E2 Law Blog : Environmental Lawyers & Attorneys : Greenberg Traurig Law Firm : Climate Change, Energy Legislation

From Adam Silverman of GT Philadelphia:

This week, the Delaware River Basin Commission (“DRBC”) released its final draft natural gas development regulations in anticipation of a final vote on whether the DRBC will adopt the regulations. The vote is scheduled for November 21, 2001. There is some reason to believe that the Commission vote may not be unanimous, which would be a rare occurrence. If adopted, the regulations will end a moratorium imposed on drilling for natural gas within the Delaware River watershed, which supplies water to Philadelphia and New York City. Since first introducing draft regulations in 2010, the DRBC received nearly 70,000 comments from the public, some of which were reportedly incorporated into subsequent drafts of the regulations. 

The final draft regulations would permit the drilling of 300 wells within the watershed, provide setback requirements, and increase financial assurance requirements to, in certain cases, $5MM per well up to $25MM for multiple-well sites. State regulations will determine the construction and operation of individual wells and pads but water sources for well pads require approval by the DRBC. The regulations also limit the discharge and storage of wastewater and fracking fluid within the watershed. The DRBC plans to reassess the regulations after 18 months. 

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Pennsylvania Governor Tom Corbett announced that he will present a plan to the General Assembly that will implement numerous recommendations proposed by the Marcellus Shale Advisory Commission (Commission), including an impact fee on wells and more rigorous standards on hydraulic fracturing.  The impact fee would subject each well to a fee of up to $40,000 in the first year, $30,000 in the second, $20,000 in the third, and $10,000 in the fourth through tenth year, adding up to a potential $160,000 per well.  Seventy-five percent of the revenues collected from these fees would be distributed to the counties and municipalities in which drilling is taking place, with the vast majority of the remainder going to the Pennsylvania Department of Transportation for infrastructure and maintenance of roads in those same counties.

The proposed standards would increase well setback distances from wells and waterbodies, increase penalties and bond requirements, and expand gas operators' "presumed liability" for impairing water quality from 1,000 to 2,500.

Governor Corbett created the Commission by Executive Order in March in order to create a plan for developing the Marcellus Shale responsibly, and on July 22 the Commission issued its final report, which included 96 policy recommendations.

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In July, the New York State Department of Environmental Conservation ("NYSDEC") released its draft Supplemental Generic Environmental Impact Statement ("SGEIS") on horizontal drilling.  As we explained in more detail earlier, the draft SGEIS included draft regulations, which would impose "rigorous and effective controls" on hydraulic fracturing.  In September, NYSDEC supplemented its SGEIS, adding mitigation measures addressing socioeconomic, community character, visual, noise and transportation impacts.

NYSDEC has now issued its draft regulations, which are the same as those released in July, for public comment.  The public comment period will conclude December 12, and four public hearings are being held in November in Dansville, Binghamton, Sheldrake and New York City.

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On August 22, the West Virginia Department of Environmental Protection (WVDEP) filed an emergency rule to increase oversight of horizontal drilling of natural gas wells.  The emergency rule adds additional permit and operational requirements focused on hydraulic fracturing, or "fracking."  If a permit applicant disturbs more than three acres of land, the applicant must submit an erosion and sediment control plan and a site construction plan.  If an operator will be using more than 210,000 gallons of water during a one-month period, the applicant must also include a water management plan with its permit application.  The water management plan must include information on the type of water source, the anticipated volume of each water withdrawal, the plan for its management and disposal, and a listing of all fracking additives.  Operational requirements include well casing requirements, notification requirements, and information gathering requirements for all water used in connection with fracking activities.  In addition, operators must issue public notice in a newspaper at least 30 days prior to drilling at a well pad for the first time.

This emergency rule follows Executive Order No. 4-11, issued by Governor Earl Ray Tomblin on July 12, which directed the WVDEP to issue rules on horizontal drilling.  This is merely considered a stop-gap measure by both the Governor and the WVDEP, who plan to work with the legislature toward a "comprehensive approach."  The rule will become effective upon approval by the Secretary of State and remain in effect for 15 months.

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 From K.B. Battaglini of GT Houston: 

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From K.B. Battaglini of GT Houston:

The Natural Gas Subcommittee of the Secretary of Energy Advisory Board issued its Ninety-Day Report today, stating that hydraulic fracturing can continue safely as long as companies disclose more about their practices and monitor their environmental impact.  The report constitutes a qualified endorsement of shale gas exploration.  Members of the Subcommittee include MIT professor John Deutch, Environmental Defense Fund president Fred Krupp, and Kathleen McGinty, former Secretary of the Pennsylvania Department of Environmental Protection who also served as Chair of the White House Council on Environmental Quality during the Clinton Administration.  The Advisory Board was established at the request of President Obama, as part of his "Blueprint for a Secure Energy Future."  The Environmental Protection Agency, which regulates air and water quality, is conducting its own study of the effects of hydraulic fracturing.  EPA intends to release a report of its findings in 2012.

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From K.B. Battaglini of GT Houston:

The EPA has announced new standards to reduce volatile organic compound (VOC) emissions from oil and gas operations.  According to an EPA fact sheet, the proposed standards rely upon existing technologies, and are projected to result in a net annual savings to the industry of $30 million.  The existing technologies have two components: implementation of the EPA's Natural Gas STAR program, which contemplates the use of "green completions" of oil and gas wells, and the continued use of "pit flaring" of non-captured emissions.  A green completion is another name for reduced emissions completions, whereby more of the emissions are captured by surface equipment.  Pit flaring involves the ignition of gas-bearing emissions at the surface, typically in a surface pit.  However, while pit flaring would eliminate certain emissions, it introduces hazards and other emissions issues.  Following a public comment period, the EPA will take final action on the proposed standards by Feb. 28, 2012.

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As we mentioned earlier, Governor Cuomo requested that the New York State Department of Environmental Conservation's ("NYSDEC") Supplemental Generic Environmental Impact Statement ("SGEIS") on horizontal drilling be completed for issuance by July 1, 2011.  On June 30, NYSDEC announced its recommendations from its report, set to be released today.  NYSDEC recommends that the moratorium on fracking be lifted, but that fracking be prohibited in the New York City and Syracuse watersheds, within 500 feet of primary aquifers, and on state-owned land.  Fracking would be allowed on privately held land, subject to "rigorous and effective controls."

These controls would (1) prohibit permits from being issued within 500 feet of a private water well or within 2,000 feet of a public drinking water supply well or reservoir, (2) require a third well casing around each well, (3) require additional spill control for flowback water and a DEC-approved plan for disposing of flowback water and production brine, and (4) require well applicants to disclose all fracking chemicals and consider chemicals that potentially pose less risk. 

Pursuant to the recently passed Water Withdrawal Reporting law, drillers also must obtain a special permit to withdraw large volumes of water.  This permit will impose conditions on water quantity, and require annual reporting on the amount of water being withdrawn or purchased.

UPDATE 1: Although the full SGEIS will not be made available until July 8, NYSDEC has released the Executive Summary, a SGEIS timeline, a document explaining what it learned from Pennsylvania, and a press release detailing who NYSDEC was appointing to its Hydraulic Fracturing Advisory Panel.

UPDATE 2: The full SGEIS can be found here.

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From Heather Behnke, GT Albany.

On April 23, New York State Department of Environmental Conservation (DEC) Commissioner Alexander "Pete" Grannis announced that any applications for natural gas drilling permits using high-volume hydraulic fracturing (fracking) techniques that are located in the New York City or Skaneateles Lake watersheds (which includes Syracuse) will be assessed on a "case-by-case" basis instead of under the Supplemental Generic Environmental Impact Statement (SGEIS).  As we discussed here, the SGEIS is in the process of being finalized by the DEC and is not expected to be completed until later this summer or this fall. The DEC claims the additional environmental review is warranted because these watersheds use an unfiltered surface water supply and drilling in these watersheds poses unique land disturbance and usage issues that will not be addressed by the SGEIS.

The president of the environmental group Riverkeeper, which has long sought to ban fracking within the NYC watershed, said this restriction amounts to a "de facto ban" on fracking. None of the 58 pending permit applications will be affected by this new restriction because they are not located in these watersheds.

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