CHAPTER 3 REGULATING SURFACE WATER IMPACTS ASSOCIATED WITH THE EXPLORATION, DEVELOPMENT, PRODUCTION, AND TRANSPORTATION OF OIL AND GAS
| Jurisdiction | United States |
(Feb 1994)
REGULATING SURFACE WATER IMPACTS ASSOCIATED WITH THE EXPLORATION, DEVELOPMENT, PRODUCTION, AND TRANSPORTATION1 OF OIL AND GAS
Washburn University School of Law
Topeka, Kansas
Of Counsel Shughart Thomson & Kilroy
Kansas City, Missouri
TABLE OF CONTENTS
Page
I. Introduction
II. Federal Regulation of Surface Water Impacts
A. Clean Water Act: NPDES Requirements
1. Regulation of Point Sources Discharging into Navigable Waters
a. Point Sources
b. Navigable Waters
2. Regulation of Produced Water
a. Stripper Subcategory
b. Onshore Subcategory
c. Coastal Subcategory
d. Agricultural and Wildlife Subcategory
e. Offshore Subcategory
3. Regulation of Storm Water Runoff
B. Clean Water Act: Oil Spills
1. Section 311 of the Clean Water Act
a. The "Harmful Discharge" Requirement
b. The "Navigable Waters" Requirement
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c. Reporting Obligations
d. Spill Prevention Requirements; Above Ground Storage Tank Regulation
e. Penalties for Failure to Comply
(1) Administrative Penalties
(2) Civil Penalties
f. Cleanup Liability
C. Oil Pollution Act of 1990
1. The OPA/CERCLA Interface
2. Liability Under the OPA
a. Navigable Waters
b. "Incidents" After August 18, 1990
c. Causation Requirement
d. Defenses
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I. INTRODUCTION
The oil and gas exploration and development process can create many surface water impacts. Drilling and production operations generate various wastes that can spill, leak, or be carried by rain, snow melt, and wind into surface water bodies. A goal of many state and federal regulatory programs is to contain and manage drilling and production wastes so they do not come into contact with surface water. In situations where discharges are permitted, the goal is to manage the volume, concentration, and chemical composition of the waste to ensure surface water quality is protected.
II. FEDERAL REGULATION OF SURFACE WATER IMPACTS
A. Clean Water Act: NPDES Requirements
The Clean Water Act (CWA) provides that the "discharge of any pollutant by any person shall be unlawful" unless the discharge meets the requirements of the Act.2 The Act provides for limitations on discharges of pollutants from "point sources" into "navigable waters."3
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1. Regulation of Point Sources Discharging into Navigable Waters
a. Point Sources
A point source is defined as: "[A]ny discernible, confined and discrete conveyance, including...any pipe, ditch, channel, tunnel, conduit, well, discrete fissure, container, rolling stock,...from which pollutants are or may be discharged."4 The Act requires point sources of pollution to obtain a permit before they can discharge pollutants into "navigable waters."5 Many oil and gas activities constitute point sources as defined by the Act. For example, during the production of oil and gas, often there are large volumes of water produced. Depending upon how this produced water is managed, it could become a point source. The issue then becomes whether the water is being discharged into "navigable waters."
b. Navigable Waters
The Clean Water Act defines navigable waters as "waters of the United States, including the territorial seas."6 The Environmental Protection Agency (EPA) has defined "waters of the United States" broadly to include even non-navigable intermittent streams and "wetlands" which may seldom fill with water.7 Courts have generally interpreted "waters of the United States" as permitting the EPA to regulate to the extent permissible under the Commerce Clause.8 Therefore, a discharge in an area that may not appear to be near an existing water body might actually be considered a discharge into "waters of the United States."
This raises the question of whether a discharge into groundwater can be considered a discharge into "waters of the United States." The EPA abandoned pressing this issue once it obtained express authority under other statutes to address groundwater problems. However, most courts addressing the issue have held EPA lacks CWA authority to control discharges into groundwater when the groundwater has no contact with surface
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water.9 This issue probably would have been resolved by the Supreme Court had the EPA not obtained the necessary authority to regulate groundwater issues through the Safe Drinking Water Act10 and the Resource Conservation and Recovery Act.11
However, I predict the issue will soon be addressed in the context of the Oil Pollution Act of 1990 (OPA)12 which allows public and private parties to seek damages and cleanup costs arising out of the discharge of oil "into or upon the navigable waters...."13 The OPA defines "navigable waters" as "waters of the United States."14 This issue is discussed at pages 29-32 of this paper. Many state water pollution statutes apply to the "waters of the state" which is often defined to include "surface and subsurface waters within the boundaries of the state."15
2. Regulation of Produced Water
Production of oil and gas often requires the production of large volumes of water with a high chloride concentration, referred to as "brine" or "salt water." As noted by the court in Natural Resources Defense Council v. U.S. E.P.A.:16
Oil production brings to the surface water which was originally trapped with oil or natural gas in a geological formation, as well as water and other fluids that have been mixed with oil or gas during the
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production process. These fluids are known as produced water.17
The Clean Water Act prohibits discharge of any "pollutant" from a point source unless the discharger obtains a permit.18 Section 402 of the Clean Water Act authorizes the Administrator to issue a permit to discharge pollutants; these are known as "National Pollutant Discharge Elimination System" permits or simply "NPDES" permits.19 To qualify for a permit, the discharge must comply with "effluent limitations" designed to meet state water quality standards and minimum technological requirements imposed by the Act.20
The minimum technological requirements incorporated into the NPDES permit generally reflect varying levels of control based upon the nature of the pollutant, the age of the facility, and the level of control that is economically and technologically feasible. The four categories include BPT,21 BAT,22 BCT,23 and NSPS.24
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The term "pollutant" is defined by the Act to include any "industrial waste" discharged into water.25 However, injection of produced water into a State-approved disposal well will not be considered a "pollutant".26 The same subsection exempts "water, gas, or other material which is injected into a well to facilitate production of oil or gas."27 Therefore, injection of material to enhance oil or gas recovery, or the injection of "water derived in association with oil or gas production," will not require a NPDES permit—if the injection has been approved by the state and the state "determines that such injection or disposal will not result in the degradation of ground or surface water resources."28 However, if the produced water is not going to be injected,29 a NPDES permit will be required—unless an alternative disposal technique is used that will not result in a discharge into "waters of the United States."30
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The EPA, at 40 C.F.R. Part 435, has promulgated effluent limitations for the "Oil and Gas Extraction Point Source Category."31 The industry category is divided into the following five subcategories:
1. Stripper
2. Onshore
3. Coastal
4. Agricultural and Wildlife Water Use
5. Offshore
a. Stripper Subcategory
The Stripper Subcategory applies to onshore facilities32 which produce "10 barrels per well per calendar day or less of crude oil and which are operating at the maximum feasible rate of production in accordance with recognized conservation practices."33 "Onshore"
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includes "all land areas landward of the inner boundary of the territorial seas."34 "Territorial seas" is defined by the Clean Water Act as:
[T]he belt of the seas measured from the line of ordinary low water along that portion of the coast which is in direct contact with the open sea and the line marking the seaward limit of inland waters, and extending seaward a distance of three miles.35
The Stripper Subcategory applies only to oil wells; no special provision is made for gas wells.36 However, a brine treatment demonstration project for stripper gas wells, sponsored by the Independent Oil & Gas Association of Pennsylvania, is currently underway along Sewickley Creek in Westmoreland County, Pennsylvania.37
Unlike the Onshore Subcategory,38 under the Stripper Subcategory there is the possibility of a permitted discharge. However, an operator desiring to dispose of produced water, by some means other than injection, must obtain a NPDES permit. Recently the EPA approved a general permit for wells in the Stripper Subcategory in Pennsylvania. The permit was submitted by the Pennsylvania Department of Environmental Resources and authorizes the discharge of produced water into streams following specified treatment. Absent specific effluent limitations for the Stripper Subcategory, discharges must comply with state water quality standards and standards that reflect the permit writer's best professional judgment concerning the required level of control pending EPA's promulgation of standards. However, as noted below, EPA's regulation of the Onshore, Coastal, and Agricultural and Wildlife Subcategories can impact stripper well operations which are also located within these Subcategories.
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b. Onshore Subcategory
The Onshore Subcategory applies to facilities39 located "landward of the inner boundary of the territorial seas...."40 However, any facility that is covered by...
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