BREAKING NEWS: EPA Withdraws Emergency Order against Range Resources in Parker County, TX

Today, the EPA withdrew its 2010 emergency order against Range Resources.

The original order alleged that 2 of Range's  Barnett Shale gas wells contaminated private wells located in Parker County, Texas, with methane.

Range has been fighting with the EPA before the Texas Railroad Commission in federal court and in the fifth circuit court of appeals over the EPA's emergency orders.

The Texas Railroad Commission ruled in 2011 that Range wasn't responsible for the methane contamination.

Read EPA's letter to Range along with the dismissal filing.

Texas-wide Repercussions on Groundwater Regulation

This is the last post in a 3-part series on "Landowners Prevail in Dispute with Regulators Over Ownership of Underground Water."

Edwards Aquifer does not necessarily portend a parade of litigation, but it likely portends a re-evaluation of how groundwater is allocated to interested stakeholders.

In light of the Supreme Court’s analysis in Edwards Aquifer, the legislature may re-draft existing regulations for the ninety-six Groundwater Conservation Districts.

 The Supreme Court decision indicates that a landowner’s fair share should be determined under a more flexible totality-of-the-circumstances test rather than the current historical use requirement. A revised permitting process may be necessary to protect the interest of newcomers to the permitting process, that is, landowners who do not have an existing permit and may be unable to establish historical use.

Notably, the Texas Railroad Commission (RRC) regulates some of the groundwater used in oil and gas operations in the state. The RRC issues drilling permits to oil and gas operators to drill an injection water supply well, that accesses more saline or brackish water, not fresh water.

When a fresh water well is drilled, other regulations may apply, such as Chapter 36 of the Texas Water Code which governs Groundwater Conservation Districts. Chapter 36 contains exemptions and exceptions for certain activities.

More information regarding regulation of water supplies used in oil and gas activities may be found on the RRC website at Demand for more water continues to escalate, and the recent Texas drought has only exacerbated the scarcity of water supplies for all interested stakeholders.

Because the Supreme Court ruled that landowners have a property interest in the groundwater and state regulators must compensate landowners for unjustifiable “takings,” the legislature is likely to revisit existing regulations to ensure landowners receive their reasonable fair share. 

Revised regulations could lead to a re-allocation of available water under existing permits.

As the legislature, the courts, and the various stakeholders weigh in on the process, the only constant on the horizon is that the status quo is likely to change.

This article was prepared by Barclay Nicholson ( or 713-651-3662) and Marti Cherry ( or 214-855-8094) of the Fulbright's Energy Practice and the firm’s Shale and Hydraulic Fracturing Task Force.

It's Unanimous: US Supreme Court Says EPA Administrative Compliance Orders Subject to Pre-Enforcement Review

In an important decision, the U.S. Supreme Court ruled unanimously today, in Sackett v. Environmental Protection Agency, et al, that the EPA may not use administrative compliance orders (ACOs) issued under the Clean Water Act (CWA) to, in the words of the court, “strong-arm” regulated entities into “voluntary compliance” without the opportunity for judicial review of whether the regulated party is within the EPA’s jurisdiction. Sackett v. EPA, No. 10-1062, slip op. at 9–10 (Mar. 21, 2012).

More specifically, the Supreme Court held that an ACO constitutes a final agency action which may be challenged in federal court pursuant to the Administrative Procedure Act (APA). Id. at 10.


Chantell and Michael Sackett own a residential lot in Bonner County, Idaho, near Priest Lake. In preparation for constructing a house, the Sacketts filled in most of the lot with dirt and rock.

A few months later, the EPA issued an ACO under § 309(a)(3) of the CWA, claiming that the Sacketts had discharged fill material into wetlands on the site without a required dredge/fill permit from the U.S. Army Corps of Engineers in violation of §§ 301 and 502(12) of the CWA. Among other things, the ACO ordered the Sacketts to restore the property to its original condition. 33 U.S.C. § 1319(a)(3); at 3–4.

The Sacketts disputed that wetlands were present on their property and asked EPA for a formal administrative hearing, which EPA denied on the grounds that a formal hearing procedure had not been established for ACOs.

The Sacketts brought suit under Chapter 7 of the APA which provides for judicial review of final agency action for which there is no other adequate remedy. However, the federal district court dismissed the Sacketts’ claim, and the U.S. Court of Appeals for the Ninth Circuit affirmed the district court’s dismissal, on grounds that the CWA precludes judicial review of an ACO prior to EPA enforcement. Id. at 4.

In their briefs to the Supreme Court, the Sacketts argued that they were entitled to a pre-enforcement judicial review of the ACO under the APA and that their Fifth Amendment right to due process had been denied by the lack of a mechanism to challenge the ACO in court before the Sacketts were subjected to legal obligations and “ruinous” penalties.

In response, the EPA argued that an ACO is not reviewable as a final agency action because such orders contain an invitation to enter into informal discussions (which the Sacketts had failed to initiate) and, therefore, the issuance of the ACO is only a step in the agency’s decision-making process.

Of note, EPA has argued to the U.S. Court of Appeals for the Fifth Circuit that an emergency administrative order issued to Range Resources under the SDWA was a final agency action. Brief for Respondent, Range Resources Corp. v. U.S. EPA, No. 11-60040 (5th Cir. filed Jan. 20, 2011).

The EPA also asserted that:

  1. the CWA distinguishes between administrative orders and enforcement orders, with judicial review allowed only for enforcement orders; and 
  2. had the Sacketts actually sought a permit or consultation, they would have obtained a final, appealable determination of whether the property constitutes wetlands.

The Court's Opinion

In the unanimous opinion delivered by Justice Scalia, the Court concluded that: 
  1. a CWA ACO is a final agency action; 
  2. there is no adequate remedy for this final agency action other than review under the APA; and 
  3. the CWA does not preclude APA review.  Accordingly, the Court reversed and remanded to the Ninth Circuit without reaching or even discussing the Sacketts' due process arguments. 
Sackett, slip op. at 10. 

In reaching its decision on whether an ACO is final agency action, the Court noted that the ACO had all of the hallmarks of a final agency action. It marked the consummation of the agency's decision-making process, determined rights or obligations, and legal consequences flowed from the order. 

Further, the Court rejected the EPA's contention that its invitation to informal discussions precludes the ACO from being final agency action, stating that "[t]he mere possibility that an agency might reconsider in light of 'informal discussion' and invited contentions of inaccuracy does not suffice to make an otherwise final agency action nonfinal." Id. at 5–6. 

The Court readily established that there is no adequate remedy to the ACO except for review under the APA by noting: 
  1. that the Sacketts accrue $75,000 in potential liability for every day they wait for the EPA to "drop the hammer"; and 
  2. an action by another agency, here the possible issuance of a permit by the U.S. Army Corps of Engineers, does not ordinarily provide an adequate remedy for an action taken by another agency. 
Id. at 6.  

Finally, the Court found that nothing in the CWA expressly precludes judicial review under the APA.  The Court also noted that the APA creates a presumption in favor of judicial review of an agency action which could be overcome by inferences of intent drawn from the statutory scheme as a whole.  

However, the Court found no language in the CWA that created an inference that Congress intended to preclude ACOs from judicial review and specifically rejected the principle that "efficiency of regulation conquers all." Id. at 7–8.

The Supreme Court reversed the judgment of the Court of Appeals and remanded the case for further proceedings. Id. at 10. 

This means that the Sacketts may challenge EPA's authority to regulate their land under the CWA.

It is important to note that the Supreme Court's opinion did not address whether there are wetlands on the Sacketts' property, whether the Sacketts had been denied due process, or whether a regulated party may dispute the terms and provisions of an ACO in a pre-enforcement action. 

As Justice Ginsberg and Justice Alito pointed out in their concurring opinions, these are issues for another day. 

This article was prepared by Patricia Finn Braddock ( or 512 536 4547) and Bob Greenslade ( or 512 536 5241) of Fulbright's Environmental Law Practice, Climate Change Practice and Energy Practice

Is Permitting Process Protecting Texas Landowners’ Groundwater Rights?

Photo courtesy of the Texas Dept. of Agriculture
This is the second post in a 3-part series on "Landowners Prevail in Dispute with Regulators Over Ownership of Underground Water."

The Texas Supreme Court recently confirmed that state regulations cannot unjustifiably deprive landowners of their fair share of the groundwater beneath their land.  In Edwards Aquifer Authority v. Day, the Court confirmed that landowners own and have a constitutionally-protected property right to their fair share of the groundwater “in place” under their land, a principle developed under the common law and Texas statutory law.  While the state may control and manage Texas water supplies by permitting its use, the Court held that state regulators may not deprive landowners of all beneficial use of the groundwater below their property without adequate compensation.

The existing permitting process may be inadequate to protect landowners’ groundwater rights.

The Court addressed whether a taking occurred under the Authority’s groundwater permitting process.  Whether the Authority’s current permitting process adequately protects landowners’ property interest to their fair share of the groundwater is open to debate, but the Supreme Court appears to suggest that it does not.

The Authority and its regulations, which are governed by Chapter 36 of the Texas Water Code, were created to safeguard public safety and welfare, to prevent waste, and to afford each owner a fair share of a common reservoir.

The regulations allow the Authority to issue permits to those who seek to withdraw water from the Edward Aquifer up to a cap of roughly 572,000 acre-feet per year.  In issuing permits, the Authority is required to give preference to “existing users” (those who operated a well for three or more years prior to 1993), considering only the amount of groundwater put to beneficial use without waste.

Under this type of “historical use” requirement, a landowner could be deprived of all use of groundwater, other than a small amount for domestic or livestock use, merely because such landowner did not use water during the historical period.

The Authority defended the “use-it-or-lose-it” approach to issuing permits, arguing that it protects investments that landowners made in developing groundwater resources.

But the Supreme Court indicated that this approach incentivizes landowners to pump as much water from the reservoir as possible in order to preserve their right to the water in the future, whereas non-use of groundwater would conserve water resources.

The Court suggested that a broader approach than the current “historic use” requirement in issuing permits may be needed to protect a landowner’s property right to the water in place beneath the land.

The Supreme Court did not find that the Authority’s conduct in denying a 700 acre-feet permit to the landowners in Edwards Aquifer constitutes a taking.

Instead, the Court remanded the two landowners’ constitutional takings claim to the trial court, cautioning that “a landowner cannot be deprived of all beneficial use of the groundwater below his property merely because he did not use it during the historical period and supply is limited.”

This article was prepared by Barclay Nicholson ( or 713-651-3662) and Marti Cherry ( or 214-855-8094) of the Fulbright's Energy Practice and the firm’s Shale and Hydraulic Fracturing Task Force.

US Supreme Court Issues Highly Anticipated Sackett Opinion on EPA Actions

The United States Supreme Court heard oral argument in Sackett v. EPA on January 9, 2012. And today, just over two months later, the Court has already issued its unanimous opinion, authored by Justice Scalia. For a full copy of the opinion, please click here. The Sackett decision is a highly anticipated one, as it may impact other actions that the EPA has taken regarding hydraulic fracturing activities.

Sackett involves a couple, the Sacketts, who own a 0.63-acre lot in Idaho, part of which they filled in with dirt and rock in preparation for building a home. The EPA issued a compliance order against the Sacketts, alleging that their land was a wetland subject to the Clean Water Act (“CWA”) and that the Sacketts violated the CWA by filling in their property without a permit. The order required the Sacketts to remove the material and restore their land to its original condition, and warned that violation of the order may subject the Sacketts to civil penalties of up to $75,000 per day.

The Sacketts filed suit in U.S. District Court, challenging the finding that their land was subject to the CWA and seeking declaratory and injunctive relief. The Sacketts brought suit under Chapter 7 of the Administrative Procedure Act (APA) which provides judicial review of “final agency action” for which there is no adequate remedy other than APA review. After the District Court granted the EPA’s motion to dismiss for lack of subject-matter jurisdiction, the Sacketts appealed. The Ninth Circuit upheld the district court’s dismissal, concluding that the APA “precludes pre-enforcement judicial review of compliance orders,” and the U.S. Supreme Court granted certiorari.

The Supreme Court’s opinion determines that the EPA’s compliance order constitutes a final agency action. The Court considered that through its order the EPA imposed legal obligations on the Sacketts, limited their rights, exposed them to penalties, and marked the consummation of the agency’s decision-making process. The Court also determined that the Sacketts had no other adequate remedy, considering it had to either comply, pay the imposed penalties, or wait for the EPA to initiate suit while the Sacketts incurred the penalties. Finally, the Court noted that nothing in the CWA precludes judicial review under the APA or otherwise.

Having held that the EPA’s compliance order constituted final agency action for which there was no other adequate remedy, the Court reversed the Ninth Circuit and remanded the case.

Fulbright will be issuing a client alert in the near future with a more thorough review of the case and the alert will be posted here as well.

This article was prepared by Barclay Nicholson ( or 713-651-3662) and Brain Albrecht ( or 713-651-3584) of the Fulbright's Energy Practice and the firm’s Shale and Hydraulic Fracturing Task Force.

Landowners Prevail in Dispute with Regulators Over Ownership of Underground Water

Image courtesy of the
Texas Groundwater Protection Committee
This is the first in a 3-part series on "Landowners Prevail in Dispute with Regulators Over Ownership of Underground Water."

The Texas Supreme Court recently confirmed that state regulations cannot unjustifiably deprive landowners of their fair share of the groundwater beneath their land.

In Edwards Aquifer Authority v. Day, the Court confirmed that landowners own and have a constitutionally-protected property right to their fair share of the groundwater “in place” under their land, a principle developed under the common law and Texas statutory law.

While the state may control and manage Texas water supplies by permitting its use, the Court held that state regulators may not deprive landowners of all beneficial use of the groundwater below their property without adequate compensation.
Landowners possess an interest in the groundwater in place that is protected by the Texas Constitution
Edwards Aquifer involves a dispute between the Edwards Aquifer Authority (Authority) and two landowners who applied for a permit to pump 700 acre-feet of water per year from the Edwards Aquifer.

When the Authority granted a permit for only 14 acre-feet per year, the landowners filed suit, claiming the Authority confiscated their water without compensation in violation of the Texas Constitution (“takings claim”).

The Authority defended their decision, arguing the landowners owned water that was produced according to the rule of capture.  But the landowners did not have a constitutionally-protected, vested interest in the groundwater “in place” beneath the soil.

As a result, the Authority claimed that its denial of a permit did not constitute a “taking” because landowners did not actually own the underground water that was not produced.

Although trial court agreed with the Authority and denied the landowners’ constitutional takings claim, the Court of Appeals reversed, finding the landowners possessed a vested, constitutionally-protected right to the groundwater in place before it is produced.

The Supreme Court agreed with the Court of Appeals. Under the rule of capture, a Texas rule that applies to water as well as oil and gas, “a landowner is the absolute owner of groundwater flowing at the surface from its well, even if the water originated from beneath the land of another.”

Thus, water at the surface of a well belongs to the owner of the well.  However, the rule of capture does not answer who owns the water that remains underground, that is, the “water in place.”

Precisely who owns the water in place is important because the Authority, through legislation, has the right to regulate the use of underground water to provide for the public good and preserve the environment.  If the landowner owns the water in place, the landowner has a vested property right in the water and may be entitled to compensation for governmental “takings” without adequate compensation.  But if the landowner does not own the water until it reaches the surface, then no taking occurs if the Authority refuses to issue a permit to landowners who fail to meet the applicable regulations.

The Supreme Court ruled that landowners have absolute title to the water in place beneath their land.  Although the landowners’ rights are still subject to the state’s police power, the Supreme Court found that the landowners’ “groundwater rights are property rights subject to constitutional protection.

This article was prepared by Barclay Nicholson ( or 713-651-3662) and Marti Cherry ( or 214-855-8094) of the Fulbright's Energy Practice and the firm’s Shale and Hydraulic Fracturing Task Force.

Footnote: In 2011, the Legislature amended section 36.002 of the Texas Water Code, recognizing that a landowner “owns the groundwater below the surface of the landowner’s land as real property. See TEX. WATER CODE § 36.002 (West 2012). The Edwards Aquifer Court noted that by specifying the ownership of groundwater as “real property,” the Legislature appears to mean ownership in place.

Preliminary Report on Link Between Earthquakes and Ohio Disposal Well

As previously reported in Fulbright's Fracking Blog post, "Injection Wells and Their Possible Link to Seismic Activity," earthquakes near Youngstown, Ohio--including a 4.0 New Year’s Day quake--sparked national interest in early 2012.

The underground injection of fluids in Class II deep disposal wells, not oil and gas drilling or the hydraulic fracturing production process, were speculated to have caused the earthquakes.

On March 9, 2012, the Ohio Department of Natural Resources (“ODNR”) released a preliminary report regarding the relationship between recent earthquakes in the Youngstown, Ohio area and the Northstar 1 Class II disposal well.

According to the report, a “number of coincidental circumstances appear to make a compelling argument” that the earthquakes around Youngstown were induced.

The report indicates that evidence gathered by state officials suggest that fluid from the Northstar 1 disposal well “intersected an unmapped fault in a near-failure state of stress causing movement along that fault.” ODNR News Release, Mar. 9, 2012.

However, the report does not definitively conclude that the Northstar 1 disposal well caused the Ohio earthquakes.

Rather, the ODNR plans to conduct further analysis and detailed modeling of the disposal well and the surrounding geology to establish a better understanding of what may have induced the seismic activity.

Concurrent with the issuance of the preliminary report, the ODNR issued new regulatory standards for the transportation and disposal of brine generated from oil and gas activities.

In addition, the ODNR has started the process of identifying a third party expert with experience in seismicity, induced seismicity and Class II injection wells to conduct an independent review of all available technical information.

This article was prepared by Heather M. Corken ( or 713 651 8386) and Kristen Roche ( or 713 651 5303) from Fulbright's Environmental Law Practice Group.

Ohio Issues New Standards for Transportation and Disposal of Brine

On March 9, 2012, the Ohio Department of Natural Resources (“ODNR”) announced new standards for the transportation and disposal of brine generated from oil and gas activities. According to the ODNR, the new regulatory framework makes Ohio’s rules for brine monitoring and disposal among the nation’s toughest.

The new standards come at the heels of the ODNR’s research regarding the alleged link between seismic events and brine disposal wells.  The standards will apply to new Class II disposal well permit applications and existing disposal wells, if applicable.

The safeguards “prohibit any new wells to be drilled into the Precambrian basement rock formation; mandate operators submit extensive geological data before drilling; and implement state-of-the-art pressure and volume monitoring devices including automatic shut-off switches and electronic data recorders.”

In addition, brine haulers must now install electronic transponders to ensure that shipments are monitored from “cradle to grave.”

The EPA delegated regulatory authority over underground disposal wells under the federal Safe Drinking Water Act to Ohio in 1983.  The proposed new standards range from requiring a complete set of geophysical logs to requiring actual installation of pressure monitoring systems, automatic shut-off systems, and data recording systems.

All of the new requirements will be considered in the Class II disposal well permitting process and “will be implemented as attached permit conditions until they are either codified in law or written into administrative rule, which carries the weight of law.”

This article was prepared by Heather M. Corken ( or 713 651 8386) and Kristen Roche ( or 713 651 5303) from Fulbright's Environmental Law Practice Group.

Agency Directors Defend Budget Proposals in front of House subcommittees

U.S. Geological Survey

On Wednesday, March 6, 2012, Marcia McNutt, Director of the U.S. Geological Survey, appeared before the House of Representatives Subcommittee on Interior, Environment and Related Agencies to defend a proposed $1.1 billion budget, a $34.5 million increase over FY 2012.

USGS is proposing a 70 percent increase in funding to study the impacts of hydraulic fracturing, which would allow the organization to contribute $18.6 million to a research effort in collaboration with the Environmental Protection Agency and the Department of Energy.

In her opening remarks, McNutt stated that the collaborative effort would “address the highest priority challenges associated with safely and prudently developing unconventional natural gas resources.”

Read U.S. Geological Survey Director Marcia McNutt’s entire opening remarks.

U.S. Department of Energy

Steven Chu, U.S. Department of Energy Secretary, recently requested a $27.2 billion budget for fiscal year 2013.

On Tuesday, February 28, 2012, Chu defended his budget in front of members of the House of Representatives’ Energy and Water Development Subcommittee.

The proposed budget includes $12 million for the Department to contribute to an initiative between the DOE, the Department of Interior, and the Environmental Protection Agency to research and minimize potential harmful impacts of hydraulic fracturing.

Chu denied that he was looking for a way to shut down fracturing operations and said that he is focused on ensuring hydraulic fracturing is done in an environmentally responsible manner.

Additionally, he noted that “President Obama is committed to developing our oil and gas resources in a safe and sustainable manner. Last year, our oil import dependence was at its lowest level in 16 years, oil production reached its highest level in eight years and natural gas production set a new record.”

Read U.S. Dep’t. of Energy Secretary Steven Chu’s opening remarks on the DOE’s proposed budget.


Also on Tuesday, February 28th, Lisa Jackson, the head of the EPA, defended President Obama’s proposed $8.3 billion budget for the EPA before two subcommittees of the House Committee on Energy and Commerce.

Subcommittee members questioned Jackson on her opinions on hydraulic fracturing.

Jackson noted the necessity of hydraulic fracturing to access the country’s natural gas resources, but stated that federal regulators still need to study the process’s impact on the environment.

The budget sets aside $45 million for the EPA, the U.S. Geological Survey, and the DOE to study the impacts of hydraulic fracturing in order to develop new regulations, including $14 million dedicated to studying shale gas development.

In Jackson’s opening remarks to the subcommittees, she stated that the budget “continues EPA's ongoing congressionally directed hydraulic fracturing study, which we have taken great steps to ensure is independent, peer reviewed and based on strong and scientifically defensible data.”

Read the Head of the EPA Lisa Jackson’s entire opening remarks.

API Believes One Agency Should Take Lead on Hydraulic Fracturing Regulations

The American Petroleum Institute (API) stated that it was advocating for the federal government to designate a lead agency on regulations dealing with hydraulic fracturing.

According to Kyle Isakower, API’s Vice President of Regulatory and Economic Policy, a wave of possible new federal rules on shale oil and natural gas development could threaten its expansion and the increased jobs and revenue it promises to generate.

Mr. Isakower stated to reporters that there are as many as 10 departments and agencies that are weighing in on regulations aimed at hydraulic fracturing.

“To my knowledge, there’s not a precedent for 10 agencies looking at a single issue like this” he stated on the call.  Mr. Isakower went on to say, “we believe there should be a lead agency looking at hydraulic fracturing and associated issues that coordinates with other agencies on this matter.”

“The administration has been advocating more oil and natural gas development. It has also called for streamlining regulations. We believe the administration could do much to achieve both objectives by taking a critical look at what its various agencies are proposing to do on hydraulic fracturing and shale energy development.”

As previous blog posts have discussed, proposed regulations on hydraulic fracturing have emerged from the U.S. Environmental Protection Agency (EPA), the U.S. Department of the Interior, the U.S. Department of Energy (DOE), the U.S. Department of Health and Human Services, the U.S. Pipeline and Hazardous Materials Safety Administration, and the U.S. Securities and Exchange Commission.

Additionally, many states have passed or have introduced legislation that would regulate hydraulic fracturing in some manner.

This article was prepared by Barclay Nicholson ( or 713-651-3662) of Fulbright's Litigation and Energy Practice Group and member of the Firms' Shale and Hydraulic Fracturing Task Force.

Niagara Falls, NY Issues Ban on Hydraulic Fracturing

On March 5, 2012, the City Council of Niagara Falls, New York, unanimously approved an ordinance banning hydraulic fracturing in Niagara Falls and the storage, transfer, treatment or disposal of water generated from natural gas exploration and production activities in the city’s wastewater treatment plant.

Ironically, the Marcellus Shale does not extend under the City of Niagara Falls.

Therefore, the ban on hydraulic fracturing likely will have little or no impact on natural gas drilling in the area.

However, the Niagara Falls Water Board previously had hoped to increase revenues by treating flowback and produced water generated in the Marcellus Shale region in the city’s wastewater treatment plant.

The City Council also unanimously passed a resolution titled “Dangers of Hydraulic Fracturing in New York State," which supports a ban on hydraulic fracturing throughout the State of New York.

The resolution will be sent to New York Governor Cuomo for consideration.  The City of Buffalo, New York is expected to approve a similar resolution today.

This article was prepared by Heather M. Corken ( or 713 651 8386) from Fulbright's Environmental Law Practice Group and Shale and Hydraulic Fracturing Task Force.

Oil and Gas NSPS and NESHAP Rule Sent for White House Review

On Friday, March 2, 2012, the EPA sent the White House a revised draft of its long-delayed expansions to the NSPS and NESHAP standards for the oil and gas sector.

This is the last step in the rule-making process prior to issuance and publication, so it appears that the EPA may actually be on schedule to issue the standards by April 3, 2012, the revised deadline in the agency’s consent decree with environmental plaintiffs groups.

This is a highly significant rule for the oil and gas industry because the rulemaking expands the definition of the oil and gas source category to, essentially, all upstream operations, including drilling and hydraulic fracturing completions.

The rule would require “green completions” for the hydraulic fracturing of wells in established fields and flaring for completions on exploratory wells.  Other requirements address such equipment as tanks and glycol units and even pneumatic controls.

The EPA’s proposal to expand the oil and gas source category has also given rise to concerns that the EPA believes drilling and fracturing emissions should be authorized in New Source Review (NSR) permits.

If the agency can mandate controls on fracture flowbacks under NSPS, what if anything prevents regulation of these emissions under NSR?

At the (highly criticized ) VOC emission rates represented in the proposal, many fracturing completions would not qualify for the exemptions or permits by rule that, in most states, have long been assumed to be sufficient authorizations for new oil and gas wells.

Also important, there may, for a considerable period of time, be insufficient equipment on the market to meet the “green completion” requirements in the proposed rule.

If this requirement takes effect without a phase-in period, fracking completions could slow to a trickle.
Even worse, the EPA could also implement the rule with NSPS applicability based on the August 2011 publication of the proposal, resulting in retroactive noncompliance for a number of existing facilities.

The EPA received a substantial number of public comments on the proposed rule, including comments from the oil and gas industry and state regulatory agencies.

Many of these comments conceded that the various controls concentrated on applicability dates were technically feasible, but argued that it would take time for the oil and gas industry to implement them.

The EPA also held public hearings on the proposed rule in Pittsburgh, Denver, and Arlington, Texas in September 2011.  The extent to which the EPA has addressed the concerns raised during the public comment period in the draft rule sent to the White House remains to be seen.

This article was prepared by Bob Greenslade ( or 512 536 5241) from Fulbright's Environmental Law Practice Group.

Colorado Governor Creates Hydraulic Fracking Task Force

On February 29, 2012, Colorado Governor John Hickenlooper issued an executive order on the intersection between state and local regulations concerning oil and gas development.

This executive order was, among other reasons, executed “in large part due to horizontal drilling combined with hydraulic fracturing that together are launching new shale oil and gas plays in counties and municipalities.”

Under the Colorado Oil and Gas Conservation Act, the Colorado Oil & Gas Conservation Commission (“COGCC”) has broad authority to promulgate regulations concerning oil and gas development.

Counties and municipalities, on the other hand, when regulating the use of land within their boundaries, have statutory authority to balance basic human needs and environmental concerns.

Increased oil and gas activity with new technology has led counties and municipalities to revisit their regulations.

The executive order creates a task force, comprised of state and local officials, to:
identify and strive to reach agreement on mechanisms to work collaboratively and coordinate state and local jurisdiction regulatory structures for the purpose of benefiting Colorado's economy and protecting public health, the environment and wildlife, and to avoid duplication and conflict of state and local jurisdiction regulations of oil and gas activities and to help foster a climate that encourages responsible development.
Among other items, the task force is to review regulations and issues regarding setbacks, floodplain restrictions, protection of wildlife and livestock, noise abatement, operational methods employed by oil and gas activities, air quality and dust management, traffic management and impacts, and fees, financial assurance, and inspection.

The goal is to clarify and coordinate regulatory jurisdiction over these issues and might include letters of cooperation and consent between state and local jurisdictions or changes to existing laws and regulations.

A more detailed Fulbright client briefing will follow soon.

This article was prepared by Jennifer Cadena ( or 303 801 2755) of Fulbright's Energy Practice Group.