CHAPTER 3 ACCESS AND PERMITTING FOR OIL AND GAS EXPLORATION, DRILLING AND DEVELOPMENT
| Jurisdiction | United States |
(Nov 1980)
ACCESS AND PERMITTING FOR OIL AND GAS EXPLORATION, DRILLING AND DEVELOPMENT
I. INTRODUCTION
Oil and gas exploration and development, like any other natural resource development activity, requires not only the expertise of geologists, engineers, and accountants, but also that of lawyers and environmental technicians. It does not matter whether the oil or gas can be physically removed from the ground. What matters is whether the operator has legal permission to remove it.
Traditionally, the exploration, drilling and production of oil and gas have been regulated mostly by the oil and gas conservation commissions or equivalent bodies of the states in which the petroleum is situated. However, The welter of environmental statutes enacted by Congress and many states during the last decade have added substantially to the number of permits required for oil and gas operations. In addition, when the oil and gas is in federal ownership, permits relating to operations are granted by various federal agencies. The overthrust belt has the misfortune of being largely under
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federal ownership. In fact, a large part of the private and state lands in the overthrust belt region are interspersed with the federal lands in such a manner that development of many nonfederal lands is at least indirectly controlled by one or more federal agencies.
The consequence of failing to obtain any of the necessary permits and approvals for an oil and gas operation range from merely very expensive to disastrous. Unfortunately, many operators and their legal counsel are forced to learn the hard way that a particular permit should have been secured, particularly in those cases in which the failure to obtain the permit not only means that a particular activity cannot take place but also that a federal oil and gas lease itself is terminated.
This paper will examine the various federal permits necessary to explore for, develop and produce oil and gas, including the construction of and operation of pipelines, gathering facilities, and processing plants. In addition, the applicable requirements of the states of Utah, Wyoming and Idaho will be examined. Except as otherwise noted, this paper will not discuss the procedures for acquiring leases or interests in leases, unitization, or permits and certifications relating to authority to do business, taxation, labor, public utilities,
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and pricing. In addition, procedures for the acquisition of water rights are not discussed herein. The following discussion of permits and approvals may not be comprehensive, as ever-changing regulatory patterns result in seemingly daily new requirements for approval of various phases of an operation.
II. FEDERAL PERMITS
A. AIR QUALITY.
1. PSD Permit.
Most drilling operations do not involve significant emission of air pollutants. There is, of course, the possibility that in certain areas significant quantities of dust or other particulate matter may be emitted in the course of construction or road building and use. However, the amount of such fugitive dust would not normally trigger federal air pollution control requirements. Nevertheless, emissions from the construction and operation of large processing facilities conceivably could trigger the need for a construction permit under the prevention of significant deterioration ("PSD") provisions of the Clean Air Act (42 U.S.C. § 7470-7491 ) and the regulations promulgated thereunder (40 CFR 52.21 and 124.41 -42).
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A PSD permit is required for certain types of activities in "clean air areas". In particular, if the construction or modification of a source or facility would result in the emission of 250 tons or more of any pollutant after implementation of pollution control equipment, preconstruction approval is required from the Environmental Protection Agency ("EPA"). Potential emissions from gas processing plants would likely include sulphur dioxide and hydrocarbon emissions. The EPA regulations, in 40 CFR 52.21 , require the applicant to submit detailed information regarding the proposal, including not only construction plans and a description of the air pollution control equipment or strategy to be employed, but also the applicant is required to submit ambient air quality monitoring data for one year in the area in which the facility will be constructed or equivalent data.
PSD areas are defined as those areas in which there is compliance with the National Ambient Air Quality Standards (42 U.S.C. § 7470). The Clean Air Act provides for the approval by the EPA of a state implementation plan under which the state will assume the authority under the Clean Air Act to regulate air quality within the state. The states of Utah and Idaho have no approved plan for its PSD areas. The state of Wyoming has a plan which essentially consists of state regulations under the state air law which are deemed by the EPA to
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be as strict or stricter than the federal clean air requirements.
B. WATER QUALITY.
1. NPDES Permit.
If an operation will result in the discharge of pollutants into water through any point source, a National Pollution Discharge Elimination System ("NPDES") permit will be necessary (33 U.S.C. § 1342). The term "point source" is defined to include any discernible, confined and discrete conveyance, including any pipe, ditch, channel, tunnel, conduit, well, discrete fissure, or container from which pollutants are or may be discharged into waters of the United States (40 CFR 122.3). The term "waters of the United States" is defined to include virtually every body of water which is used by industries engaged in interstate commerce (40 CFR 122.3).
If drilling mud, brine or any other substance from an oil and gas well or resulting from any other oil and gas operation is discharged into any body of water, an NPDES permit may be necessary. Like the Clean Air Act, the Federal Clean Water Act has a provision allowing a state to submit to the EPA a plan under which the state would assume the administration of the Clean Water Act. Absent such a plan, a state is still required to certify that an applicant for an NPDES
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permit has complied with applicable state water quality standards before the EPA will grant the permit. The State of Wyoming has an approved NPDES state program, with the result that the approval of an application for a state discharge permit will satisfy the requirements of the Clean Water Act. The states of Utah and Idaho have no such plan.
2. Underground Injection Control Permit
The Safe Drinking Water Act of 1976 (42 U.S.C. §§ 300f through 300j-9) requires the states to establish programs for the protection of underground sources of drinking water. Included in these requirements are provisions requiring a permit for the underground injection of certain substances into sources of drinking water. Section 1421(b)(2) of the Act (42 U.S.C. § 300h(b)(2)) prohibits the EPA from requiring states to prescribe requirements which interfere with or impede the underground injection of brine or other fluids brought to the surface in connection with oil or natural gas production or any underground injection of brine or other fluids for the secondary or tertiary recovery of oil or natural gas, unless such requirements are essential to ensure that underground sources of drinking water will not be endangered by such injection. Wells for the purpose of either of the foregoing types of injections are designated in the EPA regulations as Class II wells (40 CFR 122.32(b)). States are required
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to provide that all Class II wells be authorized by permit or rule, and no such authorization may be given if the injection into the well results in movement of fluid into underground sources of drinking water (40 CFR 122.31(d)).
If the state fails to submit an approvable program to the EPA, the EPA will establish a program for the state (40 CFR 122.31(c)).
3. Dredged or Fill Permit.
Section 404 of the Clean Water Act (33 U.S.C. § 1344) requires any person proposing to deposit dredged or fill materials into the waters of the United States to obtain a permit from the Army Corps of Engineers. Obviously, most drilling operations will not involve such disturbance. Conceivably...
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