For example, the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq., the federal statute that governs solid- and hazardous-waste disposal, exempts oil and gas exploration and production wastes from regulation as hazardous wastes. In addition, the Safe Drinking Water Act at 42 U.S.C. §300h(d)(1)(B)(ii), exempts fracking (except fracking with diesel fuels) from its underground injection control program.
Fracking thus currently is exempt from federal regulation under some of the major environmental laws. But this is not to say that fracking is entirely exempt from federal regulation. The Environmental Protection Agency has issued air pollution standards at 40 C.F.R. Part 60 that apply to fracked natural gas wells, and the federal government may seek to extend its authority over fracking in the future. This area bears watching.
Potential water contamination tends to be the focus of state environmental regulation of fracking. There are three potential routes to contamination: 1. fractures from fracking operations reaching the groundwater (very unlikely, given the rock overburden); 2. faulty or insufficient surface casing or cement jobs; and 3. surface contamination.
Texas has responded to these potential environmental concerns in a number of ways. The Railroad Commission has proposed an extensive set of amendments to its Rule 13 (16 Texas Administrative Code §3.13), which governs well casing and cementing, and also to its rules on recycling of oilfield wastes. Further, the commission has adopted rules implementing the frack fluid disclosure statute enacted in 2011 by the Texas Legislature.
Third, in-house lawyers must be vigilant on issues of company operations' community impact. Increased oil and gas activity in areas around the state has had a major effect on local neighborhoods, towns and cities. Without question, there has been a great benefit, including the creation of thousands of jobs and generation of millions of dollars in state and local revenues.
However, negative consequences also have resulted. For example, large oilfield trucks carrying pipe, produced water and frack tanks have a major negative impact on county roads in South Texas and across the state, but counties possess a very limited ability to collect additional fees to offset increased costs of road maintenance. This is an issue before the Legislature this session.
The advent of the shale plays has also led to a dramatic increase in urban drilling. As a result, Fort Worth and other municipalities in the Barnett Shale have enacted drilling and other ordinances. Through zoning, permitting and similar methods, municipalities may be able to regulate drilling and development patterns. In-house lawyers need to be vigilant in protecting their companies' interests in all of these areas.
The shale revolution, driven by horizontal drilling and hydraulic fracturing, stands to yield an energy abundance that may well lead to the reindustrialization of America, with the attendant jobs and other benefits. That is one reason the continued regulatory and legal response is critical. In-house attorneys must help craft the rules so they allow continued sound development instead of destroying creativity and initiative.
John R. Hays Jr. is a partner in Hays & Owens in Austin. A former examiner with the Railroad Commission of Texas, he is an adjunct professor of energy law at the University of Texas School of Law. Alicia R. Ringuet is an associate with the firm.
