06 June 2017

Sidley Shale and Hydraulic Fracturing Report

Vol. 6, No. 23

Topics discussed in this week’s Report include:

  • Court dismissed challenge to drilling in Arkansas National Forest, finding group lacked standing.
  • Pennsylvania board rejected state agency’s novel civil penalty theory.
  • EPA finalized stay of oil and gas methane rule, and environmental groups vow to challenge EPA’s actions.

Court dismisses challenge to drilling in Arkansas National Forest, finding group lacked standing. The U.S. Court of Appeals for the Eight Circuit dismissed an environmental group’s appeal of a lawsuit challenging natural gas development in Arkansas’ Ozark-St. Francis National Forest. The Ozark Society challenged a 2005 Environmental Impact Statement for the park’s Resource Management Plan (Plan). The Plan had predicted between 10 and 20 new wells would be drilled in Ozark-St. Francis over the next 10 years. An updated 2008 estimate, made after development of the underlying Fayetteville Shale was underway, raised that number to over 1,700 wells. The Ozark Society claimed that the Forest Service failed to account adequately for increased drilling. The district court granted summary judgment to the Forest Service and the Ozark Society appealed. The Eighth Circuit, however, found the Ozark Society lacked standing. The group produced an affidavit from its president, stating that he previously used the park and was concerned that hydraulic fracturing could cause harm. But, the court ruled, there was no assertion that he would use the park again in the future and therefore could not claim that he would be injured by future shale gas development.

Pennsylvania board rejects state agency’s novel civil penalty theory. The Pennsylvania Environmental Hearing Board imposed a $1.1 million civil penalty on EQT Corporation for allowing wastewater to leak from an earthen impoundment in 2012, but rejected a $4.5 million penalty sought by the Pennsylvania Department of Environmental Protection (PADEP). Pennsylvania’s Clean Streams Law allows for civil penalties of up to $10,000 per day. PADEP argued that it could assess the maximum penalty for each day that contamination remained in the underlying groundwater. Although PADEP sought $4.5 million, it asserted that it was entitled to seek up to $81 million in civil penalties due to the length of the cleanup. The Board, however, determined that liability ended when releases from the impoundment ended, cutting off liability when the company excavated the impoundment.

EPA finalizes stay of oil and gas methane rule, and environmental groups vow to challenge EPA’s action. The U.S. Environmental Protection Agency (EPA) issued a notice finalizing its three-month stay of the June 3 effective date for the New Source Performance Standards (NSPS) for new and modified oil and gas wells, pending EPA’s decision on petitions to reconsider the rule. EPA previously issued a proposed rule announcing the stay in April, stating that it would stay the NSPS to broadly reconsider various aspects of it. The notice specifies that the agency is staying the rule’s fugitive emission provisions for pneumatic pumps and the requirement that a professional engineer either certify the design and capacity of closed vent systems or that implementing pneumatic pump requirements is technically infeasible. In granting the stay, EPA referenced industry petitions for reconsideration that have argued that aspects of the final rule failed the “logical outgrowth” test, as it was so different from the proposed rule that industry could not comment on them. Several environmental groups filed a petition to review the stay and an emergency motion to keep the methane rule in place. In their emergency motion to stay, the groups claim that EPA is illegally using the stay to rescind the rule, has not met the legal requirements for reconsideration, and that issuing the stay is arbitrary and capricious.

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