APPENDIX C: OVERVIEW OF THE U.S. LEGAL AND REGULATORY FRAMEWORK FOR SHALE GAS DEVELOPMENT

Tribal Governments

Native American lands are often held in trust by the federal government, and therefore potential energy development on or near tribal lands involves coordination and negotiation with both the tribal government and relevant federal government agencies, including the Bureau of Indian Affairs. There can also be unique laws and regulations pertaining to energy development on tribal lands.

State Legislation & Regulation

States regulate shale gas development and production on their territory and are often the primary administrators of relevant federal laws. They regulate well permitting, potential environmental impacts, and certain pipelines through their state public service commissions (see Appendix E). As is the case federally, many states have been updating legislation, with more than 100 bills passed in 19 states between 2010 and 2013. 1  State legislatures are particularly focused on severance taxes, impact fees, well spacing, well pad setbacks, waste treatment and disposal, and disclosure of the chemicals used in hydraulic fracturing.

A Resources for the Future study of state regulations found a significant amount of divergence in the ways that states are regulating shale development. 2 In a 2014 review of state oil and gas regulations relevant to groundwater protection, the Ground Water Protection Council (GWPC) noted that states have been revising their regulations since its initial 2009 review. 3 The GWPC identified some trends in new regulations, including increased requirements for disclosure of hydraulic fracturing fluid ingredients, increased mechanical integrity testing, and improved requirements for wastewater disposal pits and liners.

While many states have been updating their oil and gas regulations in response to shale development, some states have declared moratoria while policy reviews are underway. In December 2014, after the release of a seven-year review of the potential environmental and health impacts of shale development in New York, the governor instituted a ban on shale development in the state. 4 In June 2015, Maryland established a two-year moratorium on shale development while the state writes appropriate regulations. 5

Disclosure

In a February 2014 report, the U.S. Department of Energy recommended enhancements to the largely voluntary FracFocus database that tracks materials used in shale development. The recommended changes would include mandatory “full disclosure of all known constituents added to fracturing fluid” as well as the possible inclusion of area well water data pre-stimulation and post-production. 6According the GWPC review cited above, chemical disclosure has recently been a common focus of state rulemaking, with almost every major oil-and-gas producing state considering the issue. 7

Local Governments

Local county and municipal governments often play a regulatory role in or near populated areas, where they may manage issues such as noise levels, traffic flow, and setbacks from residences. The primary tool for local governments to control oil and gas development in their area is through zoning laws and other land use regulations. With the growth of shale development, some local residents and communities have expressed concerns about potential health, environmental, and property value impacts and have attempted to impose increased regulations on shale development activities.

In some of these cases, local governments’ efforts to regulate the industry and land use have come into conflict with the state’s authority to manage the development of its natural resources, raising the question of when states can overrule (or preempt) local land use and zoning authority. Some of these cases are playing out in the state courts. To date, the state courts have tended to uphold local laws when they pertain to zoning and land use, as a New York court concluded when two municipalities imposed zoning restrictions on the oil and gas industry within their boundaries. 8 When local laws have attempted to regulate oil and gas procedures and operations, however, the courts have determined that the state’s authority preempts local laws. For example, when the city of Longmont, Colorado, imposed a ban on hydraulic fracturing, a Colorado district court ruled that the ban interfered with the state’s regulatory authority to permit hydraulic fracturing. 9

Selected Resources

Overview

  • Ground Water Protection Council and ALL Consulting, “Modern Shale Gas Development in the United States:  A Primer,” prepared for the U.S. Department of Energy and the National Energy Technology Laboratory (April 2009). This 2009 primer on shale gas development in the United States includes an overview of the applicable federal, state, and local regulatory environments on pages 25-42. In 2013, the National Energy Technology Laboratory issued an update to this primer, “Modern Shale Gas Development in the United States: An Update,” to address evolving concerns and regulations. The regulatory framework is covered on pages 55-57.
  • Adam Vann, Brandon J. Murrill, and Mary Tiemann, “Hydraulic Fracturing:  Selected Legal Issues,” Congressional Research Service Report (September 26, 2014). Report by the Congressional Research Services gives an overview of the legal issues pertaining to hydraulic fracturing, including applicable federal laws such as the SDWA, the CAA, and RCRA; the issue of disclosure of hydraulic fracturing fluid ingredients; state preemption of local laws, state tort law, and legislation before the 113th Congress.

Tracking Legislation & Regulation

As indicated above, the legal and regulatory framework for shale development is continually evolving. There are several organizations tracking these developments that can serve as resources for legal and regulatory information on oil and gas development, as well as shale development specifically:

  • FracFocus, the chemical disclosure registry, has a database of oil and natural gas regulations by state.
  • Fracking Insider is an environmental law and energy blog.
  • The National Conference of State Legislatures (NCSL) has a guidebook for state lawmakers, “Natural Gas and Hydraulic Fracturing: A Policymaker’s Guide” (June 2012). NCSL also has a webpage on the topic of compulsory or forced pooling, “Compulsory Pooling Laws:  Protecting the Conflicting Rights of Neighboring Landowners.”  It describes forced pooling, gives definitions of relevant terms, and describes the different state approaches to compulsory pooling. It also has a map and table of state compulsory pooling laws.
  • Resources for the Future, an independent nonprofit research organization, conducted a review of shale gas regulations in 31 states with current or potential shale development operations. There is a report, comparative tables, and maps on the website.
  • The University of Colorado Law School’s Intermountain Oil and Gas BMP website hosts several relevant resources:

State Assistance and Guidance

The following are organizations that provide assistance and guidance to states in developing oil and gas policy:

  • The Interstate Oil and Gas Compact Commission is an organization representing the governors of member states on the responsible development of oil and gas resources.
  • The State Review of Oil & Natural Gas Environmental Regulations, or STRONGER, is “a non-profit, multi-stakeholder organization whose purpose is to assist states in documenting the environmental regulations associated with the exploration, development and production of crude oil and natural gas.” STRONGER’s guidelines for state oil and gas exploration and production waste regulatory programs can be found here. The guidelines also contain a section relating to hydraulic fracturing.

Notes:

  1. National Conference of State Legislatures website, accessed November 22, 2014, http://www.ncsl.org.
  2. Nathan Richardson, Madeline Gottlieb, Alan Krupnick, and Hannah Wiseman, The State of State Shale Gas Regulation, Resources for the Future, June 2013.
  3. GWPC, State Oil & Gas Regulations Designed to Protect Water Resources (2014), 6.
  4. Thomas Kaplan, “Citing Health Risks, Cuomo Bans Fracking in New York State,” The New York Times (December 17, 2014).
  5. Timothy Cama, “Maryland Bans Fracking,” The Hill (June 1, 2015).
  6. U.S. Department of Energy, Secretary of Energy Advisory Board Task Force Report on FracFocus 2.0 (March 28, 2014)
  7. GWPC, State Oil & Gas Regulations Designed to Protect Water Resources (2014), 8.
  8. Adam Vann, Brandon J. Murrill, and Mary Tiemann, Hydraulic Fracturing:  Selected Legal Issues, 27.
  9. Adam Vann, Brandon J. Murrill, and Mary Tiemann, Hydraulic Fracturing:  Selected Legal Issues, 28-9.