Source: http://fulbrightfrackingblog.blogspot.com/2014/01/
Timestamp: 2017-06-25 03:31:14
Document Index: 561571077

Matched Legal Cases: ['§2301', '§2301', '§ 1910', 'arts 171', '§2301', '§ 3302']

Hydraulic Fracking Blog: January 2014
California court dismisses lawsuit filed by environmental groups to block hydraulic fracturing
On January 13, 2014, a superior court judge for Alameda County, California dismissed a lawsuit filed by several environmental groups based on the provisions of the state’s new hydraulic fracturing law (Senate Bill 4). In this lawsuit, the environmental groups sought an injunction prohibiting any new oil and gas permit approvals until the California Department of Conservation, Division Oil, Gas and Geothermal Resources (“DOGGR”) “complied with its legal requirements to evaluate and mitigate the significant environmental and public health impacts caused by hydraulic fracturing.” Oil and gas industry organizations intervened and moved to dismiss the lawsuit shortly after the new law was passed, arguing that “the regulatory framework adopted in S.B. 4, including new provisions for well stimulation permits and for environmental review, render plaintiff’s claims regarding the Department’s alleged past pattern and practices for environmental review of hydraulic fracturing moot.” Under S.B. 4, the DOGGR drafted emergency regulations allowing interim hydraulic fracturing activities until permanent regulations are enacted on or before January 1, 2015, as long as the operator provides the required information and certifications under Public Resources Code Section 3161(b). When the conditions are met, the DOGGR “shall allow” fracking and must issue permits. In its ruling, the Superior Court judge gave the “regulations substantial deference.” The judge stated that “S.B. 4 directs how the DOGGR must proceed regarding its environmental review of applications for hydraulic fracking, and that S.B. 4 is a comprehensive legislative solution that moots the claims in this case” by giving the DOGGR “clear directions to study fracking and to have regulations in place by 1/1/15.” Any “challenge to DOGGR’s policy or practice after 1/1/15 is not ripe for judicial review because the DOGGR has not yet completed its regulations.”
This case is Center for Biological Diversity, Earthworks, Environmental Working Group, and Sierra Club v. California Department of Conservation, Division of Oil, Gas, and Geothermal Resources, and DOES I through X, Case No. RG12652054, In the Superior Court for the State of California for the City and County of Alameda (October 16, 2012). For additional information on this case and S.B. 4, see prior blog reports entitled “California’s new hydraulic fracturing law cited as basis for motion to dismiss” and “California Governor Jerry Brown Signs Strict Hydraulic Fracturing Law”
North Carolina Mining and Energy Commission approves trade secret protection for chemicals used in hydraulic fracturing
On January 14, 2014, North Carolina’s Mining and Energy Commission passed a rule allowing oil and gas companies to protect trade secrets relating to the chemicals used during hydraulic fracturing. At least 30 days before using the trade secret chemical or mixture, the company must advise the Department of Environment and Natural Resources (“DENR”) and provide the DENR with the following information:
The manufacturer’s name, trade or common name of the chemical, CAS registry number, the chemical’s hazardous class and category (if applicable), and the common name or other similar description associated with each chemical contained in the additive or mixture; and
The justification for each chemical, additive or mixture to be protected from public disclosure, by filing an affidavit in which the company representative states that the trade secret information is not in the public domain and that the information has been treated in the same manner as other trade secrets within the company, as well as agreeing to notify the DENR if the information loses trade secret status, certifying that the chemical is not regulated under the Federal Safe Drinking Water Act, and certifying that the chemical meets the definition of a trade secret under North Carolina law.
The DENR will then schedule a closed review of the information provided and may require an oral presentation from the company. The rule allows for disclosure to health professionals and emergency responders who provide a written statement of need and execute a confidentiality agreement.
This rule is merely a recommendation to the state legislature which will have a final vote over fracking standards later this year or next. This is one of many regulations that must be issued before the state will lift its moratorium on hydraulic fracturing.
The U.S. Geological Survey (USGS) has long studied and prepared hazard maps predicting the risks of natural earthquakes. Now the USGS plans to integrate information relating to induced earthquakes and potentially induced earthquakes into its National Seismic Hazard Map. Since its last earthquake map in 2008, the USGS has identified a “remarkable” spate of earthquakes triggered by industrial activities in parts of the country. The USGS sees this increased induced seismicity to be a hazard that should be analyzed. In assessing the risk, the scientists need to determine whether the activity causing the earthquakes is likely to end quickly or whether the shaking is likely to become a “normal” event. Some recent earthquakes have occurred in areas where there are deep disposal wells in which wastewater from oil and gas operations is injected 10,000 to 20,000 feet underground. USGS geophysicist Dr. William Ellsworth who has studied injection-induced seismic events, opines that “the mechanism responsible for inducing these events appears to be the well-understood process of weakening a preexisting fault by elevating the fluid pressure.” In Oklahoma where there are approximately 4,400 disposal wells, there were almost 3,000 earthquakes in 2013, when there were only 50 in the previous 30 years. In south-central Kansas, where there are over 5,000 injection wells, there was a series of earthquakes in the fall of 2013, culminating in a 3.8 earthquake in December. In the area surrounding Azle, Texas, where there are a number of disposal wells, from November 1, 2013 through the end of the year, there were approximately 30 earthquakes. The citizens of Azle met with a representative of the Texas Railroad Commission in early January 2014. As a result of that meeting, the Commission hired a California seismologist to study the possibility of a correlation between oil and gas activities and the earthquakes. In addition, in the Texas legislature, the House Energy Resources Committee has formed a subcommittee on seismic activity to study allegations that the quakes are linked to the injection wells. This subcommittee is to consider past studies, ongoing research, expert testimony, and input from the Commission and the University of Texas’ Bureau of Economic Geology. Currently, researchers from the USGS and Southern Methodist University have placed monitoring instruments around Azle to pinpoint the location of the seismic events.
So far, there has been no definitive link between the seismic activity in Kansas, Oklahoma, and Texas with disposal wells. A representative of the Oklahoma Corporation Commission has stated that there is not enough evidence to say that the events were caused by injection of oil and gas waste and urges everyone to keep an “open mind” regarding the cause of the earthquakes.
For additional information, see previous blogs, including “Injection wells and their possible link to seismic activity” and “House Democrats request hearing on induced seismicity.”
European Commission issues recommendation for hydraulic fracturing
On January 22, 2014, the European Commission adopted a Recommendation on the “minimum principles for the exploration and production of hydrocarbons (such as shale gas) using high-volume hydraulic fracturing.” The Commission “invites” the 28-member states of the European Union “to apply the principles” so that hydraulic fracturing is done safely and without confusion over different environmental regulations among various nations. The Recommendation includes the following guidelines:
Before issuing licenses for exploration and/or production of hydrocarbons which may include high-volume hydraulic fracturing operations, the member state “should prepare a strategic environmental assessment to prevent, manage and reduce the impacts on and risks for human health and the environment.”
The member state should require the operators to prepare a characterization and risk assessment of the potential site and surrounding surface and underground area. The risk assessment should “respect a minimum vertical separation between the zone to be fractured and groundwater.”
Before high-volume hydraulic fracturing takes place, a baseline study should be made of the water, air, and land in the surrounding area in order to monitor any changes and deal with emerging risks.
The member state should ensure that operators
Use the best available practices to prevent surface leaks and spills to the soil, water, or air.
Use fracturing techniques that minimize water consumption and waste streams.
Not use hazardous chemical substances, “wherever technically feasible and sound from a human health, environment and climate perspective.”
Capture gases for subsequent use, minimize flaring and avoid venting.
Carry out high-volume fracturing in a “controlled manner and with appropriate pressure management with the objective to contain fractures within the reservoir and to avoid induced seismicity.”
Maintain well integrity through well design, construction and integrity tests.
The operator should publicly disseminate information on the chemical substances and volumes of water that is intended to be used at the site and then are finally used. The Chemical Abstract Services numbers of all substances, a safety data sheet, and the substance’s maximum concentration in the fracturing fluid should be provided by the operator.
The Commission suggests that the member states apply these guidelines within the next six months and, from December 2014 onwards, inform the Commission annually about the measures they put in place. It plans to monitor the application of the Recommendation on a publicly available scorecard, comparing what each member state is doing. In 18 months, the Commission plans to review the effectiveness of this program and will decide whether it is necessary to put forward legislative proposals with legally-binding provisions on the exploration and production of hydrocarbons using high-volume hydraulic fracturing.
Pennsylvania Supreme Court affirms lower court's decision to deny legislators' application to intervene in Act 13 lawsuit
On April 20, 2012, Pennsylvania’s Commonwealth Court denied the application of two Republican legislators to intervene in the lawsuit in which the constitutionality of Act 13, P.L. ___, 58 Pa. C.S. §§2301-3504 (a substantial re-write of the Commonwealth’s Oil and Gas Act) is being considered. The legislators appealed this order to the Pennsylvania Supreme Court, Middle District. After more than 20 months, on January 14, 2014, the high court affirmed the denial of that intervention.
Senate President Pro Tempore Joe Scarnati, R-Cameron/Elk/Jefferson, and House Speaker Sam Smith, R-Jefferson/Indiana/Armstrong, sought to intervene in order to “defend the constitutionality of Act 13 and to offer evidence and argument with respect to the intent of the General Assembly in enacting Act 13 and to the procedure by which Act 13 was adopted.” In its order, the Supreme Court stated that “the legislators simply seek to offer their perspective on the correctness of governmental conduct” and held that this interest as expressed by the legislators “is not sufficient to” give them standing in the lawsuit. Citing to earlier case law, the Court held that legislators in their official capacity can only participate as a party in a lawsuit “where there is a discernible and palpable infringement on their authority as legislators,” i.e., to protect the legislator’s right to vote or where the legislator is deprived or restricted in his authority.
This case is Robinson Township, et al v. Commonwealth of Pennsylvania, et al, No. 46 MAP 2012 (Supreme Court of Pennsylvania, Middle District, May 21, 2012), appeal from the Order of the Commonwealth Court at 284 MD 2012, dated April 20, 2012. For additional information on this lawsuit, see prior blog articles including “Pennsylvania Supreme Court strikes down major portions of Act 13 as unconstitutional.” “Pennsylvania Supreme Court asked to reconsider its decision striking down major portions of Act 13 as unconstitutional,” and “Municipalities urge Pennsylvania Supreme Court not to reconsider its decision declaring parts of Act 13 unconstitutional.”
With the recent December 30, 2013 derailment of tanker cars
carrying oil in Casselton, North Dakota, as well as other 2013 incidents
in western Minnesota, Baltimore, Alabama, and at three sites in Canada
(Gainfield, Landis, and Lac-Mégantic, where 47 people were killed when
an unattended 72-car freight train derailed in the center of town), the
U.S. Department of Transportation (DOT) met with representatives from the oil
and railroad industries to discuss transport safety issues relating to crude
oil. At the meeting on January 15, 2014, representatives from the
American Petroleum Institute (API) and the Association of American Railroads
(AAR) reportedly agreed to take steps to avoid derailments, to work on a speed
reduction plan, and to re-route trains around high-risk areas. According to the
AAR representative, 27 risk factors, including population density, volume of hazardous materials
being transported, and traffic density, are always considered when
routing trains. The API representative stressed the importance of having
strong rail cars to transport the crude oil. On September 6, 2013, in the Federal Register, the Pipeline
and Hazardous Materials Safety Administration (PHMSA) published a proposed rule concerning “Hazardous Materials: Rail Petitions and Recommendations to
Improve the Safety of Railroad Tank Car Transportation (RRR).This
proposed rule would impose additional requirements for DOT Specification
111 tank cars used to transport Packing Group (PG) I and II hazardous
materials. PHMSA has indicated that the proposed rule relating to
the construction of rail tanker cars will not be finalized until at least
With the volume of produced
oil rising faster than can be moved by pipeline, railroads are being used more
and more to transport oil products to processing facilities – and with that
increase, come increasing concerns about the safety of transporting
crude oil by rail.
In early January, PHMSA and the Federal Railroad
Administration issued a safety alert “to notify
the general public, emergency responders, and shippers and carriers that recent
derailments and resulting fires indicate that the type of crude oil being
transported from the Bakken region may be more flammable than traditional heavy
crude oil.” For additional information, see our prior blog
entitled “Safety alert relating to flammability of North Dakota Bakken crude oil transported by rail.”
Municipalities urge Pennsylvania Supreme Court not to reconsider its decision declaring parts of Act 13 unconstitutional
On January 14, 2014, six municipalities and an environmental group filed their answer to the state’s application for reconsideration of the Pennsylvania Supreme Court’s December 19, 2013 decision in which the court struck down major portions of Act 13, P.L. _____, 58 Pa. C.S. §§2301-3504 (a substantial re-write of the Oil and Gas Act) as unconstitutional. In that decision, the court held that the state cannot restrict a municipality’s ability to zone natural gas drilling and to keep natural gas wells out of residential areas. On January 2, 2014, the state defendants filed an application for reconsideration of this decision, arguing that the court issued” broad factual findings about Act 13” without an evidentiary hearing in which they would have demonstrated how Act 13 satisfies Article I, Section 27 of the Pennsylvania Constitution. Section 27 states: “The people have a right to clean air, pure water, and to the preservation of the natural, scenic, historic and esthetic values of the environment. Pennsylvania's public natural resources are the common property of all the people, including generations yet to come. As trustee of these resources, the Commonwealth shall conserve and maintain them for the benefit of all the people.” In their answer, the challengers argue that the state defendants had consistently stated that “this matter did not require the Court to make factual findings to determine Act 13’s constitutionality. It is only now, after the [Court’s] thorough analysis of the plain language of Act 13 and of Section 27, that [the state] Agencies claim that factual matters require further development in order to change the outcome in their favor.” The challengers state that the Court’s finding that Act 13 was not properly balanced against Section 27’s protections on the public’s right to clean air and pure water was correct and that the Court should not reconsider its decision.
This case is Robinson Township, et al v. Commonwealth of Pennsylvania, et al, Nos. 63, 64, 72 and 73 MAP 2012 (Supreme Court of Pennsylvania, Middle District, Dec. 19, 2013), appeal from the Order and Opinion of the Commonwealth Court at 284 MD 2012, dated July 26, 2012, 52 A.3d 463 (Pa. Cmwlth, 2012).
Reuse of acid mine water in hydraulic fracturing operations proposed in Pennsylvania
On January 13, 2014, the Pennsylvania Senate’s
Appropriations Committee passed S.B.411 which would amend Pennsylvania’s Environmental Good Samaritan Act to
limit the liability of mine operators who provide “treated mine drainage from a
permitted mining activity site” for reuse in hydraulic fracturing operations in
oil and gas development. The mine operators would be “immune from
liability for any cost, injury or damage arising out of the use of the treated
mine drainage” if (i) the mine water is used outside the boundaries of the
permitted mining activity, (ii) the water is for the development of a gas well
or another beneficial use, and (iii) the mine operator is not the same person
using the water for gas well development or other use. This bill has been promoted as a means of encouraging gas
drillers to use mine water rather than relying on the continued heavy use of
municipal and fresh water sources as well as a means of remedying one of
Pennsylvania’s greatest sources of water pollution, namely drainage from
Without the limitations provided under S.B. 411, oil and gas
developers are understandably reluctant to use acid mine water, having concerns
about the potential long term liability for any future impacts on fresh water
sources under the state’s Clean Streams Law while only using the mine water
temporarily, for a few weeks at most. In January 2013, the Pennsylvania Department of
Environmental Protection published a white paper to promote the voluntary use of acid mine water by the oil and gas
industry and to establish a process for the review and evaluation of proposals
to use acid mine water in natural gas extraction operations.
Of interest is a recent Duke University study indicating that, when acid mine water and hydraulic
fracturing flowback fluids are blended together, the acid mine water can act as
a treating agent to remove radioactive material from the fracking
Florida considers hydraulic fracturing disclosure regulations
On January 14, 2014, Florida’s House of Representatives’ Agriculture & Natural Resources Subcommittee passed two bills concerning hydraulic fracturing. The first (H.B. 71) entitled the “Fracturing Chemical Usage Disclosure Act” would require the disclosure of all chemicals used in the hydraulic fracturing process, and the second (H.B. 157) provides an exemption for trade secrets. H.B. 71 will now move forward to the Agriculture & Natural Resources Appropriations Subcommittee, with H.B. 157 going to the Government Operations Subcommittee. If passed by these subcommittees, both bills will then head to the State Affairs Committee before being considered by the full House.
H.B. 71 would require the Florida Department of Environmental Protection (“Department”) to either establish an on-line chemical registry for the disclosures or to designate FracFocus.org as the official state registry. The disclosures must include, “at a minimum, the total volume of water used in the hydraulic fracturing treatment and each chemical ingredient that is subject to 29 C.F.R. § 1910.1200(g)(2) for each well on which hydraulic fracturing treatments are performed by a service provider or vendor or by the well owner or operator if the owner or operator provides such chemical ingredients.” The bill does not require companies to disclose chemicals by concentration or based on the additive in which they are found. The disclosures must be made within 60 days after initiation of hydraulic fracturing operations at the well site.
H.B. 157 would create a public records exemption for trade secrets relating to hydraulic fracturing treatments. The party submitting a trade secret must (i) request that the trade secret be kept confidential and exempt, (ii) inform the Department of the trade secret, and (iii) clearly mark each page or portion of the document containing the trade secret information.
These bills have been met with a mixed response. Some Florida legislators state that these bills should not be considered until after the Department releases its report on the impacts of fracking which is due later this year. The Sierra Club does not believe that these bills go far enough and want disclosure of the volume and identity of all fracking fluids as well as public participation before any hydraulic fracturing activities occur.
Pennsylvania court agrees to re-consider injunction allowing pre-fracking tests
Upon a request from over 60 Pennsylvania landowners, Allegheny County Court of Common Pleas Judge Christine Ward agreed to re-consider her granting of an injunction to allow an oil and gas production company “reasonable ingress, egress, access to and use of the…properties of…sixteen (16) oil and gas leases…for the purpose of performing seismic testing.” In their motion for reconsideration, the landowners argued that the company failed to “make the required very strong showing that it is entitled to the mandatory preliminary injunction.” The hearing is scheduled for February 7, 2014.
The injunction was granted in December, with a memorandum opinion issued on January 6, 2014. In the memorandum, the Court found that the oil company had met its burden for the granting of preliminary injunctive relief by (i) establishing that it would suffer immediate and irreparable harm if not allowed to do the testing, (ii) showing that the balance of injuries weighed in favor of the company (a 60-day delay in testing would cost the company about $3,000,000, and no testing would result in over-drilling and underproduction), (iii) restoring the status quo, (iv) showing the likelihood of prevailing on the merits (valid and enforceable leases that allow 3-D seismic testing), and (v) establishing that an injunction was a reasonable remedy and (vi) in the public interest. For additional information, see previous blog “Landowners ordered to allow producer to begin preliminary pre-fracking tests.” This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.
EPA requires California offshore drillers to disclose fracking fluids
The U.S. Environmental Protection Agency (EPA), Region 9, will require oil and gas operators engaged in hydraulic fracturing off the southern California coast to disclose all chemicals discharged into the Pacific Ocean beginning March 1, 2014. This disclosure requirement is part of a revised general permit for oil and gas operations in federal waters. The revised permit requires all offshore drillers to maintain an inventory of the chemicals used to formulate well treatment, completion and workover fluids, and if there is a discharge of the fluids, to report the chemical formulation of the discharges (and the discharge volume) with the quarterly discharge monitoring report. The new permit will apply to the “23 existing development and production platforms as well as to any new exploratory drilling operations located in and discharging to the specified lease blocks on the Pacific Outer Continental Shelf covered by the permit.”
This revised permit replaces the previous general permit issued on September 22, 2004, and is similar to the permit that was proposed in December 2012. See the Fact Sheet dated December 5, 2012 (pages 18-71) and the Addendum to the Fact Sheet dated December 17, 2013 (pages 1-17). The disclosure requirement was added in response to recent concerns expressed by environmental groups and others regarding the potential effects of discharges of fluids used for hydraulic fracturing operations offshore. In November, U.S. Representative Lois Capps (D-Calif.) requested the EPA to place a moratorium on offshore fracking activities until “a comprehensive study of their impacts on the marine environment and public health is conducted and considered.”
To drink or not to drink: Water use and disposal issues in hydraulic fracturing The link below is a November 2013 presentation made in Denver, Colorado, at the AICPA/PDI National Oil and Gas Conference. The presentation was entitled “To Drink or Not to Drink? Water Use and Disposal Issues in Hydraulic Fracturing.”
Water plays a major role in the production of oil and gas from shale formations by the use of hydraulic fracturing. Within the past several years, concerns have been raised about the reduction of citizens’ water supplies due to the large volume of water used in the fracturing process, the alleged contamination of aquifers and water wells that supply drinking water, and the appropriate disposal of or recycling of the flowback or produced water.
Topics cover include hydraulic fracturing’s water cycle (from source to disposal), studies concerning the impact of fracturing on drinking water resources, lawsuits alleging water contamination from fracking, and federal and state regulations relating to fracking fluid disclosure.
New York state sued over hydraulic fracturing moratorium
On December 17, 2013, the trustee for a bankrupt energy company and a shareholder in that company sued New York State’s Department of Environmental Conservation (“DEC”) and other state officials, including the governor, asserting that the shareholder has lost almost his entire investment of $21,305.52 due to the decrease in the value of the company’s stock and that the company has lost more than $100 million due to the hydraulic fracturing moratorium that has been in place since 2008.
The energy company has 27 well-permit applications pending before the DEC. As part of the bankruptcy proceedings, the trustee tried to sell these assets at auction, but received no bids. According to the complaint, “the only way to salvage the value of [the company’s] assets is to complete the SGEIS [Supplemental Generic Environmental Impact Statement] Process.” The plaintiffs seek a mandamus to compel completion of the SGEIS Process and a determination that government officials have “arbitrarily and capriciously, abused their discretion.”
In 2008, the New York legislature passed regulations covering hydraulic fracturing. Then-governor David Patterson ordered the DEC to conduct an environmental evaluation of fracking and ordered the well approval process halted until the study was completed which was anticipated to be November 2009. A draft report was published in September 2009, but the DEC spent more than one year reviewing public comments. In December 2010, Patterson issued an executive order requiring further environmental review. Gov. Andrew Cuomo kept the order in place when he took office. In September 2012, the DEC and the Department of Health began a study of the health impacts associated with hydraulic fracturing. At a news conference on December 16, 2013, Gov. Cuomo and Dr. Nirav R. Shah, the New York State Health Commissioner, stated that there was no time-line to complete the study. Mr. Cuomo said, “My timeline is whatever commissioner Shah needs to do it right and feel comfortable.” The governor said he did not want “to put undue pressure on them that would artificially abbreviate what they’re doing.” Dr. Shah indicated that he was still conducting his review, collecting “new data from Texas and Wyoming.” When asked about transparency of the study, he stated that “the process needs to be transparent at the end, not during.” See Jesse McKinley, Still Undecided on Fracking, Cuomo Won’t Press for Health Study’s Release, N.Y. Times, December 16, 2013.
Safety alert relating to flammability of North Dakota Bakken crude oil transported by rail
On December 30, 2013, near the town of Casselton, North Dakota, a westbound train carrying grain derailed. Within minutes, an eastbound 106-car train transporting Bakken crude oil hit the derailed train. The collision caused eighteen oil cars to leave the tracks and catch fire. While no one was hurt, many of the town’s 2,400 residents temporarily evacuated their homes for two days due to explosions, intense flames, and heavy smoke from the burning cars. Taking note of this and other similar incidents involving trains carrying crude oil (see below), the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a safety alert on January 2, 2014, “to notify the general public, emergency responders, and shippers and carriers that recent derailments and resulting fires indicate that the type of crude oil being transported from the Bakken region may be more flammable than traditional heavy crude oil.”
This alert follows a joint safety alert from PHMSA and the Federal Railroad Administration (FRA) dated November 20, 2013, to reinforce “the importance of proper characterization, classification, and selection of a hazardous materials packing group as required by the Federal hazardous materials law (49 U.S.C. 5101-5128) and Hazardous Materials Regulations (HMR; 49 CFR parts 171-180).” PHMSA and FRA have initiated an “Operation Classification” program in which there will be “unannounced inspections and testing of crude oil samples to verify that…the materials have been properly classified…”
With the volume of produced oil rising faster than can be moved by pipeline, railroads are being used more and more to transport oil products to processing facilities. The Energy Information Administration estimates that 1.37 million barrels per day of oil and petroleum products were shipped on railways during the first six months of 2013, that is approximately 356,000 carloads, up 48% from the same period in 2012. Review the numbers. This increased volume has led to an increase in the number of oil-related accidents. Since April of 2013, there have been oil tanker derailments in western Minnesota, Baltimore, and at three sites in Canada: Lac-Mégantic, Gainfield, and Landis. In the Lac-Mégantic incident, on July 6, 2013, an unattended 72-car freight train wrecked in the center of the small town, rupturing many of the tanker cars, and causing a fire approximately 400 feet in diameter. Forty-seven people died in the explosion and fire. See article.
On October 17, 2013, the Canadian government imposed new regulations requiring tests to be conducted on crude oil before transporting or importing it into Canada. In the Lac- Mégantic crash, inspectors determined that the oil the train carried was more explosive than labeled. See David Ljunggren, “Fuel on train in Quebec disaster more explosive than labeled,” Reuters Canada. This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.
Pennsylvania Supreme Court asked to reconsider its decision striking down major portions of Act 13 as unconstitutional
On January 2, 2014, the administration of Governor Tom Corbett filed an application for reargument, asking the Pennsylvania Supreme Court, Middle District, to reconsider its December 19, 2013, decision striking down major portions of Act 13, P.L. ___, 58 Pa. C.S. §§2301-3504 (a substantial re-write of the Commonwealth’s Oil and Gas Act) as unconstitutional. In a 4-2 decision upholding the lower court’s ruling, the Pennsylvania Supreme Court held that the state cannot restrict a municipality’s ability to zone natural gas drilling and to keep natural gas wells out of residential areas. In a 162-page opinion and a 21-page concurring opinion, the Court found that sections of Act 13 violated the Environmental Rights Amendment of the state’s constitution and denied due process rights by “unconstitutionally, as a matter of substantive due process, usurp[ing] local municipalities’ duty to impose and enforce community planning…” For additional information on this decision, click here.
In urging reconsideration, the Pennsylvania Public Utility Commission and the Pennsylvania Department of Environmental Protection argue that the Supreme Court “proceeded on its own (and without explanation) to issue broad factual findings about Act 13, apply those factual findings to its new ‘balancing’ test, and declare various provisions of Act 13” to be unconstitutional. “However, there has been no evidentiary hearing and, therefore, no facts of record in this proceeding to support the broad factual findings that form the basis of the court’s” decision.
Act 13, which was signed into law in February 2012, applies to unconventional natural gas operations involving either hydraulic fracturing or the use of multilateral well bores or techniques that expose more of the geological formation to the well bore. Act 13 imposes statewide standards that dictate where wells, compressor stations and other drilling-related structures can be built. It requires all local drilling regulations to be reasonable and that any questions of reasonableness would be determined by the Public Utility Commission. 58 Pa. C.S. §§ 3302-3309.
On Monday, January 6, 2014, the Governor asked oil and gas operators to voluntarily adhere to an invalidated portion of Act 13 that requires a 300-foot setback between unconventional drilling activity and the state’s streams, rivers, waterways and wetlands. The Marcellus Shale Coalition, an industry group, has advised its members to comply with the buffer requirements, citing to the group’s continued efforts to promote and protect the environment.
Environmental groups sue the British Columbia Oil and Gas Commission for granting water usage rights for hydraulic fracturing
The Sierra Club of British Columbia Foundation and the Western Wilderness Committee have sued the British Columbia Oil and Gas Commission (OGC) and EnCana Corporation (EnCana) to stop the OGC issuing short-term fresh water withdrawal approvals under British Columbia's Water Act to oil and gas companies engaged in hydraulic fracturing operations.
The OGC is responsible for the regulation of oil and gas activities in British Columbia and has authority to issue approvals for the withdrawal of surface water for up to two years. The OGC regularly grants these approvals to oil and gas companies to enable them to undertake hydraulic fracturing of wells in British Columbia's prolific Montney, Horn River and Liard shale gas basins. The source of the water is from local lakes, rivers and streams. If a diversion of water for more than two years is required, then the operator requires a water withdrawal license under the Water Act. An application for a license requires more information than an application for an approval. An application for a license must also be publically advertized and various persons may object to the license being granted. A public hearing may be held to consider the objections. The environmental groups examined 1,352 short-term water withdrawal approvals They allege in the lawsuit that even though none of the individual water withdrawal approvals exceeded the two year limit imposed by the legislation, multiple approvals are regularly being issued over multiple years to the same company, for the same purpose and for withdrawals at the same location. They claim that this has had the effect of subverting the requirement that a water license be obtained, and therefore the OGC's practice violates the Water Act. The environmental groups are seeking a court order quashing 83 short-term approvals granted to EnCana and a declaration that the OGC's practice of granting approvals for more than one term is contrary to the Water Act and is unlawful.
This post was written by Alan Harvie (alan.harvie@nortonrosefulbright.com) from Norton Rose Fulbright's Energy Practice Group.
The Petroleum Services Association of Canada agrees to a hydraulic fracturing code of conduct
The Petroleum Services Association of Canada ("PSAC") is a national trade association representing about 260 companies which provide goods and services to the Canadian oil and gas exploration and production industry. PSAC members include virtually all of the hydraulic fracturing service companies.
PSAC has released a Hydraulic Fracturing Code of Conduct under which its members providing hydraulic fracturing services will focus their efforts in five key areas, including:
water and the environment;
fracturing fluid disclosure;
health, safety and training; and
PSAC consulted with over 100 community members in four provinces to gather community input into the purpose and content of the Code of Conduct.
View a copy of the Code of Conduct.
Landowners ordered to allow producer to begin preliminary pre-fracking tests
On December 26, 2013, the judge in the Court of Common Pleas of Allegheny County, Pennsylvania, ordered 69 individuals and one golf course in Allegheny County to allow an oil and gas production company “reasonable ingress, egress, access to and use of the…properties of…sixteen (16) oil and gas leases identified in the Amended Complaint for the purpose of performing seismic testing.” The company was ordered to post a bond of $25,000 before beginning the testing.
This order was issued in response to the production company’s October 2013 request for a preliminary injunction to allow access to the properties for testing, arguing that if access was blocked, its data collection efforts would suffer and costs would increase. The company’s lawsuit was filed in July 2013, shortly after Pennsylvania Governor Tom Corbett signed a law giving drillers the ability to pool leased properties into one unit for horizontal wells, as long as the oil and gas contracts in effect do not prohibit these combinations. See prior blog dated September 19, 2013, Pennsylvania landowners allege new pooling provision violates their constitutional rights.
House Democrats request hearing on induced seismicity
Reps. Henry Waxman (D-Calif.), ranking member of the House Energy and Commerce Committee, and Peter DeFazio (D-Ore.), ranking member of the House Committee on Natural Resources, issued a letter to their Republican counterparts requesting a joint hearing on the issue of seismic activity induced by the underground injection of wastewater from hydraulic fracturing activities. In the letter dated December 18, 2013, the members cite the increased seismic activity in previously seismically inactive locations, the critical need for additional data, and the potential regulatory gaps in current law that put people and property at risk from man-made earthquakes.
According to the ranking members, “[t]he tremendous boom in U.S. oil and natural gas production over the past several years has been the result of the expanded use of hydraulic fracturing and horizontal drilling, techniques that generate large quantities of wastewater, which is often disposed of through underground injection,” and reference a recent report by the National Research Council that linked seismic events to wastewater injection in Arkansas, New Mexico, Ohio, Texas, and other locations. The members also point to a joint October study from the U.S. Geological Survey and Oklahoma Geological Survey that suggested tremors in the state "may" be linked to hydraulic fracturing. In the letter, the members argue that it is not clear that current requirements under the Safe Drinking Water Act Underground Injection Control (UIC) program are adequate to address the risk posed by induced seismicity to critical surface infrastructure such as nuclear power plants and dams, not to mention homes and businesses in the vicinity of injection wells.
It must be noted that the causal connection between hydraulic fracturing and earthquakes continues to be unresolved – studies and experts have produced research and opinion on both sides of the issue. Oklahoma state geologist G. Randy Keller called the claims "a rush to judgment," while Interior Department Deputy Secretary David Hayes said his teams have found "no evidence to suggest that hydraulic fracturing itself" is the cause of earthquakes.