Law and the Environment

Recent Appellate Court May Expose Companies for Disclosures in Title V Deviation Reports

The U.S. Fifth Circuit Court of Appeals recently (May 27, 2016) reversed a federal district court in a citizen’s suit that sough hundreds of millions of dollars in civil penalties under the federal Clean Air Act for alleged thousand of violations.  In the case Environment Texas Citizen Lobby, Inc. v. ExxonMobil Corp., the district court had ruled that only 94 of the allegations were actually violations, and that no penalty was in order.  In reversing this decision, the Fifth Circuit may have opened the door to civil penalties for all of the statements in Title V Deviation Reports that indicate a violation of the Title V permit or regulations have occurred.  This raises significant issues as companies are required to make deviation reports every year, and in most, cases, it is difficult to avoid any deviations in such reports.

 

New Law Firm

I have recently established my own law firm and am working with clients in environmental, energy, and water projects for the most part. My  New Website provides a discussion of my experience, knowledge, and skill sets. I hope you will visit my website when you have a chance.

Happy Thanksgiving!

Scott Deatherage Quoted in Environmental Law 360 on New Ozone NAAQS Standard

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.

EPA Issues Approval to Allow Texas to Take over Greenhouse Gas Permitting Program

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.

Oil Companies Recycling Water and Using Saltier Brackish Water in Drought Stricken West and South Texas

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.

Client Receives Greenhouse Gas Permit for $1.2 Billion Natural Gas Power Plant in West 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 36^th GHG permit EPA has issued in Texas. The agency has proposed an additional five permits and has 19 more in development.

US Fish and Wildlife Service Lists Lesser Prairie Chicken as Endangered Species.

https://www.fws.gov/southwest/es/LPC.html