Posts Tagged ‘fracking’

(Posted by Grant Maki, OEC Attorney Of Counsel)

This is the first of a series of posts highlighting a few situations where a landowner could face liability for the conduct of a company that leases their land for natural gas drilling.

So you’ve signed on the dotted line to finalize an oil and gas lease, and now the trucks are rolling in and the drilling rig is being set up right there on your land.  You hear all the machines humming and see workers connecting hoses to some of trucks lined up on the pad.  For the first time, you realize just how much goes into drilling in the Marcellus shale.  You start to wonder: what will happen if something goes wrong?  Could you be left holding the bag for the cleanup of environmental contamination?

It turns out that you could.  Congress enacted the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”, also known as “Superfund”) in 1980 to help clean up sites that have been contaminated with hazardous substances.  The government can clean the contaminated sites and then use CERCLA to force the parties responsible for the contamination to pay back the costs.

Unfortunately for landowners, CERCLA can require payment from a very broad range of “potentially responsible parties,” including the owner or operator of a “facility” and the person who owned or operated a facility during which time the disposal of a hazardous substance occurred.[1]  The term “facility” is defined as “any site or area where a hazardous substance has . . .come to be located”.[2]  This has been interpreted by courts to include a the whole area around the contamination that had the same general function[3]—probably at least an entire well pad in the case of an oil and gas operation.

BUT ISN’T OIL & GAS EXEMPT FROM CERCLA?  It is true that 42 U.S.C. § 9601(14) exempts petroleum and natural gas from regulation under CERCLA.  It does not, however, exempt any materials that have been mixed with petroleum or natural gas, waste products from natural gas drilling operations, or chemicals brought in for use in such operations.  See, for example, United States v. Gurley, 43 F.3d 1188, 1199 (8th Cir.1994) (limiting the exemption to crude petroleum products or refined products, and declining to extend the exemption even to used petroleum products.)  

To make sense of these rules, let’s apply them to a hypothetical gas lease situation.  Say the landowner signs a lease to allow a company to drill for gas on his land.  The company drills the well, harvests the gas, plugs the well, and leaves.  Then, years later, something happens.  Maybe its a few cracks in the cement casing that is supposed to keep the hazardous chemicals that were forced underground from rising to the surface.  Maybe one of the tanks that stored a hazardous substance developed a slow leak that was never noticed until the chemicals seeped through the soil all the way to a nearby creek.  Whatever the cause, imagine that the contamination doesn’t becomes apparent until 30 years after the end of the lease.

If the site qualified for CERCLA, the government could come in and clean it up.  Then it would look for potentially responsible parties to pay them back under CERCLA.  Even though the landowner didn’t handle chemicals or drill the well, they are the “owner” of an “area where a hazardous substance has . . . come to be located”.  That is enough to make them a potentially responsible party under CERCLA.

Now things start to get pretty scary for the land owner.  CERCLA provides for strict liability for any potentially responsible party, without regard to who actually caused the contamination.[4]  CERCLA also provides that all of the potentially responsible parties are held jointly and severally liable for the contamination—this means that the government can put the whole bill on any one responsible party and leave it to them to settle the allocation amongst the other parties.[5]  This means that if the companies that caused the contamination have been dissolved, the landowner could be the only potentially responsible party left, and they would have to pay the entire bill.

It’s far past the scope of this blog post to get into the nuances of exactly when a landowner could be liable, and for how much.  I’s also past the scope of this post to discuss how and to what extent landowners can protect themselves from CERCLA liability—that’s an issue for an individual landowner to bring up with their attorney.

Our purpose here was to show that landowners could be exposed to liability under CERCLA if their land becomes contaminated with hazardous waste as a result of a shale gas lease, even though it wasn’t their fault.  Without the proper protections in the lease, the landowner could have to spend a considerable amount of time and money with a very qualified attorney to defend the case in federal court at the very least. At the worst, they could be left holding the bag for the entire cost of cleanup.


[1] 42 U.S.C. § 9607(a)(1) and (2)

[2] 42 U.S.C. § 9601(9)(B)

[3] See United States v. Twp. of Brighton, 153 F.3d 307, 312-13 (6th Cir.1998).

[4] State of N.Y. v. Shore Realty Corp., 759 F.2d 1032, 1042 (2d Cir.1985)

[5] J.V. Peters & Co. v. E.P.A., 767 F.2d 263 (6th Cir. 1985); U.S. v. ChemDyne Corp., 572 F. Supp. 802

(S.D. Ohio 1982).

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Keep the Burden on the Industry to Protect Ohio from Fracking’s Risks

(Posted by Grant Maki, Attorney, Ohio Environmental Council)

There are a lot of unknowns about the potential impacts of fracking.  The technologies involved in fracking have never been done on this kind of scale before, and the impacts have not been thoroughly studied.  How likely is groundwater contamination—and over what timeframe?  How do we reconcile the divergent reports about the risks to air quality and global warming?  Even our regulators admit that there are many unknowns, and industry is often two steps ahead of regulation.

OEC and its attorneys with the Ohio Environmental Law Center are working now to develop protective regulations to present to ODNR and Ohio EPA to make sure the air, land, and water in Ohio’s Gaslands are protected.

Because of the unprecedented scale of hydraulic fracturing activities expected to come to Ohio, we need an effective set of laws in place that will make sure that people are quickly and fully compensated even for risks that are well understood, like the risk that a truck carrying chemicals to a well site springs a leak.  But when there is so much uncertainty and the State has taken a regulatory approach that can be described as “drill first, ask questions later,” it becomes even more important to plan for the fact that many impacts caused by fracking will “fall through the cracks.”

Thus, lawmakers should be concerned with creating a set of rules that can quickly and cost-effectively adjudicate disputes surrounding the harms caused by fracking.   Lawmakers should also try to create a set of rules that gives the people who know the most about the industry—the fracturing companies themselves—the proper incentives to avoid harms by forcing them to internalize all of the costs of their activities.

So beyond the necessary water quality and property rights regulations that desperately need strengthened, the actual legal and regulatory structure, itself, also needs an overhaul.

The Law Center has developed a list of five recommendations for how lawmakers can prepare the legal system to “fill in the cracks” in our regulatory scheme.  Because there is so much unknown about this industry—in part because the technology and industry practices are changing rapidly and vary from site to site—the proposed framework is designed to assign costs to the drilling companies while placing minimal administrative burden on the courts.

Read the Law Center’s Fracking Litigation Report VOL. 1 Filling in the Structural Cracks of Fracking Regulation for details on what the General Assembly can do to fix the system.

First, pre-drilling, post-drilling, and continuous environmental quality monitoring should be borne by the industry . . period.

Secondly, drilling companies should be held strictly liable for all harms caused by fracking operations, and rules should be put in place to minimize the administrative burden on both the courts and on parties seeking redress.

Furthermore, insurance requirements should be required to provide for potential catastrophic risks, and a severance tax should be levied to pay for latent harms that are not yet apparent, and to plug the abandoned oil wells that provide a potential pathway for fracking fluid migration.

Finally, drilling companies should have to pay attorneys fees and court costs for plaintiffs who successfully sue them for damages.

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(Posted by Melanie Houston, OEC Director of Water Policy & Environmental Health)

The United States Forest Service announced on Monday that shale drilling, or “fracking” will be allowed in the Wayne National Forest.

In a statement issued by the agency, Anne Carey, Wayne National Forest Supervisor, concluded that there was no need to amend the 2006 Forest   Plan for the Wayne to incorporate potential surface level impacts associated with horizontal drilling. Carey stated “I have reviewed the new information contained in the Supplemental Information Report, and determined that further environmental analysis is not needed.” She further stated “I believe that the existing Forest Plan direction is adequate to   address the surface effects anticipated from the potential development of horizontal wells as projected by the Bureau of Land Management (BLM).” According to an analysis done by the U.S. Bureau of Land Management, shale wells could be drilled in as many as 13 sites throughout the Wayne forest by 2016.

The Ohio Environmental Council (OEC), along with Buckeye Forest Council and other environmental organizations, oppose Forest Service’s decision to allow fracking in the Wayne, Ohio’s only national forest. “This decision is premature and inconsistent with the agency’s mission ‘to sustain the health, diversity, and productivity of the nation’s forests and grasslands to meet     the needs of present and future generations’,” stated Melanie Houston Director of Water Policy and Environmental Health.

In a statement after the Wayne decision, Nathan Johnson, staff attorney for the Buckeye Forest Council, stated, “The Wayne’s decision is extremely disappointing.”

“We believe the Wayne is violating federal law by failing to update their 2006 study and plan, and litigation is a distinct possibility,” added Johnson.

According to Buckeye Forest Council’s analysis, Federal law requires the Forest Service to conduct a new environmental study and update their plan whenever ‘significant new circumstances or information’ arise. High volume horizontal fracking is clearly a significant new circumstance demanding study and additional protections.

Trent Dougherty, Director of Legal Affairs at OEC stated, “The Forest Service has failed to conduct their due diligence in reviewing the environmental impacts associated with unconventional gas drilling in national forestland. They have decided to take a short-cut rather than fully assess fracking’s impacts on the long-term viability of this treasure of Southern Ohio.”

Ohio’s lone National Forest is now fertile ground for industrial-scale  fracking.

The Forest Service itself acknowledged in their supplemental informational report that there are drastic differences between  conventional oil and gas drilling and the new horizontal drilling: larger well pads, more surface area disturbance, and much greater water usage.

“There will also be more air emissions, more noise, and more light pollution, which will be disturbing not only to the surrounding public and    forest visitors, but also to the federally endangered Indiana bat and  sensitive species little brown bat.” added Houston.

Read the US Forest Service’s report:

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(Posted by Trent Dougherty, Director of Legal Affairs)

One of the many jewels of Ohio’s State Park system is the Mohican Complex – Mohican State Park, Mohican Memorial State Forest, and the unique and inspiring Malabar State Park

Historic Malabar Farm was the heart and soul of Mansfield, Ohio’s own    Louis Bromfield and his work for conservation. Yet, did you know it  was in peril during his last days?

To chronicle  the importance of this public treasure, a 3 minute video was created by Tender Land Company to celebrate the work of Mansfield’s famous son and challenges us to re-think the management of  our Ohio State Parks. Look at the tough truth behind the story-book life of Bromfield and the peril that awaits his farm today.

Click the link below to view the movie: The Woods at Malabar.

Also, view Mohican Advocates film on Mohican State Park , entitled  Mohican: The Long View.

The threats: Drilling & Logging

More than a year has passed since the passage of HB 133, which opened Ohio’s State Parks to oil and gas drilling, and provisions in the State’s  Biennial Budget Bill that opened those same parks to commercial logging. Yet, while bill’s Leasing Board has yet to meet, and while no drill-bit has yet pierced our parks (yet), state officials are working hard.

As public records show (and we will feature on future posts on drilling in     our parks) officials have been working hard to abide by the mandates of      the new law: inventorying  and classifying state owned parcels; checking titles; and clearing any encumbrances.  All to make our parks primed and ready for drilling and logging.

But there is another group working hard as well.  The Coalition to Protect Ohio’s Parks, led by Mohican Advocates, Inc., has coalesced in an effort to reverse the decision of state lawmakers to open Ohio’s State Parks and Forests to drilling and fracking for gas and oil, and their decision to allow commercial logging in our State Parks for profit alone.

A focal point of the group’s effort is to shine an important light on the  reasons why the State Parks were set aside in the first place, and why, for generations, commercial logging and industrial scale drilling were denied.  The movies on Mohican and Malabar are just the start of CPOP’s efforts to protect the sanctity of small slices of public land we have in Ohio.

Please visit the Mohican Advocates, Inc. website and the Coalition to   Protect our Parks to sign the petition to protect our parks.

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Columbus, OH – The Ohio Environmental Council (OEC) is praising State Representative Mark D. Okey (D-Carrollton) and echoing his call to action for state leaders to prevent exploitation of Ohio’s property owners and natural resources.  Today, Rep. Okey called on Governor John Kasich and legislative leaders to act on his proposed legislation to protect Ohio’s landowners from predatory leasing practices by the oil and gas industry.

“The OEC stands side by side with Rep. Okey in urging the Kasich administration and Statehouse leaders to put an end to predatory leasing and to establish consumer rights for property owners who wish to lease their land for oil and gas production,” said Trent Dougherty, Director of Legal Affairs for the Ohio Environmental Council.  “Land owners need better protection from unscrupulous oil and gas ‘landmen.’   The law should assure arms-length dealings for Ohio’s gasland communities.”

The call for strengthened consumer rights comes just days after a recent Wall Street Journal article chronicled Chesapeake Energy’s attempts to renegotiate Ohio landowners’ leases in an attempt to help the cash-strapped company.  The article cites that since 2008, more than 100 lawsuits have been filed across the country by landowners, who claim the company breached contracts.

Rep. Okey’s recently introduced “Truth in Leasing Act” (House Bill 493) would guarantee an honest leasing process by requiring “landmen” who secure leases on behalf of drillers to be subject to registration, licensing, and disclosure requirements, and establish consumer protection rights for property owners.

In February of this year, the state’s top lawyer, Attorney General Mike DeWine, urged, among other improvements in Ohio law, that his office or another state agency be empowered to help landowners with complaints about lease agreements for drilling.

“Arms-length lease negotiations will not only help protect landowners’ pocketbooks, but also protect the localized environment,” Dougherty added. “Absent fully protective regulations, effective lease negotiations can secure better protections for landowners’ safety and protection of their air, land, and water resources.

“From negotiating longer setbacks, to requiring post-drilling testing of water wells, to dictating how the land is reclaimed, the lease can be a powerful tool for a landowner to protect his or her property from environmental risks.  However, that is only the case if the landowner is on equal footing with the operator and the ‘landmen’ are held accountable,” said Dougherty.

OEC fully supports and endorses HB493. The OEC advocated for many of the bill’s provisions during the debate over the Governor’s Energy Bill (SB315).

“Gov. Kasich has renewed his push to make the 0il and gas industry pay its fair share in taxes.  The industry’s henchmen also should be ‘taxed’ with mandatory licensing, registration, and financial disclosure to protect landowners from the unscrupulous practices of predatory ‘landmen.’”

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(Posted by Trent Dougherty, OEC Director of Legal Affairs)

Last week, a decision of the Ohio Environmental Review Appeals Commission (ERAC) opened the door for Patriot Water Treatment, Inc. to treat brine and fracking wastewater in its facility, and the City of Warren to discharge the brine through its wastewater treatment plant into the Mahoning River.

Under a 2010 modification to the City of Warren’s wastewater discharge permit, treated brine water produced from oil and gas drilling activity could be sent to the city of Warren’s wastewater treatment plant. The city’s 2012 permit renewal from the Ohio Environmental Protection Agency, which took effect April 1, however, contained a provision that did not allow the city to accept the water from Patriot.

The change in permit terms came with the change of Administrations, and a subsequent change (or more aptly, a clarification) of Ohio EPA policy toward discharge of drilling wastewater into waters of the state. The essential clarification was that it was the Ohio Department of Natural Resources (ODNR), and not Ohio EPA, who was the authority to permit disposal of drilling-related wastewater.

The Commission’s decision thus hinged on whether that policy could be enforced through the City of Warren permit. The Commission said no.

The Commission’s ruling does not necessarily permit the brine to be accepted by Warren and discharged into the Mahoning (especially if you ask Ohio EPA – read their reaction).  However, it does strike the provision that Ohio EPA inserted into Warren’s 2012 water quality permit that prohibited the discharge of brine unless and until ODNR approves of it as a disposal method.

Under current Ohio law (ORC 1509.22), the only approved methods of disposing of brine and other wastefluids from oil and gas drilling is through Class II injection wells or application on roads for dust/ice control.  Yet, that law does allow the ODNR to approve other methods of disposal, but has yet to ever do so.  The main crux of the decision was that it was unlawful for Ohio EPA to enforce ODNR’s law through the City of Warren’s permit.

The ball, then, is squarely in ODNR’s court to definitively state whether discharging treated “brine” into waters of the State of Ohio is an acceptable and approved method of disposal. The Department has a choice:

  1.  defend their statements that underground injection is the best and safest disposal method and prohibit Warren from discharging;
  2. approve the treatment and discharge through the wastewater treatment plant as an ODNR approved brine disposal method, and begin the, hopefully, public debate about which disposal method is the safest (if either);
  3. or do nothing, and let its executive agency cousin, Ohio EPA, fight the battle.

For almost a decade, Ohio law has put the “sole and exclusive authority to regulate the permitting, location, and spacing of oil and gas wells and production operations within the state” to ODNR’s Division of Oil and Gas Resources.  However, that law also, exempts from that authority “those activities regulated under federal laws for which oversight has been delegated to the environmental protection agency and activities regulated under sections 6111.02 to 6111.029 of the Revised Code.” So there are three important questions that should be answered:

  1. Whether Patriot’s “treated” brine is still brine under Ohio’s law?
  2. Whether discharging it through a wastewater treatment plant is disposing of brine?
  3. Is regulating it an activity granted to Ohio EPA by the Clean Water Act, and thus not under ODNR’s authority at all?

The answer to those questions not only determines who has authority over these operations (left unanswered in last week’s decision), but where the great influx of shale drilling waste is headed for the foreseeable future.

The state can just add these to the list of other questions that need to be addressed as we ramp up to the 2000 shale permits envisioned by ODNR and the industry, and the hundreds of millions of gallons of wastewater that comes with it.

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(Posted by Trent Dougherty, OEC Director of Legal Affairs)

Earlier this month, Ohio Department of Natural Resources (“ODNR”) and its Division of Oil and Gas Resources Management (“DOGRM”) released draft rules to strengthen its regulation of fracking waste injection wells. These rules were proposed to establish more stringent regulations to protect public health and safety due to recent seismic events in the Youngstown area potentially caused by Class II brine injection.  (Read ODNR’s Report on the earthquakes).

It is important to note that the Youngstown-area injection well is NOT the only deep injection well in Ohio that has triggered associated earthquakes.  The Class I Hazardous Waste injection well (not a fracking waste well) in Ashtabula County is thought by researchers to have induced a series of earthquakes in 1987 (Seeber and Armbruster, 1993). There also appears to be a relationship between a series of earthquakes near Marietta at the Burning Springs Anticline and a set of active deep Class II injection wells in the area.

While the impetus may be the earthquakes, the true need for full overview of the Class II brine injection well regulations is due to the great influx of waste from Pennsylvania and the predicted boom of domestic shale production in Ohio.

Source: USEPA

According to ODNR’s Business Impact Analysis on the rule package:  Ohio currently has 196 Class II brine injection wells permitted to operate and nationally, there are 144,000 Class II brine injection wells disposing of in excess of two billion gallons of oilfield fluid wastes each day.

The industrial-scale deep shale oil and gas wells, projected to total in the thousands, will need a great amount of new injection well capacity for disposing of the millions of gallons of brine and wastewater.

WHAT’S IN THE PROPOSED RULE

  • Allows DOGRM to require specific tests or evaluations for new wells;
  • Prohibits an applicant from injecting fluid into an injection well until DOGRM has evaluated the results of any test performed;
  • Gives DOGRM the right to withhold the authority to inject fluids based upon the results of the tests performed;
  • Gives the DOGRM more time (fifteen days instead of the current five days) to review an application;
  • Increase the public notice requirements for brine injection well permit applications from one notice in a local newspaper to at least 5 consecutive days in one week;
  • Requires future injection wells to continuously monitor; and
  • Requires the injection well owner to install an automatic shut-off device set to terminate injection if injection pressure is exceeded.

OEC, on Monday, submitted its comments on the rules to ODNR, including a technical review undertaken by members of the Ohio Fracture Flow Working Group [1], an organization of highly qualified scientists and engineers, on behalf of the Ohio Environmental Council.

We stressed that these new rule changes are important, and ODNR should be commended for moving forward with them.  However, the proposed rules have FOUR overarching flaws:

  1. Too much discretion is given to the well operator to perform, or not perform, a test;
  2. Only new wells – not the nearly 200 current wells – are subject to continuous monitoring and other requirements;
  3. Far too little local community and local government notice and comment opportunity is afforded; and
  4. The rules focus only on mitigation of more earthquakes, and not the breadth of other issues concerning risks to human safety and water resources.

ISSUES NOT ADDRESSED IN THE PROPOSED DRAFT

Because state law gives ODNR broad authority to issue rules regulating brine injection, OEC urged the state to take the opportunity and look beyond earthquake prevention and immediately begin drafting – regulations to:

  • Provide for groundwater quality monitoring and  testing;
  • Require or otherwise incent recycling of wastewater;
  • Establish protective siting criteria for constructing wells on/near ecologically sensitive areas;
  • Require, where appropriate, chemical tracers to monitor migration of substances;
  • Increase notice, comment, and similar permit participation rights for local community members and local governments.

While it is easy to understand and appreciate the need and desire to finalize these proposed rules quickly in response to the 2011 earthquakes, the need for speed should not influence whether further protections are adopted.

RECENT FEDERAL REPORT SHOWS LINK

OEC also brought to ODNR’s attention a recent National Research Council report on induced seismicity from energy production and related operations.

The report examines the potential for energy technologies — including shale gas recovery, carbon capture and storage, geothermal energy production, and conventional oil and gas development — to cause earthquakes.

A conclusion of the 223-page report isthat although fracking has a low risk for causing earthquakes, underground injection wells – used to dispose of fracking wastes – present greater seismic risks. This report supports many of the technical concerns expressed over the past few months, and displaces the rhetoric that the Youngstown incidents were a mere “anomaly.”  Hopefully ODNR reviews the report, and that the report’s recommendations are incorporated into Ohio’s regulations. 

The rules will most likely be finalized this Summer.


[1] The Ohio Fracture Flow Working Group members contributing to the technical comments include:
Julie Weatherington-Rice, PhD, CPG, CPSS – Bennett & Williams
Linda Aller, RS, CPH, CGWP, CPGS – Bennett & Williams
Kerry Hughes Zwierschke, PhD, PE – Bennett & Williams
Stuart Smith – Ground Water Science
Al Kemerer – mechanical engineer/businessman Carrollton, Ohio

 

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