P. 6 ~ Continued - Trends emerge on hydraulic fracturing litigation

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Despite proposed federal regulations, many states have instituted their own regulations of the fracturing process. First, and most commonly, states have begun enacting disclosure laws, requiring fracturing operators to list all of the chemicals they intend to use. Those states that create exemptions for companies that believe their fracturing compounds are trade secrets, such as Arkansas, nevertheless still require a disclosure of the chemical family name, and the volume of such chemicals that the company intends to use.

At this time, at least 28 states have adopted such laws, of varying complexity, and it is likely that more will soon follow.

In addition to disclosure laws, the SWDA bestows regulatory authority on the states to manage their own underground injection control programs; thus state agencies are administering at least some portions of the SWDA in their states. But as a response to the recent negative publicity of hydraulic fracturing, some states have taken an even more firm-handed approach.

One of the harshest responses has been in New York, possibly because New York residents are less accustomed to fracturing operations than those who reside in Texas or possibly because the population density places drilling apparatuses close to residential areas.

Either way, pursuant to an executive order by Gov. David Patterson in December 2010, the New York Department of Environmental Conservation was required to draft an environmental impact statement on fracturing, and no permits for high-volume wells may be issued until it is finished.

This EIS was recently released for public comment and is more than 1,000 pages long. This is simply the first step in a longer process before finalizing the EIS. Only then can the process of applying for permits begin, and even then, the first permits likely will be challenged by several special interest groups.

New York also has the most restrictive local ordinances. In Buffalo, for example, the local government adopted a ban on fracturing within its territory.

Other states have undertaken more unofficial efforts to frustrate the spread of hydraulic fracturing operations. In Maryland, the state indefinitely stopped authorizing permits in 2009, while it waits on the legislature to debate the merits of the process.

Additionally, though few have gone so far as Buffalo, many other municipalities also have flexed their regulatory might with respect to fracturing, enacting regulations to preclude nighttime operations, or imposing limits on noise, dust, and other nuisance creating activity.

Resource importance

Despite the challenges facing the natural gas industry on numerous fronts, the overwhelming importance of developing natural shale gas reserves cannot be overstated. Issues ranging from decreasing unemployment rates and increasing economic activity to helping the US become more energy independent and strengthening national security are tied to shale gas development.

Recently, several studies extolled the benefits of developing the vast reserves of US shale gas. It is hoped that these new studies will add to the dialogue that must continue on the exploration and the development of this important and abundant natural resource.

References

1. US Fossil Fuel Resources: Terminology, Reporting, and Summary, Congressional Research Service, Mar. 25, 2011, http://www.fas.org/sgp/crs/misc/R40872.pdf.

2. Shale Gas Gets Support from MPs in New Report, The British Parliament, May 23, 2011, http://www.parliament.uk/business/committees/committees-a-z/commons-select/energy-and-climate-change-committee/news/new-report-shale-gas/.

3. Dillard, S.C., and Nicholson, B., Duke University Releases Study Reporting Methane Contamination in Areas of Natural Gas Extraction, The International Law Firm of Fulbright & Jaworski, May 11, 2011, http://www.fulbright.com/index.cfm?fuseaction=publications.detail&pub_id=4865&site_id=494&detail=yes.

4. Environmental Consequences of Fossil Fuel Exploration, The Energy Institute, University of Texas at Austin, May 9, 2011, http://energy.utexas.edu/research/fossil/.

5. Casey, R., and Schumer, C.S., 1215: Fracturing Responsibility and Awareness of Chemicals Act, 111th Congress, available at: http://www.govtrack.us/congress/billtext.xpd?bill=s111-1215.

The authors