Environmental & Energy Law Brief

The United States Environmental Protection Agency recently announced plans to develop regulations for the disposal of flowback water recovered from the hydraulic fracturing of shale formations.  Specifically, the EPA announced plans to require that flowback water be pre-treated before it is sent to publicly-operated wastewater treatment plants.

What is flowback?

 "Flowback" water is a byproduct of "hydraulic fracturing," a process that facilitates the production of oil and natural gas by using hydraulic pressure to create fractures in low-permeability, underground rock formations.  Water, along with sand and a small amount of other additives, is used transmit the hydraulic pressure.  After the fracturing is complete, the operator of the oil or gas well that is being fractured allows the pressure of the underground formation to push the water back to the surface, where it is recovered.  The recovered water is called "flowback."

Why is the EPA planning to add regulations?

The EPA is responding to concerns that many treatment plants are not designed to remove some of the contaminants found in flowback, which can contain the substances originally added to the fracturing water to facilitate the fracturing process, as well as other substances that dissolve into the fracturing water from the formation being fractured.  The other substances that are naturally found underground and which can dissolve into the flowback include salts, metals, and naturally-occurring radioactive materials.  Further, the salts sometimes can interfere with the working of wastewater treatment plants, though this usually does not occur because the operators of treatment plants usually combine the flowback with larger streams of water from other sources, so that the concentration of salts is diluted to a concentration level that does not interfere with the operation of treatment plants.

What would the regulations do?

The regulations have not been developed yet, so no one knows exactly what the planned regulations will say.  The EPA's announcement suggests that the regulations will require that, prior to flowback being sent to a treatment plant, the water must be pre-treated to remove contaminants that would not be adequately removed by the treatment plant itself or would possibly interfere with the treatment plant's operations.

When will the regulations be complete?

The EPA expects to gather information and input from stakeholders, draft regulations, and then seek public comments in 2014.

Is flowback always sent to treatment plants?

No.  Environmental regulations prohibit anyone from discharging flowback directly into streams, lakes, or other surface waters, but that does not mean that all flowback is sent to treatment plants. Operators typically do one of three things with flowback.  First, they often dispose of the flowback in underground injection wells, under regulation by the Safe Drinking Water Act.  Second, operators sometimes recycle the flowback for use in future fracturing operations, but such recycling is not always feasible.  Third, operators sometimes send the flowback to wastewater treatment plants

How was the announcement made?

The EPA announced its plans in its Final 2010 Effluent Guidelines Program Plan.  Section 304 of the Clean Water Act requires EPA to publish such a plan every two years to identify sources that discharge water either directly to surface waters or to wastewater treatment plants, and which EPA has selected for new or additional regulations.  The EPA published its preliminary 2010 Plan on December 28, 2009 at 74 Fed. Reg. Notice 68599.

Did EPA announce anything else in its Final 2010 Plan?

Yes, EPA announced plans to develop regulations for other types of discharges, including water produced during coalbed methane extraction.

What information is available from EPA?

Information available on EPA's website includes:

• the EPA's news release regarding the Final 2010 plan
• a "Fact Sheet" regarding the plan
• the Federal Register Notice containing the Final 2010 Plan   
• the Technical Support Document for the Final 2010 Effluent Guidelines Program Plan 
• a page with links to appendices to the technical support document
• a December 2010 Coalbed Methane Extraction Detailed Study Report 
• more information on coalbed methane extraction, and 
• information on shale gas extraction.  

Last week, the Supreme Court agreed to hear two cases in which plaintiffs have sued organizations for alleged human rights violations overseas.   

In Kiobel v. Royal Dutch Petroleum Co., plaintiffs filed a putative class action in the United States District Court for the Southern District of New York against three foreign oil companies (herein, "Shell").  The plaintiffs alleged that Shell provided food and other support to Nigerian troops who violated the human rights of native persons who had protested the environmental effects of Shell's oil exploration and production in Nigeria.  The plaintiffs relied on the Alien Tort Statute as the basis for the court's subject matter jurisdiction.  Judge Kimba Wood dismissed the action, holding that the Alien Tort Statute does not provide jurisdiction for claims against corporations, and a divided Second Circuit Court of Appeals affirmed.    See Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111 (2nd Cir. 2010).  

The Alien Tort Statute was enacted by the first Congress in 1789.  It states that, "The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States."  See 28 U.S.C. §  1350.  The plaintiffs did not point to any treaty as a basis for their claim.  Instead, they asserted that the defendants' actions violated the law of nations.   

The Second Circuit stated that the law of nations involves only those norms that are "specific, universal, and obligatory," and matters of mutual concern between nations.  After reviewing the history of the Nuremberg tribunal and other international tribunals, the court stated that no corporation had ever before been subjected to liability for human rights violations under the law of nations. 

International tribunals have held nations and natural persons liable for a limited number of international crimes, such as "war crimes, crimes against humanity (such as genocide), and torture," but have never imposed such liability on juridical persons, such as corporations, and in some cases have expressly limited their jurisdiction to natural persons.  Liability for such conduct has not been extended to corporations, explained the Second Circuit, "because the moral responsibility for a crime so heinous and unbounded as to rise to the level of an 'international crime' has rested solely with the individual men and women who have perpetrated it."  Thus, individual employees of a corporation potentially could be liable under the law of nations, but not the organization. 

The D.C. Circuit Court of Appeals reached the opposite conclusion on jurisdiction in Doe v. Exxon Mobil, 654 F.3d 11 (D.C. Cir. 2011), holding that federal courts have jurisdiction to hear alien tort claims brought against corporations.  In that case, plaintiffs allege that the security forces of Exxon Mobil subsidiaries committed human rights violations in Indonesia.

The Supreme Court agreed to hear the Second Circuit's Kiobel case along with Mohamad v. Rajoub, 634 F.3d 604 (D.C. Cir. 2011).  In Mohamad, plaintiffs were the widow and sons of a U.S. citizen allegedly tortured and killed by the Palestinian Authority and the Palestine Liberation Organization.  The plaintiffs brought suit in a U.S. federal court against those organizations, as well as various individuals, puporting to assert claims under the Torture Victims Protection Act and federal common law. The district court dismissed the claims against the two organizations, holding that the Torture Victims Protection Act does not authorize claims against organizations, and that he plaintiffs did not have a cause of action under federal common law. 

The two cases will be argued together next year.

Pennsylvania Governor Tom Corbett announced plans to implement numerous recommendations made by the Marcellus Shale Advisory Commission, "including changes to enhance environmental standards, an impact fee, and a plan to help move Pennsylvania toward energy independence."

The recommendations Corbett plans to implement include:

• Increasing well setback distances for Marcellus wells from private water from 200 feet to 500 feet, and to 1000 feet from public water systems
• Increasing setback distances from 100 feet to 300 feet from streams, rivers, ponds, and other bodies of water
• Increasing bond requirements from $2000 to $10,000 for wells
• Increasing blanket bonds (that a company can post in lieu of bonds for individual wells) from $25,000 to $250,000      
• Expanding an unconventional gas operator's "presumed liability distance" for water well contamination from 1000 feet to 2500 feet      
• Extending the duration of presumed liability from 6 months to 12 months after completion of a gas well        
• Giving the Department of Environmental Protection the ability to take quicker action to revoke permits from any operator who consistently violates regulations        
• Doubling the authorized penalties from $25,000 to $50,000 for civil violations of environmental regulations         
• Doubling daily penalties from $1000 to $2000     
• Subjecting wells to an impact fee of $40,000 in the first year, $30,000 in the second year, $20,000 in the third year, and $10,000 in the fourth year.

Under Governor Corbett's plan, 75 percent of the revenue from impact fees would be retained at the local level, with 25 percent going to the State.  Much of the State's share would be dedicated to roads.

Governor Corbett also announced plans to promote energy independence and reduce reliance on foreign oil by helping convert fleets of school buses and mass transit vehicles to the use of natural gas, and developing "Green Corridors" with refueling stations for natural gas vehicles at least every 50 miles.

Governor Corbett's announcement stated that most of the Marcellus Shale Advisory Commission's regulations can be implemented by directives he will grant to executive agencies, but that about a third of the recommendations will require legislative action.  Corbett stated that he would submit a proposal to the legislature in the near future.

Effective October 1, 2011, the United States Department of Interior replaced its Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) with two new bureaus -- the Bureau of Safety and Environmental Enforcement (BSEE) and the Bureau of Ocean Energy Management (BOEM).  The Department of Interior recently announced the reorganization, which the Department described as the culmination of a process to replace the former Minerals Management Service (MMS) with three separate organizations -- BSEE, BOEM, and the Office of Natural Resources Revenue (ONRR), each with separate functions.

The former MMS had responsibility for overseeing the development of resources from the outer continental shelf, as well as the responsibility for regulating and overseeing the safety of such development.  About a month after the April 20, 2010 explosion aboard the Deepwater Horizon, Secretary of the Interior Ken Salazar directed that MMS be split into BSEE, BOEM, and ONRR. 

The reorganization has proceeded in three steps.  The first step was simply the renaming of MMS, which became BOEMRE in June 2010.  Second, ONRR became a separate office within the Department of Interior on October 1, 2010, with responsibility of collecting revenue from mineral leases covering federal lands.  The third step is the split of BOEMRE into BSEE and BOEM. 

The new BSEE has the responsibility for overseeing safety and environmental regulations for oil and gas operations on the outer continental shelf.  Pending completion of a "national search" for a permanent director of BSEE, the new bureau will be led by Michael Bromwich, who lead BOEMRE up until its split.

BOEM will be led by Tommy Beaudreau, and will be responsible for managing the development of resources on the outer continental shelf.