### PERSPECTIVES ON ENFORCEMENT & COMPLIANCE

STEPHEN C. SMITH STEPTOE & JOHNSON PLLC AWMA OIL & GAS ENVIRONMENTAL COMPLIANCE CONFERENCE MAY 14, 2014

## Disclaimer

• This presentation reflects my personal opinions formed over the course of my career which includes 3 years as an agency enforcement attorney, 17 years in private practice and almost 9 years as Deputy General Counsel, Environmental Director of a limestone mining and lime manufacturing company operating in a dozen states and one province. These opinions do not necessarily reflect the views of Steptoe & Johnson PLLC or our clients.

## Overview of Presentation

• There ought to be a law against that!

– Incidents in the Utica and Marcellus Plays
• Perception of the need for enforcement or gaps can lead to more laws/ regs
• Be Responsible
• Be Environmental Stewards

– Internal Actions

– External Actions
• Conclusion

## There ought to be a law against that!

• Donora Smog of 1948

– 20 people die in 24 hours


### • Cuyahoga River on fire

– Toxic and flammable industrial discharges


### • Toxic waste buried at Love Canal

– There goes the neighborhood

– Here comes Superfund

## Donora Smog

• Donora, PA (30 miles east of Washington, PA)

• Steel mills, zinc smelter and other industries operating in area

• October 30

- 31, 1948 (pop = 14,000)

• Unusual, yellow dense fog hung over Mon River valley

• 500 residents become sick

## Donora Smog (cont)

• 20 people die in 24 hours

– Ages 52

- 85 with chronic heart/pulmonary diseases
• “Worst air pollution disaster in U.S. history” NPR “Smog Deaths in 1948 Led to Clean Air Laws” (April 22, 2009)

• Led to local, state and federal (1955) air pollution laws

– Allegheny County enacted smoke ordinance in 1946
• AWMA began in Pittsburgh in 1955

## Cuyahoga River

• Cuyahoga River flows into Lake Erie at Cleveland, OH

• Several industries (steel, oil, chemical) operating on its banks

• In June 1969, “oil slick” caught fire near Republic Steel plant

• Cleveland Mayor Stokes demanded action

• Led to Clean Water Act of 1972

## Love Canal

• Hooker Chemical buried tons of toxic waste in aborted canal in Niagara Falls, NY 1940

- 1950s

• City bought site for $1 in 1953

• About 100 homes and school built on site

• 1978, waste migrated to surface

• Homes evacuated

## Love Canal (cont)

• NY bought homes from residents

• President Carter approves emergency funds

• Congenital birth defects documented

• Led to passage of Superfund (CERCLA) in 1980

• Time Magazine listed Love Canal as #4 in its 2010 list of history’s greatest environmental tragedies

## So what... that’s past history

• Do not forget how we got here

• Consider other stakeholder perspectives

• Enforcement of env laws demonstrates protection of human health/environment

• More laws can be expected if:

– (Perception of) inadequate enforcement, or

– Gaps in laws expose risks


### • Examples (next 2 slides)

## Robinson Twp Decision

• In 2012, Pa enacted Act 13 amending Oil & Gas Act
• Impact fees to localities
• Preempted municipal ordinances/local permit review
• Statewide uniformity in regulating O&G operations
• December 2013, Pa Sup Ct (plurality) held Act 13 to be unconstitutional (violates Env Rights Amendment and/or Due Process)
• Chief Justice “By any responsible account, the exploitation of the Marcellus Shale Formation will produce a detrimental effect on the environment....”

## WV Tank Act

• January 9, 2014

- 10,000 gallons of a chemical used by coal industry leaked from AST into Elk River
• Just upstream of water intake for treatment plant supplying 300,000 people
• Illness and major inconvenience to Charleston, WV
• Gap in regulations prompted WV to enact “AST Water Resources Protection Act”

– NOTE

- New law will impact O&G operators

## Future of Environmental Compliance?

• Expect environmental regulation to escalate

– Goal of zero emission/closed loop operations

– Compliance will be more challenging


### • Companies with robust compliance programs may have competitive advantage

• Consider internal/external strategies for developing compliance programs

## Internal Efforts

• Core values

- environmental stewardship

• Commit $$$ to develop env resources

– Retain & support environmental professionals

– Develop internal expertise understanding regulations, permitting, reporting

– Support participation in industry trade groups
• Avoid organizational “silos”

– Include environmental leadership in strategic planning

– Benefits flow between operations and environmental

## Internal: Participate in Trade Groups

• API
• Marcellus Shale Coalition

– Numerous committees and work groups
• PIOGA

– Environmental Committee
• OOGA
• WVONGA
• Participate in rulemaking reviews, comments

## External

- Communities

• Know your community and neighbors

– Who will be impacted by operations?

– Hunters (camps)

– Fishermen

– Sporting clubs

– Local newspapers

– Who commented/objected to a similar permit?

– Consider pre

- permit meeting with neighbors

– Which NGOs are active in area?

## External

– Agency Relationship

• Develop a positive relationship with agency personnel

– District inspectors/supervisors

– Permitting personnel

– Become aware of historical enforcement

– Become familiar with program guidance and technical manuals

## Professional Networks

• AWMA
• Consultants

– With experience in your industry in your area


### • Counsel

– State and federal issues


### • Other operators
• Trade associations
• NGOs

## NGO’s

• Consider dialogue with NGOs

– Env Defense Fund joined with Anadarko, Encana , & Noble Energy to support more stringent methane regs in Colo

– “Our families live here and breathe the air”

- Noble Energy
• Attending January 2014 MSC meeting:

– Keystone Elk Country Alliance

– Ruffed Grouse Society

– National Wild Turkey Federation

• Create desirable game habitat
• Demonstrate stewardship & community involvement

## When Enforcement Strikes

• Thorough investigation

• Careful communications

• Consider company goals

– Reputation

– Relationships

– Costs


### • Learn from experience

– What changes should be made, if any?

## Conclusion

• Regulation of energy operations will escalate

– Perception of carbon as dirty fuel

– Some NGO’s see O&G as enemy of renewables

– President Obama’s Methane Reduction Strategy

– Threat of municipal regulation


### • Be responsible

• Be environmental stewards

• Force critics to cite facts not fears

## Thank you

• Stephen C. Smith Of Counsel
• Steptoe & Johnson PLLC 11 Grandview Circle, Suite 200 Canonsburg, PA 15317 O: 724

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