ENVIRONMENTAL ISSUES IN INTERNATIONAL OIL AND GAS EXPLORATION AND PRODUCTION
| Jurisdiction | United States |
(Feb 1995)
ENVIRONMENTAL ISSUES IN INTERNATIONAL OIL AND GAS EXPLORATION AND PRODUCTION
Hughes & Luce, L.L.P.
Dallas, Texas
These days everyone in the oil and gas industry in the United States is familiar with the complex overlay of the seemingly infinite federal and state agencies claiming jurisdiction over oil and gas exploration and production and the associated operations. Although exemptions exist under the Resource Conservation and Recovery Act1 ("RCRA") for wastes associated with the exploration, development or production of crude oil or gas,2 and petroleum and natural gas are excluded from regulation under the Comprehensive Environmental Response Compensation Liability Act ("CERCLA"),3 recent case law continues to dilute the exemptions under RCRA and CERCLA. Furthermore, other byproducts of oil and gas exploration and production are increasingly being regulated under these statutes and other federal and state statutes.
The following non-exempt oil and gas wastes are some of those currently regulated under RCRA: painting wastes, unused fracturing fluids or acids, gas plant cooling tower cleaning wastes, oil and gas service company wastes, refinery wastes, used equipment lubrication oils, waste compressor oil and filters, used hydraulic oil, waste solvents, waste in transportation pipeline pits, caustic or acid cleaners, pesticide wastes, sanitary wastes, boiler cleaning wastes, drums, insulation, and pigging wastes from transportation lines.4
The following additional byproducts and wastes associated with oil and gas exploration are also regulated5 :
1. Asbestos. Though not included in the definition of hazardous waste under RCRA, asbestos is considered an air toxic and is one of the substances that is regulated. Asbestos can be found on oil and gas properties where materials containing asbestos have been used to wrap underground pipelines to prevent corrosion, and for insulating purposes.
2. Used Oil. Used oil is not exempt under RCRA and can be classified as a characteristic hazardous waste if it exhibits one or more of the characteristics within these categories under RCRA. Recycling used oil can exempt the oil from RCRA regulation.
3. Used Oil Filters. Used oil filters are not exempt under RCRA unless they are hot-drained by puncturing, crushing or dismantling or by other methods which would remove the used oil. More stringent state regulations exist with regard to disposal methods for these filters.
4. Glycol/Amine Filters. State laws generally regulate the disposal of these wastes which are exempt under RCRA.
5. Tank Bottoms. State law generally regulates the disposal of tank bottoms which are exempt under RCRA.
6. Sandblasting Wastes. Sandblasting wastes may be regulated under RCRA as a hazardous waste if they contain lead levels that make the lead hazardous under the toxicity characteristic.
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7. Crude Oil Stained Soils. State laws generally regulate the handling of crude oil spills and the disposal of contaminated soils.
8. Contaminated Oils. Oils contaminated through use, when the contaminant was not part of the product, or when the hazardous substances are added to the oil for purposes other than re-use, are considered CERCLA hazardous substances. Recent cases continue to indicate that materials exempt under RCRA may still be regulated as hazardous substances under CERCLA.6
Oilfield exploration production is further regulated at the federal level by statutes which include the following:
The Oil Pollution Act of 1990, 33 U.S.C. §§ 2701 -2761 (West Supp. 1994);
The Endangered Species Act of 1973, 16 U.S.C. §§ 1531 -1544 (West 1985 & Supp. 1994);
The National Environmental Policy Act of 1969, 42 U.S.C. §§ 4321 -43706 (West 1977 & Supp. 1994);
Coastal Zone Management Act of 1972, 16 U.S.C. §§ 1451 -1464 (West 1985 & Supp. 1994);
Marine Protection, Research, and Sanctuaries Act of 1972, 33 U.S.C. §§ 1401 -1445 (West 1986 & Supp. 1994); and
The Clean Air Act as amended in 1990 (42 U.S.C. §§ 7401 -7642 (West 1983 & Supp. 1994).
State level regulation includes new rules and regulations relating to the disposal of naturally occurring radioactive material ("NORM"), contaminated oil and gas wastes,7 management and disposal of NORM contaminated equipment, the storage, treatment and disposal of oil and gas wastes,8 UST's, PCB containing transformers and equipment, state clean water act issues, plugging of wells, prevention and control of spills and wildlife protection measures (i.e., netting and fencing).
In addition to the above, the United States Environmental Protection Agency ("EPA") has been developing new standards under the Clean Water Act in relation to offshore exploration and production (new discharge standards) and onshore exploration and production (new affluent limitation requirements and new source performance standards). The agency plans to propose new regulations in 1995 with final versions expected in 1996. New regulations could potentially ban onshore and coastal surface discharges of drilling muds, drill cuttings and produced brine. As a precursor, EPA Region VI prohibited discharge of drilling fluids and drill cuttings and set limits on other discharges relating to exploration and production in the coastal waters of Texas and Louisiana when it issued its final National Pollutant Discharge Elimination System general permits in September of 1993. New standards are additionally expected in 1994 for underground injection controls for Class II wells under the Safe Drinking Water Act.9
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According to a report released by the American Petroleum Institute in 1994, titled "Costs to the Petroleum Industry of Major New and Future Federal Government Requirements", the figures reflect $17-25 billion annualized new and potential environmental costs by the end of the 1990's.10 By the year 2,000 the report predicts that the petroleum industry will be spending between $26-33 billion annually to comply with the...
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