02 August 2016

Sidley Shale and Hydraulic Fracturing Report

Vol. 5, No. 31

Topics discussed in this week’s Report include:

  • EPA defends oil and gas effluent limitation guideline.
  • BLM moving oil and gas leasing online.
  • Spokane puts crude-by-rail ban on ballot.
  • Environmental groups sue to stop oil and gas exploration in Big Cypress National Preserve.
  • Delaware River Basin Commission moves to dismiss hydraulic fracturing challenge.
  • BLM argues that environmental groups lack standing to challenge agency management plan.
  • Research paper blames Barnett Shale for Dallas quakes.

Federal

EPA defends oil and gas effluent limitation guideline. In a response-to-comments document, the U.S. Environmental Protection Agency (EPA) defended its proposal to ban disposal of hydraulic fracturing wastewater at publicly owned treatment works (POTWs). Industry had argued that pretreatment is feasible, but EPA responded that no combination of POTW technology would remove 100 percent of the pollutants commonly found in shale oil and gas wastewater. While oil and gas operators rarely discharge wastewater to POTWs, industry would have preferred that EPA keep POTWs available as an alternative to underground injection wells. Oil and gas companies in Pennsylvania are especially concerned as the state’s geology is ill-suited for injection wells, requiring them to dispose of most wastewater in neighboring states.

BLM moving oil and gas leasing online. Beginning this September, the U.S. Bureau of Land Management (BLM) will start conducting oil and gas lease sales through an online process. The first sale will offer 14 parcels underlying portions of the Homochitto and Bienville National Forests in Mississippi. BLM has stated that online auctions will reduce costs, expedite the process and match similar changes at the state level. Environmental activists oppose the move, claiming that it circumvents “the public process.” Activists have disrupted BLM lease sales as a protest against federal fossil fuel leasing, requiring BLM to postpone four sales.

States

Spokane puts crude-by-rail ban on ballot. The city council of Spokane, Washington unanimously approved a ballot measure asking voters to ban train shipments of crude oil and coal within city limits. According to the measure, violations would be subject to a $261 civil penalty per tank car. The council sponsors claimed that the federal government has failed to implement adequate regulations for trains hauling crude oil, citing a recent derailment on the Oregon-Washington border. Any municipal ban on crude oil cargoes would likely be challenged in court as preempted by federal authority over railroad operations and safety.

Litigation

Environmental groups sue to stop oil and gas exploration in Big Cypress National Preserve. A coalition of environmental groups filed suit in federal district court in Florida against the National Park Service (NPS) to block plans to allow for an oil and gas exploration survey in South Florida’s Big Cypress National Preserve. The groups argue that NPS violated the National Environmental Policy Act and NPS regulations because it failed to consider fully the environmental impacts of the exploratory drilling project, including seismic survey activities, and allegedly did not take the required hard look at the effectiveness of mitigation measures. The groups also served a 60-day notice of intent to sue NPS under the federal Endangered Species Act, alleging that the exploration activities would affect several endangered species and their habitat within the Preserve.

Delaware River Basin Commission moves to dismiss hydraulic fracturing challenge. The Delaware River Basin Commission (DRBC) has moved to dismiss a suit that seeks to overturn the de facto moratorium imposed by DRBC on the use of hydraulic fracturing in the Delaware River Basin. DRBC banned hydraulic fracturing in 2010 until it could issue regulations governing shale gas development, which it has yet to do. In its complaint, plaintiff Wayne Land & Mineral Group LLC claims DRBC lacks the power to ban exploratory drilling in the Basin. In response, DRBC argues that its moratorium is a non-binding, advisory measure that lacks the finality required for review by federal courts and that the plaintiff failed to pursue necessary administrative appeals before filing suit. Wayne Land also filed its opposition to a motion to intervene by the Delaware Riverkeeper Network, arguing that the DRBC is adequately representing the Network’s interests.

BLM argues that environmental groups lack standing to challenge agency management plan. Relying on the recent U.S. Supreme Court decision in Spokeo v. Robbins, BLM has moved to dismiss a lawsuit filed by environmental groups challenging a resource management plan (RMP) for certain federal lands in California. The lawsuit claims that the RMP could allow for hydraulic fracturing to be used in future development but that BLM failed to properly consider that potential use when it conducted a National Environmental Policy Act (NEPA) review of the RMP. BLM argues that the groups cannot plead a concrete injury as required by Spokeo, as the RMP does not itself authorize oil and gas development. Only when the RMP is complete may BLM begin the leasing process, which is then subject to NEPA review — and on which interested parties may in turn comment and thereafter appeal. According to BLM, at this juncture, the plaintiffs’ procedural violation is too far removed to sustain standing under Spokeo. The plaintiffs have asserted that BLM’s argument would essentially extinguish the public’s statutory right to challenge faulty NEPA reviews.

Studies

Research paper blames Barnett Shale for Dallas quakes. Southern Methodist University researchers published a paper in the journal Physics of the Earth and Planetary Interiors claiming that wastewater injection is responsible for a series of 33 tremors in the Dallas area since 2008. There is no gas production in Dallas County, and the seismic activity originated more than six miles from the nearest injection well. However, the researchers claim to have found that wastewater disposal wells are collectively changing underground pressure over time. Since 2006, companies have disposed of approximately 1.7 billion barrels of fluid into injection wells, with most of that concentrated in three counties. These three counties have experienced nearly half of the Dallas-area earthquakes, although the quakes have not originated near any particular injection well and occurred years after the wells began operating. The researchers believe it is “plausible” to conclude that it took many years and significant injection volumes for the wastewater to influence fault lines located a considerable distance from the wells. The Texas Railroad Commission is reviewing the paper.

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