The Clean Water Act and Oil & Gas Operations Professor Tracy Hester Environmental Law in Oil & Gas Oct. 30, 2017

Overview Water demands and impacts of oil and gas development Federal and state clean water laws Federal: the Clean Water Act, Oil Pollution Act State: Texas Water Code (other states: e.g., PA’s Clean Streams Law) What waters are covered? What obligations are triggered? What liabilities can apply? Future directions and strategies for water quality management at O&G operations

Quick review Federal Clean Water Act (ignoring Rivers & Harbors Act for now) Prohibits discharge of a pollutant from a point source into navigable waters without a permit (either federal National Pollutant Discharge Elimination System (NPDES) or from delegated state) Does NOT include Groundwater Purely intrastate waters DOES include “wetlands” Section 404 permits Army Corps of Engineers

Katy Prairie 1,000 sq miles Major migratory bird flyway “Prairie Potholes”

Quick reminder: spill reporting Recall – release of hazardous substances above a reportable quantity (as determined over 24 hours) triggers a duty to report immediately to National Response Center Special rules for oil: sheen test. See CWA Oil Spill Reporting Rule

So let’s wade in… Rapanos v. U.S. Don’t forget the statutory backdrop: “Discharge of any pollutant shall be unlawful” – CWA 301(a) “Discharge of any pollutant” defined to include “any addition of a pollutant to navigable waters from any point source” – CWA 502(12) “Navigable waters” defined as “the waters of the United States, including the territorial seas.” Which means Only question of federal statutory law and interpretation State laws can differ – in Texas, “waters of the State” Congress can change law, or agency can change intepretation

Rapanos – the mysterious mess Part of famous troika of U.S. Supreme Court cases: U.S. v. Riverside Bayview Homes (1985) – apartment on wetlands abutting navigable water Solid Waste Agency of North Cook County v. Corps of Engineers (SWANCC) (2001) – isolated flooded gravel quarry used by migratory birds Here?

So what’s the holding? Scalia’s plurality – “waters of the United States” includes only “relatively permanent, standing or continuously flowing bodies of water” that “form geographic features” Wetlands don’t qualify unless they have a “continuous surface connection” to waters of the United States such as that there’s no “clear demarcation” between them. Stevens dissent – narrow questions, with Chevron Step 1 answer Wetlands immediately adjacent to tributaries of WOTUS Manmade berm separating wetland from adjacent tributary

The one-man majority Justice Kennedy’s concurrence So what’s a “significant nexus”? Case-by-case? So what’s the holding of Rapanos? E.g., what’s “relatively permanent”? Seasonal? EPA: Three months

The saga continues… Stepping into the Chevron breach: Clean Water Authority Restoration Act – 2012 through 2010 EPA and Corps proposed new rule to clarify scope of “waters of the United States” - Clean Water Rule: Definition of 'Waters of the United States,' – April 21, 2011. Received more than 1 million comments Final rule – 80 Fed. Reg. 37054 (June 29, 2015)

The litigative scrum Who gets to rule? CWA judicial review provisions unclear; Sixth Circuit injunction National Association of Manufacturers v. U.S. Dep’t of Defense Oral argument on Oct. 11, 2017 Forecast – U.S. likely to lose

Let’s keep some perspective Effect of WOTUS fight on oil & gas development?

Let’s keep perspective – state law requirements In Texas, three most common discharges regulated under state law and regs: hydrostatic tests, gas plant effluent, and produced waters (both inland and offshore) Discharges to surface waters of Texas may require permits from both Texas Railroad Commission and U.S. EPA Receiving waters defined by Statewide Rule 3.8(a)(29) Cannot allow discharge which would violate Texas surface water quality standards Produced waters – 98th Meridian standard and EPA General Permit Storm water permitting

U.S. v. Hawkes – so when can I sue? So how do you know whether to discharge or dig? Jurisdictional determinations – essentially a comfort letter from the Corps of Engineers Regulatory process to obtain and administratively appeal Good for five years 8th Circuit holding U.S. Supreme Court?

Legacy of Hawkes 8th Circuit affirmed, 8-0, on May 31, 2016 Result: jurisdictional determinations can be appealed immediately as final actions Consequences?

Questions? Professor Tracy Hester University of Houston Law Center tdheste2@central.uh.edu 713-743-1152 (office)