Fracking Insider Readers: We are pleased to bring you Volume 42 of our State Regulatory Roundup, including updates in Maryland, Texas, and Wyoming. As we explained in earlier volumes, we designed the Roundup to provide quick overviews on state regulatory activity. If you have any questions on any of these summaries, please do not hesitate to ask.
Maryland – The Department of Energy has authorized Dominion Resources to export liquefied natural gas (LNG) from the company’s Cove Point facility to countries that do not have free-trade agreements with the U.S. (See our previous coverage here.) The May 7 authorization was the last regulatory approval the company needed to build a liquefaction facility and shipping terminal near Lusby, in Calvert County on the west bank of the Chesapeake Bay, to export LNG globally. The site of the project is a 1970s LNG import terminal, which will be converted to an export facility in a $3.8 billion project expected to be completed in 2017. A license to export LNG from the site to countries that have free-trade agreements with the U.S. was approved in October 2011, but the new authorization approves export to countries with which we have no free-trade agreements, such as China, India, and Japan. On May 7, several environmental groups filed suit in the U.S. Court of Appeals for the District of Columbia Circuit against the Federal Energy Regulatory Commission (FERC) alleging its approval of the project in September 2014 circumvented the National Environmental Policy Act by neglecting to consider that the project would cause additional hydraulic fracturing in the Marcellus Shale region.
Texas – Gov. Greg Abbott (R) has signed House Bill 40, which prohibits local governments’ use of zoning powers to ban energy development. The bill, which is effective immediately, specifies that the Texas Railroad Commission has sole authority to regulate oil and gas development, while local communities retain the right to impose “commercially reasonable” regulations on surface elements such as lights, noise, and traffic. The bill also shields existing local ordinances against lawsuits, provided that those ordinances do not interfere with drilling and production. The bill was offered in response to the Denton hydraulic fracturing ban (see our previous coverage here and here), and consideration by other Texas cities of more stringent oil and gas drilling regulations.
Wyoming – An environmental group has filed a challenge with the EPA’s Environmental Appeals Board (EAB) over the issuance of five National Pollutant Discharge Elimination System (NPDES) permits to discharge production water on the Wind River reservation. The challenge by Public Employees for Environmental Responsibility (PEER) alleges that, because drillers are not required to disclose the chemicals they use in hydraulic fracturing operations, the agency is unable to fully evaluate the effects on wildlife and livestock of discharging wastewater.
Under NPDES, the onshore oil and gas industry is subject to a “zero discharge” limitation, effectively requiring the industry to capture 100% of their wastewater for disposal in underground injection control (UIC) wells, for reuse in drilling, or, in some circumstances, for treatment in waste treatment facilities. In order to encourage more beneficial reuse of oil and gas production water in the arid West, EPA exempts from the “zero discharge” ban wastewater discharges west of the 98th Meridian that are used for agriculture, livestock, or propagation. Such discharges must still meet numerical limits for oil and grease, and be found by permitting authorities to be “of good enough quality” for their proposed beneficial reuses.
EPA is still considering a PEER petition urging that the NPDES provision allowing produced water from oil and gas operations to be discharged in certain western regions of the U.S. be narrowed. The National Resources Defense Council (NRDC) has also filed an EAB petition regarding Wind River, arguing that EPA could not have found that produced water containing well treatment chemicals is “of good enough quality” for livestock and wildlife without knowing what chemical constituents were used. It is unclear what ecological risks would be presented by the presence of proprietary chemical mixtures that likely amount to 0.01 – 0.0001% of the total discharge. Indeed, it is likely that permit authorities know more about the precise chemical make of hydraulic fracturing fluid than they know about residential discharges or discharges from other industries. And, even if some risk could even be identified for such a small percentage of discharge, it would need to be weighed against the potential harm from depriving drought-prone areas from an important water source.