Marcellus Shale drillers face potential liability under Clean Air Act

Energy Alert

By:

A recently filed lawsuit in a Pennsylvania federal court may signify that Marcellus Shale drillers could be exposed to lawsuits under the Clean Air Act for air emissions associated with hydraulic fracturing (“fracking”) operations. 

 

Fracking, a process of initiating a fracture in a rock layer to extract oil or gas reserves, has more commonly been criticized relating to allegations of water quality concerns.  If this lawsuit proves successful, Marcellus Shale drillers may also need to worry about seeking Clean Air Act new source review (NSR) permits.

 

Under the federal Clean Air Act (CAA), the EPA has established National Ambient Air Quality Standards (NAAQS) for criteria air pollutants, including ozone, which is caused in part by the release of nitrogen oxides (NOx) into the atmosphere.  Under the CAA’s NSR program, a new or modified source with the potential to emit criteria air pollutants in excess of annual thresholds must, among other things, apply for a permit to construct, comply with stringent emissions limits, install controls, and, when the source is located in an area in non-attainment with the NAAQS, offset its emissions with emission reduction credits.

 

The citizen suit filed by Citizens for Pennsylvania’s Future (PennFuture) in late July this year in the United States District Court for the Middle District of Pennsylvania against Ultra Resources, Inc. alleges that Ultra’s Marcellus Shale drilling sites in Pennsylvania required a major NSR permit under  the CAA and Pennsylvania law.  Although Ultra’s gas extraction activities include 34 gas wells, 7 compressor stations and a metering and regulation station that together span a 558- square-mile area, PennFuture argues that these all should be considered a single source of air emissions under the CAA, because the activities support one another and are connected by pipeline.  PennFuture charges that total NOx emissions produced by Ultra’s gas extraction activities as a single source exceed NSR emissions thresholds of 100 tons per year.  Because Ultra did not apply to Pennsylvania for an NSR permit to construct, install stringent NOx emissions controls or obtain emissions offsets, PennFuture alleges that Ultra violated the CAA and Pennsylvania law implementing the CAA.

 

A favorable ruling for PennFuture could have serious nationwide implications for Marcellus Shale drillers.  When a driller’s activities are located within an ozone NSR non-attainment area, and its NOx  emissions exceed the applicable threshold, which ranges from 10 to 100 tons per year, the driller would be subject to potential liability under the Clean Air Act if it did not obtain the necessary permits, which in turn would have emissions limitations and require controls and offsets.

 

Moreover, within the Ozone Transport Region, which includes all areas from Washington, DC to Maine, all areas are legally bound by nonattainment requirements even if the air does not actually fail to meet the NAAQS.  If the citizens are correct,  this would mean that any driller proposing to operate in that region would have to obtain a CAA NSR permit or face litigation if aggregate emissions exceeded the thresholds.

 

Marcellus Shale drillers should keep a careful eye on this litigation and the combined emissions from their operations or risk potential penalties or shutdown under the Clean Air Act.

 

For more information about the potential effect of this litigation on your business, please contact the members of our Shale Oil and Gas practice:

 

Robert J. Gruendel

 

Deborah E. Jennings

 

Jayne Anderson Risk

 

 

The Energy Daily published another version of the authors' Alert on October 4, 2011.

 

 You may also be interested in our other Alerts about the Marcellus Shale: