Maryland state senators propose legislation targeting hydraulic fracturing

Senators Robert A. Zirkin and Jamie Raskin have introduced legislation aimed at drastically reducing hydraulic fracturing operations in Maryland. The bill, Senate Bill 458, would hold parties engaging in hydraulic fracturing operations strictly liable for injuries, deaths, or other losses caused by the fracking activities.

A plaintiff relying on Senate Bill 458 would have a rebuttable presumption that the defendant was jointly and severally liable for the plaintiff’s damages deriving from the hydraulic fracturing operations and the proximate cause for those damages. The bill would be limited to plaintiffs living in “a certain presumptive impact areas.”

Senate Bill 458 would also strip companies of several defenses and increase the insurance requirements currently imposed on parties engaging in hydraulic fracturing operations. Senate Bill 458 proposes to prohibit defendants from asserting that they fully complied with applicable laws and standards. Moreover, the bill purports to render void any contractual agreements in which the plaintiff may have waived claims against the defendant.

Senate Bill 458 would also set forth the awards plaintiffs should receive in certain cases and permit plaintiffs to recover economic as well as noneconomic damages. In fact, the bill triples a plaintiff’s award if the defendant has violated a state or federal law or is guilty of gross negligence or willful misconduct. Additionally, the bill would heighten the insurance requirements imposed on parties engaging in hydraulic fracturing. Under Senate Bill 458, information relating to the chemical composition of fracking fluids would not be eligible for trade secret protection.

Zirkin has expressed his desire to enact a ban on hydraulic fracturing. In fact, Zirkin has previously sponsored a bill that would have banned fracking in the state. That earlier bill was easily defeated. Many members of the oil and gas industry have stated that Senate Bill 458 would constitute a ban on hydraulic fracturing.

Read the proposed bill.

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This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.

EPA reviews states’ solid waste management regulations for oil and gas operations

In an April 1, 2014 memorandum, the U.S. Environmental Protection Agency (EPA) summarized state regulatory programs concerning the management of solid waste from oil and natural gas exploration, development and production (E&P) operations.

In reviewing each state’s regulations, the EPA focused on surface storage and disposal facilities managing produced waters, drilling muds, drilling cuttings, hydraulic fracturing return fluids, and various other waste liquids and materials intrinsically related to oil and gas E&P.

The EPA found that the state regulations were primarily concerned with the “technical requirements associated with the design, construction, operation, maintenance, closure, and reclamation of surface pits, ponds, lagoons or tanks, as well as financial assurance requirements associated with such facilities.”

Among the common parameters are state requirements for liners in pits and impoundments, secondary containment requirements for tanks, set-back requirements, and various inspection requirements. However, the EPA did find gaps in regulations relating to groundwater monitoring, leachate collection, air monitoring, and waste characterization.

Overall, with the review, the EPA had developed an understanding of the wide-range of state regulatory programs currently in place in the twenty-six (26) oil and gas producing states covered in the summary.

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This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.

U.S. Department of Transportation meets with oil and rail industry leaders to discuss transport safety issues

With the recent December 30, 2013 derailment of tanker cars carrying oil in Casselton, North Dakota, as well as other 2013 incidents  in western Minnesota, Baltimore, Alabama, and at three sites in Canada (Gainfield, Landis, and Lac-Mégantic, where 47 people were killed when  an unattended 72-car freight train derailed in the center of town), the U.S. Department of Transportation (DOT) met with representatives from the oil and railroad industries to discuss transport safety issues relating to crude oil. 

At the meeting on January 15, 2014, representatives from the American Petroleum Institute (API) and the Association of American Railroads (AAR) reportedly agreed to take steps to avoid derailments, to work on a speed reduction plan, and to re-route trains around high-risk areas. According to the AAR representative, 27 risk factors, including population density, volume of hazardous materials being transported, and traffic density,  are always considered when routing trains. The API representative stressed the importance of having strong rail cars to transport the crude oil. 

On September 6, 2013, in the Federal Register, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published a proposed rule concerning “Hazardous Materials: Rail Petitions and Recommendations to Improve the Safety of Railroad Tank Car Transportation (RRR).This proposed rule would impose additional requirements  for DOT Specification 111 tank cars used to transport Packing Group (PG) I and II hazardous materials. PHMSA has indicated that the proposed rule relating to the construction of rail tanker cars will not be finalized until at least January 2015.

With the volume of produced oil rising faster than can be moved by pipeline, railroads are being used more and more to transport oil products to processing facilities – and with that increase, come increasing concerns about the safety of transporting crude oil by rail.

In early January,  PHMSA and the Federal Railroad Administration issued a safety alert “to notify the general public, emergency responders, and shippers and carriers that recent derailments and resulting fires indicate that the type of crude oil being transported from the Bakken region may be more flammable than traditional heavy crude oil.”  For additional information, see our prior blog entitled “Safety alert relating to flammability of North Dakota Bakken crude oil transported by rail.”

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This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.

Chesapeake Appalachia, LLC, to pay large CWA 404 civil penalty

The U.S. Environmental Protection Agency and the Department of Justice announced on December 19, 2013, that Chesapeake Appalachia, LLC, will pay a $3.2 million civil penalty and spend an EPA-estimated $6.5 million to restore 27 sites damaged by discharges of fill material into streams and wetlands and to implement a Clean Water Act (CWA) 404 compliance plan at the company’s natural gas extraction sites in West Virginia.

Of the 27 sites, four are freshwater impoundments, one is a compressor station, six involve operations related to vertical wells, and the remaining 16 sites involve operations related to horizontal drilling.

In addition to a civil penalty of $3.2 million, the Consent Order requires restoration where feasible, mitigation, employee training for five years in West Virginia, Virginia, Maryland, and Pennsylvania, and integration of a CWA Section 404 compliance protocol into its operating procedures in West Virginia.

According to EPA’s press release, the civil penalty is one of the largest ever imposed for violations of CWA 404. The penalty will be divided between the United States and West Virginia. More information, including the Consent Order, is available on EPA’s web site.

The consent decree, lodged on December 19 in the Northern District of West Virginia, is subject to a 30-day public comment period and court approval.

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This post was written by Janet McQuaid (janet.mcquaid@nortonrosefulbright.com or +1 724 416 0427) from Norton Rose Fulbright's Energy Practice Group.