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Recent Developments in Federal and State Efforts to Regulate Hydraulic Fracturing

by James A. Pardo and Brandon H. Barnes

Obama Signs Executive Order Creating Hydraulic Fracturing Task Force

President Obama’s position that hydraulic fracturing must be conducted in a "safe and responsible" manner has been interpreted as suggesting the need for increased federal regulation of fracing. Indeed, various federal agencies have stepped forward with proposed regulations targeting air emissions, chemical disclosures, wastewater handling and other fracing-related issues.  Many natural gas stakeholders have expressed concern about this building wave of federal regulation, from different agencies and regulators, and the potential that this will result in inefficient, burdensome and even conflicting federal-versus-federal and federal-versus-state regulatory requirements. 

Perhaps in response to these concerns, on April 13, President Obama signed an executive order creating a task force of 13 federal agencies to "coordinate the efforts of Federal agencies responsible for overseeing the safe and responsible development of unconventional domestic natural gas resources and associated infrastructure and to help reduce our dependence on oil …." While some in the oil and gas industry have applauded the creation of this task force for its potential to streamline and coordinate federal activity on fracing, stakeholders will keep a close eye on the path taken by the Obama Administration.  Since 2005, the bulk of hydraulic fracturing oversight has come from state regulatory authorities – who typically are better positioned to deal with the unique regional and local issues often presented by oil and gas development. 

Requiring coordination among 13 different federal agencies may be a positive development. However, the precedent of federal regulation – and the possibility that coordination may lead to calls for more regulation in the future – may be one that stakeholders will be less than enthusiastic about, particularly after the Environmental Protection Agency wraps up its multi-year study of fracing’s impacts on groundwater in 2014.

Colorado Governor’s Task Force Releases Draft Report

A task force established by Colorado Governor John Hickenlooper recently released a draft report on strategies regarding state and local development and regulation of oil and gas activities.  The task force determined that "drawing bright lines between state and local jurisdictional authority was not realistic or productive," thus refusing to find that local authority is completely preempted by the Colorado Oil & Gas Act.  The group also concluded that no new laws are necessary at this time, but that consideration of Colorado’s oil and gas rules related to setbacks and air quality are topics for further discussion.  

The task force is comprised of representatives from counties, municipalities, the state, industry, civic organizations and the general public.  The Governor’s task force was established only a few days after two New York trial courts rejected separate legal challenges to local zoning amendments that banned hydraulic fracturing – handing victories to those who advocate for "local" (not state) control over whether fracing is allowed.  Fracing supporters in Colorado had hoped that the task force report would conclude (or recommend) that state regulation preempted local ordinances like those in New York.  Fracing opponents had hoped for [...]

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Texas Commission Requires Public Disclosure of Fracking Chemicals

by Bethany K. Hatef

The Railroad Commission of Texas now requires the disclosure of chemicals used for hydraulic fracturing (fracking) of oil and natural gas deposits.  The disclosure rule, adopted on December 13, 2011, and codified at Rule 3.29 of Title 16 of the Texas Administrative Code, implements fracking disclosure legislation that the state enacted earlier in 2011.  Arkansas, Colorado, Louisiana, Montana, Michigan, Pennsylvania and Wyoming likewise regulate fracking through legislation or regulation.  Given the increasing use of fracking techniques worldwide and heightened public scrutiny of industry practices, an increasing number of states are expected to adopt comparable laws and regulations.

The rule applies to fracking treatments of wells in Texas for which the Railroad Commission has issued an initial drilling permit on or after February 1, 2012.  The rule defines “fracking treatment” as the stimulation of a well by applying fracking fluid under pressure to create fractures in a target geologic formation in order to enhance oil and natural gas migration and production.  The rule requires the supplier (the entity who provides additives for use in fracking treatments) or the service company (the entity that performs fracking treatments) to provide the well operator (the person responsible for the physical operation and control of a well) with the identity of each chemical ingredient intentionally added to the fracking fluid within 15 days of completing fracking treatments.

The rule also imposes new requirements on well operators.  On or before the date a well completion report is submitted to the Railroad Commission, the operator must complete a Chemical Disclosure Registry form and upload it on the Chemical Disclosure Registry, known as FracFocus, a publicly accessible national fracking chemical registry website.  This form includes information about the chemicals and volume of water used in a fracking treatment, as well as other well-related information.  Not required to be disclosed are chemicals: (1) not disclosed to the supplier, service company or operator; (2) not intentionally added to the fracking treatment; (3) that occur incidentally or are otherwise unintentionally present; and (4) eligible for trade secret protection.

A supplier, service company or operator is generally not required to publicly disclose trade secrets unless the Texas Attorney General or a court determines that the information is not entitled to such protection.  If an entity withholds information about a chemical ingredient, it must still disclose specific information to the Commission.  Only certain individuals may challenge a claim of trade secret protection, and if any health professional or emergency responder is given trade secret information, that person must keep it confidential, with limited exceptions for diagnostic or treatment purposes. 

Violations of the rule may subject a person to monetary penalty and/or other penalties or other sanctions and/or lead to revocation of a well’s certificate of compliance (a certificate from the Railroad Commission stating that the well operator has complied with applicable rules).

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