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Oil, gas (including coalbed methane), and coal are the nation's principal non-renewable energy resources. Development of federally owned oil and gas resources is regulated by several federal laws and associated regulations:
Oil and Gas Resource Development
Key Concepts Leasable Minerals Coal-bed Methane: Gas or Coal? Responsible Agencies Split Estates Mineral Development with Split Estates Good Neighbor Agreements Revenue Sharing with States Energy Right-of-Way Corridors Process Essentials: Federal, State and Local Regulation The Federal Process NEPA Analysis State and Local Processes Controversies Hydraulic Fracturing Oil, Gas and the Clean Water Act Collaboration in Action Scope of the Agenda Conservation Buyouts Oil and Gas Legislation in the 110th Congress Links Key ConceptsLeasable MineralsFederally owned oil, gas, coal, coalbed methane, and oil shale are all "leasable" minerals. The Bureau of Land Management (BLM) has discretion to lease these minerals, generating revenue for the states, tribes and federal government. The MLA does not specifically mention coalbed methane, but it is generally leased as part of the gas resource. All these minerals were originally "locatable" minerals, developed for free on federal lands under the General Mining Law of 1872. The MLA removed the energy minerals (coal, oil, oil shale, gilsonite and gas) from the "free access" rule of the 1872 Mining Law. The 1872 Mining Law still allows development of hardrock minerals like gold, silver and copper without payment of any lease royalty.
BLM chooses which lands to lease for oil and gas development. The agency is not obligated to lease any particular area for development—even after advertising the area in a lease sale. See the Trapper's Point bottleneck decision for more information on oil and gas leasing. Coal-bed Methane: Gas or Coal?Coalbed methane is a form of natural gas that is trapped within coal seams. The gas is attached to the internal surfaces of the coal and held in place by water pressure. Coal miners originally considered coalbed methane a waste gas, producing it mainly to reduce the threat of methane explosions in coal mines, but commercial production started in 1981 and has grown rapidly.Does WY CBM waste water pumping violate MT water rights on the Yellowstone River? The State of Montana contends that Wyoming has violated the MT-WY Yellowstone River Compact by taking more water out of the river than is allowed under the compact. Montana contends that groundwater pumped out of the basin by CBM producers must be counted as Wyoming water use under the compact allocation. Coalbed methane is produced and transported with much the same process and equipment as methane from a regular gas field. The major difference is that wells are drilled into the coal seam to first remove water. As the water is removed and water pressure in the seam decreases, the gas is released from the coal and flows through fractures in the coal to the well. Generally, a lot of water is produced from a coalbed methane well before much methane can be recovered. The quantity and quality of the water released during production varies throughout the West with deeper coalbed methane wells generally producing less—but poorer quality—water than shallow wells. Disposal of this water is a major controversy in coalbed methane development in the West. For recent developments on disposing of CBM-produced water, see Clean Water Act: Process Essentials: Section 404 Dredge and Fill Permits.
Do Development Impacts Differ Significantly?
Sometimes, yes; sometimes, no. IF the impacts of CBM development are likely to differ from those of traditional oil and gas, BLM must specifically assess the potential impacts of CBM development - not just oil and gas development - in a NEPA document before leasing. See Wyoming Outdoor Council, et al., 164 IBLA 84 (Pinedale, WY) and Pennaco Energy v. DOI (10th Cir. 2004) (Powder River Basin). IF the impacts are not significantly different (e.g., in the Piceance Basin of Colorado), BLM's pre-lease analysis of conventional oil and gas development is a sufficiently "hard look" at the issues to satisfy NEPA. See Western Slope Environmental Resource Council, 163 IBLA 262.
Indian Trust Accounts
In 1887, Congress passed the General Allotment Act authorizing the division of some tribal reservation land into individual plots. These plots were assigned to tribal members but held in trust by the federal government. In the allotment era, Congress tried to dismantle tribes and instill the concept of private land ownership in Native Americans. This era ended with the passage of the Indian Reorganization Act in 1934 but most allotted lands remained in trust. As part of their trust responsibility, the Department of Interior manages Individual Indian Money accounts (IIM) for the many heirs of the allotees. These accounts include revenue from oil and gas leasing, timber sales and mineral extraction. Alleging that mismanagement of these funds constituted a breach of fiduciary duty, plaintiff Elouise Cobell and others filed a class action suit (Cobell v. Kempthorne) in 1996 on behalf on the beneficiaries of the IIM trust accounts. The litigation also sought a formal accounting of the IIM trust which Congress ordered the Department of the Interior to make in 1994. (Indian Trust Fund Management Reform Act ). The Department claims that such an accounting would cost $10 billion. To read the latest on the case, click here . Responsible AgenciesSeveral federal agencies are involved in energy resource development:
Agency Coordination
The Energy Policy Act of 2005 included two major provisions directed at cooperation among federal agencies to facilitate oil and gas development: Section 363 requires DOI to develop an MOU with the Forest Service to establish administrative procedures to:
Split EstatesA "split estate" exists when the landowner does not own the land's minerals. Traditionally, the owner of land controlled "from the heavens to the center of the earth." Congress changed this so that land ownership can be horizontally divided into surface and subsurface "estates." The mineral estate can be further subdivided by minerals—the oil, gas and coal owners can all be different.
Split Estate Study
There are three types of split estates:
The Energy Policy Act of 2005 requires DOI to review its current policies and practices for federal oil and gas development under private surface. The DOI report, published in December 2006:
Mineral Development with Split EstatesIf the private landowner owns only the surface, she does not have the right to develop the minerals and, in most cases, does not have the right to prevent development. Depending on who owns the minerals:
More detail on BLM's policy for protecting split estate landowners can be found in the Department's Instruction Memorandum 2003-131.
State law on split estates
The Western Organization of Resource Councils (WORC) web site provides information on split estates and other oil and gas issues. See, for example their report, Law and Order in the Oil and Gas Fields.Several western states have recently considered measures to address the rights of landowners in split estate situations. In 2005, Wyoming's S0060 :
Despite Wyoming's efforts, the law may do little to help landowners. Ten of the 11 million acres of split estate lands in Wyoming involve federal minerals. The Department of the Interior claims that the Wyoming law does not apply where federal minerals are involved. Carbon Capture and Sequestration In 2008, Wyoming brought split estate law into the 21st century with a new state law (HB0090) governing ownership of the underground formations that may be used for carbon sequestration. Good Neighbor AgreementsGood Neighbor Agreement (GNA) are a type of negotiated agreement between a community organization and a local pollution-generating company. So far, the agreements have been used primarily in fields such as petrochemicals, but GNAs can also be used for mines and wellfield development. GNAs take a variety of forms, but typically they are agreements promising company concessions and behavioral changes designed to reduce (and more fully disclose) negative community impacts in exchange for community group commitments to forego permit challenges, lawsuits, negative publicity campaigns, and other forms of activism against the company. Despite the positive sentiments evoked by the "good neighbor" terminology, these arrangements are typically the product of hard-fought negotiations.For more information on Good Neighbor Agreements, see the Stillwater Mine Good Neighbor Agreement story. Revenue Sharing with States
Energy Right-of-Way CorridorsRights-of-way (ROW) for oil and gas development, as well as other purposes, are generally authorized through special use permits issued by the land management agencies. A ROW grant is an authorization to use a specific piece of public land for specific facilities for a specific period of time. BLM grants the majority of its ROWs under Title V of FLPMA (43 U.S.C. 1761-1771) and, for oil and natural gas gathering and transmission pipelines, under special provisions of the Mineral Leasing Act.The Energy Policy Act of 2005, section 368, requires DOI to consult with several other departments and entities to designate corridors for oil, gas and hydrogen pipelines and electricity transmission and distribution facilities on federal lands in the eleven western states. These entities must also perform the necessary NEPA evaluations and incorporate the corridors into appropriate land use plans. Preliminary draft maps of potential energy corridors are available for public review. The corridor locations shown in these maps are subject to change until they are officially established in August 2007. See the BLM's Lands and Realty web page for detailed information on BLM ROWs. Process Essentials: Federal, State and Local RegulationDepending on who owns the land and who owns the minerals (see Key Concepts: Split Estates), oil and gas development may be regulated by federal, state and/or local laws and regulations. For federal lands or minerals, the process can involve all three levels of government. For private or state lands and minerals, the permitting process is mostly state and local, although all development needs to comply with the national environmental laws like the Clean Air Act and Clean Water Act.The Federal ProcessThe process for developing oil and gas (including coalbed methane) on federal land with federal minerals is a three or four step process:1. Planning: Most federal oil and gas development is on BLM or Forest Service managed lands and begins with land use plans prepared under the Federal Land Policy and Management Act (FLPMA) or the National Forest Management Act (NFMA). In their planning processes, the agencies discuss the impacts of development and decide which lands should be open for what kind of development. BLM uses the "reasonably foreseeable development" scenario (RFD scenario) to project long-term oil and gas exploration, development, production, and reclamation activity in a defined area for a specified period of time. The RFD scenario projects a baseline scenario of activity assuming all potentially productive areas can be open under standard lease terms and conditions, except those areas designated as closed to leasing by law, regulation or executive order. The baseline RFD scenario is the basis for analyzing the effects that management decisions have on oil and gas activity, and it also provides basic information that is analyzed under various alternatives of NEPA documents. For details on RFD reports, see BLM Instruction Memorandum 2004-089. 2. Leasing: Depending on decisions made in the planning process, BLM offers leases for the mineral estate. BLM holds competitive, oral auctions for oil and gas leases at least quarterly. While BLM actually issues the leases, the Forest Service has to authorize them for the lands they manage. A lease gives an operator the right to explore and develop the mineral in accord with stipulations in the lease. Standard lease stipulations include compliance with federal environmental laws such as the Clean Water Act and Endangered Species Act. Special lease stipulations can be added to restrict specific uses of the lease area or the timing of certain activities. Special stipulations might be added to protect wildlife breeding areas. The most stringent stipulations ("no surface occupancy" or NSO stipulations) exclude all exploration and development facilities from the lease area.
To protest a lease sale:
In order to attempt to stop an area from being leased, individuals can protest a lease sale, but must follow BLM procedures modified in July 2005.
Congress Short-Circuits Agency Leasing
3. POD: If the operator intends to develop a field rather than just a single well, the operator submits a Plan of Development (POD) to BLM. The POD can be used to consolidate infrastructure—roads, pipelines, waste disposal facilities—used to develop a whole well field. BLM is encouraging use of PODs, also called "multiple APD packages," as part of the Bush administrations effort to expedite permit approvals. In late 2006, the 109th Congress withdrew two important wildlife areas from mining and mineral leasing:
4. APD: Finally, the operator files an application for a permit to drill (APD) with BLM. The APD—for a well or group of wells—includes a drilling plan, a surface use plan, and plans for reclamation. BLM or Forest Service may conduct an on-site visit to adjust the development plans or add mitigation measures. Before BLM can approve the APD, the operator must post a performance bond. BLM requirements for obtaining permit approval and conducting environmentally responsible oil and gas operations are available in the BLM Gold Book — The Surface Operating Standards and Guidelines for Oil and Gas Development. BLM's revised rules governing permitting of oil and gas operations on federal lands are in On Shore Oil and Gas Order No. 1, effective May, 2007
Energy Policy Act of 2005
New Timeframes for Permit Decisions (Sec. 366):
DOI must review current onshore oil and gas leasing and permitting practices, including:
DOI and USDA must ensure timely action on leases and APDs, by
NEPA Analysis
NEPA Analysis
Federal agencies are required to comply with NEPA and assure compliance with all national environmental laws throughout the oil and gas development process. Clearly compliance includes an assessment of reasonable alternatives and mitigation measures. However, the range of available alternatives and mitigation measures shrinks at each stage of this NEPA review. Once land use plans are adopted and leases issued, the federal land management agencies lose the flexibility to deny mineral development—at least without monetary compensation—or to substantially lessen its impacts.
While the Montana court allowed continued CBM development during preparation of the phased development plan, the 10th Circuit Court of Appeals eventually put a hold on BLM permit approval and continued development of coalbed methane in part of the basin pending their final decision on an appeal. What "compliance" means, however, has been a major controversy in the Intermountain West for years. This controversy became more heated with the rapid development of CBM. With changes in Forest Service planning rules and passage of the Energy Policy Act, the application of NEPA to oil and gas development is changing - and becoming even more controversial.
RMP Development
Step 1: Traditionally, both BLM and Forest Service have prepared an EIS while developing a new plan or significant amendments to an existing land management plan. While BLM continues to prepare these EISs, the U.S. Supreme Court in Norton v. SUWA has called into question the enforceability of the plans themselves. Based in part on this Supreme Court ruling, the Forest Service overhauled their planning process and regulations to eliminate most NEPA analysis from their land management planning process. Even when land use plan EISs are available, they may be inadequate to support CBM development as many were prepared before agencies anticipated the extent of CBM development. BLM provides information and opportunities to comment on management plan revisions on their web sites. See, for example, the Pinedale RMP webpage. Step 2: Many believe that the appropriate time for considering the potential impacts of oil and gas exploration and development in a NEPA document is when BLM proposes to lease public lands for oil and gas purposes. With support of two circuit courts, they believe that leasing, at least without NSO stipulations,
While this disagreement remains unresolved, both agencies generally prepare pre-lease NEPA analysis. In 2004, the Interior Board of Land Appeals (IBLA) told BLM it must prepare pre-lease environmental impact documentation (an EIS or EA) before issuing oil and gas leases which allow for surface occupancy. Forest Service uses a two-step process for analyzing its areas for leasing, making leasing decisions for specific lands in the second step. Before making these decisions, the agency must determine that it has adequately addressed leasing of the specific lands in a NEPA document and that leasing is consistent with its land and resource management plan. Step 3: POD, multiple APD, or field developments are an opportunity to address site specific factors in a NEPA analysis as well as to address cumulative impacts of field development. At this stage of permitting, BLM can best evaluate and require consolidation of infrastructure and develop mitigation measures that could reduce environmental impacts. An EA is usually prepared at this step, but large field developments, like the Pinedale Anticline of Wyoming, can be the subject of major—and controversial—EIS analysis. Step 4: NEPA review at the final well permitting stage is normally limited to site-specific considerations not previously addressed in broader NEPA documents. APD NEPA documents are often tiered off of EISs or EAs prepared for step 1 or 2 (planning or leasing). Preparation of NEPA documents at this stage is also changing with increased use of categorical exclusions from NEPA.
Energy Policy Act of 2005: Categorical Exclusions for Oil and Gas Development
Preparation of NEPA documents at this stage is also changing with increased use of categorical exclusions from NEPA.
Scoping in Categorical Exclusions:
For more information on NEPA and categorical exclusions, see the National Environmental Policy Act section and the Pending Legislation section. Even if a project is categorically excluded from NEPA analysis requirements, the Forest Service Handbook (FSH 1909.15, Chapter 10, section 11) requires that the agency "scope out" environmental impacts of their proposed action. For more details on these steps in the oil, gas and coalbed methane development process, including a discussion of the role of NEPA and opportunities for public involvement in the process, see Western Resource Advocates "Preserving Our Public Lands: A Citizens Guide to Understanding and Participating in Oil and Gas Decisions Affecting Our Public Lands." For more information on BLM's proposed categorical exclusions, see DOI's Office of Environmental Policy and Compliance web page. State and Local Processes
Some local governments have also begun to regulate oil and gas development. Cities and counties may have zoning ordinances to designate areas open or closed to development. Some local governments also have ordinances to control conditions of use—controlling noise, location of roads and other operating facilities. Whether or not a local government has the power to regulate development depends on what kind of regulation it is, what power they are given by state law, and whether state or federal law has "preempted" local regulation. For example, cities and counties cannot "zone out" development on federal lands within their boundaries, although federal land management agency planning rules may require coordination of agency projects with local land use plans. Similarly, state law can preempt local regulation if the state legislature has given an agency broad power over oil and gas development. The result is that local governments may be able to more tightly control oil and gas development—especially the environmental impacts of development—if the state legislature has not explicitly given broad power to a state oil and gas regulatory agency or commission. Colorado
Oil and Gas Operation Exemptions: Will all states follow the federal relaxation of controls?
In Colorado, oil and gas development is regulated by the Colorado Oil and Gas Conservation Commission (COGCC) created by the Oil and Gas Conservation Act. The COGCC's original function was exclusively development oriented, focusing on increasing production by preventing oil and gas waste. In 1984, the Colorado legislature directed the COGCC to adopt rules to protect the health, safety, and welfare of the general public with respect to oil and gas wells. In 1994, the Colorado legislature expanded the Commission role again, charging the COGCC to adopt measures to "prevent and mitigate significant adverse environmental impacts on any air, water, soil, or biological resource resulting from oil and gas operations." In updating the law, the Colorado legislature did not specifically preempt local regulation of oil and gas production, and declared that the act was not intended to affect the existing land use authority of local governmental entities. Since 1994, COGCC has enacted regulations regarding water quality standards, reclamation, safety, and financial security requirements and the State's Department of Public Health and Environment (CDPHE) implements the major environmental laws with which oil and gas operations must comply. In 2007, the Colorado legislature expanded the COGCC to include more environmental interests and enacted the Colorado Habitat Stewardship Act to plan and manage oil and gas operations in a manner that balances development with wildlife conservation.The Energy Policy Act of 2005 broadened exemptions for oil and gas exploration and development from Clean Water Act stormwater permit requirements. Despite this federal legislation, the state of Colorado decided in January 2006 to continue to enforce its more stringent regulations requiring operators to get stormwater permits for one to five acre construction sites. For more information on the federal requirements see Controversies: Oil and Gas Exemptions from Clean Water Act..
State laws--and small staff--muzzle would-be watchdog
Local communities in Colorado have been the most active in the intermountain West in their attempts to regulate oil and gas development beyond that of their state oil and gas commission. Colorado communities that have regulations on oil and gas development range from the metro-Denver communities of Denver, Aurora, and Lafayette, to more rural Front Range communities like Greeley and Frederick. Colorado communities have, with mixed success, tried to regulate traditional oil and gas development since the early 1990s. More recently, the proliferation of CBM development in the San Juan Basin of southern Colorado prompted counties, notably Las Animas and LaPlata, to adopt comprehensive land use regulations governing oil and gas activity. by Jennie Lay, High Country News, March 7, 2005
Whether these types of regulations are enforceable has been very controversial and is not completely settled. In 1992, before the legislature gave the COGCC its broader mandate, the Colorado Supreme Court decided that state law had given counties authority to regulate land use aspects of oil and gas operations and that the Oil and Gas Conservation Act had not preempted that power. On the other hand, the court made it clear that cities could not totally ban drilling within their city limits. Because oil and gas development was "of concern" to both the state and local government, both levels of government could regulate, but local government ordinances could not conflict with state regulations. Whether there is a conflict between state and local regulations—a conflict that the state regulations would win—has to be decided on a case-by-case basis. Recent litigation has provided some more guidance to Colorado communities, although many questions still remain. In a 2002 decision, Colorado courts found that even the 1994 law revisions did not completely trump a town's ability to pass effective ordinances. The court found some of the Town of Frederick's provisions invalid, however, because the town tried to regulate the "technical aspects" of development or otherwise conflicted with state regulations.
The court has also laid out some limits for the state, invalidating a state regulation that said that a state-authorized permit to drill would trump any conflicting local governmental permit or land use approval process. The court said that this state regulation went too far and would have allowed oil and gas operators to disregard even appropriate local land use regulation. Legal challenges to Las Animas County's oil and gas regulations were settled out of court with the county agreeing to amend its regulations significantly. Those new regulations include requirements for county permits for both major and minor oil and gas facilities, including performance standards for setbacks, visual impacts, water, wildlife, waste disposal, etc., and provisions for fees, enforcement and fines for violations. MontanaIn Montana, the legislature established the Montana Board of Oil and Gas Conservation (MBOGC) in 1953 with the passage of the Montana Oil and Gas Conservation Act. The Board consists of seven members, three of whom must be from the oil and gas industry, and two of whom must be landowners residing in oil- or gas-producing counties in the state. The MBOGC primarily serves to prevent waste of oil and gas, encourage maximum efficient recovery of the resources, and protect mineral owners' right to recover their fair shares. In addition, MBOGC can take measures to prevent contamination of or damage to surrounding land caused by drilling operations. These measures include, but are not limited to, regulating the disposal of produced salt water and the disposal of oil field wastes. Under Montana law, no oil or gas exploration, development, production, or disposal well may be drilled until MBOGC issues a drilling permit. The state has also adopted special rules on coalbed methane development, including drilling wells in the Powder River Basin Controlled Groundwater Area.
Montana counties and municipalities have authority to adopt local ordinances and zoning regulations necessary to promote the general welfare of their citizens, although only Gallatin County has adopted such regulations for oil and gas. In general, Montana law does not allow local governments to make resolutions or rules that prevent the complete use, development, or recovery of any mineral, forest or agricultural resource. While this does not preclude all local regulation of mineral processing or extraction—local governments can impose reasonable conditions on application approvals—land use and zoning ordinances must allow effective utilization of mineral resources. In exceptional circumstances, counties can adopt interim zoning maps or regulations—including moratoriums on mineral developments—as emergency measures to promote public health, safety, morals and public welfare.
In 2002, the county invoked its emergency powers to establish a two-year interim emergency zoning district. This Bozeman Pass district, also near Bridger Canyon, covered high potential oil and gas areas-areas with coal deposits-that were not already included in existing zoning districts. The county also declared a moratorium on all permits for oil and gas wells in this emergency district. During the moratorium period, which expired with the emergency district in August 2004, the community worked with the Sonoran Institute to develop a permanent zoning district-the Bozeman Pass Zoning District, which set tough new standards for oil and gas development in the area. In 2006, Huber relinquished four CBM leases in the area. New MexicoThe New Mexico Oil and Gas Act (O&G Act) like many similar state statutes, focuses on preventing the waste of oil and gas resources. The act gives authority over all matters related to conservation of these resources to the Oil Conservation Division (OCD) of the Energy, Minerals and Natural Resources Department and the Oil Conservation Commission (OCC). This authority includes, according to OCD rules, protection of public health and the environment. State permits for drilling set out spacing requirements for drill pads, regulate disposal of wastes (including injection of produced water), and describe the standards for abandonment and reclamation of wells. The agency regulations also cover bonding requirements which are often linked to the depth of the wells.At least four New Mexico cites have ordinances regulating oil and gas development: Aztec, Carlsbad, Farmington, and Lovington. City ordinances include requirements for obtaining a permit from the city, bonding, local review of the location of wells and structures, and some specifications for drilling practices. As in other states, however, New Mexico law can preempt a local government's ability to regulate either by clearly stating the intention to do so or if the state law and local government's ordinance conflict. New Mexico courts have not, however, specifically addressed whether local governments have exceeded authority in this area. The O&G Act does not appear to explicitly preclude all local regulation because it only gives the OCD exclusive authority over matters related to conservation of oil and gas, not all development of oil and gas. In addition, New Mexico law gives counties and municipalities the authority to regulate and restrict the location and use of buildings, structures and land for industry and other purposes. Furthermore, in a similar area of law, the New Mexico supreme court has upheld county and municipal authority to enact zoning and land use ordinances to promote the health, safety, and general welfare of their citizens related to mining. In this context, the court decided that state law does not preempt local ordinances if neither the state law nor the agency's regulations mention traditionally local development issues such as traffic congestion, increased noise, compatibility of the mining with the use made of surrounding lands, appropriate distribution of land use and development, and the effect of the activity on surrounding property values. Since the O&G Act does not mention these issues either, it is likely that New Mexico courts would allow local governments some leeway to regulate oil and gas development. What local regulations will be found valid, if challenged, will be decided on a case-by-case basis. UtahIn Utah, the Utah Board of Oil, Gas and Mining and its related technical and administrative agency, the Division of Oil, Gas and Mining (DOGM) regulate oil and gas development. The Board's powers include regulation and enforcement related to drilling, testing, completing, operating, producing, and plugging wells; spacing and location of wells; and disposal of salt water and field wastes. Utah law requires operators to take all reasonable precautions to avoid polluting lands, streams, reservoirs, natural drainage ways, and underground water. The Board's rules encourage the development of "surface use agreements" with landowners. If the landowner and operator do not reach an agreement, DOGM will establish minimum well site restoration requirements that must be met before the agency will release the operator's bond.The Utah legislature has also authorized cities and counties to enact all measures necessary to promote the general health, safety, morals, and welfare of their citizens. A few counties have done so for oil and gas development, but Utah courts have not as yet reviewed their validity. As in other states, ordinances could be found invalid if the legislature has passed comprehensive state legislation or local regulations conflict with state law. The Utah Oil and Gas Conservation Act of 1983 is fairly comprehensive—stating that one of its purposes is "to provide exclusive state authority over oil and gas exploration and development" as regulated by the Act. "Exclusive state authority" might not, however, extend to matters of purely local concern such as traffic congestion, noise, and compatibility with surrounding uses, that are not specifically addressed by the law. One DOGM rule even explicitly recognizes the role of local governments, specifying that disposal of waste, including produced water, must be done in compliance with both federal and local regulations or ordinances. Carbon County, which includes both traditional oil and gas and coalbed methane development, provides an example of local regulation in Utah. The county requires that wells on private land meet zoning requirements and that operators obtain conditional use permits for development in the more sensitive zoning categories. Conditions of those permits range from requirements for controlling dust, weeds and odors to fencing and lining produced water ponds. Wyoming
Wastewater goes unwatched
The Wyoming Oil and Gas Commission (WOGCC) is comprised of the governor, the director of the office of state lands and investments, the state geologist, and two additional members from the public appointed by the governor. WOGCC has the authority to require drilling, casing, and plugging of wells in order to prevent escape of oil or gas, bonding for plugging dry or abandoned wells, and monitoring of well performance. WOGCC has the authority to regulate, for conservation purposes, the drilling, producing and plugging of wells, the shooting and chemical treatment of wells, well spacing, disposal of salt water and drilling fluids and development, and the contamination or waste of underground water. In addition, WOGCC has a duty to prevent the waste of natural gas and to keep it from polluting or damaging crops, vegetation, livestock, and wildlife. WOGCC rules require that, owners and operators not pollute streams, underground water, or unreasonably damage or occupy the surface of the leased premises or other lands. The Wyoming Department of Environmental Quality (WDEQ) regulates surface discharge for wastewater disposal through rules created by a Governor-appointed council. by J.M. McCord, High Country News, March 7, 2005
WY Governor has the Last Word
Like other states, Wyoming cities and counties have zoning and planning authority that can be used to regulate oil and gas development. The authority of Wyoming counties is more restricted than that of its cities and towns. Cities can regulate construction or use of buildings and land for various reasons, including promoting health and general welfare and encouraging the most appropriate use of land throughout the city or town. Zoning regulations for the City of Gillette, for example, define oil, gas and mineral exploration and production activities as "permitted uses" within the agricultural or heavy industrial districts within the city. Gillette requires a permit to drill wells which the city will issue if it is satisfied that there will be no hazard to the general public and that no undue nuisance will be created. While WDEQ and the Wyoming Environmental Quality Council can make and implement rules, the Governor can approve or reject them. In May 2007, the Governor rejected new rules, prompted by an environmental lawsuit, that would have required that water discharged from CBM operations be suitable for agricultural purposes.
Powder River Basin wastewater controversy
Counties can also regulate structures and land use, but no county zoning resolution or plan may prevent any use necessary to the extraction or production of mineral resources. Each Wyoming county is unique in its treatment of oil and gas development and the rules are in flux. For example in coalbed methane territory, the Campbell County code explicitly exempts extraction of oil, gas, coal, or other minerals from building permit requirements and Converse county does not have zoning regulations. Johnson county, on the other hand, developed a land use plan in early 2004 to be followed by zoning regulations and zoning designations. The plan and regulations will help the county address noise, dust and visual impacts, damage to roads and other county facilities, placement of infrastructure, air and water discharges and pollution, and reclamation of oil and gas development. As other counties revise their plans, conservation organizations like the Powder River Basin Resource Council will undoubtedly be recommending changes to better address oil and gas development. Even Governor Dave Freudenthal has asked county commissioners if they are interested in gaining more authority over oil and gas development. A district court in Wyoming decided in March 2006 that surface owners cannot necessarily be forced, without legal recourse or monetary compensation, to accept coalbed methane water produced from upstream wells. In this case, the rancher didn't want the water because it might change the natural character of the ephemeral waterway and ruin the creek bottom where his cattle graze. Williams Production argued that the rancher can't refuse the water because it becomes "waters of the state" when the company discharges it to a natural watercourse. The judge decided that the ephemeral drainage was not a "natural watercourse." If they still want to discharge the water, Williams Production could either appeal the decision or proceed with condemnation efforts to allow their discharge. Ranchers and conservationists hope that the decision will help in their effort to force the state to require truly beneficial uses of coalbed methane produced water. READ MORE >> Pinedale Anticline and Jonah Field air quality concerns Following health warnings regarding high ozone levels issued by the Wyoming Department of Environmental Quality, county officials, citizens and environmental groups are calling for a health impact assessment to help guide development of the two major gas fields in Sublette County. For more information on specific state and local regulations, see Links: Other Resources: Natural Resources Law Center at the end of the Oil and Gas section. ControversiesHydraulic FracturingHydraulic fracturing is high pressure injection of fluids into a well to crack the rock. Energy companies use the process to increase the flow of oil, gas, and CBM to production wells, allowing them to extract more than they could using conventional drilling techniques. While the value of hydraulic fracturing for production - particularly in Wyoming gas fields - is clear, its impact on groundwater is controversial. The Energy Policy Act of 2005 changed the rules on regulation of this practice.Until summer 2005, the Environmental Protection Agency (EPA) regulated hydraulic fracturing because it was considered "underground injection" under the Safe Drinking Water Act. In June 2004, EPA released a study concluding that there is no strong link between hydraulic fracturing and pollution of underground drinking water supplies. Yet an EPA environmental engineer challenged the findings and methodology of the study, and correspondence between the vice president's office and the agency shows that EPA officials urged the administration to consider ongoing scientific study into whether the practice could contribute to groundwater contamination. Following urgings of Democratic lawmakers, the EPA Inspector General decided to investigate complaints that the Bush administration has ignored scientific studies that show the fracturing threatens drinking water supplies. Nonetheless, the Energy Policy Act of 2005 included a provision (Section 322) that redefines "underground injection" under the Clean Water Act to exclude hydraulic fracturing.
Use of hydraulic fracturing is widespread in Wyoming
For a copy of the EPA report Evaluation of Impacts to Underground Sources Drinking Water by Hydraulic Fracturing of Coalbed Methane Reservoirs, click here. Without the Section 322 exemption, EPA's investigation might have slowed development.
The Oil and Gas Accountability Project has produced its own report criticizing the EPA study. For more information on the fracturing controversy, see “Waxman questions EPA monitoring of key extraction method,” Greenwire, 10/27/07. Oil, Gas and the Clean Water Act
NPDES ExemptionsFollowing a long controversy over oil and gas exemptions from NPDES permitting requirements under the Clean Water Act (CWA), the Energy Policy Act of 2005 expanded the CWA definition of "oil and gas exploration and production activities" in order to expand the existing exemption. Many thought that this change would simply exempt relatively small (one to five acre) oil and gas drill site construction activities from CWA stormwater permit requirements. However, in June 2006, EPA finalized new stormwater regulations to implement the change. A number of Senators contend that the EPA rule goes beyond Congress' intended change. The Senators argue that EPA's rule incorrectly interprets the 1987 Clean Water Act by excluding sediment contamination as a factor that may cause a normally exempt oil and gas activity to require a stormwater permit.For more information on the rule see EPA's web page. CBM Effluent GuidelinesEPA has initiated a study to determine if the agency should develop effluent guidelines to control pollutants discharged in CBM produced water.For details on the study, see the EPA Effluent Guidelines web page. Collaboration in ActionScope of the AgendaThe agenda of a collaborative group can be narrowly tailored to a specific issue or broadly defined. The group's focus can also evolve over time. Two RLCH stories illustrate collaboration in the oil and gas development arena.The Muddy Creek Coordinated Resource Management project, for example, began in 1991 to address many of the traditional concerns of rural Wyoming - drought, grazing, erosion, and water quality. The CRM project focused on non-contentious issues and created an atmosphere of trust and open communication that resulted in a number of successful initiatives. The area of south-central Wyoming is now confronted with the possibility of extensive coalbed methane development and the collaborative is faced with a decision on whether and how to deal with this highly contentious issue with many new stakeholders. In contrast, the Trapper's Point/Pinedale working group formed specifically to address oil and gas development in the Pinedale Anticline. In October 2003, local and regional environmental organizations, ranchers, county and industry officials, Wyoming state agencies, and the BLM began meeting to discuss core issues of oil and gas development near Trapper's Point—a half-mile wide natural bottleneck in a critical wildlife migration corridor. While the group continues to focus on oil and gas issues and is still grappling with group process issues, it plans to expand its discussions beyond Trapper's Point. Conservation BuyoutsCollaborative processes often result in an agreement to share resources — with some lands slated for development and others protected for conservation. In rare cases, stakeholders — with the help of Congress — agree to protect an entire area of federal land from oil and gas development. In Montana, the Coalition to Protect the Rocky Mountain Front, Congress, BLM, the Forest Service, and energy companies have worked together to keep oil and gas development out of the Rocky Mountain Front.In the last days of the 109th Congress, lawmakers passed a permanent moratorium on mineral and geothermal leasing and mining in the Rocky Mountain Front. Title IV, section 403 of the Tax Relief and Health Care Act of 2006, also provides tax incentives for the sale of existing mineral and geothermal rights to tax-exempt entities. The Coalition will buy out some of those existing leases on federal lands with the help of funding from the Wyss Foundation. For more information on the Rocky Mountain Front, see the Coalition web site. See also, Coalition buys Front leases, By Sonja Lee, Great Falls Tribune. Oil and Gas Legislation of the 110th CongressPublic Law 110-140 Energy Independence and Sercurity Act of 2007An Act to move the United States toward greater energy independence and security, to increase the production of clean renewable fuels, to protect consumers, to increase the efficiency of products, buildings, and vehicles, to promote research on and deploy greenhouse gas capture and storage options, and to improve the energy performance of the Federal Government, and for other purposes.
HR6 Clean Energy Act of 2006 - see P.L. 110-140, aboveAmends the Energy Policy Act of 2005 to allow cost recovery fees for drilling-related permit application. The bill also addresses off shore leases, denying certain tax benefits/incentives for domestic production gross receipts, addressing royalty payments and establishing conservation of resources fees. The law would establish a Strategic Energy Efficiency and Renewables Reserve to hold federal receipts for various renewable energy purposes.
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