I was quoted today in Environmental Law 360 in an article entitled Industry Has Edge Over Enviros To Fight EPA Ozone Rule. The new standard was set at 70 parts per billion (ppb) down from the prior 75 ppm standard set a few years ago. That standard was challenged in court, but was upheld by the relevant courts. The new standard has been attacked by industry as being too low and environmental groups as being too high. Expect legal challenges from both sides. The trouble for both sides is that the courts tend to defer to EPA and other governmental agencies in making scientific analysis and reaching science-based decisions.
One challenge, particularly for places like the Tyler-Longview-Marshall, Texas area is that the background level of ozone is at or near at the 70 ppm standard. The natural and human emissions from other areas that blow in make it difficult to meet the new standard. One question is how does an area like this challenge the standard and/or the designation as a non-attainment area for ozone and all the heightened regulatory and permitting restrictions that could hurt local industry and the local economy.
Effective as of Nov. 10, 2014, the U.S. Environmental Protection Agency (EPA) approved the Texas program to issue permits for greenhouse gas (GHG) emissions under the Prevention of Significant Deterioration (PSD) program established by the Federal Clean Air Act. In January 2011, EPA had issued what is known as a Federal Implementation Plan (FIP) to allow EPA to issue GHG emission permits in Texas when Texas initially refused to implement the federal program. The Texas legislature subsequently required the Texas Commission on Environmental Quality (TCEQ) to take action to implement the program in Texas.
The TCEQ submitted to EPA a modified State Implementation Plan (SIP) relating to GHG permitting. EPA has now approved the part of the modified SIP relating to GHG permits and will withdraw the FIP. As a result, the program is being transferred to the TCEQ. Sources required to obtain GHG permits under the EPA program will be able to seek a permit for both conventional air emissions and GHG emissions from the TCEQ.
The EPA approval eliminates the dual permitting system with both EPA and TCEQ issuing permits for major projects exceeding the applicable GHG emissions threshold. This change should stream line the air permitting system for large projects and reduce the time it takes to obtain permits required to start construction of new or modified sources subject to GHG permitting requirements. One of the key elements of the Texas legislation is that it exempted the TCEQ GHG permitting process from contested case hearing provisions in order to make the process more efficient.
EPA and the TCEQ will be working cooperatively to address GHG permits now pending before EPA.
The U.S. Supreme Court recently reviewed the EPA GHG permitting program and concluded that GHG permits could only be required of new or modified sources that would have to obtain federal permits anyway for conventional pollutants under the PSD program. These “anyway” sources may be required to include GHGs in their permits depending on the amount of GHG emissions.
Under the Supreme Court decision, EPA is required to develop a de minimis threshold level for GHG sources. In the meantime, EPA is applying a threshold level for PSD permits for new sources that emit or have the potential to emit 75,000 tons per year (tpy) or more of GHGs on a carbon dioxide equivalent (CO2e) basis. For modified sources, a permit would be required when the following apply: (1) the modification is otherwise subject to the PSD for a pollutant other than GHGs; and (2) the modification results in a GHG emissions increase and a net GHG emissions increase equal to or greater than 75,000 tpy CO2e.
Water, some say, may be worth more than oil. Well, today, water is necessary to produce oil. With the technology breakthrough of hydraulic fracturing and horizontal drilling, water is crucial for producing oil in the tremendously productive Permian Basin and Eagle Ford Shale in West and South Texas. But the hitch is these areas are drought stricken, and have been for many years. As a result, a great deal of pressure has been placed on oil companies to reduce the amount of freshwater that they use for fracing wells. The oil companies have responded with technology and water management innovation to find ways to lessen their use of freshwater.
While there may be plenty of water for the oil companies to use, public pressure is intense, and public companies tend to respond to this pressure. As a result, a great deal of time, money, manpower, and equipment have been focused on ways to reduce water use in the Texas oil fields.
One means of doing this is to reuse water. A great deal of effort has been placed on recycling water that comes back up the well after fracing. This water may have high salt content and gels that are used to enhance the fracing process. The oil companies discovered that the water did not have to meet freshwater standards for reuse for fracing. Thus, the water does not have to be cleaned up as much to allow reuse.
At times, however, certain amounts of salts, metals, or gels need to be removed before the water can be used for another frac job. Many startup companies have developed various technologies to remove these materials and chemicals from water in the oil field and to provide a competitively priced solution to the oil companies. Oil companies are trying these technologies and evaluating which ones may provide a reliable means of producing water that is useful for fracing.
One of the challenges is that the needs of a particular well or geology, the contaminants in the water produced after fracing, and what chemicals are used to frac, may vary significantly from one well, one location, and one field to another. This means that one water treatment technology or process may work in one location, but not in another, and that one type of treatment is needed for a particular well, that is not needed for another.
This complicating factor makes selecting technologies or companies to provide water treatment more difficult. Some companies remove certain materials while others do not. The costs of one technology may be higher than another.
In all of this, the question is what is the cost to reuse water compared to use of freshwater. Economics still apply to oil drilling and the expense of treating water for reuse has budget limits.
As a result, oil companies have started considering other water sources than the traditional fresh water wells used to provide frac water. In West and South Texas, as in many parts of the country, the aquifers, or water-bearing geologic zones underground, may be saltier depending upon location and depth. Typically, the freshwater that has low levels of salt is found in the upper reaches of the ground, nearer to the surface, while the water found deeper in the ground tends to be saltier. The saltier water is called “brackish” water. Typically brackish water is not very palatable to drink or too salty for agricultural purposes, so it generally has gone unused.
But for the oil industry, it may be perfectly fine for fracing. This opens up a significant possibility for a source of water that can be used that does not offend local citizens and farmers who are concerned about current and future supplies of freshwater for drinking, showering, farming, and other uses.
A great deal of effort is now being focused on how brackish water wells may supply water for fracing. The testing of this water in terms of its chemical content and its potential use in fracing is well underway. Companies are finding that it may be sufficient without any treatment in many cases. In other cases, some level of minimal treatment may be necessary.
The use of brackish water is new to the oil business. The regulator in Texas, the Railroad Commission of Texas (RRC), had not reviewed this issue. In considering use of brackish water, the RRC conclude that it would be regulated in the same way as freshwater in makeup pits for either use in drilling oil wells or for injection for water floods to produce more oil in secondary or tertiary recovery operations.
Brackish water use may present a lesser concern for now, but this may be changing. Cities are now using brackish groundwater as a source of drinking water. A few cities have drilled wells into brackish aquifers and used desalination technologies to remove the salts and other chemicals to produce drinking water. Several bills were filed in the last session of the Texas legislature to define and clarify regulation of brackish water use. None of these bills passed, but future bills are expected in next year’s legislative session as brackish water is seen as a future source of water supply.
The use of brackish water may present in a few instances challenges for oil companies. Even so, the use of brackish water is far less controversial than use of fresh water.
Water and oil are critical to our economy and to our lives. While water may not cost as much as oil, it is certainly of critical value in drilling for oil now that fracing is a key component of the most productive oil fields in Texas. The recycling and reuse of water and use of brackish water will reduce the amount of freshwater that is used by the oil companies in producing oil. As the droughts continue, these innovations by the oil industry provide a means of conserving a scarce resource and will hopefully allow oil companies, farmers, landowners, and citizens of towns and cities in West and South Texas to coexist as water continues to be a critical resource to the life and economies of Texas.
EPA Region 6 just issued the following press release for a permit granted to our client governing green house gas emissions.
Permit allows construction of $1.2 billion natural-gas fired plant; will add hundreds of construction jobs and over 30 permanent jobs
DALLAS – (April 29, 2014) This week, the U.S. Environmental Protection Agency (EPA) issued a final greenhouse gas (GHG) Prevention of Significant Deterioration (PSD) construction permit to FGE Power for the FGE Texas project near Westbrook, Texas. The permit allows the company to build a new natural-gas fired combined-cycle electric generation plant.
“This facility will bring clean-burning electricity to the people of Texas,” said EPA Regional Administrator Ron Curry. “The FGE plant is an example of how electricity providers can meet customer demand while reducing harmful greenhouse gas emissions.”
“We look forward to putting people to work and helping to power Texas’ economic future,” said FGE Power’s CEO, Emerson G. Farrell. “EPA’s thorough review and thoughtful findings demonstrate that new technology, combined with a fresh approach to developing clean energy and sustainable infrastructure, can make a positive difference on our economy and the environment.”
The facility, in West Texas between Midland and Abilene, will generate 1,620 megawatts of gross electric power. The facility will operate almost entirely on clean-burning natural gas, with some emergency equipment using diesel fuel.
In June 2010, EPA finalized national GHG regulations, which specify that beginning on January 2, 2011, projects that increase GHG emissions substantially will require an air permit.
EPA believes states are best equipped to run GHG air permitting programs. Texas is working to replace a federal implementation plan with its own state program, which will eliminate the need for businesses to seek air permits from EPA. This action will increase efficiency and allow for industry to continue to grow in Texas.
This permit is the 36th GHG permit EPA has issued in Texas. The agency has proposed an additional five permits and has 19 more in development.
Kenny Rogers sang a song years ago with the lines “Know when to hold ‘em, know when to fold ‘em.” While referring to a poker game and a life lesson, I was reminded of the song in a recent criminal investigation a client was facing. In these investigations, you always have to decide how much you will volunteer versus waiting on specific requests from environmental criminal investigators or attorneys.Making the decision on how much to volunteer is a true judgment call.
In some cases, like the one I just worked on, you have to decide if the facts demonstrate a clear lack of criminal intent or knowing violation in the case of most state and environmental statutes. Some are based on strict liability or negligence, but most are “knowing” violations. The line between civil and criminal enforcement is often largely a matter of enforcement discretion by environmental agencies or attorneys, prosecutors, agency attorneys, or district attorneys.
Evaluating the facts and circumstances, and how they may be perceived by the individuals involved is critical. Different people will see matters differently.One sees something as a mistake, others as an intentional, knowing act.
Sometimes this may mean federal and state agencies, sometimes two or three. Occasionally, a local city or county investigator may want to be involved. In addition to environmental agencies, in Texas EPA and the Texas Commission on Environmental Quality, you may face review by wildlife agencies such as the US Fish and Wildlife Service or the Texas Department of Parks and Wildlife.
In the right case, it can be productive to disclose the facts and make facilities available for tour by the investigators.It can be effective to avoid a criminal investigation to disclose all and push for a decision that the matter should be referred to civil enforcement representatives, rather than being investigated by the criminal side of the agency house.
Often a rather early meeting and provision of documents and information may gain great confidence from the criminal investigators that the parties under review acted in good faith, but for whatever reason violated the law, even causing environmental damage.Avoiding the criminal investigation can be more important for reputation of the entity and potentially even stock price.Criminal environmental investigations tend to gain focus by the media and reverberate through the Internet and social media.A turn from the criminal to the civil can avoid much of the damaging reputational impact.For some parties that work with the government, criminal investigations can result in debarment from federal, state, or local contracts—with even greater damage than any fine.
When an event occurs that leads to a criminal investigation, a rapid legal analysis and strategy development is crucial. Sometimes, it makes a significant difference if the alleged violator acts quickly and presents information and explanation before any subpoena or other request for information is received.
The pro-active disclosure strategy does not fit every case. Sometimes waiting for any requests for information or documents is the best strategy. Every instance must be considered based on its unique facts and actions by the entity’s or contractor’s employees.
You have to “know when to hold ‘em, know when to fold ‘em.” I have found that in the right case, the full disclosure approach can turn a potentially damaging criminal investigation into a civil settlement of a small penalty.
One of the most interesting aspects of my career over the last 10 years is working with people who are trying to bring environmental disruptive technologies to market.Current and future environmental emissions, discharges, and damage result from invented technology.Innovation that leads to modified existing technology or new technology can reduce or eliminate the environmental impact of pre-existing technology.
Interestingly enough, evolution that takes so long to occur in natural ecosystems, can have quite rapid results in human technology, economies, and societies.Human evolution itself, may have ended in terms of physical terms or in our DNA, but our inner ideas and concepts and the resulting development of innovative technology never ends.Our post-physical evolution is potentially unlimited.
As a result, it is not out of the question that we can develop technologies that greatly reduce, and in some instances, eliminate environmental impact in certain sectors of business, industry, or our personal lives.
Disrutpive environmental technologies may be of many types. For fossil fuels, it may be a cheaper way to capture carbon dioxide from burning fossil fuels, or capturing the CO2 and making a product from it. It could be a new additive that increases gas mileage, reduces emissions, or both. A more efficient natural gas power plant may reduce emissions.
Capturing CO2 and using it for enhanced oil recovery, what is know as Carbon Capture, Use and Storage, is the more likely approach that may in time help reduce greenhouse gas emissions from power plants. It is being used for fertilizer plants, natural gas processing plants, and certain other plants that produce a more concentrated stream of CO2.
For renewable energy, it may be a more efficient wind turbine or solar panel. Manufacturing changes that make these technologies cheaper has been a major development particularly with respect to solar panels. Solar and wind are approaching fossil fuel prices to produce electricity, and in some parts of the world or even the US, this price has already been achieved.
We can recycle and reuse a number of materials now considered wastes. Converting waste plastic to energy or transportation fuel is one of a number of waste to energy or fuel technologies under development or in early pilot or full-scale plants.
Thus, the future need not be considered bleak. How bleak was disease before immunization and antibiotics? How bleak was food supply before innovation in agricultural techniques and technology? How did we communicate before the Internet and email? How about the disruptive impact of computers, cell phones, and now smart phones and pad computers?
Environmental inventors and environmental entrepreneurs are working every day to try to bring new disrutpive environmental technologies into being. There are thousands of technologies being developed in the United States and around the world. Some of those wil be commercialized and most will never make it out of the garage stage. But the innovation continues apace.
Like any other invention, early stage capital will be needed to develop the technology to a pilot and then commercial level. This is the hard part. Finding capital is extremely difficult as I have watched many parties struggle and many times give up. Sometimes the technology is not right or cannot be developed into a cost-effective product or is otherwise not able to lead to a profitable business.
Other times, the inventor or others involved are not willing or able to work with capital providers to bring the technology along. Often the inventor will not give up enough ownership to get capital or wants to be the CEO, when they don't have the training or skills to manage a business, even though they may be highly talented with inventing technology.
Over the last 27 years of my own career as an energy and environmental lawyer, I have seen amazing strides in reducing environmental impact of industry and other aspects of our society and economy. I believe we will see a number of disruptive technologies come to the forefront to greatly reduce the environmental emissions and impact of our time. I am working with groups developing some of these technologies now.
We need more early stage investors with the knowledge and funding to invest in these companies, and have the capacity to evaluate the technologies and make good judgment as to which ones to invest. This will be one of the more crtical steps in our environmental evolution--enabling the commercialization of new and innovative technologies to address environmental concerns. Keep up the faith.