergency planning committees upon request, it also allows operators to claim that certain chemical compositions are “trade secrets” and thus exempt from disclosure.102 Infrastructure Build-­‐Out Few federal statutes or regulations directly address oil and gas infrastructure development, thus leaving much of the work to the states.103 The Clean Water Act is one of the federal statutes that does explicitly address site infrastructure concerns during the permitting process. Stormwater permitting rules are addressed through the National Pollutant Discharge Elimination System (NDPES), contained in Section 402 of the Act.104 These rules apply during the development of a well site and its access road.105 However, Congress exempted “uncontaminated discharges”106 of stormwater runoff from 98 Id. 99 Id. 100 29 C.F.R. § 1910.1200(b) (2010); 42 U.S.C. § 11005 (2012). 101 Wiseman, supra note 66, at 121 n.126. 102 Id. 103 See infra Section “Extent and Reach of Federal Regulations ‘Generally’”, describing the shortcomings of federal regulations related to fracking. 104 42 U.S.C. § 1342 (2012). 105 Hydraulic Fracking Background Information, U.S. EPA, http://water.epa.gov/type/groundwater/uic/class2/hydraulicfracturing/wells_hydrowhat.cfm (last accessed Oct. 21, 2014). 106 40 C.F.R. 122.26(a)(2)(ii)(2006) (noting that as part of the Energy Policy Act of 2005, “EPA plans to . . . codify the revised 2005 Energy Policy Act definition of “oil and gas exploration, production, processing, 15 oil and gas exploration and production operations from CWA permitting requirements in the Energy Policy Act of 2005.107 The Ninth Circuit has subsequently ruled that EPA impermissibly excluded “sediment” from the definition of contaminate runoff, and vacated the rule.108 As a result of this decision, oil and gas operators now typically must obtain a CWA stormwater permit that contains basic erosion prevention practices before constructing sites of a few acres or more.109 Although the Clean Water Act allows EPA to directly implement the NPDES program, EPA can authorize states to implement all or parts of the national program.110 When EPA implements the NPDES permit, the agency’s involvement in these state-­‐issued permits is limited.111 Further, statutory requirements applicable to federal actions, such as preparing an Environmental Impact Statement under the National Environmental Policy Act or a consultation under the Endangered Species Act, may not apply when a state issues a permit.112 The Endangered Species Act is one of the other federal statutes that focuses on infrastructure. At both the well site development stage and later stages of development, such as water withdrawals for hydraulic fracturing, operators must consider ESA requirements.113 If operations will impact endangered or threatened species, the operator must negotiate with the Fish and Wildlife Service and potentially obtain an ‘incidental take’ permit.114 This regulatory requirement is particularly important in the Marcellus region where the Fish and Wildlife Service recently listed the diamond darter as treatment, and transmission operations” to clarify that certain uncontaminated discharges from oil and gas construction activities are exempt from permitting, as identified in section 402(l)(2) of the Clean Water Act.”). 107 Id. 108 NRDC v. EPA, 526 F.3d 591, 606 (9th Cir. 2008) (“[W]e conclude that EPA’s inconsistent and conflicting position regarding the discharge of sediment-­‐laden storm water from oil and gas construction sites causes its interpretation of amended section 402(l)(2), as reflected in the storm water discharge rule, 40 C.F.R. § 122.26, to be an arbitrary and capricious one.”). 109 Id. 110 Office of Wastewater Mgmt., Water Permitting, U.S. EPA, http://water.epa.gov/polwaste/npdes/basics/upload/101pape.pdf (last accessed Oct. 22, 2014). As of June 2014, only seven states (including Puerto Rico and the Pacific Territories) did not submit a Memorandum of Agreement to the EPA to implement their own NPDES system. Memorandum of Agreements Between EPA and States Authorized to Implement the National Pollutant Discharge Elimination System (NPDES) Program, U.S. EPA, http://www.epa.gov/compliance/resources/policies/state/moa/ (last updated June 13, 2014). 111 Gaba, supra note 16, at 298. 112 Id. 113 Section 7 of the Act essentially provides that “the action agency must not jeopardize the species, nor adversely modify its designated critical habitat, regardless of the wildlife agency says in its biological opinion.” Robbins, supra note 52, at 1150. Section 9, which prohibits takings of listed species, is also quite powerful: “To grasp the incredible power behind section 9, consider that it applies to private use of private property, prohibiting even mere habitat alterations—without requiring those alterations to be so great as to jeopardize the species. Any alterations injurious to an individual member of the protected species are proscribed, where “injury” includes impact on its ability to breed, feed, or obtain shelter.”). Id.. 114 Sean Gahan, Endangered Species Act Finding with Potential Fracking Implications, FRACKING INSIDER (July 31, 2012), http://www.frackinginsider.com/regulatory/endangered-­‐species-­‐act-­‐finding-­‐with-­‐potential-­‐fracking-­‐
implications/ (“In general, incidental take permits will only issue after thorough federal review of the activity and, often, imposition of mitigation measures and various terms and conditions that can range from minimal to prohibitive.”). 16 endangered.115 This listing could impact operators withdrawing water from streams for fracturing. Drilling After the well site and access road are developed, few federal regulations apply directly to drilling and fracturing. There is no federal regulation of the drilling process or how operators must case wells, although EPA has issued draft guidance with casing standards for fracking that will use diesel fuel.116 Trucks carrying fracturing chemicals to well sites must also comply with Department of Transportation hazardous transport regulations that require labeling, transport containers of adequate design, and other protections.117 During and after drilling and fracturing, most wastes that are stored on site and eventually discarded are not subject to federal regulation, because of the RCRA Subtitle C exemption.118 Under this exemption, most oil and gas exploration and production or E&P wastes are not subject to the federal hazardous waste portions of RCRA.119 Thus, even if wastes have toxic and hazardous qualities, RCRA leaves regulation to the states.120 States oversee the wastes that are stored in pits and tanks and disposed of in a centralized landfill or through road spreading.121 Federal regulation does apply, however, to birds that are impacted by waste pits.122 Discussion Questions: ● What are the pros and cons of federal regulation? o Cons: current federal regulation is even more limited than state law. And because geology varies greatly over regions, there is need for on-­‐the-­‐
ground expertise in crafting regulations. o Federal inaction has created problems for local municipalities, which have been forced to legislate beyond their means, causing takings claims and capacity issues. ● What are the prospects that the cons will be eliminated in the near future? ● Are there other roles for the federal government that we have not identified? ● What is the scope of federal authority? o Mostly—at least right now—in regulating air quality impacts through the Clean Air Act. 115 With its habitat nestled within the Marcellus and Utica Shale formations of West Virginia, the diamond darter was listed on the endangered species list in 2013. Species Profile, U.S. FISH & WILDLIFE SERVICE, http://ecos.fws.gov/speciesProfile/ profile/speciesProfile.action?spcode=E014 (last updated Oct. 22, 2014). 116 Draft Underground Injection Control (UIC) Program Guidance on Transitioning Class II Wells to Class VI Wells, U.S. EPA (Dec. 2013), http://water.epa.gov/type/groundwater/uic/class6/upload/epa816p13004.pdf. 117 Wiseman, supra note 66, at 121. 118 See supra Section 6 (“Resource Conservation and Recovery Act”). 119 Id. 120 Id. 121 Id. 122 See supra Section 4 (“Endangered Species and Migratory Bird Treaty Act”). 17 ● To what extent has the federal government utilized that authority? ● How well does the permitting process work? ● Do permitees have any responsibility under federal regulations to comply with local plans or regulations? Should they? Extent and Reach of State Regulations:123 Assessing fracking regulations at the state level is difficult, as “this activity involves so many stages, . . . produces such a broad array of risks and benefits,”124 and varies greatly between states. Each state has its own statutory provisions and regulations, and no comprehensive database has identified the statutes and regulations that apply to each stage of the process at the state level.125 Even if an organization were to catalogue these requirements, the state regulations are evolving quickly, as science regarding fracking develops and public opinion shifts.126 Here, we examine four states’ regulatory frameworks to illustrate the current landscape. Pennsylvania Overview Fracking has been used for gas extraction in Pennsylvania since the 1950s, but grew enormously in the late 2000s.127 In response to increased fracking in the state at that time, Pennsylvania updated its Oil and Gas Act in 2012.128 In addition to the Oil and Gas Act, oil and gas exploration is regulated under the Coal and Gas Resource Coordination Act, Oil and Gas Conservation Law, and the state’s environmental protection laws: the Clean Streams Law, the Dam Safety and Encroachments Act, the Solid Waste Management Act, the Water Resources Planning Act, and the Community Right to Know Act.129 Since 2008, the Pennsylvania Department of Environmental Protection (DEP) has more than doubled its drilling oversight staff. Revenue from drill permit application fees funds this additional staff, as well as the DEP oil and gas program more broadly.130 However, some commentators argue that Pennsylvania regulators are still understaffed.131 Casing & Cementing Standards 123See generally, Nathan Richardson et al., The State of Shale Gas Regulation, RES. FOR THE FUTURE (2013), http://www.rff.org/shalemaps. 124 Hannah J. Wiseman, Regulatory Islands, 89 N.Y.U. L. REV. 1661, 1696-­‐97 (2014). 125 Id. at 1697. 126 Id. at 1698-­‐99. 127 Pennsylvania Hydraulic Fracturing State Review, STRONGER, INC. 10 (Sept. 2010), http://www.strongerinc.org/sites/all/themes/stronger02/downloads/PA%20HF%20Review%20Print%20
Version.pdf. 128 Tushar Kansal & Patrick Field, Approaches to Local Regulation of Shale Gas Development, LINCOLN INST. OF LAND POL’Y 24 (2013) (working paper), http://www.lincolninst.edu/pubs/dl/2360_1700_Kansal_WP14TK1.pdf. 129 Laws, Regulations and Guidelines, PA. DEP’T OF ENVTL. PROT. (2015), http://www.portal.state.pa.us/portal/server.pt/community/laws%2C_regulations___guidelines/20306. 130 Id. 131 Kansal & Field, supra note 5, at 32. 18 Pennsylvania updated its standards for well casing and cementing practices in 2012 to require operators to develop and maintain a casing and cementing plan. These plans must describe the casing that the operation is using, the proposed depths to which they will set casing, the proposed placement of centralizers, as well as detailed information about the type of cement they will use.132 Water: Surface, Ground, and Wastewater Pennsylvania manages fracking wastewater in any of four ways: It is (1) reused to fracture additional wells; (2) treated and discharged to surface water; (3) injected into underground disposal wells; or (4) transported to out-­‐of-­‐state facilities.133 For groundwater, the 2012 Oil and Gas act stipulates that water withdrawals used for oil and gas drilling may not adversely affect the quality or quantity of water in the watershed.134 Additionally, the Department of Environmental Protection (and Oil and Gas Act) requires operators to submit water management plans to identify where and how much water will be withdrawn during the course of fracking operations.135 The Pennsylvania Oil and Gas Act includes a presumption that an oil and gas well operator is responsible for pollution of a water supply if it occurs within six months of drilling and is within 1,000 feet of the well, and both the landowner and operator must undertake baseline water quality tests before operation.136 There are no specific additional requirements for protecting surface water.137 Air The General Permit for Air Pollution Control in Natural Gas Compression and/or Processing Facilities (GP-­‐5) regulates air emissions in Pennsylvania. This general permit authorizes the construction, modification, and operation of natural gas or gas processing facilities.138 It is only applicable to non-­‐major facilitates (as defined by the Clean Air 132 Pennsylvania Follow-­‐Up State Review, STRONGER, INC. 10-­‐11 (Sept. 2013), http://strongerinc.org/sites/all/themes/stronger02/downloads/Final%20Report%20of%20Pennsylvania%
20State%20Review%20Approved%20for%20Publication.pdf. 133 Pennsylvania Hydraulic Fracturing State Review, supra note 127, AT 10. Pennsylvania has not accepted primacy for the Underground Injection Control (UIC) program, and so EPA administers the Safe Water Drinking Act UIC program in Pennsylvania. Id. at 11. 134 Pennsylvania Follow-­‐Up State Review, supra note 9, at 60-­‐62. 135 Id. 136 Id. at 10. 137 Pennsylvania Hydraulic Fracturing State Review, supra note 4, at 38. 138 Pennsylvania Follow-­‐Up State Review, supra note 9, at 113; see also GP-­‐05, Natural Gas Compression Facilities, PA. DEP’T OF ENVTL. PROT., http://www.elibrary.dep.state.pa.us/dsweb/View/Collection-­‐9747 (last visited May 21, 2015). 19 Act);139 major facilities need separate plan approval from the Department of Environmental Protection before construction.140 Permitting & Reporting Requirements Pennsylvania is not involved in regulating lease agreements between mineral property owners and producers, and the Department of Environmental Protection does not audit payments, read or calibrate meters or tanks, or otherwise involve itself in lease matters.141 As far as reporting, the Pennsylvania Oil and Gas Act requires operators to notify the Department of Environmental Protection at least 24 hours before they begin drilling the well, but there is no specific requirement that the operator notify the DEP before beginning hydraulic fracturing (i.e., injecting fluid into the pre-­‐drilled well).142 The operator must then file a report within thirty days after completing drilling, and the report must include information about the well, such as the type of propping agent that will be used, average injection rate, rock pressure and well service company name.143 Pennsylvania’s chemical disclosure rules require that drilling companies disclose to the Pennsylvania DEP the names of chemicals that are used at a drilling site, with the exception of trade secrets.144 Recent Updates STRONGER, an independent non-­‐profit that helps states develop their hydraulic fracturing regulations, recommended in 2013 that the DEP improve its data standardization for tracking violations and enforcement actions to facilitate accurate internal performance and provide accurate information to the public.145 The team also recommended that the DEP complete a study for unconventional gas development to determine whether its program appropriately assesses wastes for TENORM, an EPA test for radiation detection.146 Further, STRONGER recommended that DEP consider developing a process by which it determines surface casing depths to protect fresh groundwater, as its methodology has heretofore been inconsistent.147 It also suggested the state consider developing guidance for pre-­‐drilling water sampling.148 DEP released its most recent 139 “Major” means as defined in Title V of the Clean Air Act: “[A]ny source that emits or has the potential to emit 100 tons per year or more of any criteria air pollutant.” 35 PA. CONS. STAT. ANN. § 4006.6(b) (West 2015); Vocabulary Catalog, U.S. ENVTL. PROT. AGENCY (Feb. 21, 2013), http://ofmpub.epa.gov/sor_internet/registry/termreg/searchandretrieve/glossariesandkeywordlists/searc
h.do?details=&vocabName=Air%20Permitting%20Terms&uid=1810064&taxonomyName=Air%20Permittin
g%20Terms. 140 General Permit for Natural Gas Compression and/or Processing Facilities (GP-­‐5), PA. DEP’T OF ENVTL. PROT. (Dec. 2014), http://www.elibrary.dep.state.pa.us/dsweb/Get/Document-­‐103720/2700-­‐FS-­‐DEP4403.pdf. 141 Id. 142 Pennsylvania Hydraulic Fracturing State Review, supra note 4, at 13. 143 Id. 144 Francis Gradijan, State Regulations, Litigation, and Hydraulic Fracturing, 7 ENVTL. & ENERGY L. & POL’Y J. 41, 74-­‐75 (2012); 58 PA. CONS. STAT. ANN. § 3222.1 (West 2015).
145 Pennsylvania Follow-­‐Up State Review, supra note 10, at 11. 146 Id. at 12. 147 Id. 148 Id. at 12-­‐13. 20 annual report in 2013 and that report does not indicate that it has adopted these suggestions.149 In response to New York State’s fracking ban, in December 2014, Pennsylvania Governor Tom Wolf said he believes fracking can be done safely: “I want to do what I think we can do here in Pennsylvania and that is have this industry, but do it right from an environmental point of view, from a health point of view.”150 Governor Wolf also stated that he would support a moratorium on fracking in the Delaware River basin, in the eastern part of the state, and on new leasing in state parks and forests. On January 29, 2015, Governor Wolf signed a moratorium on drilling in Pennsylvania’s state parks and national forests, representing over two million acres of land.151 In April 2015, Governor Wolf heard comments from the public on proposed fracking regulations that would increase the mandatory setbacks of oil and gas drilling operations to at least one mile from schools.152 These regulations would also ban temporary fracking waste storage pits at well sites and increase requirements for ponds used as way stations for drilling waste.153 North Dakota Overview In the last ten years, North Dakota has emerged as the third-­‐largest oil producing state in the United States.154 The North Dakota Industrial Commission (Department of Mineral Resources, Oil and Gas Division) administers the oil and gas laws found in the North Dakota Century Code and the North Dakota Administrative Code.155 The North Dakota Industrial Commission has about fifty employees across several field offices.156 These regulations cover several aspects of the hydraulic fracturing process, including well permitting, materials, and construction requirements to rules for the disposition of fracturing fluids, reporting, and record keeping.157 The North Dakota Department of Health (Environmental Health Section) administers provisions of the NDAC that protect the state’s air, land, and water resources. The North Dakota Department of Trust Lands regulates oil 149 See 2013 Oil and Gas Annual Report, PA. DEP’T OF ENVTL. PROT., http://www.portal.state.pa.us/portal/server.pt/community/annual_report/21786 (last updated 2015). 150 Katie Colaneri, Wolf: New York’s Fracking Ban is “Unfortunate”, STATEIMPACT PA. (Dec. 18, 2014 5:09 PM), http://stateimpact.npr.org/pennsylvania/2014/12/18/wolf-­‐new-­‐yorks-­‐fracking-­‐ban-­‐is-­‐unfortunate/ 151 Gov. Wolf Signs Moratorium on Fracking on State Lands, CBS LOCAL (Jan. 29, 2015 12:07 PM), http://pittsburgh.cbslocal.com/2015/01/29/wolf-­‐bans-­‐new-­‐gas-­‐drilling-­‐leases-­‐on-­‐public-­‐land-­‐as-­‐
promised/. 152 State Hears Comments on New Fracking Regulations, THE ALLEGHENY FRONT, Apr. 29, 2015, http://www.alleghenyfront.org/story/state-­‐hears-­‐comments-­‐new-­‐fracking-­‐regulations. 153 Id. 154 Shale and Fracking Tracker, VINSON & ELKINS LLP, http://fracking.velaw.com/north-­‐dakota-­‐hydraulic-­‐
fracturing-­‐profile/ (last viewed Apr. 12, 2015). 155 Id. 156 Employee Directory, NO. DAKOTA INDUS. COMM’N, https://www.dmr.nd.gov/oilgas/employees.asp (last visited May 22, 2015). 157 Id. 21 and gas lease agreements, bonus payments and royalties, rights-­‐of-­‐way applications and procedures, surface damage agreements, and seismic surveys.158 Casing & Cementing Standards North Dakota regulations specify that all wells drilled for oil or natural gas must be “properly cemented at sufficient depths to adequately protect and isolate all formations containing water, oil or gas or any combination of these; protect the pipe . . . ; and isolate the uppermost sand of the Dakota group.”159 These regulations require operators to pressure test casing strings after cementing, and before commencing other operations on the well, such as injecting fracking fluid. Before completing any well, operators are required to keep a log describing the presence and quality of bonding of cement. Operators must file these reports within thirty days of completing the work.160 Further, North Dakota requires the application of an appropriate cement evaluation tool to test well bore and casing integrity before conducting hydraulic fracturing activity.161 Exploration and production waste must be stored in lined pits, which must be removed within seventy-­‐two hours after operations have ceased and must be disposed of at an authorized facility. Within thirty days of ceasing operations, any open pit must be reclaimed.162 North Dakota law requires that within sixty days of performing hydraulic fracturing, the owner, operator, or service company must “post on the fracfocus [sic] chemical disclosure registry all elements made viewable by the fracfocus [sic] website.” However, there are no express exceptions to reporting requirements for trade secrets or otherwise confidential information.163 Lastly, the North Dakota Industrial Commission may grant exceptions to these rules, “after due notice and hearing, when such exceptions will result in the prevention of waste and operate in a manner to protect correlative rights.”164 Air The regulations do not establish any special requirements for air pollution or emissions, but they do specify that the commission may require surface air monitoring to detect movement of carbon dioxide that could endanger an underground source of drinking water.165 Water: Surface, Ground, and Waste Water Much of North Dakota’s regulation of water utilized in hydraulic fracturing relates to carbon dioxide sequestration. Before issuing a permit, the Oil and Gas Commission must find that the drilling operation’s storage facility for carbon dioxide will not adversely affect surface waters.166 North Dakota regulations specify that drilling pits shall be diked to 158 Id. 159 N.D. CENT. CODE § 43-­‐02-­‐03-­‐21 (West 2015). 160 N.D. CENT. CODE §§ 43-­‐02—03-­‐21, 03-­‐31 (West 2015); BAKERHOSTETLER, supra note 25. 161 N.D. CENT. CODE § 43-­‐02—03-­‐27-­‐1 (West 2015); BAKERHOSTETLER, supra note 25. 162 N.D. CENT. CODE § 43-­‐02—03-­‐19.3 (West 2015); BAKERHOSTETLER, supra note 25. 163 N.D. CENT. CODE § 43-­‐02—03-­‐27-­‐1 (West 2015); BAKERHOSTETLER, supra note 25. 164 N.D. CENT. CODE § 43-­‐02—03-­‐02 (West 2015); BAKERHOSTETLER, supra note 25. 165 N.D. CENT. CODE § 43-­‐05-­‐01-­‐11.4 (West 2015). 166 N.D. CENT. CODE § 38-­‐22-­‐08 (West 2015). 22 prevent surface water from running into the pit,167 and treatment facilities shall be constructed and operated “so as not to endanger surface or subsurface water supplies.”168 For groundwater, all applications for permits to drill must provide leak detection and monitoring plans for all wells and surface facilities, and this plan must identify potential degradation of ground water resources, with a particular emphasis on underground sources of drinking water.169 Further, the operator must prepare a testing and monitoring plan to ensure that a geologic sequestration project does not endanger underground sources of drinking water. This plan must contain a schedule of periodic monitoring of ground water quality and geochemical changes.170 There are no additional requirements for wastewater disposal.171 Permitting & Reporting Requirements In North Dakota, a person may not begin any operations for drilling a well without first obtaining a permit from the North Dakota Industrial Commission.172 Unless the Commission provides a waiver, it will not issue a permit for an oil or gas well that will be located within 500 feet of an occupied building.173 If the Commission issues a permit within 1,000 feet of an occupied building, it may impose additional conditions on the permit operator. Recent Updates North Dakota has recently challenged the Bureau of Land Management’s proposed rules for fracking on BLM-­‐managed land, arguing that federal law lets states regulate oil and gas operations and thus BLM regulations impermissibly override North Dakota’s authority. 174 Several other states, including Colorado, Wyoming, and Utah, have joined the suit. Colorado Overview Colorado state law gives primary regulatory authority over oil and gas development to the state. Local jurisdictions have authority to regulate local affairs, including land use. Colorado’s state courts have ruled that state laws will only preempt local efforts if the local law causes an “operational conflict” with state law.175 Colorado has an extensive history of oil and gas development, historically on the Western Slope of the state and more recently in the densely populated Front Range area, which includes Denver and Boulder.176 Colorado 167 N.D. CENT. CODE § 43-­‐02-­‐03-­‐19.4 (West 2015). 168 N.D. CENT. CODE § 43-­‐02-­‐03-­‐51.3 (West 2015). 169 N.D. CENT. CODE § 43-­‐05-­‐01-­‐05 (West 2015). 170 N.D. CENT. CODE § 43-­‐05-­‐01-­‐11.4 (West 2015). 171 See N.D. Cent. Code §§ 38-­‐43 (West 2015). 172 N.D. CENT. CODE § 38-­‐08-­‐05 (West 2015). 173 Id. 174 Katherine Lynn, North Dakota Seeks to Join Suit Against Federal Fracking Rule, GRAND FORKS HERALD, Mar. 31, 2015, http://www.grandforksherald.com/news/business/3711856-­‐north-­‐dakota-­‐seeks-­‐join-­‐suit-­‐against-­‐
federal-­‐fracking-­‐rule. 175 Kansal & Field, supra note 128, at 26. 176 Id. at 25. 23 has a strong tradition of home rule and local governments are authorized to address even those aspects of oil and gas development that the Commission’s regulations cover, as long as the local government regulations can be harmonized with state regulations and do not “materially impede” or “destroy” the state regulation.177 The Colorado Oil and Gas Conservation Act (COGCA) seeks to balance oil and gas development “consistent with protection of public health, safety, and welfare, including protection of the environment and wildlife resources.”178 COGCA grants power to the Colorado Oil and Gas Conservation Commission (COGCC) to make and enforce regulations as reasonably necessary to implement it; otherwise, the statute has very few other specific guidelines for the Commission.179 However, the Commission’s implementing regulations are specific and cover a large number of subjects. Casing & Cementing Standards Colorado Oil & Gas Conservation Commission’s 300 Series regulates drilling, development, production, and abandonment of wells.180 Rule 326 governs the mechanical integrity of wells. It specifies that there shall be a “test to determine if there is a significant leak in the well’s casing, tubing, or mechanical isolation device.”181 The Commission’s regulations also cover well spacing requirements.182 Other aspects of hydraulic fracturing governed by the Commission’s regulations health and safety requirements (600 Series), include fire prevention, and setback and mitigation requirements for various types of buildings.183 The 1200 Series establishes a comprehensive wildlife protection system.184 Air Regulation 805 specifies that oil and gas facilities shall be operated in such a manner that odors and dust do not constitute a nuisance or hazard to public welfare.185 Operators must control fugitive dust caused by their operations.186 No special mention is made to any other type of contaminant. Water: Waste, Ground, and Surface Water In 2012, the Colorado Oil and Gas Commission promulgated a final rule that will apply to oil and gas wells for which a permit has been granted on or after May 1, 2013.187 177 Joel Minor, Local Government Fracking Regulations: A Colorado Case Study, 33 STAN. ENVTL. L.J. 61, 104 (2014). 178 COLO. REV. STAT. ANN. § 34-­‐60-­‐102 (1)(a)(1) (West 2015). See also Minor, supra note177, at 102-­‐03. 179 COLO. REV. STAT. ANN. § 34-­‐60-­‐105(1). 180 COLO. CODE REGS. §§ 300-­‐341 (2015). 181 Rule 326: Mechanical Integrity Guidance, CO. OIL & GAS CONSERVATION COMM’N, May 15, 2015, http://cogcc.state.co.us/documents/reg/OpGuidance/Rule%20326%20Mechanical%20Integrity%20-­‐%205-­‐
15-­‐15.pdf . 182 Minor, supra note 177, at 103. 183 2 COLO. CODE REGS. §§ 404-­‐1.606A, 1.609, 1.604 (West 2015). 184 2 COLO. CODE REGS. §§ 404-­‐1.1201-­‐1205 (West 2015) (requiring operators to identify impacted wildlife and creating area-­‐specific restrictions). 185 2 COLO. CODE REGS. § 805 (West 2015). 186 Id. 187 2 COLO. CODE REGS. § 609 (West 2015). 24 That rule will require initial baseline samples of groundwater underlying the wells and subsequent monitoring from several locations on a proposed oil and gas well.188 There are no further regulations targeting water. Permitting & Reporting Requirements In 2012, the Colorado Legislature passed a law requiring operators to keep a chemical inventory on-­‐site at each well and make that information available to emergency responders and local governments within twenty-­‐four hours in the event of a spill.189 The rule also requires that operators disclose the content and composition of each chemical that has been added to their fracturing fluids.190 Drilling operators are encouraged to create a Comprehensive Drilling Plan intended to identify foreseeable oil and gas activities in a defined geographic area, but they are not required to do so.191 According to Rule 206, all operators must file “accurate and complete reports” at times specified by the as well as conduct tests to determine the presence of waste or pollution.192 Recent Updates A 2011 study by STRONGER suggested that Colorado’s regulatory framework could benefit from several improvements that the state has not yet implemented.193 First, the group suggested that the COGCC set minimum and maximum surface casing depths to demonstrate that those depths assure that the casing and cementing procedures are adequate to protect fresh groundwater.194 Secondly, the team recommended that the state jointly evaluate available sources of water for use in hydraulic fracturing.195 In 2014, the state of Colorado made headlines when it approved regulations crafted by the state’s most productive oil and gas producers in conjunction with the Environmental Defense Fund.196 The regulations seek to fix persistent leaks from tanks and pipes by requiring companies to install equipment to minimize leakage of toxic gases and to control or capture 95% of emissions, and are also the first attempt by a state to regulate methane emissions from fracking.197 Texas Overview Texas’s approach to fracking is highly decentralized, and local jurisdictions are granted significant leeway in defining their approaches to oil and gas development 188 Id. 189 Gradijan, supra note 144, at 68-­‐69. 190 Id. 191 2 COLO. CODE REGS. § 216 (West 2015). 192 2 COLO. CODE REGS. § 206 (West 2015). 193 Colorado Hydraulic Fracturing State Review, STRONGER, INC. 5 (Oct. 2011), http://cewc.colostate.edu/wp-­‐
content/uploads/2012/02/Colorado_HF_Review_2011.pdf. 194 Id. at 5-­‐6. 195 Id. at 7. 196 Jennifer Oldham, Colorado First State to Clamp Down on Fracking Methane Pollution, BLOOMBERG NEWS (Feb. 24, 2014 9:20PM), http://www.bloomberg.com/news/articles/2014-­‐02-­‐24/colorado-­‐first-­‐state-­‐to-­‐clamp-­‐
down-­‐on-­‐fracking-­‐methane-­‐pollution. 197 Id. 25 occurring in the state.198 The Texas Railroad Commission administers the bulk of statewide regulatory authority though the Texas Commission on Environmental Quality is responsible for administering air quality regulations.199 However, that Commission has had its budget cut by about a third since 2008, leading to questions about the organization’s effectiveness in enforcement.200 Casing & Cementing Standards Texas Administrative Code Rule § 3.13 provides specification for well casing, cementing, drilling, well control, and completion requirements.201 However, these rules apply only to wells that will be spudded on or after January 1, 2014.202 The Railroad Commission regulations include well construction requirements and surface gauges to monitor these casings to protect groundwater.203 Operators must comply with “general proper wellhead practices for casing and well-­‐waste disposal.”204 Air While the Texas Commission on Environmental Quality regulates air quality, there are no regulations specifically related to air quality and fracking in Texas. A 2014 study revealed that there were only five permanent air monitors in a 20,000-­‐square-­‐mile region and that they are all located far away from the drilling areas where emissions are highest.205 Further, only a small percentage of emissions complaints are investigated.206 Water: Waste, Ground, and Surface Water Water use in Texas is regulated by the Texas Commission on Environmental Quality, which regulates the use of surface water, and local groundwater conservation districts, which regulate the use of groundwater in their regions.207 To protect groundwater, the Railroad Commission states that all wells drilled in Texas must have the surface casing in the well set below the “depth of usable quality water.”208 The Commission’s rules also include strict well construction requirements that specify that several layers of steel casings shall be utilized to protect groundwater.209 The 198 Kansal & Field, supra note 128, at 30. 199 Id. 200 Lisa Song, Jim Morris & David Hasemyer, Fracking Boom Spews Toxic Air Emissions on Texas Residents, INSIDE CLIMATE NEWS, Feb. 18, 2014, http://insideclimatenews.org/news/20140218/fracking-­‐boom-­‐spews-­‐
toxic-­‐air-­‐emissions-­‐texas-­‐residents. 201 TEX. ADMIN. CODE § 3.13 (West 2015). 202 Id. § 3.13(a). 203 Oil & Gas FAQs, TEX. R.R. COMM’N, http://www.rrc.state.tx.us/about-­‐us/resource-­‐center/faqs/oil-­‐gas-­‐
faqs/faq-­‐hydraulic-­‐fracturing/ (last visited Apr. 14, 2015). 204 Id. See also 16 TEX. ADMIN. CODE § 3.14 (West 2015) (describing casing requirements for plugging a well); 16 TEX. ADMIN. CODE § 3.95 (West 2015) (describing casing requirements for Underground Storage of Liquid or Liquefied Hydrocarbons in Salt Formations); 16 TEX. ADMIN. CODE § 3.13 (West 2015) (describing general well casing requirements); see generally 16 TEX. ADMIN. CODE §§ 3.01-­‐3.107 (West 2015). 205 Song et al., supra note 200. 206 Id. 207 Oil & Gas FAQs, supra note203. 208 Id. 209 Id. 26 Commission also requires that the production casing, a pipe placed in the wellbore, be permanently cemented in place.210 Permitting & Reporting Requirements In 2012, the Railroad Commission of Texas implemented the Hydraulic Fracturing Disclosure Rule.211 The rule requires Texas oil and gas operators to disclose the chemical ingredients and water volumes used in hydraulic fracturing treatments on the website FracFocus.212 However, this rule does not apply to components considered “trade secrets” or chemicals that are not disclosed to the operators themselves by manufacturers, or chemicals present in trace amounts.213 Recent Updates While Texas’s approach to regulating fracking is localized, local jurisdictions can go beyond the baselines state-­‐level standards if they choose. In November 2014, the town of Denton, for example, passed the first fracking ban in the state.214 The four states surveyed here have made promising steps in regulating fracking—
particularly in terms of requiring disclosure of chemicals used in fracking operations and specifying construction and maintenance techniques for casing and well pipes. However, there is still much work for states to do to create a comprehensive and responsibly managed fracking scheme. Specifically, there are gaps in terms of water and air regulation, as evidenced by Texas’s large number of air quality complaints and low enforcement rate. Further, even in states like Colorado that have a detailed and specific list of fracking regulations (and in fact Colorado seems to also be a leader in governing traditionally local issues such as dust and other nuisances) there are still gaps around many of the impacts that the Yale-­‐Pace research team has identified. In addition to some of the larger gaps noted above, such as insufficient air and water regulation, less tangible aspects of fracking have also been left unaddressed. For example, no state studied has codified effects of fracking on increased tax revenue, strain on the local housing market, or effects on local economic development. These gaps, even when they are relatively small compared to an overall fracking regulatory scheme, should be an important focal point for local regulators. Thus, there remain opportunities for local regulators to improve, and augment, local fracking regulations. Discussion Questions: ● What are the pros and cons of state regulation? o Pro: State preemption may sometimes be a positive thing. o Pro: Every state’s relationship to its local government is different, as is its 210 Id. 211 16 TEX. ADMIN. CODE § 3.29 (West 2015). 212 Oil & Gas FAQs, supra note203. 213 Gradijan, supra note 144, at 78. 214 Molly Hennessey-­‐Fiske, In Denton, Texas, Voters Approve ‘Unprecedented’ Fracking Ban, LA. TIMES (Nov. 7, 2014 7:19 PM), http://www.latimes.com/nation/la-­‐na-­‐texas-­‐fracking-­‐20141108-­‐story.html. 27 ●
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ability to pay for monitoring and maintenance. o Pro: Currently stronger than federal regulation. o Con: States are financially constrained, some more so than others (Alaska has a regulatory budget of $1500/well/year vs. Kentucky with $40/well/year) o Con: States don’t address all the relevant impacts of fracking at the local level. What is the extent of state regulatory authority? To what extent have states utilized that authority? o Colorado is at the forefront of new regulations at the state level. o The Illinois Hydraulic Fracturing Regulatory Act is an example of comprehensive state action, developed by state agencies and in cooperation with various industry and NGO stakeholders—includes features like robust online disclosure, rebuttable presumption of liability if water contamination occurs within a certain distance of drill site, and regulation of waste. o Maryland is an example of a state that has focused regulation on the pace and scale of fracking to mitigate the boom and bust cycle—some discussants countered that the economics of the industry drive the pace, and attempts to control pace will result in significant industry opposition. o Many local governments would like the state to take responsibility, but often it doesn’t—state need to help fund monitoring and strategies for post-­‐development phase (i.e. bonds). How well does the permitting process work? o As few states have pre-­‐clearance requirements, state governments often may not even know when and where fracking is happening Do state permitees have any responsibility to comply with local plans or regulations? Should they? Local Initiatives: Municipal governments have a number of strategies available to them to control local impacts of hydrofracking. These include education and planning functions that convene, inform, and influence the citizens of the community, preparing the way for cautious and careful progress. Such strategies can involve working with landowners to ensure that their lease agreements with drilling companies contain measures to prevent or mitigate local impacts. Also, leases could compel lessees to sign a local host community agreement that requires signatories to follow stewardship and drilling procedures in lieu of local regulations. Following proper local educational efforts, a municipality can amend its comprehensive plan (an advisory, non-­‐regulatory document) to add an unconventional gas exploration component that articulates objectives and planning strategies for achieving those objectives. This component should list and describe possible local impacts in detail. The planning strategies may or may not include adoption of local regulations. State agencies, in their regulatory regimes, can require or encourage permitees to work with communities that adopt gas exploration components and to respect these local objectives 28 and follow local strategies. Implementation of these local strategies put municipal leaders in a position to create collaborative decision-­‐making forums and to mediate the tension that inevitably occurs when local leadership is excluded from decisions affecting their communities and local impacts are ignored. In addition, municipal governments that have not been preempted from regulating local land use impacts of hydrofracking can adopt land use and police power regulations necessary to fill the gap in the overall regulatory system. Local Approach to Mitigation: ● Collaboration and Mediation o Stakeholder engagement ● Education and Planning o Community benefit agreements o Leases and lease content negotiation ● Baselines, Testing, and Regulation o Comprehensive Plan Component o Zoning Regulations and Zoning Map o Subdivision and Subdivision Regulations Discussion Questions: ● In these times, do we need to rely on cooperative government, taking advantage of the legal power, resources, and competencies of each level of government? o Yes – proven success with a state governmental liaison appointed to work with local governmental officials to promote trust, collaborate, and share information. ● Should localities be able to prevent gas drilling completely? o This is the ‘knee-­‐jerk’ reaction of localities, especially during the ‘crisis mode’ when local people are very vocal, particularly when local governments do not have mitigation models to consider. o If drilling is not right for the community, and/or the local government has no capacity to be able to properly regulate, a ban may be appropriate. General feeling that local governments aren’t prepared to handle this sort of activity—they don’t have the capacity or resources. o In the past, land use regulation of fracking was not thought to be the province of local government, but now it very much is, so perhaps there is room to evolve there. o If local government does ban, it opens itself up to a takings claim, a lawsuit that could be devastating financially and bankrupt the local government. Likewise, a ban could mean avoiding a number of economic and financial benefits. ● How can this be prevented or minimized? o Use the administrative, not the zoning, process for oil and gas issues. Administrative process is more flexible and longer and so less prone to law suits. 29 o Comprehensive plan, priority-­‐setting ● Whether localities can regulate local impacts or not, what are their non-­‐regulatory options? o Collaboration with industry -­‐ this should be in advance of regulation. o “Punt” the issue to the state ● Other options below -­‐ but these are all ancillary or complementary to local government regulations o Much discussion of the importance for towns to have a comprehensive plan, which would back them up in decisions regarding drilling. It triggers ‘a lighter standard of judicial review.’ o Conduct baseline testing of water and air. This will be necessary in developing regulations when applications come in. o Increase local government capacity commensurate with the paperwork/other needs implicated by the regulations. ● What resources do local governments need to regulate local impacts effectively? o Need more capacity: more people to be able to handle the paperwork, inquiries, etc. when the local government becomes a main point of contact. o Need information on what the potential local impacts are, success/failure stories from other towns, especially during the ‘crisis period’ which follows a proposal to drill in the area. Local officials spend a lot of time trying to get up to speed on the issues. o Need baseline studies: information on existing conditions, hopefully state could provide this or fund it, because local government does not have the budget. o Need to monitor, report, verify—but often do not have the budget. o Information to help set reasonable fees and develop fee justifications in order to cover the administrative costs of managing a drilling program. o Need assistance with strategies for post-­‐development phase. State Preemption of Local Authority and Extent of Local Authority: If the advocates of either federal or state preemption of local control over some aspects of hydrofracking prevail, the historical role of municipalities in controlling local land uses and their impacts will be diminished. Local governments are created by and derive their powers from the state. They acquire the power to adopt land use plans and regulations through state planning and zoning enabling acts and home rule statutes. If the state legislature expressly and in certain terms preempts the use of that delegated power to promote a state interest such as gas exploration, this clearly trumps the local government’s power. When state legislatures do not preempt local zoning expressly or where their intention to do so is ambiguous, the courts must determine whether localities are preempted. Courts may find that, by implication, state legislatures intended to preempt local power. Implied preemption may be based on the court finding direct conflicts between general state legislation and local zoning controls (conflict preemption) or by finding that the state legislative scheme is so comprehensive that it intended to occupy the 30 field (field preemption). In most states, zoning is one of several powers and responsibilities that local governments are delegated to serve local and state interests. Zoning determines how property is used and developed and how valuable it will be. Localities have the power to impose property taxes on the land they regulate, and they are expected to use those revenues to fund municipal operations, provide municipal infrastructure, and carry on the business of local government, which benefits local citizens and the state in multiple ways. Given the complexity, comprehensiveness, and utility of these linked powers and duties, the judiciary is rightfully cautious about finding that a state legislature intended its regulatory enactments, like fracking regulations, to inhibit local prerogatives. The importance of local land use regulation, in this larger context of municipal governance, should lead to a presumption against preemption that challengers must overcome to convince state judges that, in adopting oil and gas laws, state legislatures intended to preempt local zoning. Discussion: The Proper Extent of Local Authority: ● Federal Hands-­‐Off Doctrine ● State Deference to Home Rule Doctrine ● Comprehensive Legislative Scheme for Local Regulation ● Three-­‐legged Stool of Zoning, Finance, and Municipal Operations There is tension in the four Marcellus Shale states regarding regulatory control of gas drilling. Debates take on an “either-­‐or” character, with advocates arguing to elbow out the level of government they think is least likely to meet their interests. In Pennsylvania, the state government sought to take greater control fracking governance through Act 13, which, among other things, limited the role of local control over hydrofracking. In late December 2013, a decision from the Pennsylvania Supreme Court, Robinson v. Commonwealth, ruled that Act 13’s effort to remove local authority was impermissible under a rarely used provision of the Pennsylvania constitution.215 A similar lawsuit is currently underway in New York.216 If the New York towns, whose power to ban fracking has been upheld by lower courts, win on appeal, those who oppose fracking will likely encourage greater local resistance, encouraging others to follow suit. If they are successful, the industry and those who will benefit from its relatively cheap energy and local economic impacts will lobby for new state legislation clearly preempting local regulation. Rather than ask which level of government should win the battle for control of gas drilling, it is far preferable to ask how both state and local officials and stakeholders can be involved. As this discussion demonstrates, zoning is an important tool in the municipal governance toolkit and should not be sacrificed for the sake of streamlining the gas drilling permitting process. Zoning out fracking, on the other hand, may frustrate important state and local interests, particularly if it becomes widespread. Gas reserves transcend local boundaries, and states have a legitimate interest in promoting an adequate supply of energy sources of their choice. These tensions cannot be resolved in winner-­‐take-­‐all litigation or advocacy in 215 216 31 legislative offices and chambers. They require a concerted effort to negotiate a process and create a framework for decision-­‐making that provides a role for both local and state agencies and their stakeholders. The result of such a process might be an agreement by the state to promulgate model zoning ordinances, such as a gas exploration overlay zone, and provide technical assistance showing localities how to adapt such ordinances to their local circumstances. It may be that communities adopt total bans in part because they do not have access to best practices such as these and do not understand both the law and science necessary to employ them. State agencies that are investing time and money in creating their own regulatory regimes can provide such technical assistance to localities cost effectively as part of a cooperative, state-­‐local approach to controlling local impacts and promoting regional and state-­‐wide interests. In New York, the NYS Department of Environmental Conservation (“DEC”) has proposed giving communities that adopt a gas drilling component in their comprehensive plans a way to participate in the permitting process. 217 In towns that adopt this planning component, the proposal requires an applicant for a gas-­‐drilling permit to negotiate with local officials to conform the drilling to the local plan, prior to DEC’s final decision on the permit.218 But, how will localities with limited professional staff draft an accurate and reasonable comprehensive plan component on fracking with its multiple and complex impacts? Such a plan should discuss and assess all environmental and public health risks, as well as adverse impacts on a particular community’s character and environment. State agencies charged with regulating oil and gas industries can provide information to localities to help them draft well-­‐informed and appropriate planning documents. This information also could guide communities in identifying measures that mitigate the adverse impacts of gas drilling. States could intentionally include and work with local governments in the regulation of fracking, followed by serious negotiations to create a framework and practices for working together. Such a policy would avoid the uncertainty and vagaries of preemption debates and litigation, respect the critical role of local governments in controlling land uses within their jurisdictions, offer them the technical assistance they need to determine where fracking can occur and how to guard against its adverse impacts, and avoid simplistic solutions such as complete proscriptions that may be inimical to larger state interests. Discussion Questions: ● How can preemption of fracking regulation be made consistent with cooperative government? ● Does preemption at federal or state level properly respect and protect legitimate local involvement and control? ● Is it possible or desirable for a state regime to protect those interests normally 217 218 32 ●
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protected by zoning? o In some cases it may be possible. The new Illinois law, which bypasses the local approval process but gives veto power to municipalities within their regions and also attempts to address local issues usually addressed through zoning (such as setback provisions). o May be desirable where political considerations commonly trump conformance with the law at the local level. Can localities be given a meaningful role in state decision-­‐making? o The model of “new federalism” embodied in the Telecommunications Act provides an example, whereby local governments can regulate placement of cell towers if they are regulating for local well-­‐being not health impacts.219 o Yes, state government liaisons can work with local government designees, promoting trust and sharing information. How do the risks of capture by the industry or forces against hydrofracking of state and local government differ? Are local regulators competent to carry out hydrofracking regulations? o Many lack capacity but there is a wide range in competency. See success in Santa Fe as an example of competency (multi-­‐disciplinary approach).220 If local regulators are not competent, what sort of skills, knowledge, and best practices are needed? o Need assistance/support during the “crisis period” that follows a application to drill in the area, ex. with surge of paperwork (permit applications, etc.). o Checklist of local impacts backed by facts would be very useful (to use as justification for municipal findings and then regulations). o Need funding for baseline studies and monitoring, as well as assistance developing strategies for post-­‐development phase (such as bonds). o Need assistance developing cost justification for fees (most local governments just make up the fees). o Need help incorporating fracking regulation into comprehensive plan. o Can include “preemption questioning process” to help localities understand the extent of their authority before taking action. What should the next steps be for this project? o Create model ordinances, fact sheets, checklists of local impacts. o Develop best practices. o Work towards incorporating fracking into comprehensive plans. Examples of Existing Local Regulation of Hydrofracking: City of Longmont, Colo., Ord. O-­‐2012-­‐25 (July 17, 2012), http://www.ci.longmont.co.us/city_council/agendas/2012/documents/071712_8A.pdf. 219 220 33 This ordinance excludes oil and gas well surface operations and facilities in hazard areas and residential zoning districts, which includes residential, mixed use, planned unit development districts, and mixed use zoning districts that included existing or planned residential uses. This Ordinance also requires that all permits issued under this section pay an impact fee, and it imposes setbacks from water and recommends the setback distance to be 300 feet or more from the normal high water mark of any water body. Power used to enact: land use authority, police powers, zoning Saguache County, Colo., LAND DEV. CODE Art. XXI (July 9, 2008), http://www.saguachecounty.net/images/stories/docs/oilgas/O&GRegs-­‐adopted.pdf. Separates operations into major and minor facilities that have different requirements that the facilities must meet in order to obtain a permit, but they both require a permit in order to operate. Activities associated with oil and gas operation have a setback of at least 1,000 ft. from the normal high water mark of any water body. Power used to enact: police powers, zoning Common Council of City of Terre Haute, Ind., Res. No. 12 (June 8, 2013), http://documents.foodandwaterwatch.org/doc/Frack_Actions_TerreHauteIN.pdf. Perpetual moratorium on hydrofracking within the corporate limits of Terre Haute, in force until Council understands the risks of hydrofracking. Will not be rescinded until Council acts to do so. Power used to enact: police powers City of Oklahoma City, Okla., Muni. Code, Chapter 37: Oil & Gas (1999), http://www.okc.gov/pw/pdf/c37.pdf. Comprehensive chapter of municipal code regulating oil and gas drilling. Creates an oil and gas zone, defines permitted uses for the oil and gas zone, requires permits for drilling, requires the drillers be insured, regulates the location of wells, has enforcement provisions, regulates fencing/screening/landscaping, equipment, storage tanks, noise/nuisance, impoundments, etc. § 37-­‐103 specifically regulates hydrofracking. Power used to enact: zoning, land use authority, police powers Town of New Lisbon, N.Y., Local Law No. 2 (2011), http://www.citizenscampaign.org/PDFs/fracking-­‐
resolutions/HF%20local%20laws%20New%20Lisbon.pdf. Unlawful for anyone to conduct "heavy industry" within the town. Existing uses now become nonconforming uses (including hydrofracking operations). Specifically addresses leases, noting leases that have been signed, but not yet acted upon, come under full force of the law, whereas leases already being utilized for extraction (in compliance with NYSDEC standards) become nonconforming uses. After one year, nonconforming use status expires (amortization clause). Power used to enact: home rule authority, zoning 34 Coppell, Tex., Code of Ords. § 2009-­‐1228 (2009), http://www.nctcog.org/trans/air/Coppell.pdf. Prohibits the drilling of a well within 1,000 ft. of any habitable residential structure, including but not limited to: religious institution, public building, hospital, school, public park, or any business. In permitted drilling locations (which includes property that is zoned light industrial, planned development-­‐light industrial, or agricultural) the operator must receive a permit prior to commencing drilling activities. Power used to enact: police powers, zoning Southlake, Tex., Code of Ords. § 880-­‐B (2011), http://weblink.cityofsouthlake.com/WebLink8/DocView.aspx?id=452815&&dbid=0. Drilling and production of gas or oil within city limits is only allowed by a special use permit and a separate specific use permit is required for each drill site and all applications for these special use permits have an application fee. Hydrofracking and completion of wells is also prohibited during the months of June, July, and August and hydrofracking operations shall be scheduled to occur in the daytime hours. Power used to enact: home rule authority and zoning powers 35