Ohio Warns Oil & Gas Companies to Comply with Federal Hazardous Reporting Requirements

Back in April of this year, a citizen group filed a petition that argued Ohio illegally tried to exempt oil & gas companies from complying with federal emergency planning and citizen reporting requirements under the "Emergency Planning and Community Right-to-Know Act ("EPCRA").  EPCRA requires companies that store certain hazardous chemical above certain thresholds to inform local emergency responders, known as "local emergency planning committees" (LEPCs), regarding the chemical storage.  The Act also makes certain information available to the public.   

In 2001, the Ohio General Assembly adopted Ohio Revised Code (R.C.) 3750.081, Compliance by Oil & Gas Facilities: Use of Electronic Database which provided an alternative to EPCRA's reporting requirements.  The State believed the state and federal reporting requirements were "overlapping" and, therefore, felt R.C. 3750.081 was necessary to eliminate potentially duplicative reporting requirements.  The law stated that the information required under EPCRA could be provided in the Ohio Department of Natural Resources (ODNRs) Division of Oil & Gas annual reporting requirements.

In response to the Citizen's petition, U.S. EPA determined that R.C. 3750.081 does not supersede the reporting requirements of EPCRA.  Therefore, U.S. EPA determined oil & gas well owners and operators must separately comply with EPCRA.  

On September 11th, the Ohio State Emergency Response Commission (SERC) notified oil and gas well owners and operators of U.S. EPA's determination.  It clarified that owners and operators must comply with the reporting requirements under EPCRA despite R.C. 3750.081.  The memorandum contained the following guidance:  

  1. EPCRA Initial Reporting Requirements-  If a well owner maintains any hazardous chemical for which a facility must maintain a Material Safety Data Sheet (MSDS) in quantities at or above 10,000 pounds, the owner must provide written notice to the SERC, LEPC and local fire department within 90 days after receiving a shipment or producing the substance at the site.  A lower reporting threshold applies to chemical classified as "Extremely Hazardous Substances (EHS)."
  2. Tier II Chemical Inventory Annual Reporting-  By March 1st of each year, a well owner must provide a chemical inventory report annually if, at any time during the calendar year, the owner stored more than 10,000 pounds of a hazardous chemical or between 1 to 500 pounds of an EHS (depending on the chemical). 
  3. Trade Secret Claims-  Any well owner who does not want to disclose a particular chemical for proprietary reasons, must follow U.S. EPA's procedures for asserting trade secret protection.  

Failure to comply with EPCRA requirements may result in enforcement by U.S. EPA, including civil penalties of up to $32,500 per day for violations of the Tier II chemical reporting requirements.  It is worth noting that U.S. EPA frequently takes enforcement for failure to comply with EPCRA reporting requirements.

If you believe you may have failed to report, it may be worth evaluating U.S. EPA Audit Policy.  If a company performs a voluntary audit of its compliance an discloses any noncompliance to U.S. EPA, the company may qualify for reduction in civil penalties.  You should consult your attorney before deciding whether to report noncompliance under the Audit Policy.

 

Ohio EPA Guidance On TENORM Oil & Gas Related Wastes

This past summer the Ohio General Assembly passed House Bill 59 which changed various aspects of the regulatory approach toward oil & gas waste material management.  One aspect dealt with under H.B. 59 was the regulation of oil & gas related waste that may be considered technologically enhanced naturally occurring radioactive material (TENORM).  H.B. 59 provided Ohio EPA the authority to adopt rules regarding the regulation of TENORM.

What is TENORM?

To understand TENORM, one must understand what constitutes NORM- naturally occurring radioactive materials.  NORM is radioactive materials naturally present in the environment (i.e. soils, air and water).  NORM emits low levels of naturally occurring radiation and is common to the environment.   

TENORM is naturally occurring radioactive material with radionuclide concentrations that are increased by or as a result of pat or present human activities.  TENORM is regulated by the Ohio Department of Health.   Oil & gas drilling can generate TENORM.

Which oil field wastes are NORM and which are TENORM?

Certain oil & gas related waste is classified as NORM and exempt from regulation.  As set forth in the Ohio EPA Fact Sheet on TENORM (see below), drill cuttings are considered NORM and not TENORM.  Drill cuttings are the mixture of rock, soil and other subterranean matter brought to the surface during drilling of oil & gas production wells.

Oil & gas drilling related waste classified as TENORM include tank bottoms, spent drilling muds and pipe scale.  Here is a description of each of those waste streams:

  • Tank Bottoms- material accumulated in storage tanks associated with the oil & gas drilling
  • Pipe Scale- the build-up of minerals, rocks, oil and other substances that accumulate on the inside of metal casing and tubing used for the production of oil and natural gas.
  • Drilling Mud-  fluid used to cool and lubricate the drill bit, helps stabilize the well bore during drilling and keeps fluids in the formation from entering the borehole

What do the new guidance documents from Ohio EPA require?

As of September 29, 2013, any landfill or solid waste transfer facility must receive sample results of any TENORM regulation waste to ensure that the material doesn't exceed the regulatory limit of 5 pCI/g above natural background.  The facilities receiving this material must maintain daily logs that identify the waste streams from oil & gas drilling and retain copies of the sampling.

A solid waste transfer facility or landfill that wants to accept TENORM with concentrations above 5 picocuries per gram must receive proper authorizations from ODH and Ohio EPA.  Facilities may receive the material if authorized for purposes of dilution.  However, material above 5 picocuries per gram cannot be disposed of in the landfill. 

Are rules likely to be adopted by Ohio EPA regarding TENORM?

Yes.  Ohio EPA has released a fact sheet soliciting early stakeholder outreach regarding the development of rules regarding TENORM at solid waste landfills and transfer facilities.  The rules would potentially govern:

  • Monitoring leachate and groundwater for radioactive material;
  • Establishing regulations to ensure that TENORM greater than 5 picocuries per gram above natural background is not accepted at the facility.  This include development of detection and prevention plans at landfills or solid waste transfer facilities.


What available guidance documents and fact sheets are available  from Ohio EPA on this issue?

  1. Fact Sheet: Drill Cuttings from Oil and Gas Exploration in the Marcellus and Utica Shale Regions of Ohio (October 2013)
  2. Fact Sheet:  House Bill 59- TENORM Acceptance at Solid Waste Landfills and Transfer Facilities;
  3. Guidance Document:  Impact of HB 59 on Solid Waste Landfills and Transfer Facilities
  4. Municipal Solid Waste Landfill- Daily Log of Operations (Draft)
  5. Solid Waste Transfer Facility- Daily Log of Operations (Draft)

 

Huge Increase in Disposal of Frac Water in Ohio Deep Wells

An article in the Akron Beacon Journal discusses a study by Kent State University regarding the disposal of flow back water from natural gas fracking in deep wells in Ohio.  Flow back water is the water that comes back up from fracking a natural gas well.  The flow back water is considered wastewater.

A prior post discussed the issues Pennsylvania was facing in handling disposal of flow back water.  As a result of increased regulations in Pennsylvania, the main method of disposal of flow back water had become shipment to Ohio for disposal in deep wells.  Ohio has 179 permitted deep wells.  Pennsylvania has five permitted deep wells. 

Here are some of the key statistics from the study as discussed in the ABJ article:

The volume of Marcellus wastewater has grown 570 percent from 2004 to 2011 due to increased shale gas production in Pennsylvania, Lutz said.

Pennsylvania has about 6,400 Marcellus shale wells that have been drilled and another 3,500 that have been permitted. In comparison, Ohio has about 500 wells permitted in the Utica shale, of which 200 have been drilled.

Lutz said Pennsylvania generated about 20 million barrels (each holding 42 gallons) of wastewater in 2011. About 7 million barrels were shipped to Ohio injection wells.

Ohio is projecting that its injection wells handled nearly 14 million barrels in 2012, up from 12.8 million barrels in 2011. (Final figures have not been compiled). More than half of that volume came from Pennsylvania and West Virginia.

While the increases are huge, what happens when Ohio has more wells?  Will there be a reliable method for disposal of the flow back water from the Pennsylvania and Ohio wells.

As mentioned in the article, Ohio has no means of banning the shipments from out of state.  Ohio tried to regulate shipments of out-of-state solid waste from the east coast.  A similar issue arose when eastern states stopped permitting new landfills and Ohio was the closest state with available capacity.  Ohio starting receiving shipments of solid waste by rail. 

Laws meant to regulate the shipments of out-of-state solid waste were struck down as unconstitutional.  Solid waste was determined by the courts to constitute "interstate commerce."  Under the U.S. Constitution, one state cannot treat unfairly interstate commerce.

Now a similar dynamic is playing out with flow back water from fracking.  The issue will only get worse when Ohio has more wells drilled and needs to find a home for more flowback water generated in-state.
 

 

Governor Signs Three Major Pieces of Environmental Legislation

Typically, environmental legislation may be passed in Ohio once every few years.   In fact, most environmental regulatory reform is done in small doses during the budget bill process.  In the last two weeks, Governor Kasich has signed into law three separate bills that including major environmental regulatory provisions. 

  • S.B. 315- Establishes new regulations for oil & gas drilling, including provisions regarding fracking;
  • S.B. 294- Contained a series of legislative overhauls to laws administered by Ohio EPA including: wetlands, solid waste, and underground storage tanks
  • H.B. 473- Implemented Ohio's Water Withdrawal Regulatory Program under the Great Lakes Compact

Below are some of the major highlights from each piece of legislation. 

H.B. 473- Ohio's Implementation of the Great Lakes Compact

The Great Lakes Compact required each State to pass implementation legislation to set up regulations governing withdrawls and diversions from the Great Lakes.  Under the Compact, the Great Lake States were given wide discretion for deciding when a permit would be needed and the criteria for issuance of a water withdrawal permit. Now that H.B. 473 has passed, for the first time Ohio, businesses may need to get a permit before withdrawing water from Lake Erie or its tributaries.

Last summer, Governor Kasich vetoed Ohio's first attempt at passage of the Compact implementation legislation- H.B. 231.   The bill was sharply criticized as being too business friendly. 

This time Governor Kasich signed the legislation after certain aspects of the water withdrawal permitting program were made more stringent. (See Prior Post) Here are the most notable changes from H.B. 231:

  • Withdrawal Triggers-  The thresholds for triggering a permit were significantly lowered.  Any withdrawal of the following size will trigger a permit: 
    • 2.5 million gallons per day (MGD) from Lake Erie or a recognized navigation channel;
    • 1 MGD from a river or ground water
    • 100,000 gallons from designated high quality streams
  • Adverse Impact-  If you trigger a permit, ODNR can't grant a permit if it determines the withdrawal will have an "adverse impact" on Lake Erie.  H.B. 231 defined adverse impact in the negative- any withdrawal from the Lake less than 90 mgd was presumed to cause no impacts.  This proved highly controversial and was jettisoned in H.B. 473.  Rather than try and define adverse impacts in the legislation, H.B. 473 simply defers to ODNR to define the term through rulemaking. 

In one significant way H.B. 231 and H.B. 473 are very similar.  Only impacts to Lake Erie are to be considered in determining whether a withdraw would have an adverse impact.  Impacts to the receiving stream itself are not evaluated, except possibly with high quality streams.  In the end, Ohio's program is still, in essence, a Lake Erie and not a stream protection program.

S.B. 294- Ohio EPA Omnibus Regulatory Reform Bill

S.B. 294 was dubbed the Ohio EPA regulatory reform bill by the Administration.  While it does contain some significant changes to certain Ohio EPA programs, the regulatory reform could hardly be described as controversial. 

Most of the changes tweak certain administrative aspects of Ohio EPA's programs. While it is true the legislation does not contain any major substantive regulatory reforms, there are some much needed reforms in the bill, including the following:

  • OCAPP Confidentiality- The Office of Compliance Assistance and Pollution Prevention is housed within Ohio EPA.  The Office serves as a free compliance assistance resource to businesses.  One historical impediment to use of OCAPP has been related to confidentiality.  Previously, Ohio law only protected as confidential inquiries related to air pollution compliance.  S.B. 294 changes this and provides confidentiality protection to all inquiries made to OCAPP regardless of subject matter (hazardous waste, solid waste, wetland permitting, surface water, and drinking water). 
  • Underground Storage Tanks-  S.B. 294 addresses a longstanding issue with regulatory overlap pertaining to clean up of underground storage tanks.  Prior to the legislative changes, a developer or business wishing to clean up their property under Ohio EPA's Voluntary Action Program (VAP) had to first deal with any underground storage tanks regulated by BUSTR.  Those portions of the property with BUSTR tanks had to be cleaned up first under BUSTR's clean up program before proceeding with the VAP.  This double regulation made no practical sense since VAP standards were designed to address this type of contamination.  S.B. 294 allows volunteers to address BUSTR USTs through the VAP thereby removing a significant hurdle that had delayed and increased costs at many brownfield and site clean ups.
  • Wetland Mitigation- S.B. 294 provides Ohio EPA the authority to establish an "in-lieu fee" program for wetland mitigation.  Instead of a developer needing to create wetlands on-site or buying credits at a wetland bank to offset its wetland impacts, the developer could write a check to pay for the necessary wetland mitigation.  If the program is established it could significantly streamline the wetland permitting process.

S.B. 315- New Regulation for Oil & Gas Drilling including "Fracking"

While S.B. 315 was dubbed as an all encompassing energy bill, it is largely tilted toward one form of energy- natural gas.  The most significant provisions in the bill place new regulation on the oil & gas industry, in particular "fracking."

For over a year, renewable energy companies and advocates feared Governor Kasich would do away with Ohio's fledgling renewable energy standards (RPS).  For many, the good news regarding S.B. 315 is what the bill didn't do- overhaul Ohio's RPS.  The bill did allow waste energy recovery systems to qualify for credits towards meeting Ohio's RPS, but the main structure of Ohio's RPS was left in tact.

With regard to oil & gas drilling, S.B. 315 did put in place major new regulations, including:

  • New Oil & Gas Permit Requirements-  The legislation requires more information to be submitted with permit applications.  This includes: agreements with local governments regarding road maintenance, identification of the proposed source of surface or ground water, as well as requiring water well sampling in the neighboring area prior to drilling.
  • Disclosure of Chemical Used in Drilling- Upon well completion, the well owner must supply information regarding the amount of products, fluids, and substances used to facilitate drilling or stimulate the well.  However, the bill includes a broad trade secret provision that exempts covered chemicals or materials from the disclosure requirements.
  • Insurance-  Requires the oil and gas well owner to obtain liability insurance in an amount not less than $5 million dollars for bodily injury or property damage.  The insurance policy must also include a "reasonable level" of coverage for environmental claims. 

 

U.S. EPA Releases New Air Emission Standards for Fracking

On April 17th, EPA issued new rules designed to reduce air emissions from oil & gas operations, including wells drilling using hydraulic fracturing ("fracking").  The new federal standards (New Source Performance Standards -NSPS) are seen as the first significant new federal regulation governing fracking. 

Some may wonder how gas wells generate air emissions.  When a horizontal gas well is drilled and fracking is used, large amounts of water and some chemicals are pumped down the well to break up rock in the shale formations in order to release the gas for recovery.  Prior to putting the well into production, the water and chemicals are removed.  This is referred to as "flowback water."

When flow back water is recovered it is accompanied by gases, including volatile organic compounds (VOCs) and methane, which in most cases, is simply vented to the atmosphere. 

Methane emissions from fracking has received significant attention recently due to the fact it is a potent greenhouse gas- 20 times more damaging than CO2 emissions.

EPA says that the oil & gas industry is the largest source of methane emissions in the U.S. making up approximately 40% of all methane emissions.  Controlling VOC and methane emissions is what prompted EPA to issue the new federal standards.

EPA Delay's More Expensive Controls to 2015

EPA seeks to reduce air emissions from fracking by requiring, initially destruction of the gas and then recovery through "green completion."  In a green completion, special equipment separates gas and liquid hydrocarbons from the flowback that comes from the well as it is being prepared for production. The gas and hydrocarbons can then be treated and used or sold.

EPA's draft rule would have mandated "green completion" as the best control technology.  However, industry voiced strong concern that the equipment wasn't widely available and requiring this technology too quickly could impact production.  In the final rule, EPA decided to delay the mandate for "green completion" until January 1, 2015.

Until 2015, producers must control emissions by using flares to burn off the VOCs and methane emissions. The flare must be able to eliminate 95% for the VOC emissions.

For more information:

 

Ohio EPA Issues "Faster Air Permit" for Shale Gas Sites

In anticipation of an influx of shale gas drilling operations coming to the State, Ohio EPA decided to try and get ahead of the curve by developing an expedited permit to cover air emissions from such operations.

On February 1st, Ohio EPA issued a final air pollution general permit to cover production operations at shale gas well sites. By issuing the general permit, Ohio EPA is providing a path for shale gas operators to received expedited regulatory approval necessary to cover air emissions.  Without the general permit, operators must obtain an individual air permit which can take longer and may be less certain as to terms and conditions for operations.

Applicants that meet the criteria, terms and conditions of the permit can expect to receive approval within weeks of applying.  An individual air permit can take six months to issue.  The process is expedited because all the terms and conditions of the permit are established up-front instead of after the application is filled.

The only issue with general permits is that they are one-size fits all templates.  Meaning, you must be sure that your specific operation can meet the terms and conditions cause they can't be changed or modified to meet your specific circumstances.  Company's that cannot live with the general permit terms & conditions can still apply for an individual air permit.

The Agency received many comments from both industry and environmental groups/concerned citizens on the draft permit released in October.  The Agency announced that it had modified the permit to address the following concerns:

  • restricts normal flare operation, increases total flare capacity and allows for emergency flaring to safely burn gas;
  • requires installation of newer spark ignition internal combustion engines if total horsepower is to exceed 1300;
  • removes a limit on the number of storage tanks and replaces it with a limit on the total volume of material stored in tanks;
  • increases allowable dehydrators from one to two; removes unpaved roadways as an emissions unit (it is covered under another existing general permit); and
  • removes the natural gas micro turbine emissions unit (it was determined to be exempt).

Study Reveals Environmental Issues in Oil & Gas Leases

There was an excellent article in the New York Times discussing the issues homeowners and landowners are facing when signing oil & gas leases- Learning Too Late of the Perils in Oil & Gas Leases

The Times reviewed 111,000 oil & gas leases from Ohio, Pennsylvania, New York Texas and West Virginia.  It found many of the leases contained very unfavorable terms for landowners and homeowners who sign up with drilling companies.  Many of the issues pertain to the potential environmental problems that may happen once drilling commences or even after work is finished at the property.

Concerns identified included:

  • less than half the leases compensate for water contamination;
  • many lack language to protect against livestock and crop damage;
  • grant driller broad rights to build road, store chemicals and even leave waste in place once drilling has ceased.

Not discussed in the article are other issues that need to be considered by landowners when negotiating leases. 

First, even if the lease contains language which entitles the landowner to compensation if environmental contamination or other property damage occurs, does the company really have the resources to pay?  Its possible the corporate structure is established to prevent liability from flowing to the parent corporation.  

Second, what happens if you neighbors sue you claiming environmental contamination, nuisance or property damage?  Does the lease provide any guarantee that your attorney costs will be paid? 

Landowners are constantly hearing about the opportunities associated with the Marcellus and Utica shale deposits.  However, are they protecting themselves properly in the event something goes wrong?   

Ohio and Pennsylvania Debate Regulation of Hydraulic Fracking Wastewater

Hydraulic fracking provides the opportunity to tap into massive natural gas reserves which is located deep beneath the earth.  In Ohio and Pennsylvania, Marcellus and Utica Shale is sedimentary rock which contains huge quantities of natural gas.

Hydraulic fracking uses water injected at high pressure to break up the rock allowing the gas to be released into wells.  The process uses large amounts of water.  One well may use up to three to eight million gallons of water in about a week. 

Most of the water stays deep underground, but around 10% resurfaces and is called flowback water.  Regulators consider flowback water wastewater from an industrial operation because the water contains total dissolved solids (TDS), salts and metals/oils used to aid in the fracking process.

Disposal of the flowback water has been hotly debated in Pennsylvania where massive quantities of the water have been generated.  Pennsylvania Department of Environmental Protection (Pennsylvania DEP) estimates 235 million gallons of flowback water was generated in 2010.

Methods for Disposal of Flowback Water

The primary method of disposal of flowback water in Pennsylvania was through publicly owned sewage treatment plans (POTWs).  However, concerns emerged that POTWs could only dilute the water, not treat it prior to discharge to streams and rivers. 

Pennsylvania passed regulations establishing effluent standards for treatment of flowback water.  However, the regulations exempted existing loads and only kicked in if a treatment facility was expanding.  Pressure mounted on DEP to regulate disposal of all flowback water.

Industry Voluntarily Ceases Use of POTWs in Pennsylvania

Last week, Pennsylvania DEP announced that the oil/gas industry voluntarily agreed to stop the practice of shipping flowback water to POTWs.  The DEP announcement from last Thursday was covered in Pennlive.com:

Environmental Protection Secretary Michael Krancer told officials in a meeting in Washington, D.C., on Thursday that drilling wastewater is no longer being discharged to rivers or streams in Pennsylvania without full treatment.

DEP spokeswoman Katy Gresh said the agency has not yet confirmed full compliance with Krancer’s request that drillers voluntarily stop taking the wastewater to such facilities.

But she said it has confirmed that “We’ve gone from millions and millions of gallons being discharged to virtually none.”

After the announcement, its seems clear Pennsylvania is moving toward use of dedicated treatment facilities that can treat the brine and materials in flowback water.  Approximately 25 of these facilities are slated to open. 

Debate over Disposal of Flowback Water Shifts to Ohio

Perhaps seeing the debate unfold in Pennsylvania, Ohio regulators decided they needed to tackle the issue over disposal of flowback water.  In part, the issue was brought to a head by a company, Patriot Energy Partners, who had built and operated a pretreatment center connected to the City of Warren's POTW.  The company also was in process to build and operate facilities in Steubenville and East Liverpool.

On May 16th Ohio EPA issued a letter to the Ohio Department of Natural Resources clarifying regulatory authority over the disposal of flowback water.  In part, the letter was issued to clear up a debate between the Agencies as to who had regulatory authority since ODNR regulates oil & gas drilling and Ohio EPA regulates POTWs through NPDES permits.

The letter set forth the Agencies regulatory determination on several key issues:

  • ODNR has regulatory authority over the disposal of flowback water (letter uses the term "brine")
  • POTWs will not be allowed to accept flowback water for disposal (the City of Warren permit will not be renewed)
  • Current Ohio law (R.C. 1509.22) only allows disposal of flow back water by the following methods:
    • deep well injection into underground formations
    • road surface application
    • catchall: other approved methods by ODNR

For practical purposes, deep well injection will likely be the primary method of disposal in Ohio unless its shown that dedicated treatment facilities are a cheaper disposal option.  Its interesting to note that Pennsylvania has only one commercial deep well and Ohio has approximately 150 wells that may be capable of disposing of flowback water.