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August 8, 2011

EPA, Environmental Groups Pursue New Sources of Fracking Regulation

With the Environmental Protection Agency (“EPA”) largely barred from regulating hydraulic fracturing (“fracking”) under the Safe Drinking Water Act, regulatory proponents have turned their attention to alternate means of controlling the industry’s environmental impacts.  Last month, EPA proposed the first federal rules limiting air emissions from fracking operations, and on August 4, a coalition of environmental groups petitioned EPA to require the testing and disclosure of fracking fluids under the Toxic Substances Control Act (“TSCA”).  Others have turned to the courts to compel greater environmental review of fracking’s impacts, with a new suit filed in the United States District Court for the Eastern District of New York late last week.    

On July 28, 2011, EPA proposed a suite of new Clean Air Act rules governing the emission of volatile organic compounds (“VOCs”), sulfur dioxide, and air toxics from oil and gas extraction and transmission activities, including the first federal air standards for hydraulically fractured wells.  During fracking, VOC emissions are often elevated during “flowback” periods, when fluids injected into wells return to the surface carrying contaminants that can evaporate into the air.  EPA’s proposed rules would require wells to separate and capture natural gas and hydrocarbons during flowback, reducing emissions of VOCs by an estimated 95 percent.

Additional EPA rules may be forthcoming in response to a petition filed last week by Earthjustice on behalf of over 100 non-profit groups.  The petition asks EPA to issue regulations under TSCA requiring manufacturers and processors of “chemical substances and mixtures used in oil and gas exploration or production,” including fracking fluids, to conduct testing on the toxicity and environmental and health impacts of their products and disclose the results to EPA.  If the petition is denied, Earthjustice has suggested it would challenge EPA’s determination in court.

Fracking regulation is also moving forward on the state and regional level, with the Delaware River Basin Commission (“DRBC”) – a regional body consisting of four states and the Army Corps of Engineers – proposing rules governing hydraulic fracturing siting and operations in New York, New Jersey, Pennsylvania, and Delaware.  New York Attorney General Eric Schneiderman has filed suit in federal court seeking to enjoin the finalization of those rules pending the preparation of an Environmental Impact Statement under the National Environmental Policy Act (“NEPA”).  On August 4, the Delaware Riverkeeper Network, Hudson Riverkeeper, and National Parks Conservation Association brought a similar suit in the same court.  Unlike New York, however, the environmental groups named DRBC as a defendant.   

The U.S. Department of Justice (“DOJ”), on behalf the Army Corps of Engineers and other federal defendants, recently announced its plans to move to dismiss New York’s lawsuit on sovereign immunity, standing and ripeness grounds.  There are also questions as to whether the proposal of a regional body is a “major federal action” governed by NEPA – an argument that DOJ reserved the right to raise at a later date as an additional ground for dismissal.  A pre-motion conference on DOJ’s request for dismiss is scheduled for Wednesday, August 10.

April 13, 2011

Scientific, Regulatory Challenges Mount for Natural Gas “Hydrofracking”

While the use of hydraulic fracturing to extract natural gas from shale has generated substantial concerns about its water quality and conventional air pollution impacts, such opposition has rarely focused on greenhouse gas (“GHG”) emissions.  Instead, it has been widely assumed, including by some environmental organizations, that natural gas is the least harmful “bridge fuel” to reduce GHG emissions during a transition from coal to alternative energy sources.  That core assumption was called into question this week following the release of a new study finding that total GHGs from natural gas extracted through hydraulic fracturing (“shale gas”) may match or exceed those from coal.  The validity of these conclusions, however, is already the subject of intense debate.

The study, by three Cornell University researchers, reported that the primary GHG emissions from hydraulic fracturing are not carbon dioxide from the burning of natural gas, but methane released during the fracturing process, the operation of the wells, and the transportation and storage of the fuel.  Because methane is a far more potent greenhouse gas than carbon dioxide, the study concluded that over a 20 year time frame “the GHG footprint for shale gas is at least 20% greater than and perhaps more than twice as great as that for coal.”  Carbon dioxide remains in the atmosphere for longer than methane, but even over a 100-year period the study found that shale gas emissions were “comparable” to coal emissions.  The study’s data and methodology have already been disputed by the oil and gas industry, principally because the assumed rate of fugitive emissions is at odds with industry standards and practices.  The report’s authors acknowledge that better data is needed on the amount of methane emissions that leak or are otherwise lost during and after hydraulic fracturing operations, which is now likely to become a focus of increased attention.

Additional obstacles for fracturing proponents surfaced during a Senate Environment and Public Works Committee hearing yesterday, as an Environmental Protection Agency (“EPA”) official affirmed that drilling companies that use diesel fuel in hydraulic fracturing operations without a permit are in violation of Safe Drinking Water Act.  A 2010 report revealed inconsistent positions among state environmental regulators concerning the use of diesel as a fracturing fluid, and last year EPA posted a statement on its website that: “Any service company that performs hydraulic fracturing using diesel fuel must receive prior authorization …”  The Independent Petroleum Association of America and U.S. Oil & Gas Association are challenging that posting in the D.C. Circuit Court of Appeals, alleging that EPA imposed new substantive requirements without undertaking the rulemaking procedures required by the Administrative Procedures Act (“APA”).

In New York, a bill that would have required the disclosure of hydraulic fracturing chemicals was rejected in the Senate Environmental Conservation Committee yesterday.  The legislation, S. 425, drew support from a majority of Committee members voting, but fell one vote short of the eight required to bring it to the Senate floor.  Fracturing disclosure legislation is also pending in the United States Congress.  While such disclosure is not currently required nationwide, a new website from the Ground Water Protection Council and the Interstate Oil and Gas Compact Commission, funded in part by the Department of Energy, has collected chemical data voluntarily submitted by participating oil and gas companies and published it in a searchable database.

September 23, 2010

Preliminary Stages of EPA’s Study on Hydraulic Fracturing Begin with Meetings and Information Requests

The past few weeks have seen new developments in EPA’s initiative to study the effects of hydraulic fracturing on public drinking water supplies. Hydraulic fracturing uses high-pressured water, combined with chemicals, to release natural gas present underground in shale formations. The use or proposed use of this process has raised concerns across the country that this process has contaminated, or will contaminate, drinking water supplies. 

On September 9, EPA announced that it had issued a voluntary information request to nine natural gas companies, seeking information on the chemical composition of fluids used in the hydraulic fracturing process, data on the impacts of the chemicals on human health and the environment, standard operating procedures at their hydraulic fracturing sites, and the locations of sites where fracturing has been conducted.  The request was made in the context of limited public knowledge about the exact composition of hydraulic fracturing fluids; according to the New York Times, “most companies that make the fluids used in hydraulic fracturing have declined to disclose their formulas, arguing that the exact components are trade secrets.” Not surprisingly, industry’s lack of transparency with respect to the composition of hydraulic fracturing fluids has engendered concern, anxiety, or suspicion among advocacy groups and residents of areas affected by hydraulic fracturing. 

In its Information Request, EPA seeks the information within thirty days and has indicated that it may treat certain data as Confidential Business Information at a company’s request, protecting such information from public disclosure.  Adding teeth to its request, EPA alludes to a potential for litigation should the companies fail to provide a proper response.  Industry representatives have indicated that the natural gas companies will cooperate with EPA’s request.

On September 13-14, EPA convened a public meeting in Binghamton, NY to discuss the scope and methods of its hydraulic fracturing study.  About 500 people attended, reflecting a high level of concern, from a range of perspectives, about hydraulic fracturing and natural gas development. Although pre-hearing rallies reflected the passion with which people on all sides of the issue view the prospect of natural gas development via hydraulic fracturing, EPA was commended for “running a meeting in a way to keep the discourse civil and the comments, for the most part, on the substance.”

April 28, 2010

DEC Excludes Watershed Areas from Current Environmental Review of Marcellus Shale Drilling

On Friday, April 23, the New York State Department of Environmental Conservation (“NYSDEC”) announced that it would exclude the New York City and Syracuse drinking water watersheds from its Final Supplemental Generic Environmental Impact Statement (“FSGEIS”) concerning natural gas development in the Marcellus Shale.  Unless and until NYSDEC creates a separate Generic Environmental Impact Statement applicable to the New York City and Syracuse watersheds, each permit application to drill for gas in these areas must be accompanied by a site-specific Environmental Impact Statement (“EIS”).  Because an EIS can be lengthy, complicated, and costly—especially if contested in litigation—DEC’s position may discourage gas companies from drilling in these watersheds; some accounts have characterized NYSDEC’s decision as a de-facto ban on drilling in these areas.  However, the regulatory limbo imposed on the New York City and Syracuse watershed areas is not permanent; according to the Associated Press, “[t]he DEC and the state Health Department will work with Syracuse, New York City and communities within the watersheds to develop special restrictions for drilling companies seeking permits in the watershed.”

NYSDEC’s decision reflects the competing demands it faces with respect to natural gas development in New York state.  The New York City watershed supplies drinking water to over nine million people; the Syracuse watershed supplies roughly 200,000 people.  Due to the high quality of this water, both cities are exempt from federal regulations requiring drinking water filtration.  Environmentalists and city officials have consistently called for a state ban on natural gas development in the watershed areas in order to protect drinking water sources.  However, NYSDEC Commissioner Alexander “Pete” Grannis has expressed concern that an outright ban on drilling in these areas, much of which is privately owned, could give rise to takings claims from property owners deprived of potentially lucrative leasing opportunities.

NYSDEC’s compromise, which was announced without an official written statement, may lower the temperature of the debate surrounding gas production in the Marcellus Shale.  It remains to be seen whether the Department’s present action will ultimately result in a solution that is both politically and environmentally tenable.

April 1, 2010

EPA Releases Review of Federal Drinking Water Standards and Proposes New Strategy for Protecting Drinking Water

By: Vicki Shiah — Filed under: Compliance, Emerging Issues, Enforcement, Safe Drinking Water Act — Posted at 4:28 pm

This month, the EPA completed its second review of National Primary Drinking Water Regulations under the Safe Drinking Water Act (“SDWA”) and published the findings of its review in the Federal Register.  Such reviews are required every six years under Section 1412(b)(9) of the SDWA.  The EPA reviewed existing regulations for 71 contaminants and determined that 67 regulations remain appropriate, while four regulations are in need of revision.  Each regulation covers a single contaminant.

The four regulations found to be in need of revision were those governing acrylamide, epichlorohydrin, tetrachloroethylene, and trichloroethylene.  According to the EPA, “tetrachloroethylene and trichloroethylene are used in industrial and/or textile processing and can be introduced into drinking water from contaminated ground or surface water sources,” and “[a]crylamide and epicholorohydrin are impurities that can be introduced into drinking water during the water treatment process.”  The review states that reevaluations of the health risks posed by exposure to acrylamide, tetrachloroethylene, and trichloroethylene are under way.  The review also concludes that compliance with more stringent limits on the concentration of all four contaminants is feasible and will likely be required under the revised regulations.

The review was published in the Federal Register on March 29, 2010, one week after EPA Administrator Lisa Jackson announced a new drinking water protection strategy. The new strategy is intended to focus on the following four principles that the EPA seeks to promote:

  • Addressing contaminants as a group rather than one at a time so that enhancement of drinking water protection can be achieved more quickly and cost-effectively.
  • Fostering development of new drinking water treatment technologies to address health risks posed by a broad array of contaminants.
  • Using the authority of multiple statutes, including the Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”) and the Toxic Substances Control Act (“TSCA”),  to help protect drinking water.
  • Partnering with states to share more complete data from monitoring at public water systems.

Rules implementing these proposed reforms have not yet been developed, and the EPA’s recent review of National Primary Drinking Water Standards has followed the existing regulatory regime.  It remains to be seen whether, and to what extent, the EPA’s proposed reforms will take root, and may impact revisions to contaminant-specific standards.  Over the next few months, the EPA will seek input on developing its new approach from experts as well as members of the public.

December 29, 2009

New York City Criticizes State’s Plans to Regulate Natural Gas Drilling in Upstate New York

Last week, New York City’s Department of Environmental Protection (“DEP”) called upon New York State’s Department of Environmental Conservation (“DEC”) to rescind its Draft Supplemental Generic Environmental Impact Statement (“DSGEIS”) addressing natural gas drilling in the Marcellus Shale formation.  The Marcellus Shale formation, which contains large quantities of natural gas, extends from Ohio and West Virginia through parts of Pennsylvania and into New York’s Southern Tier.  Notably, the formation includes lands in the watershed that provides drinking water to New York City and, in total, approximately half of the state’s population.

 DEP has taken the position that any drilling in the watershed should be banned due to risks posed to the drinking water supply by the technique used to extract gas from the underground shale, known as high-volume hydraulic fracturing.  In its comments on the DSGEIS, DEP makes a number of arguments to support its contention that the DSGEIS does not adequately analyze the potential significant adverse environmental impacts of drilling in the Marcellus Shale formation, including the following:

 The DSGEIS does not adequately analyze the possibility that contaminants may spill into surface waters or migrate underground into natural drinking water supplies or water supply tunnels;

  • The DSGEIS’s requirements for the disclosure of the chemicals used in the hydraulic fracturing process are insufficiently protective of human health and the environment;
  • The DSGEIS engages in “segmentation” in violation of the New York State Environmental Quality Review Act (“SEQRA”) by failing to adequately analyze potential significant adverse environmental impacts associated with waste disposal, surface water withdrawals, induced growth, cumulative impacts, air quality impacts, pipeline construction, and ancillary infrastructure;
  • The no-drill buffer zones proposed in the DSGEIS are inadequate to protect New York City’s drinking water supply; and
  • The DSGEIS does not sufficiently analyze alternatives to hydraulic fracturing, and does not at all address alternatives to natural gas development.

 DEP also issued a report in conjunction with its comments.

 The comment period for DEC’s DSGEIS has been extended to December 31, 2009.  While New York City’s interest in upstate drilling is based primarily on potential impacts to its watershed and water supply infrastructure, upstate municipalities are likely to focus on other issues, including tax revenues, road and truck traffic impacts, noise impacts, and preemption of local regulatory authority.

December 17, 2009

Manhasset Lakeville Water District Settles Litigation to Clean Up Public Water Supply Contamination

By: Ashley S. Miller — Filed under: Citizen Suits, Project Updates, RCRA, Safe Drinking Water Act — Posted at 10:15 am

The Manhasset Lakeville Water District has secured a $2.75M settlement for costs incurred in response to contamination of the aquifer underlying the Water District’s service area.  Sive Paget & Riesel represented the Water District in its efforts to recover these costs.

The Water District provides drinking water to its 45,000 customers in Manhasset, Great Neck, and New Hyde Park, NY.  After Freon-22 was detected in the aquifer waters, the Water District was forced to build a treatment system to remove the contaminants and render the water safe for public consumption in compliance with New York State drinking water quality standards.

SPR assisted the Water District in locating parties that were potentially responsible for the contamination, investigating the historic source of the contamination, and bringing a federal litigation in the Eastern District of New York against the owners of the source of the contamination for recovery the Water District’s costs.  The litigation asserted federal claims under the citizen suit provisions of the Safe Drinking Water Act (SDWA) and the Resource Conservation and Recovery Act (RCRA).

The Water District has now settled certain of its claims in that litigation for $2.75M.  These settlement funds will offset costs incurred to build the treatment system, legal and engineering fees, as well as the ongoing operation and maintenance costs of removing contaminants from the drinking water supply.  The settlement also serves as an important example to public water districts, demonstrating that ratepayers need not bear the burden of addressing environmental contamination in the water supply.

The following SPR attorneys represented the Water District in this matter: David Yudelson, Daniel Riesel, Dan Chorost, and Ashley Miller.

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