CONTROLLING THE LOCAL IMPACTS OF HYDROFRACKING March 28, 2014 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: ●
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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 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 develipment? 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). 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: land use lawyer, land use planning firm, oil and gas attorney, petroleum engineer, geologist, hydrologist, county legal staff. ▪ Even though the industry left negotiations, the City persisted and created a regulation that would help avoid preemption and lawsuits. 3 Although the ordinance has not been tested it involves the following elements: prohibit open pit storage, mandate closed-­‐loop systems, mandate baseline water quality testing, mandate disclosure of fracking process, mandate 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 Safe Drinking Water Act (“SDWA”), Clean Water Act (“CWA”), Clean Air Act (“CAA”), Comprehensive Environmental Response Compensation Act (“CERCLA”), Resource Conservation and Recovery Act (“RCRA”), Endangered Species Act (“ESA”), and Toxic Substance Control Act (“TSCA”) all nominally may cover aspects of the hydrofracking lifecycle, but all contain exemptions or nuances that make them largely ineffectual under the unique circumstances of 4 hydrofracking. The SDWA applies to the injection or reinjection of fracking fluid into groundwater aquifers that provide drinking water. However, the SDWA only imposes standards upon drilling operations injecting diesel fuel into aquifers. Diesel fuel is just one of myriad chemicals that may be included in injected fracking fluid. The CWA, which applies to surface water contamination, is powerless to address potential contamination resulting from water migrating to surface waters after being injected into the ground. The Environmental Protection Agency is currently using CAA authority to institute new rules regulating the release of methane and hazardous air pollutants, but the scope of this regulatory scheme is confined to the well pad point source. CERCLA grants EPA the authority to hold polluters strictly liable for cleanup costs of hazardous waste sites, but “petroleum… [and] natural gas” are exempt from the definitions of “hazardous substances.” Likewise, oil and gas waste is exempt from the “cradle-­‐to-­‐grave” waste management scheme of RCRA. The ESA grants the Secretary of Interior the power to protect endangered species from “take,” but this approach is rarely used and entirely contingent upon the regional concerns of particular species. The Obama administration partially granted a petition to require manufacturers to disclose the chemical makeup of fracking fluids under TSCA, but even if fully granted, these disclosures do not necessitate any regulation of hydrofracking activities. They merely mandate some degree of transparency. Federal laws apply to nearly every phase of the shale gas development process but often only indirectly. The remainder of this section, as with the following section on state regulation, reviews the extent of regulatory schemes by shale gas development stages. Infrastructure Build-­‐Out Few federal statutes or regulations directly address oil and gas infrastructure development, thus leaving much of the work to the states. CWA stormwater permitting rules do apply when a well site and its access road are developed. In the Energy Policy Act of 2005, however, Congress exempted from CWA permitting requirements “uncontaminated discharges” of stormwater runoff from oil and gas exploration and production operations. Despite this, a subsequent EPA regulation implementing the new statutory provision was vacated in NRDC v. EPA (9th Cir. 2008), where the Ninth Circuit found that EPA impermissibly excluded “sediment” from the definition of contaminated runoff. Therefore, oil and gas operators typically must obtain a CWA stormwater permit, which contains basic erosion prevention practices, before constructing sites of a few acres or more. Many states delegate permitting to the state environmental agency, which requires only a general permit. At both the well site development stage and later stages of development, such as water withdrawals for hydraulic fracturing, operators must consider ESA requirements. 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. This regulatory requirement is particularly important in the Marcellus region where the Fish and Wildlife Service recently listed the diamond darter as endangered. This listing could impact operators withdrawing water from streams for fracturing. 5 Drilling After the well site and access road are developed, few federal regulations apply directly to drilling and fracturing, but several are relevant. Under the Emergency Planning and Community Right-­‐to-­‐Know Act (“EPCRA”), operators must have material safety data sheets on site for hazardous chemicals stored on site in threshold quantities, and they must provide these sheets to local emergency planning coordinators. Operators may, however, claim trade secret status for the chemicals under EPRCA. Occupational Safety and Health Administration (“OSHA”) standards regarding hazardous chemicals management, emergency response procedures for hazardous chemicals, and occupational noise exposure, among others, also apply. 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. Similarly, few federal regulations apply directly to the hydraulic fracturing process, aside from hydraulic fracturing with diesel. EPA draft guidance for fracturing with diesel fuel will apply if finalized. 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. The most direct regulation of fracturing is through the CAA, which, as of January 1, 2015, will require operators at newly fractured and refractured wells to capture the volatile organic compounds (“VOCs”) emitted from the wells and flowback water where feasible. This “green completion” capture of VOCs will also capture methane that would otherwise be emitted to the air. During and after drilling and fracturing, most wastes that are stored on site and eventually discarded are not subject to federal regulation because of a RCRA Subtitle C exemption determination EPA made in 1988. 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. Thus, even if wastes have toxic and hazardous qualities, RCRA leaves regulation to the states. States oversee the wastes that are stored in pits and tanks and disposed of in a centralized landfill or through road spreading. Federal regulation does apply, however, to birds that are impacted by waste pits. Operators who maintain pits that cause bird deaths, which sometimes occur because the liquid waste attracts birds, are strictly liable under the Migratory Bird Treaty Act. A recent federal district court case, United States v. Brigham Oil & Gas (D.N.D. 2012), seems to weaken this strict liability, but it conflicts with another federal district court case, United States v. CITGO Petroleum Corp. (S.D. Tex. 2012). The disposal of liquid wastes through underground injection control wells or through publicly owned treatment works (wastewater treatment plants or “plants”) is federally regulated. The SDWA prohibits Class II underground injection control (“UIC”) wells—those used for oil and gas waste disposal—from endangering underground sources of drinking water. Many states have federally delegated UIC permitting authority. For disposal through wastewater treatment plants, which previously occurred in Pennsylvania, the 6 plants must ensure that they can treat the waste adequately before accepting it. EPA suspected that Pennsylvania plants were not ensuring adequate treatment, leading to several strongly worded letters exchanged between the EPA regional office and Pennsylvania Department of Environmental Protection. Pennsylvania eventually asked operators to stop sending wastes to the plants. Similarly, the Clean Water Act prohibits discharge of brine from oil and gas sites into waters of the United States east of the 98th meridian. West of the 98th meridian, the brine must be treated for grease before being discharge. Throughout the drilling, fracturing, and production process, and after the well site is abandoned, operators could be responsible for the costs of cleaning up any contamination under CERCLA. However, CERCLA does not apply to spills of oil or natural gas. Beyond the well site, interstate natural gas pipelines are subject to a number of federal regulations as well, including Department of Transportation Pipeline and Hazardous Materials Safety Administration regulations for safe transport and line maintenance and Federal Energy Regulatory Commission permitting for siting. Further, some gas processing plants and compressor station groups might be large enough to be regulated as major sources of air pollution under the CAA, although EPA is limited in its ability to aggregate oil and gas emission points and define them as a major source. Finally, the Bureau of Land Management has written draft rules for fracturing on federal lands, and the Department of Energy Shale Gas Production Subcommittee has issued guidelines for improving governance. EPA is “developing an Advance Notice of Proposed Rulemaking that will initiate a stakeholder process to provide input on the design and scope of possible [hydraulic fracturing chemical] reporting” under TSCA.2 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 -­‐ which is 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. ● 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 2
EPA, Regulatory Development and Retrospective Review Tracker, Hydraulic Fracturing Chemicals; Chemical
Information Reporting under TSCA section 8(a) and Health and Safety Data Reporting under TSCA section 8(d),
available at http://yosemite.epa.gov/opei/rulegate.nsf/byRIN/2070-AJ93#1. 7 plans or regulations? Should they? Extent and Reach of State Regulations:3 Due to SDWA exemptions of most hydraulic fracturing and RCRA exemptions of most oil and gas waste disposal, among other exemptions from federal laws, the states have the bulk of the responsibility for regulating the impacts of oil and gas well site development, drilling, hydraulic fracturing, and ongoing production from the well. This section identifies the range of state regulatory schemes at the different phases of hydrofracking. Pre-­‐Drilling A small number of states require a permit and careful environmental review for geophysical testing to locate oil or gas underground. Many others, however, have minimal regulation at this stage. For testing that involves the use of explosives in “shot holes,” most states require anybody blasting shot holes to have a blaster’s license. Some states mandate minimum distances between blasting and buildings and other structures, and some require shot holes to be filled and minimal restoration of sites. For well site development once geophysical testing is complete, states with delegated CWA authority typically issue a general stormwater permit with best management practices to prevent and mitigate erosion. EPA issues this permit in states without delegated authority. Some states also require operators to test existing (baseline) water quality prior to well site development or incentivize this testing through a rebuttable presumption that the oil and gas operator causes contamination within a certain distance and time of drilling. Most states do not address habitat fragmentation or other impacts of well-­‐site development, although Maryland has proposed legislation to require local comprehensive plans that include consideration of the well-­‐site footprint. Drilling The bulk of state regulations apply after site development when drilling begins. All states require that the well be “cased” in a particular way—that it be lined with steel cemented into the ground. Casing regulations, however, vary substantially. Some are narrative, requiring “adequate” casing, while others specify the type of steel and cement required, the time for which the cement must set, the required cementing method, and how deep the casing must run. During drilling, states typically require the use of blowout prevention equipment to prevent the well from exploding when an operator encounters unexpected pressures while drilling. To some extent, all states also regulate the surface pits or tanks that are used to store drilling and fracturing wastes. Most require that the pits be lined and “dewatered” (emptied and dried out) within a certain period of time after drilling and fracturing ends. Solid wastes—solids from dewatered pits and the drill cuttings, such as rock and soil, that 3
See Nathan Richardson, Medeline Gottlieb, Alan Krupnick, and Hannah Wiseman, The State of Shale Gas
Regulation, Resources for the Future (2013), available at http://www.rff.org/shalemaps. 8 come out of the well—are either buried on site or sent to a state-­‐regulated “exploration and production” waste landfill. With respect to the management of surface pits at sites, most states also require that a certain amount of empty space called “freeboard” be maintained in pits so that they do not overflow. Further, some states require secondary containment beneath storage tanks or pits—additional liners or other materials that will catch spills if they occur. Finally, most states require operators to have a spill prevention and response plan that outlines certain practices that must be followed to avoid or catch spills and quickly recover spills if they occur. For the fracturing process following well drilling and casing, few direct regulations apply. For example, states typically do not regulate the type of chemicals that may be used, although most require disclosure of the chemicals while allowing for trade secret protection. Several states do require that a well be pressure tested before fracturing to ensure that the casing can withstand pressure and that operators notify the state oil and gas agency before fracturing the well. Some states require permits for the withdrawal of water for fracturing, while others do not. For surface water withdrawals, states like West Virginia and Pennsylvania ask the operator to demonstrate that the withdrawals will not affect aquatic life adversely. Specific state regulations also apply to the disposal of flowback water, with many states allowing disposal only in underground injection control wells (regulated by states if they have delegated authority under the SDWA) or, in limited circumstances, through wastewater treatment plants. Following drilling and fracturing, states typically require minimal site restoration. During and just after drilling, completion, and fracturing of the well, any gas that comes out of the well must be vented (released into the air), flared (burned off), or captured and sent through a gathering line to a pipeline. This cleans out the well and allows for ongoing production. Some states limit the amount of venting or flaring that may occur, and several also require leak and valve controls on various wellhead equipment and storage tanks to limit VOC (and thus methane) emissions. A limited number of states require the type of “green completion” (captured VOCs and methane released from flowback water and the well) that EPA will require, where feasible, as of January 1, 2015. During the ongoing production of oil and/or gas, states regulate how produced water, the brine that comes out of the well over its life, may be stored and discarded. Many allow the brine to be spread on dirt roads, and other disposal typically occurs through underground injection control wells or, more rarely, wastewater treatment plants. In areas like the Marcellus, operators are reusing much of the flowback or brine for fracturing at other well sites, although this reuse will become more limited once the number of new fractured wells begins to decline. Finally, minor source air quality regulations also apply to processing equipment that remains on site, such as heater treaters and glycol dehydrators that separate water from oil or gas or do other minimal processing and gas compressors. 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 ability to pay for monitoring and maintenance. 9 ●
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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 -­‐ states need to help fund monitoring and strategies for post-­‐development phase (ex. 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 and follow local strategies. 10 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 – note 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. o Comprehensive plan, priority-­‐setting 11 ● 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 field (field preemption). 12 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. A similar lawsuit is currently underway in New York. 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 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. 13 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. 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. 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 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? 14 ●
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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. 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). 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. 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. 15 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 & 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 which are already being utilized for extraction (in compliance with NYSDEC standards) become nonconforming uses. After 1 year, nonconforming use status expires (amortization clause). Power used to enact: home rule authority, zoning 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. 16 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 17