18th Annual KBAI KIOGAOil & Gas Conference

Sponsored bytbe Kansas Bar Association

and tbe Kansas Independent Oil & Gas Association

KANSAS BARASSOCIATION

Wichita Marriott9100 Corporate Hills Drive

Wichita, Kansas

Copyright 1990, 1993 @ Kansas Bar Association

All rights reserved.

No use eEept the use offonm B pemdaedwhkhwJD.1nfrInge on the~wJtb..out the apras wrIUen mosentofthe Kansas BarAssodadon.

I.S.B.N. #0-942357-86-8

NOTE: The Kansas Bar Legal Educatm J11blications and programs are intended to ass~Kansas lawyers. Publications are distributed and programs presented with the understandingThe Kansas Bar Association, is committees, authors and speakers do not hereby rendeC legaladvice. The material is presented as research infamatioo to be used by lawyers in amjuJ:Ktionwith other research deemed necessaJV, in the exercise of their independent professional judge-ment. Original and fully current sources of authaity should be researched.

A Summary and Update ofOil & Gas Environmental Law

Presented by

Professor David E. Pierce

Washburn Law SChool

1700 College

Topeka, Kansas 66621-1140

August 5, 1993 -Wichita, Kansas

SUMMARY AND UPDATE OFOIL & GAS ENVIRONMENTAL LAW

by

David B. Pierce

Prof•••or of LawWashburn University School of Law

Topeka, bnsas

Of COUDselShughart Thomson , Kilroy

Kansas City, Hissouri

I. IftRODUCTION

A. The Realities of oil , Gas BnviroDmental Law

1. oil and gas activities impact theenvironment.

2. All phases of oil and gas development aresUbject to extensive state and federalenvironmental requirements.

3. CUrrent levels of compliance range fromexcellent to nonexistent.

4. Existing requirements will be the objectof new enforcement efforts; newrequirements will be imposed.

B. Regulatory ObliqatioD. aDd Liability

1. Two primary approaches to regulating oiland gas environmental impacts:

a. Specific regulatory requirements.

(1) Reporting obligations.

(2) Performance, operation, anddesign obligations.

----------------------~-----------------o COPrright 1993 b7 David •• PiereeAll Ri9h~. a•••rYed

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b. Liability imposed to remedy anenvironmental problem.

(1) Ordered to clean up a problem(oil spill, hazardous substancerelease).

(2) Ordered to pay money to theqovernment or private partiesto reimburse them for cleanupcosts.

(3) Ordered to pay for damagesassociated with the activity orcondition.

c. Topics for summary and Update

1. Emergency Planninq and community Right-to-Know Act

a. Reportinq obliqations.

b. The Kansas program.

2. Clean Water Act/Safe Drinkinq Water Act

a. Manaqinq produced water.

b. Managing related development wastes.

c. Oil spill reporting, cleanup, andprevention.

3. Oil Pollution Act

a. Oil spill liability.

b. Private right of action for damages.

4 • Comprehensive Environmental Response,Compensation and Liability Act/ResourceConservation and Recovery Act

a. Cleanup liability.

b. Avoidinq liability in routine oil andgas transactions.

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xx • BKBRGDCY PLUHXlfG UD COIlllUHZTY RZGB'1'-TO-DOW ACT(BPCRA) (SARA TITLB III)

A. The Basic Goals of the Act

1. Require state and local agencies, andprivate businesses that have hazardousmaterials on site, to plan for emergenciesassociated with the hazardous materials.

2 • Require persons that have hazardousmaterials on site to provide information(reports) to the local fire department,local emergency planning agency, and stateemergency planning agency, concerning theexistence, location, and nature of thehazardous materials.

3. Require persons to provide immediatenotification of certain releases ofhazardous materials.

4. The program is the product of theEmergency Planning and Community Right-To-Know Act of 1986, 42 U.S.C. 5S 11001to 11050 (1988) which comprised Title IIIof the Superfund Amendments andReauthorization Act of 1986 (thUS "SARATitle III").

5. Although it is a federal program, the Actrelies upon the states for its basicadministration.

B. The Program Players

1. Each state is directed to form a "stateEmergency Response Commission." EPCRAS 301(a), 42 U.S.C. S 11001(a) (1988).

a. E.g. Kan. stat. Ann. S 65-5703 (a)(1992) creating the state EmergencyResponse Commission.

b.· The Kansas statute authorizes .theCommission:

(1) To carry out "all requirements

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(2) To provide assistance incoordinating state agencyactivities concerning" [c] hemical emergency training,preparedness, and response" and"chemical release reporting andprevention, transportation,manufacture, storage, handling,and use."

2. Each state commission is directed tocreate local emergency planning districtsand appoint a local emergency planningcommittee to prepare and implementemergency plans for hazardous materialswithin the planning district. EPCRA S 301(b), (c), 42 U.S.C. 5 11001(b), (c)(1988).

a. E.g. Kan. stat. Ann. 5 65-5703 (a)(1992) creating the state EmergencyResponse Commission.

b. In Kansas each County is generallydesiqnated as the local emergencyplanning district.

c. Determining What's out There: 5S 302/303

1. The owner or operator of certain definedfacilities must notify the state EmergencyResponse Commission if they are currently,or sUbsequently become, sUbject to the ·emergency planning portion of EPCRA(5302).

a. To come under the S 302 notificationrequirement the facility must:

(1) Have a listed "extremelyhazardous substance" at thefacility;

(2 ) In a volume equal to or inexcess of a listed "thresholdplanning quantity" (TPQ).

b. The list of extremely hazardoussubstances and their associated TPQs

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are found at 40· C.F.R. Part 355,Appendix A (1992).

APPENDIX A TO PART 355-TtE LIST OF ExTREMELy HAzARDous SUBSTANCES AND THEIRTHREIHOLD PlANNING QuANTlTlES-Contln

:=; TtnIhaIdCAS No. a..IaII- NaIll .=.....-r7722~-t ..,...,. ...... ceanc >sn.' ... 1 1.0007713-07-5 ..,...,. ....... • 1 1077I3-CIS-4 ..,...,...... • 100 -113-11-1 ......... I 1 10011O.aoo,....... Iran.,......... • 1 '00.7-71-1 ....... .... • t 'OO110.aoo~-o ....../1...... .... t '.aoo

'01-11-3 ...,.. Add. 1.4Gd""'.'" EIIIr • 1 1OO/10.aoo-.n-e IIadItn 1 100/10.000...1-4 .........- c '00 '00

4011-1'-1 ..........c.... .... t '00,..... ......... 0 ...._ o • • 1 1.000,,1-1I-O ................... 011........... • 1 IDD71-17-1 ........ • , '.000"...... ........ • t oo141-11-Iס.ס'/100 ........ c. .. " 1 10....... LhIIne d 1 'JIGO/'O.ODO~.. Ltin ........ It.. 1 100,,,,,-I ......... ,'- ooס.ס10011

'11-"1-1 Me..... T........ .....,IcJD.~t.,..... .... , 10011-11-1 MId........ c.. , '0

""0-7 • , IDOtlllO-l7-1 MInuIc--. • t 100I10.000Excerpt from Exhibit A to Part 355.

2. Facilities reporting under S 302 mustprovide a representative who willparticipate in the emergency planningprocess with the local emergency planningcommittee and serve as a "facilityemergency coordinator. n EPCRA S 303 (d)(1),42 u.s.c. 5 11003 (d) (1) (1988).

3. Facility owner or operator obligated toinform the emergency planning committeeof any relevant changes occurring at the.facil!ty as the occur or are expected tooccur. EPCRA 5 303(d) (2), 42 U.S.C.S 11003 (d) (2) (1988).

4. Governor or state emergency responsecommission can designate additionaltacilities to be included in the S .302planning process. EPCRA S 302(b) (2), 42U.S.C. S 11002 (b) (2) (1988).

5. If a facility is not currently SUbject tothe reporting requirement (chemical noton the list or below TPQ) , but

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subsequently becomes sUbject to therequirement (chemical listed or exceedTPQ), the facility owner or operator has60 days in which to report to the statecommission and local committee. EPCRAS 302 (c), 42 U.S.C. S 11002 (c) (1988).

6. See generally 40 C.F.R. S 355.30 (1992).

D. D.t.~ininq What'. out There: S 311 List ofHazardous Chemicals on Site

1. Certain owners or operators of definedfacilities must submit to the statecommission, the local committee, and thelocal fire department, either a materialsafety data sheet (MSDS) or a list ofhazardous chemicals at the facility.EPCRA S 311(a) (1), 42 U.S.C. S 11021(a) (1)(1988). NOTE: Some states may requirethat you report by chemical "list" withan obliqation to provide backup MSDSs' uponrequest. See, e.g., Kan. stat. Ann.S 65-5707 (1992).

a. To come under the S 311 reportingrequirement the facility must:

(1) Be one. for which theOccupational Safety and HealthAct requires a MSDS for an OSHA"hazardous chemical;" and

(2) The hazardous material is·present in a volume equal to orin excess of the followingthreshold levels:

(a) Hazardous chemical: 10,000pounds;

(b) Extremely hazardoussubstance: 500 pounds orits TPQ--whichever islower.

b. See generally 40 C.F.R. S 370.20(1992).

2. OSHA's MSDS requirement: 29 C.F.R.

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S 1910.1200(b) (1) (1992) provides, inpart:

"This section requires ••• all employersto provide information to their employeesabout the hazardous chemicals to whichthey are exposed, by means of a hazardcommunication program, labels and otherforms of warning I material safety dataSheets, and information and training."

a. "Employer" is defined as "a personengaged in a business where chemicalsare either used, distributed, or areproduced for use or distribution,including a contractor orsubcontractor." 29 C.F.R. S 1910.1200 (c) (1992).

(1) "Chemical" means "any element,chemical compound or mixture ofelements and/or compounds."

(2) "Distributor" means "a business,other than a chemicalmanufacturer or importer, whichsupplies hazardous chemicals toother distributors or toemployers."

b. "Hazardous chemical" means "anychemical which is a physical hazardor a health hazard." 29 C.F.R.S 1910.1200(c) (1992).

(1) "Physical hazard" means "achemical for which there isscientifically valid evidencethat it is a combustible liquid,a compressed gas, explosive,flammable, an organic peroxide,an oxidizer, pyrophoric,unstable (reactive) or water-reactive."

(2) "Health hazard" inc.ludes"chemicals Which arecarcinogens, toxic or highlytoxic agents, reproductivetoxins, irritants, corrosives,sensitizers. • and agents

1-7

which damage the lungs, skin,eyes, or mucous membranes."

c. Produced hydrocarbons (crude oil,natural gas, condensate) would seemto meet the definition of either aphysical or health hazard andtherefore be a "hazardous chemical"requiring a MSDS under OSHA's hazardcommunication standards.

(1) The API •s standard reportingguide lists ProducedHydrocarbons as having thefollowing Physical and HealthHazards: Fire and SuddenRelease of Pressure physicalHazards and Immediate (acute)and Delayed (chronic) HealthHazards.

(2) See generally Bulletin on theGeneric Hazardous Chemicalcategory List and Inventory forthe oil and Gas Exploration andProduction Industry, BulletinEl (SUL El), API (2d ed. Dec.1, 1990). Copies can beobtained from American PetroleumInstitute, Publications andDistribution Section, 1220 LStreet, NW , Washington, D•C.20005, (202) 682-8375.

3. Although th,e EPCRA incorporates the OSHA ·definition of "hazardous chemical", EPCRAspecifically excepts the following fromthe definition (for EPCRA reportingpurposes) :

n(l) Any food, food additive, coloradditive, drug, or cosmetic regUlated bythe Food and Drug Administration.

(2) Any substance present as a solidin any manufactured item to the extentexposure to the substance does not occurunder normal conditions of use.

(3) Any substance to the extent itis used for personal, family, or household

1-8

purposes, or is present in the same formand concentration as a product packagedfor distribution and use by the generalpUblic.

(4) Any substance to the extent itis used in a research laboratory or ahospital or other medical facility underthe direct supervision of a technicallyqualified individual.

(5) Any substance to the extent itis used in routine agricultural operationsor is a fertilizer held for sale by aretailer to the ultimate customer."

EPCRA S 311 (e), 42 U • S • C• S 11021 (e)(1988).

4. Also excepted from the reportingobligations (55 302, 311, 312, & 313) are:

" [T]ransportation, including the storageincident to such transportation, of anysubstance or chemical SUbject to therequirements of this chapter, includingthe transportation and distribution ofnatural gas." EPCRA 5 327,42 U.S.C.5 11047 (1988) (does not exempt theseactivities from emergency releasenotification under 5 304).

5. Must update the information by filing arevised document "[w]ithin three monthsfollowing discovery • • • of significant·new information concerning an aspect ofa hazardous chemical •••• " EPCRA S 311(d) (2), 42 U.S.C. S 11021(d) (2) (1988).

6. Note that the threshold quantity for ahazardous chemical or extremely hazardoussubstance is measured by the amountpresent at a "facility" at any time.

a. Designated facility will determinewhether reporting is required "and,if reporting is required, the scopeof materials included in the report.

b. "Facility" defined by EPCRA asfollows:

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"[A]ll buildings, equipment,structures, and other stationaryitems which are located on a singlesite or on contiguous or adjacentsites and which are owned or operatedby the same person (or by any personwhich controls, is controlled by, orunder common control with, suchperson) • For purposes of section11004 of this title [releasenotification], the term includesmotor vehicles, rolling stock, andaircraft."

EPCRA S 329(4),42 U.S.C. S 11049(4)(1988).

c. The regulations define "facility" asabove, but add the following:

"Facility shall include manmadestructures as well as all naturalstructures in which chemicals arepurposefully placed or removedthrough human means such that itfunctions as a containment structurefor human use•••• "

40 C.F.R. S 370.2 (1992).

d. How will facility be dealt with inthe oil and gas context?

(1) Tank battery?

(2) oil and gas lease?

(3 ) Operating Agreement "contractarea."

(4) Pooled or unitized area?

(5) See The Kansas EmergencyPlanning and Community Right-To-Know Act Compliance ReportingGuide for the oil and GasExploration and ProductionIndustry, Kansas Department ofHealth & Environment.

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mE JeANS'S EHE1lGENCY PLANNING AND COMMUNITY RIGHT-to-gol' ACT

COMPLIANCE REPORTING GUIDE

lOll THE OIL AND GAS EXlLORATIOR AND PROpUCTION mUSTIlY

1-11

This guide to compliance reporting has been prepared specifically to assist

the Oil and Gas Production Industry of Kansas in completing required reporting

under the Kansas Emergency Planning and Community Right-to-Know Act (EPCRA)

K.S.A. 65-5701 incl. 65-5710.

The Kansas EPCRA requires written notification to the State Emergency

Response Commission (SERC) of all facility locations storing hazardous chemicals

meeting specific reporting criteria.

Historically, confusion concerning the definition (and consequent

reporting) of a facility has existed between the Kansas Department of Health and

Environment's Community Right-to-Know Program, the Environmental Protection

Agency, and the Kansas Oil and Gas Production Industry.

For purposes of emergency planning, response, and safety the Right-to-Know

Program believes reporting by tank battery complex or free standing facility best

fulfills this purpose. EPA's facility definition may expand beyond the tank

battery or free standing facility in that EPA views each lease to be a separate

site .. which is one element of EPA's definition of a facility. The Industry, for

the most part, has shown preference to report by ·production foreman areas·.

Affecting the interpretation of each of these definitions has been the lack of

a definitive response from EPA to questions raised by the Kansas Right-to-Know

Page 21-12

Program concerning contiguous and adjacent sites as part of the location element

within the Federal definition of a facility.

The Right-to-Know Program has progressed to a point at which further delay

in reporting by the Oil and Gas Industry will have a detrimental affect on the

intent of this program.

We are, therefore, providing the industry with alternative methods of

reporting to satisfy compliance. Either method is acceptable, and depending on

your specific operation, one method may be beneficially preferable over the

other. The Kansas Right-to-Know Program prefers reporting by tank battery or free

standing facili~ for the reasons stated above.

OIL & GAS EXPLORATION AND PRODUCTIQR IRDUSTllX COMPLIANCE UPORTING

The oil and gas exploration and production industry faces a rather unique choice

because of the definition of facili~ under the federal statute. This definition

gives the industry a number of options to choose in how to structure their Title

III reports. The definition of "facility" in Section 329 (4) of the act and

regulations in 40CFR 355.20 and 370.2 contains three elements: a stationary item

element ("all buildings, equipment, structures, and other stationary items"),

a location element ("which are located on a single site or on contiguous or

adjacent sites"), and a control element (which are owned or operated ,by the same

person...• ·). The definition applies equally to surface and subsurface rights.

Page 3

1-13

All three elements of the above definition are relevant in determining the

appropriate reporting facili~ in general; and in clarifying reporting

obligations to the oil and gas production a~eas in particular.

The State of Kansas considers a wfacili~w to be a Wtank batte~ complex" or a

"free standing facility." A "tank batte~ complexw consists of the well or wells

pumping into a tank batte~ and the tank batte~ itself which meet a reporting

threshold. The location of the tank battery must be given. This allows the tank

batte~ and all wells connected to it to be reported as one facili~. A wfree

standing facili~" is a well for which the drilling, completion, production, or

workover operation meets a reporting threshold and the well has not been

previously reported in a tank batte~ complex. If a well which is connected to

a tank battery is reworked and therefore meets the reporting thresholds for

chemicals used during the rework, the rework chemicals must either be reflected

on an update of the Wtank batte~ comp1exw report or be reported as a "free

standing facili~." Other examples of -free standing facilities" could include

a pump station, pipeline terminus, maintenance facilities, and underground

containment if they meet notification requirements.

EPA has determined that each lease 1s a separate site, which mayor may not aieet

criteria to become identified as a facili~. EPA takes the position that oil

and gas deposits are not ·structures· under Title III. The subsurface mineral

lease gives a leasee a proper~ interest that may be broader than surface

operations. Therefore, a report under Title III for a single' 'facility may

represent, geographically, a number of adjacent or contiguous leases that must

have stationa~ structures and are owned or operated by the same company. Where

Page 4

1-14

•

an undeveloped lease (no surface or subsurface stationary structures) intervenes

between two developed leases, then those two ~.ve~oped leases must be repo~ted.

separately since they are not -adjacent and contiguous·. This facility

definition mayor may not be co-current with your actual operations be they

managed by your company based upon well field, production management area, or

some other company classification.

The Kansas Department of Health and Environment will allow oil and gas

exploration and production industry companies to use either application in

determining a reportable facility under Title III. For companies wishing to use

the EPA facility definition in reporting, it will be necessary to provide, with

the Title III submissions, supporting documentation sufficient to establish the

three criteria (stationary surface or subsurface structures, location and

control). Documentation to support these three elements will include maps, legal

descriptions, and a current (annual) description of all surface and subsurface

stationary structures and their locations relative to each individual lease

which is agglomerated as part of a single facility sub.ission.

Once a company makes a decision regarding the facility definition they will

apply, all Title III submissions (Sections 302, 304, 311, 312, and if applicable,

313) should be submitted using this same facility criteria. If, after initially

reporting, a company wishes to change to the alternate facility definition a

letter identifying that a change is being made and describing h~w the change has

either increased the number of reportable facilities or decreased the number of

reportable facilities must be sent to the SERe.

Page 5

1-15

Be advised notifications and appropriate fees are currently due for the calendar

years 1988, 1989 , and 1990. It .111 be your responsibility to review yourfacility reporting records to determine current status for these years and submit

any delinquent notifications and/or fees promptly to avoid pursuit of regulatory

actioD$.

You must also be aware of legislative amendments made to the Kansas EPCRA which

will affect reporting for the calendar year 1991, which will be due Karch 1,

1992. These amendments include·: facilities regulated under Section 311 and

Section 312 of the federal act shall submit lists of chemicals in lieu of

material safety data sheets, and Tier II reports in lieu of Tier I reports

(H.B. 2472). Additionally, reference should be made to EPA's Final Rule on

Community Right-to-Know Reporting Requirements 40CFR Parts 350, 355, 370, and

372 Federal Register Vol.55, No.l44, 30632 July 26, 1990 (subsurface operations).

Our goal is to bring your industry into compliance with EPCRA in as efficacious

a manner as possible. If your facility has not previously reported under this

Act, please contact this office so additional information and assistance may be

provided.

RTKGIOILPARTB.192

Page 6

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B. Det8raininq What I • out Tho.re: S 312 ADDualaeport of Basar4ou8 Ch..icals OD site

1. Apply same criteria as used under S 311to determine whether facility is subjectto reporting requirements of S 312. See40 C.F.R. S 370.25 (1992).

2. Report to the same parties as under S 311.

3 • Must report on or before March 1 forhazardous chemicals on site during thepreceding calendar year.

4. Initial reporting could be satisfied byproviding "Tier I" information; moststates now require the more detailed "TierII" rep.orting format. EPCRA S 312 (d) (1) ,(2),42 U.S.C. S 11022 (d) (1), (2) (1988).See, e.g., Kan. stat. Ann. S 65-5707(1992) (requiring Tier II reporting).

5. Mixture reporting: If the material is amixture containing one or more hazardouschemicals, the owner or operator Dlayreport under S 311 and S 312 by:

"(1) Providing the requiredinformation on each component in themixture which is a hazardous chemical;or

(2) Providing the requiredinformation on the mixture itself ••• n

EPCRA S 311 (a) (3), 42 U. S • C• S 11021 (a) (3) .(1988); 40 C.F.R. S 370.28 (1992).

6. Sample Tier II reporting forms arecontained on the pages that follow.

1-17

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1'. Dete:raininq nat'. out Th.ere: S 313 ADDualToxic Cheaical Re1e.se Reporting

1. Must report on or· before JUly 1 for toxicreleases from the facility during thepreceding calendar year.

2. Most oil and gas producers will not besUbject to S 313 reporting requirements.

3. S 313 apply to the following facilityowners and operators:

a. Having 10employees;

or more full-time

b. Facility falls within standardIndustrial Classification Codes 20through 39 (exploration andproduction activities fall under SIC13);

c. Facility involved in' themanUfacturing, processing, orotherwise using a "toxic chemical";

d. "Toxic chemical" must be on the toxic·chemical list found at 40 C.F.R.S 372.65 (1992); and

e. A listed toxic chemical must be atthe facility in one of the followingthreshold amounts:

(1) 10,000 pounds if it is "used" ·at the facility;

(2) 25,000 pounds if it is"manufactured or processed" atthe facility.

G. Emergency Botification: Spills and ae1ea.8.

1. Release of a listed "Extremely HazardousSubstance" or a CERCLA "HazardousSubstance" can trigger EPCRA noticerequirements. EPCRA S 304, 42 U.S.C.S 11004 (1988).

2. For an event to be SUbject to the S 304

1-19

notification requirement, the followingmust exist: .

a. The facility must produce, use, orstore a "hazardous chemical;"

b. Must have a "release" of an EPCRA"Extremely Hazardous Substance" ofa CERCLA "Hazardous Substance;"

c. The release must exceed therequlatory "Reportable Quantity" forthe substance;

d. The release must result in exposureto persons beyond the site or siteson which the facility is located.

3. The requlations contain additionalreporting exemptions that parallel thereporting exemptions under CERCLA S 103.See 40 C.F.R. S 355.40(a) (2) (1992).

4 • Although petroleum is not an ExtremelyHazardous Substance or a CERCLA HazardousSubstance, must consider whether itcontains any hazardous substances in suchconcentration and volume so as to triggerreporting under S 304.

5. Notification details. EPCRA S 304 (b), 42U.S.C. S 11004 (b) (1988); 40 C.F.R.S 355.40(b) (1992).

a. Who must the ownerI operator report ·to?

(1) Community emergency coordinatorfor the local emergency planningcommittee of areas likely to beimpacted by the release.

(2) state Emerqency ResponseCommission for any state likelyto be impacted by the release.

(3 ) Federal National Response Center(under CERCLA S 103).

(4) If the spill is the result ofa transportation event, the

1-20

notice re~irements can be metby dialing 911.

b. When must the notice be given?Immediately by telephone; follow-up in writing.

6. Penalties for failure to give immediatenotice:

a. civil penalties: $25,000 for eachviolation for each day it continues;second or sUbsequent violations$75,000 per day.

b. Criminal penalties: "knowingly andwillfully" fails to give notice:$25,000 and 2 years prison for firstoffense; $50,000 and 5 years prisonfor second or sUbsequent convictions.

III. CLBD WATER ACT

A. Regulation of Discharge.

1.

2.

The Clean Water Act (CWA) provides thatthe "discharge of any pollutant by anyperson shall be unlawful" unless thedischarge meets the requirements of theAct. CWA S 301(a), 33 U.S.C. S 1311(a).

~: ir~(~'a.

b.

,!!!!!: "[.?]iS~h~~~e(16f; 3;U.S.C. S 1362(16) •

...W*_: II [W] aste discharged intowat:er·············.......···~·······. • • [but exclud'ing] (B)water, gas, or other material whichis injected into a well to facilitateproduction of oil or gas, or waterderived in association with oil orgas production and disposed of in awell, it the well • • • is approved

1-21

c.

by authority of. the state in whichthe well is located, ADd if suchstate determines that such injectionor disposal will not result in thedegradation of ground or surfacewater resources." S 502(6), 33U.S.C. S 1362(6).

!~: d;s[:J:le d~~~:~~;~~:;including. • any pipe, ditch,channel, tunnel, conduit, well,discrete fissure, container, rollingstock, • • • from which pollutantsare or may be discharged." CWA S502(14), 33 U.S.C. S 1362(14).

d. 11¥~lllml~~~~~111111:UnJ.ted States,territorial seas."U.S.C. S 1362(7).

"[W]aters of theincluding theCWA S 502(7),33

(1) The Environmental ProtectionAgency (EPA) has defined "watersof the United states" broadlyto include even non-navigableintermittent streams and"wetlands" which may seldom fillwith water. 40 C.F.R. S110.1.

(2) Courts have generallyinterpreted "waters of theUnited states" as permitting theEPA to regulate to the extent·permissible under the CommerceClause. E • g • , United states v.Texas Pipe Line Co., 611 F.2d345, 347 (loth Cir. 1979).

(3) Therefore, a discharge in anarea that may not appear to benear an existing water bodymight actually be considered adischarge into "waters of theUnited States."

3. Any discharge of a pollutant is unlawfulunless a permit for the discharge isobtained and the terms of the permitfollowed. CWA S 301(a), 33 U.S.C. S 1311

1-22

(a) •

a. section 402 of the Clean Water Actauthorizes the Administrator to issuea permit to discharge pollutants;

~g~~!~~'b. To qualify for a permit, the

=~_n~~eCs~mPnl';dW::hm!!P!!f!;a1re~alrty sta~dards and minimumtechno.logical requirements imposedby the Act. CWA S 402(a), 33 U.S.C.S 1342(a) (1988).

4 • The minimum technological requirementsincorporated. into the NPDES permitgenerally reflect varying levels ofcontrol based upon the nature of thepOllutant, the age of the facility, andthe level of control that is economicallyand technologically feasible. CWA S502(11), 33 U.S.C. S 1362(11).

5. The four effluent limitations categoriesinclude BPT, BAT, BCT, and NSPS.

a. IS: Best practicable control€"echnology currently available. CWAS 301(b) (1) (A), 33 U.S.C. S1311 (b) (1) (A). This level of controlroughly equates to the "average of .the best" existing treatmentperformance in an industry category.EPA v. National Crushed stone Ass'n,449 U.S. 64, 76 n.1S (1989).

b. BA~: Best ava1e lable technologyeconomically achievable. CWA S301(b) (2) (A), 33 U.S.C. S1311 (b) (2) (A). This reflects a moredemanding level of pollution controland applies to toxic andnonconventional pollutants.

c. ..: Best conventional pollutantc·ontrol technology. CWA S 301 (b)(2) (E), 33 U.S.C. S 1311(b) (2) (E).

1-23

(1)

(2)

Conventional pollutants includesuch things as suspended solids,pH, and oil and grease. See 40C.F.R. S 401.16 (1992).

Generally the level of controlunder the BCT standard will beequal to, or more rigorous than,the BPT standard. However, itwill usually be less rigorousthan the BAT standard.

d.

(1) The NSPS standard reflects:"[T]he greatest degree ofeffluent reduction which theAdministrator determines to beachievable through applicationof the best availabledemonstrated control technology• • • • " CWA S 306 (a) (1), 33U.S.C. S 1316(a) (1).

(2) This will generally reflect thehighest level of control of allthe standards.

(3) A "new source" means "anysource, the construction ofWhich is commenced after thepUblication of proposed·regulations prescribing astandard of performance • • •applicable to such source • •• ." CWA S 306 (a) (2), 33 U. S • C•S 1316(a) (2).

6 • The Act contemplates that existingdischarge sources will initially beregulated by applying effluent limitationswhich meet the BPT level of control.

a. Subsequently, higher levels ofcontrol will be achieved by employingBCT for conventional pollutants andBAT for toxics and nonconventionalpollutants.

1-24

b. New discharge sources must meet thehighest level of control since newplants can be designed to incorporatethe necessary controls.

7. NPDES permits can require the dischargerto monitor, collect samples, and reporton its compliance status. CWA S 308(a),33 U.S.C. S 1318(a).

B. Regulation of Produced .ater: Int~oductioD

1. Production of oil and gas often requiresthe production of large volumes of waterwith a high chloride concentration,referred to as "brine" or "salt water."As noted by the court in Natural ResourcesDefense Council y. U,S, E,P,A,l:

"Oil production brings to the surfacewater which was originally trapped withoil or natural gas in a geologicalformation, as well as water and otherfluids that have been mixed with oil orgas during the production process, Thesefluids are known as produced water,"Natural Resources Defense Council v, U,S,E,P,A" 863 F.2d 1420, 1425 (9th Cir,1988).

2. The term "pollutant" is defined by the Actto include any n industrial waste"discharged into water.

a, However, injection of produced waterinto a state-approved disposal wellwill not be considered a "pollutant",CWA S 502(6) (B), 33 U.S.C, S 1362(6)(B).

b. The same SUbsection exempts "water,gas, or other material which isinjected into a well to facilitateproduction of oil or gas."

c. Therefore, injection of material to

1863 F.2d 1420 (9th Cir, 1988).

1-25

enhance oil or gas recovery, or theinjection of "water derived inassociation with oil or gasproduction, n will not require a NPDESpermit--if the injection has beenapproved by the state and the state"determines that such injection ordisposal will not result in thedegradation of ground or surfacewater resources." CWA S 502(6) (B),33 U.S.C. S 1362 (6) (B).

3. If the produced water is not going to beinjected, a NPDES permit will be required--unless an alternative disposal techniqueis used that will not result in adischarge into "waters of the Unitedstates."

a. Alternative disposal techniques, ifallowed by state law, could include:road spreading, evaporation pits ,percolation pits, agricUltural use,or discharge into a sewer system.

b. For an excellent collection of thevarious state regulatory alternatives·for dealing with produced water andother oil and gas exploration andproduction wastes, see EPA/IoceProject OD state RegulatioD of oiland Gas Exploration &n4 Pro4uction••ste (December 1990), published anddistributed by the Interstate oil andGas Compac:;t Commission, 900 Northeast.23rd street, P.o. Box 53127, OklahomaCity, Oklahoma 73152, (405) 525-3556.

4 • The operator of the well might alsocontract with third parties to dispose ofthe water. The third party may then truckor pipe the water to a permitted injectionwell or dispose of it in some otherauthorized manner.

a. However, in a recently proposed NPDESGeneral Permit the EPA stated thatproduced water given to a contractorfor disposal is still the operator's"discharge" and if improperly

1-26

disposed the ope~ator can be liable.

b. The proposed Permit prohibitspermittees from "causing orcontributing" to prohibiteddischarges.

c. -The EPA stated:

"Causing or contributing to such adischarge includes contracting withanother party which actuallydischarges the pollutants ortransports them to a third partywhich actually discharges them. Inaddition, disposal contractors havebeen listed as a class of permitteesunder the proposed permits , aprovision which will render operatorsand their disposal contractorsjointly and severally liable forpermit violations."

PrQPosed NPDES General Permits forProduced Water and Produced SandDischarges from the Oil and GasExtraction Point Source Category toCoastal Waters in Louisiana andTexas, 57 Jled. aeq. 60926, 60928(December 22, 1992) (emphasis added) .

c. aegulation of Produced Water: BffluentLimitations for the "oil and Gas ExtractionPoint Source Cateqory"

1. The EPA, at 40 C. F. R. Part 435, haspromulgated effluent limitations for the"Oil and Gas Extraction Point SourceCategory."

2. The oil and Gas Extraction Point SourceCategory is divided into the followingSUbcategories:

a. Stripper

b. Onshore

c. Coastal

1-27

stripperD.

d. Agricultural an4 wildlife Water Use

e. Offshore

Regulation of Produce4 Water:Subcategory

1. The Stripper SUbcategory applies to"onshore facilities" which produce "10barrels per well per calendar day or lessof crude oil and which are operating atthe maximum feasible rate of productionin accordance with recognized conservationpractices." 40 C.F.R. S 435.60.

8. "Facilities" includes "facilities• • • engaged in production and welltreatment in the oil and gasextraction industry. " 40 C. F •R.5435.60.

b. "Onshore" includes "all land areaslandward of the inner boundary of theterritorial seas. II 40 C.F.R. 5435.61(b) •

c. "Territorial seas" is defined by theClean Water Act as:

"[T]he belt of the seas measured fromthe line of ordinary low water alongthat portion of the coast which isin direct contract with the open seaand the line marking the seaward·limit of inland waters, and extendingseaward a distance of three miles."CWA S 502(8), 33 U.S.C. 5 1362(8).

2. The Stripper SUbcategory applies only to2il wells; no special provision is madefor qas wells.

3. A gas well is "any well which producesnatural gas in a ratio to the petroleumliquids produced greater than 15, 000 cubicfeet of gas per 1 barrel (42 gallons) ofpetroleum liquids." 40 C.F.R. 5 435.61(d) •

4. The EPA has not adopted specific effluent

1-28

OnshoreB.

limitations for the Stripper Subcategory,therefore, discharges must comply withstate water quality standards andstandards that reflect the permit writer'sbest professional jUdgme-nt concerning therequired level of control pending EPA'spromUlgation of standards.

5. However, as noted below, EPA's regulationof the Onshore, Coastal, and Agriculturaland wildlife SUbcategories can impactstripper well operations which are alsolocated within these SUbcategories.

Regulation of Produced Water:Subcategory

1. The Onshore Subcategory applies tofacilities located "landward of the innerboundary of the territorial seas •••• "

2. However, any facility that is covered bythe Coastal, Agricultural and WildlifeWater Use, or stripper SUbcategory isexcluded from the Onshore SUbcategory.40 C.F.R. S 435.30.

3 • The Onshore Subcategory establisheseffluent limitations which are pretty

4. Essentially, the EPA has determined thatthe best practicable control technologyavailable for such wastes is to injectthem in such a manner that they will notbe a "pollutant" under the Clean WaterAct.

5. On February 25, .1991 Region VI of the EPApublished final NPDES General Permits forthe Onshore SUbcategory for operations inLouisiana, New Mexico, Oklahoma, andTexas. Final NPDES General Permits for

1-29

the Oil and Gas Extraction Point SourceCategory. Onshore SUbcategory--States ofLouisiana. New Mexico. Oklahoma. andTexas, 56 Fed. Req. 7698 (Feb. 25, 1991)[hereafter called General Permit].

a. Each permit prohibits any dischargeof pollutants from onshore oil andgas wells and facilities.

b. The permits also narrow the stripperSUbcategory to exempt only wells thatmeet the Stripper designation at thetime the permit is issued. Forexample, if a well produces 11barrels of oil per day and, after thepermit takes effect production fallsbe·low the stripper well level, itwill not be eligible for stripperSUbcategory treatment. GeneralPermit, 56 Ped. Req. at 7703.

6 • The General NPDES Permit incorporates bestmanagement practices imposed by thevarious states to ensure drilling fluidswill be properly contained within areceiving pit to prevent a discharge orseepage.

a. Produced water is defined to includewater from "well drilling, productionor workover operations, as well aswaste waters from storage tanks,separators, saltwater or brine pits."

b. The discharge of produced water isprohibited and best managementpractices specified by each statemust be employed to minimize thechance of a discharqe or seepaqe ofproduced water.

c. Similar conditions are placed ondrill cuttings, produced sand, deckor rig floor drainage, blowoutpreventer fluid, and fluids used forwell treatment, completion, andworkover.

7 • Under this general permit approach,individual well owners and operators do

1-30

Coastal1'.

not need to apply for. 8 permit; they arecovered automatically.

8 • However, the EPA Regional Administratormay require any discharger to obtain anindividual NPDES permit if they fail tocomply with the general permit.

9 • The General Permit authorizes citizen.suits to enforce a permittee I snoncompliance with state pit and pondregulations which are incorporated intothe permit as "best management practices. "

a. The General Permit states: "Anypermit non-compliance constitutes aviolation of the Clean Water Act andis grounds for enforcement actionsand/or for requiring a permittee toapply for and obtain an individualNPDES permit."

b. Although the permittee is notrequired to file monitoring reports,they are required to report anynoncompliance with the permit "within24 hours from the time the permitteebecomes aware of the circumstances. It

Regulation of Produced Water:8ucateqory

1. The Coastal Subcategory applies tofacilities that are located in "any body ·of water landward of the territorial seas• • • or • • • any wetlands adjacent tosuch waters." 40 C.F.R. 5 435.40,5435.41(e). Section 435.41(f) defines"wetlands." 40 C.F.R. 5435.41(f).

2 • The current EPA regulations establish BPTlimits and permit the discharge ofproduced water so long as the dischargedoes not have a daily oil and greasecontent in excess of 72 milligrams perliter (mg/l) and a monthly average of 48mg/l. 40 C.F.R. S 435.42(a) (table).

3 • The regulation also prohibits the releaseof oil, applying the sheen test, from

1-31

discharges of deck .drainage, drillingmuds, drill cuttings, well treatment, andsanitary waste. 40 C.F.R. S 435.42 (a)(table).

4 • Operations may become sUbj ect to a generalpermit that imposes more demanding BCT andBAT requirements.

a. For example, a recent proposedGeneral Permit for coastal waters inLouisiana and Texas contains BCT andBAT standards and imposes limitationson stripper wells located withincoastal areas. Proposed NPDESGeneral Permits for Produced Waterand Produced Sand Discharges from theoil and Gas Extraction Point SourceCategory to Coastal Waters inLouisiana and Texas, 57 :re4. Reg-60926 (December 22, 1992).

b. The proposed General Permit, ifissued as proposed, would:

" [P]rohibit discharges ofproduced water and producedsand derived from facilities inthe Coastal, Offshore, andStripper SUbcategories to allwaters of the United statesshoreward of the inner boundaryof the Territorial Seas inLouisiana and Texas. Inaddition, the permits willprohibit the discharge ofproduced water and producedsand derived from facilities inthe Coastal SUbcategory to anyother water of the Unitedstates."

G. Regulation of Pro4uce4 Water: Aqricultura1and Wildlife Water U.e Subcateqory

1. This SUbcategory applies to onshorefacilities located in the continentalUnited states and west of the 98thmeridian.

1-32

This generally incluQes areas west of thefollowing cities:

Ft. Ransom, North DakotaMitchell, South DakotaHastings, NebraskaHutchinson, KansasEl Reno, OklahomaNew Braunfels, Texas

2. However, to qualify for this subcategory,the produced water must have a "use inagriculture or wildlife propagation • .•• " 40 C.F.R. S 435.50.

3. "Use in agriculturepropagation" means:

or wildlife

"[T]he produced water is of good enoughquality to be used for wildlife orlivestock watering or other agriculturaluses ADd that the produced water isactually put to such use during suchperiods of discharge. II 40 C.F.R. S435.51(c)

4. Whether the water meets the qualityrequirement will be determined in thepermitting process.

5. The effluent limitations established forthis SUbcategory limit oil and grease inproduced water discharges to a dailymaximum limit of 35 mg/l. 40 C.F.R. S43S.S2(a)(2).

becanwaterOnly produceddischarged.

b. The effluent limitations provide:

a.

"There shall be no discharge ofwaste pollutants into navigablewaters from any source (otherthan produced water) associatedwith production, fieldexploration, drilling, wellcompletion, or well treatment(i.e. drilling muds, drillcuttings, and produced sands) • II40 C.F.R. S 435.52(a) (1).

1-33

OffshoreB. Regulation of Produced Water:su!:»category

1. The Offshore SUbcategory applies tofacilities "seaward of the inner boundaryof the territorial seas." 40 C.F.R.5435.10.

2. The current regulations reflect only aBPT standard. 40 C.F.R. S 435.12.

a. The current regulations permit thedischarge of produced water so longas the discharge does not have adaily oil and grease content inexcess of 72 mg/l and a monthlyaverage of 48 mg/l. 40 C.F.R.5435.12 (b) (table).

b. The regulation also prohibits therelease of oil, applying the· sheentest, from discharges of deckdrainage, drilling muds, drillcuttings, well treatment, andsanitary waste. 40 C.F.R. 5 435.12(b) (table).

3 • However, most operations are currentlygoverned by a general permit issued bythe EPA Regional Office having authorityover the area. For example, Region VIrecently issued a NPDES General Permitfor the Western Gulf of Mexico which·governs facilities in federal watersseaward of Louisiana and Texas. Final'PDES General Permit for the Western Gulfof Mexico outer Continental Shelf, 57Ped. Reg. 54642 (November 19, 1992).

a. This General Permit includes BAT andBCT standards which reflect RegionVI's best professional jUdgmentconcerning the required level ofcontrol pending EPA's promUlgationof final BAT and BCT standards.

'b. The General Permit imposes severalnew requirements inclUding newtoxicity limitations and extensive

1-34

monitoring, testing, and reportingrequirements. .

4. After April 5, 1993, offshore operationswill be governed by a final rule issuedMarch 4, 1993 by the EPA. oil and GasExtraction Point Source Category;Offshore SUbcategory Effluent LimitationsGuidelines and New Source PerformanceStandards, 58 Pe4. Reg. 12454 (March 4,1993).

a.

.b.

This new rule establishes thestandards for BAT, BCT, and NSPS.

The new rule does not change theexisting BPT standards found at 40C.F.R. S 435.12.

I. Regulation of sto~ Water Runoff

1.

2.

3.

section 402 (p) of the Clean Water Actrequires the EPA to establish NPDESpermit programs for certain types ofstorm water discharqes. CWA S 402 (p), 33U.S.C. S 1342(p).

A "storm water discharge" consists of"storm water runoff, snow melt runoff,and surface runoff and drainage." 40C.F.R. S 122.26(b) (14).

Under the Act a storm wa~ep'ermi$ j 5 rem) j w:::J:or he·associat@d with ipdlJ5tri,1 actiYity." 40C.F.R. S 122.26(a) (ii).

~ "Associated with industrial activity"• includes:

"Facilities classified as StandardIndustrial Classifications 10 through 14(mineral industry) [Standard IndustrialClassification 13 is "Oil and GasExtraction"] including •• • oil andgas exploration, prOduction, processing,or treatment operations, or transmissionfac.ilities that discharge storm watercontaminated by contact with or that hascome into contact with, any overburden,

1-35

5.

raw material, intermediate products,finished products, byproducts or wasteproducts located on the site of suchoperations • • • " 40 C.F.R. S 122.26(b) (14) (iii).

The oil and gas industry could also beaffected by 40 C.F.R. S 122.26(b) (14) (x)which defines "industrial activity" toinclude:

"Construction activity includingclearing, grading and excavationactivities except: operations thatresult in the disturbance of less thanfive acres of total land area which arenot part of a larger common plan ofdevelopment or sale •••. " 40 C.F.R.S 122.26(b) (14) (x).

a. However, in Natural ResourcesDefense Council v. United statesE.P.A., 966 F.2d 1292, 1305-06 (9thCir. 1992), the court struck downthe EPA's exclusion of constructionsites of less than five acres asbeing unsupported by theadministrative record.

b. The EPA is in the process ofreevaluatinq this exclusion. SeeNational Discharge EliminationSystem; storm Water Discharges;Permit Issuance and PermitCompliance Deadlines for Phase I·storm Water Discharges, 57 Fed. aeg.60444, 60446 (December 18, 1992).

6. Drilling activities will trigger theconstruction subcateqory of "industrialactivity."

a. Depending upon the area impacted, astorm water discharge permit may berequired.

b. Particularly if the EPA adopts itsinitial proposed exclusion limit ofone acre instead of five acres.~, 922 F.2d at 1305-06.

1-36

7. section 402 (1) (2) of the Act prohibitsthe EPA from requiring a permit:

II [F]or discharges of stormwater runofffrom mining operations or oil and gasexploration, production, processing, ortreatment operations or transmissionfacilities, composed entirely of flowswhich are from conveyances or systems ofconveyances (including but not limited topipes, conduits, ditches, and channels)used for collecting and conveyingprecipitation runoff and which are notcontaminated by contact with. or do notcome into contact with. any overburden,raw material, intermediate products,finished product. byproduct « or wasteproducts located on the site of suchoperations." CWA S 402(1) (2), 33 U.S.C.S 1342(1) (2) (emphasis added). See also40 C.F.R. S 122.26 (a) (2).

a. This exemption recognizes that oftenstorm water is deliberatelychanneled around oil and gas andother mineral development operationsto prevent contact with on-sitecontaminants. National PollutantDischarge Elimination System PermitApplication Regulations for stormWater Discharges, 55 Pede Req.47990, 48029 (November 16, 1990).

b. Therefore, Congress concluded:

"[T]hat operators that use goodmanagement practices and makeexpenditures to preventcontamination must not be burdenedwith the requirement to obtain apermit. Hence, section 402 (1) (2)creates a statutory exemption fromstorm water permitting requirementsfor uncontaminated runoff from thesefacilities."

8 • To implement the storm water dischargeprogram, and the exemption foruncontaminated runoff, the EPA hasimposed a permit requirement forcontaminated storm water discharges

1-37

resulting from contac~ with the facility.

a. However, even though the storm waterdischarge is contaminated, it willnot be sUbject to NPDES requirementsunless the discharge is into the"waters of the United states."

b. To determine whether a contaminatedstorm water discharge has occurred,the EPA employs the sheen test foroil and the S 311 reportablequantity requirements for hazardoussubstances.

c. The operator of the site mustdetermine, for all periods sinceNovember 16, 1987, whether they havehad any discharge of storm waterfrom the facility Which caused thedischarge of a reportable quantity(RQ) of oil or a hazardousSUbstance, or which "contributes toa violation of a water qualitystandard."

d. If they have not experienced such adischarge, they need not apply fora storm water discharge permit. Ifsuch a discharge has occurred, oroccurs in the future, they will berequired to apply for a permit.

9 • To determine whether there has been adischarge of a reportable quantity of oil·the operator must use the "sheen test"provided for in 40 C.F.R. S 110.3.

a. Under the sheen test a discharge ofoil that can II [clause a film orsheen upon or discoloration of thesurface of the water • • ."constitutes a reportable quantity.

b. To determine if there has been adischarge of a reportable quantityof a hazardous substance theoperator must apply the RQsestablished under S 311 of the CleanWater Act and S 102 of theComprehensive Environmental

1-38

Response, compensation, andLiability Act. .

10. If a permit is required, the operatorshould have filed their permitapplication on or before October 1, 1992.

11. The regulations also allow forindividual, group, and general permits.

12 • The EPA has promulgated general permitsfor several states, territories, Indianlands, and federal facilities.

13. For example, on September 9, 1992 EPApublished its general permits for Alaska,Idaho, Louisiana, New Mexico, Oklahoma,South Dakota, and Texas. Final NPDESGeneral Permits for storm WaterDischarges Associated with IndustrialActivity, 57 Pede .eg. 41236 (September9, 1992).

a. For operations in an area covered bya 'general permit, the regulatedparty must file a Notice of Intent(NOI) form with the EPA.

b. The general permits requiredevelopment and implementation ofstorm water pollution preventionplans (SWPP Plans) , siteinspections , selective monitoring,

(J and certain limitations.14. If a new discharge is being proposed, apermit application must be submitted atleast 180 days before the facilitycommences operations that may result ina discharge. 40 C.F.R. 122.21(c).

~~owever, if the industrial activity~~s "construction" under 40 C.F.R.

5122.26 (b) (14) (x), the applicationmust be submitted at least 90 daysbefore the date the construction isto commence.

The application date can be variedby a general permit. For example,under the EPA's September 9, 1992

1-39

general permits., "facilities thatbegin industrial activities afterOctober 1, 1992, are required tosubmit an NOI-at least 2 days priorto the commencement of the newindustrial activity."

c. The EPA •s general permits alsoprovide that oil and gas operatorswho experience a contaminated stormwater discharge after October 1,1992 "are required to submit an NOIwithin 14 calendar days of the firstknowledge of such release."

The following chart indicates the deadlines forpermit applications, permit issuance, and permitcompliance:

Mar I'. '.3 .__._..__ _ Ma, 17, 1114•

• IndwIduItE........... ..••_ •.__..• a:-. I, 1112 __•.. • _ __•__ _ ~ I, 11a..- 1PP'a1lon - ---. ()cIaber I, 1~ • .._ ••_._.__ ~ t, 1~.......... •••••• 110 ell,. ~ 01 ..., wIIIGb One,.at""'" of .....

_, ca CIIChI'II. ... '~.IOILN_aanItIUeIIon..... . _ 10.,.priDr~~"'~ ._ an.,..,...., II ..

...... ...... 1IIIPbIIOft.

• Gnaup:PIlI, Pall 1

AI .,......... ......,• '.1 0CIDber 1, 1112 ••_ ••_ 0CIDber 1, 1113.-.r • ......-v papuIIIIon at ........250.aaD•

..................01 operaIId.., •........, Mar II, ,. __- ..... • papuIIIan It IIU..110.OOO•.......

PM, ParI 1• .,...,. • II' _........ NovMIbIr II, ••• __ ....... , •• '112 ._....__ November 'I. '113.• ,...,.. ........_.._.__.. _. ...._...._... Mar 11,1112 Mar 17•.1813 •••_._•• Mar 17, t.N•....,.._ -.., , .

The chart is taken from National PollutantDischarge Elimination System; storm Water Discharges;Permit Issuance and Permit Compliance Deadlines forPhase I storm Water Discharges, 57 l'e4. aeq. 60444,60447 (December 18, 1992). See also Natural ResourcesDefense Council y, United states E,P,A., 966 F.2d 1292,1297-1301 (9th eire 1992) (EPA improperly extendedpermit application deadlines).

1-40

J. Clean Water Act: oil spills

1. oil spills can trigger reportingobligations, cleanup requirements, fines,and liability for damage to pUblic andprivate interests.

2. oil spills are dealt with at the federallevel by Section 311 of the Clean WaterAct and the oil Pollution Act of 1990.CWA S 311, 33 U.S.C. S 1321; oilPollution Act of 1990, 33 U.S.C. S5 2701to 2761.

3 • oil spills are regulated at the statelevel by statutes and traditional commonlaw concepts of negligence, nuisance,strict liability, and trespass.

4 • The "harmful quantities" requirement:5311 provides, in part:

II (3) The discharge of oil orhazardous substances (i) into orupon the navigable waters of theUnited states, adjoining shorelines,• • • or which may affect naturalresources belonging to orunder the exclusive management ofthe United States ••• in suchquantities as may be harmful asdetermined by the President underparagraph (4) of this SUbsection, isprohibited, except ••• [forcertain discharges permitted underthe Clean Water Act]."

5. Paragraph (4) of S 311(b) authorizes theEPA to designate, by regulation, "thosequantities of oil and any hazardoussubstances the discharge of which may beharmful to the public health or welfareor the environment of the United States

n. . . .6. Pursuant to S 311(b) (4) the EPA adopted

the following -regulation to determinewhen a discharge of oil "may be harmful":

n [D] ischarges of oil into or upon thenavigable waters of the United States or

1-41

adjoininq shorelines; in such quantitiesthat it has been determined may beharmful to the pUblic health of welfareof the United states includedischarges of oil that:

(a) Violate applicable water qualitystandards, or

(b) Cause a film or sheen upon ordiscoloration of the surface of the wateror adjoining shorelines or cause a sludgeor emulsion to be deposited beneath thesurface of the water or upon adjoiningshorelines." 40 C.F.R. S 110.3 (this iscommonly known as the EPA's "sheen test"for oil discharges).

7. The EPA's regulation deems this to be a"harmful" discharge which censtitutes aviolation of S 311 (b) (3) of the Act--even thouqh no lasting damage is done tothe environment.

8. The "navigable waters" requirement:

a. The Act defines "navigable waters"to mean "the waters of the Unitedstates, including the territorialseas." CWA S 502 (7), 33 U.S.C.51362(7).

b. The EPA defines the term to include:

"(a) All waters that are-currently used, were used in thepast, or may be susceptible to usein interstate or foreiqn commerce.. . . ,

(b) Interstate waters,including interstate wetlands;

(c) 'All other waters suchas intrastate lakes, rivers,streams, (includinqintermittent streams) ,mUdflats, sandflats, andwetlands, the use, degradation,or destruction of which wouldaffect or could affect

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interstate or foreign commerceincluding any such waters:

(1) That are or could beused by interstate or foreigntravelers for recreational orother purposes;

(2) From which fish orshellfish are or could be takenand sold in interstate orforeign commerce;

(3) That are used orcould be used for industrialpurposes by industries ininterstate commerce;

(d) All impoundments ofwaters otherwise defined asnavigable waters under thissection;

(e) Tributaries of watersidentified in paragraphs (a)through (d) of this section,including adjacent wetlands;and

(f) Wetlands adjacent towaters identified in paragraphs(a) through (e) of this section•••• " 40 C.F.R. S 110.1.

9 • EPA •s regulation creates an expansive .definition of navigable waters.

10. Although the statute merely defines"navigable waters" to include "waters ofthe United states," cases defining theterm "waters of the United states"support the EPA's broad definition. ~generally United states v. RiversideBayyiew Homes. Inc., 474 U.S. 121 (1985)(interpreting "waters of the' Unitedstates" broadly in defining the scope ofArmy Corps of Engineers jurisdictionunder S 404 of the Clean Water Act).

11. In United states y. Texas Pipe Line Co"611 F.2d 345 (10th eire 1979), Texas Pipe

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Line Co. (IITPL") owned a pipeline whichran through a farm in Oklahoma.

a. TPL's pipeline was damaged by abulldozer operator working for theowner of the farm; 600 barrels ofoil were released into "an unnamedtributary of caney Creek, whichdischarges into Clear Boggy Creek,itself a tributary of the RedRiver."

b. TPL reported the spill immediatelyand conducted a successful cleanupbefore the oil left the unnamedtributary.

c. Even though the regulatory agenciescommended TPL for its prompt andeffective action to clean up thespill, TPL was assessed a $2 , 500civil penalty.

d. In Texas Pipe the court upheld thepenalty noting:

liThe Company contends that since thespill was confined to the unnamedtributary, no 'navigable waters'within the meaning of the FWPCA wereinvolved. See 33 U.S.C. S 1362(7).But we held in United states v .Earth Sciences. Inc., 599 F.2d 368(lOth Cir. 1979), that Congress didnot in this Act use the term-'navigable waters I in thetraditional sense; Congressintended to extend the coverage ofthe Act as far as permissible underthe Commerce Clause."

e. In Texas Pipe the court noted: "Itmakes no difference that a streamwas or was not at the time of thespill discharging water continuouslyinto a river navigable in thetraditional sense."

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K. Clean Water Act: Reporti~q Obligations

1. section 311(b) (5) provides:

"Any person in charge of • • • anonshore facility • • • shall, as soon ashe has knowledge of any discharge of oilor a hazardous substance from such • • •facility in violation of paragraph (3) ofthis sUbsection, immediately notify theappropriate agency of the United statesGovernment of such discharge. II CWA S 311(b)(5), 33 U.S.C. S 1321(b) (5).

2 • Failure to comply with this reportingrequirement is a crime punishable by fineand imprisonment for up to 5 years.

3 • A discharge of oil into the waters of theUnited states that meets the sheen testmust be immediately reported to the"appropriate agency of the United statesGovernment."

4. By regulation, the EPA requires that alloil spill reporting be made to theNational Response Center by calling 800-424-8802. 40 C.F.R. S 110.10.

L. spill Prevention Requirements; Above Groundstoraqe Tank Regulation

1. As part of the government's nationalresponse system, section 311 requires the·EPA to adopt regulations:

n[W]hich require an owner or operator ofa tank vessel or facility • • • toprepare and submit to the President aplan for responding, to the maximumextent possible, to a worst casedischarge, and to a substantial threat ofsuch a discharge, of oil or a hazardoussubstance. II CWA S 311(j) (5) (A), 33U.S.C. S 1321(j)(5)(A).

2 • This requirement applies to an onshorefacility that "because of its location,could reasonably be expected to causeSUbstantial harm to the environment by

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discharging into or on the navigablewaters •••• " CWA 5 311(j) (5) (B) (iii),33 U.S.C. S 1321(j) (B) (iii).

3 • The "plan" required by the Act iscommonly known as a "Spill PreventionControl and Countermeasure Plan" orsimply the "SPCC Plan." See 40 C.F.R.S 112.3 (1990).

4. The existing requlations governing SPCCplans are in the process of being revisedto reflect several significant changesrequired by the oil Pollution Actamendments to 5 311 of the Clean WaterAct.

• a • The existing regulations are foundat 40 C.F.R. 55 112.1 to 112.7.

The EPA has proposed new regUlationsaddressing these matters:

(1) Oil Pollution Preyention; Non-Transportation-Related Onshoreand Offshore Facilities, 56Ped. _eq. 54612 (Oct. 22, 1991)(proposed rule).

(2) oil Pollution Preyention; Non-Transportation-Related OnshoreFacilities, 58 Ped. aeq. 8824(Feb. 17, 1993) (proposedrule) •

5 • For onshore operations, under theexisting requlations, a plan is requiredonly if the following criteria are met:

a. It is a "non-transportation-related"facility;

b. Engaged in drilling, producing,gathering, storing, processing,refining, transferring,distributing, or consuming of oil oroil products; and

c. In an area geographically located sothat it can "reasonably be expectedto discharge oil," applying the

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"sheen test,"United states.(b) •

into waters of the40 C.F.R. S 112.1

6 • Excluded from the requirement arepartially buried storage tanks which havean underground capacity of not more than42,000 gallons and unburied capacity ofnot more than 1,320 gallons.

7 • However, if any single unburied containerhas a capacity in excess of 660 gallons,it will trigger the SPCC plan.requirements. 40 C.F.R. S 112.1(d) (2).

8. The EPA, by regulation, states the itemsthat must be addressed in the SPCC Plan.

a. The general tenor of the Planrequirements is revealed by 40C. F •R. S 112 • 7 which provides, inpart: "The SPCC Plan shall be acarefully thought-out plan, pr~paredin accordance with good engineeringpractices, and which has the fullapproval of management at a levelwith authority to commit thenecessary resources."

b. This section is followed by detailedpractices which should be employedfor various operations, such as "Oilproduction facilities (onshore)."

c. The requirements for preparing the·SPCC Plan are found at 40 C.F.R. S112.3.

d. One of the major requirements isfound at S 112.3(d) which provides,in part:

"No SPCC Plan shall beeffective to satisfy therequirements of this partunless it has been reviewed bya Registered ProfessionalEngineer and certified to bysuch Professional Engineer."

e. By means of this certification the

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engineer, having examined thefacility and being familiar with theprovisions of this part, shallattest that the SPCC Plan has beenprepared in accordance with goodengineering practices. 40 C.F.R.S112.3(d).

f • A copy of the Plan must be kept atthe facility if it is normallyattended at least 8 hours per day;if it is not, the Plan should bekept at the nearest field office.40 C.F.R. S 112.3(e).

9. Many new statutory requirements createdby the oil Pollution Act of 1990 are notreflected in the EPA's current sPCCregulations.

a. The existing regulations will bemodified, to impose additional SPCC-related obliqations, as th~ EPAworks through its regulatory agenda.

b. For a discussion of the regulatoryfuture of SPCC planning, see Qil.·Pollution Prevention; Non-Transportation-Related Onshore andOffshore Facilities, 56 Pede R8q.54612 (Oct. 22, 1991) (proposedrule) and oil Pollution Prevention;Non-Transportation-Related ·OnshoreFacilities, 58 Ped. Reg. 8824 (Feb.17, 1993) (proposed rule).

H. Penalties for Failure to comply

1. Either the EPA Administrator, or theSecretary of the Coast Guard, can assessadministrative penalties aqainst "anyowner, operator, or person in charge" ofa facility from which there has been adischarge of oil. CWA 5 311(b) (6) (A), 33U.S.C. S 1321(b) (6) (A).

2. The owner, operator, or person in chargecan also be assessed a penalty forfailing to comply with any regulationissued under S 311(j) Which concerns spec

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Plans.

3. Any discharge that violates S 311 cangive rise to a civil penalty up to$25,000 per day of violation, or anamount up to $1, 000 per barrel of oildischarged. CWA S 311(b) (7) (A), 33U.S.C. S 1321 (b) (7) (A).

a. If the discharge is found to be theresult of "gross negligence orwillful misconduct" the civilpenalty can be an amount "not lessthan $100 , 000 , and not more than$3,000 per barrel of oildischarged."

b. The penalty is assessed against anyperson "who is the owner, operator,or person in charge" of thefacility.

c. The major difference between thispenalty procedure and theadministrative penalties discussedin the previous section, is therequirement that civil penaltiesunder S 311 (b) (7) must be soughtthrough a court action.

4. Civil penalties can also be imposed forfailure to carry out a cleanup orderissued under S 311 (c) or an abatementorder issued under S 311(e) (concerningan "actual or threatened discharge of·oil").

a. The civil penalty can be up to$25,000 per day of violation "or anyamount up to 3 times the costsincurred by the oil Spill LiabilityTrust Fund" to conduct the cleanup.CWA S 311 (b) (7) (B), 33 U.S.C. S1321(b)(7)(B).

B. Cleanup Liability

1. The "owner, operator, or person incharge" of the facility can be ordered toclean up the discharge. CWA S 311(b) (7)

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(B), 33 U.S.C. S 132~(b) (7) (B).

2. The federal government can also respondto the discharge and seek reimbursementof cleanup costs from the "responsibleparty." CWA S 311(c)(1), 33 U.S.C.S 1321(C) (1).

3 • The owner or operator of the onshorefacility is liable to the United statesfor cleanup costs unless it can be proventhat the discharge was caused solely by:"(A) an act of God, (B) an act of war,(C) negligence on the part of the Unitedstates Government,' or (D) an act oromission of a third party . • • or anycombination of the foregoing • "CWA S 311(f)(2), 33 U.S.C. S 1321(f) (2).

4. section 311 caps the owner or operator'scleanup liability for a single dischargefrom an onshore facility at $50,000,000.

a. No cap applies when the discharge"was the result of willfulnegligence or willful misconductwithin the privity and knowledge ofthe owner •••• " CWA S 311(f) (2),33 U.S.C. S 1321(£) (2).

b. The cap only applies to cleanupcosts sought by the federalgovernment under Section 311; itdoes not affect the rights of thefederal government, state-government, and other governmentaland private parties to seekcompensation under other laws. CWAS 311(0), 33 U.S.C.A. S 1321(0).

c. The most notable law that can imposeadditional liability is the OilPollution Act of 1990.

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IV. OIL POLLU'l'IOH ACT OF 1"0

A. The OPA/CERCLA Interface

1. The Comprehensive Environmental Response,Compensation and Liability Act (CERCLA)excludes from its coverage:"[P]etroleum, including crude oil or anyfraction thereof which is not otherwisespecifically listed or designated as ahazardous substance • • • • .. CERCLA S101(14), 42 U.S.C. S 9601(14) (1988)(defining "hazardous substance"); CERCLAS 101(33),42 U.S.C. S 9601(33) (defining"pollutant or contaminant").

2 • This is commonly called the "petroleumexclusion" and has been interpreted toapply to "unrefined and refined gasolineeven though certain of its indigenouscomponents and certain additives du~ingthe refining process have themselves beendesignated as hazardous substances withinthe meaning of CERCLA. " WilshireWestwood Associates v. Atlantic RichfieldCorp., 881 F.2d 801,805 (9th Cir. 1989).

3. The oil Pollution Act of 1990 (OPA)establishes a CERCLA-like liabilityregime for oil to fill the void createdby CERCLA's petroleum exclusion.

4 • The OPAl CERCLA connection is created byOPA S 1001 (23) which defines "oil" to·include:

"[O]il of any kind or in any form,including, but not limited to, petroleum,fuel oil, sludge, oil refuse, and oilmixed with wastes other than dredgedspoil, but does not include petroleum.including crude oil or any fractionthereof. which is specifically listed ordesignated as a hazardous substance under

rCERCLAJ." OPA S 1001(23), 33U.S.C. S 2701(23).

5. The scope of the CERCLA petroleumexclusion also defines the scope of theOPA.

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a. If it is covered by CERCLA, bydefinition it is D2t covered by theOPA.

b. If it is not covered by CERCLA, andit meets the definition of "oil," itwill be covered by the OPA.

B. Liability Under the OPA

1. section 311 of the Clean Water Actaddresses the government's cleanupconcerns with regard to oil spills.

2. The OPA addresses who is ultimatelyliable for cleanup costs and damage causedby a spill.

3. Section 1002(a) of the OPA states:

"[E]ach responsible party for avessel or a facility from which oilis discharged, or which poses asubstantial threat of a discharge ofoil, into or upon the navigablewaters • • • is liable for theremoval costs and damages specifiedin subsection (b) ·that result fromsuch incident. OPA S 1002 (a), 33U.S.C. S 2702(a).

4 • The "responsible party" for an onshorefacility includes "any person owning or-operating the facility" except for agovernmental body that merely owns thefacility and leases it to another person.OPA S 1001(32)(8), 33 U.S.C. S 2701(32)(B) •

s. The term "discharge" includes"intentional or unintentional" emissionsincluding "spilling, leaking, pumping,pouring, emitting, emptying, or dumping."OPA S 1001(7), 33 U.S.C. S 2701(7).

6 • The OPA could apply to undergroundstorage tanks Which are " leaking. "However, the discharge of oil must beinto or upon the "navigable waters or

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adjoining shorelines. or the exclusiveeconomic zone." OPA S 1002(a) , 33 U.S.C.S 2702(a).

c. Baviqable Water.

1. "Navigable waters" is defined as "thewaters of the United states, includingthe territorial sea." OPA S 1001 (21), 33U.S.C. S 2701(21).

2. Presumably courts will interpret thephrase "waters of the United states" atleast as broadly as the term has beeninterpreted under the Clean Water Act.

3. However, it is likely that privatelitigants will attempt to expand thedefinition of "waters of the Unitedstates" beyond the limits previouslyestablished by the EPA under the CleanWater Act. See D. Pierce, The EmergingRole of "Liability-Forcing" inEnvironmental Protection, 30 Washburn L.J. 381, 414-16 (1991).

4. Section 1002(b) (1) (B) permits "anyperson" to recover their removal costsand section 1002 (b) (2) permits any person("claimant") to recover damages forinjury to real or personal property, lostprofits, and similar consequentialdamages. OPA S 1002 (b) , 33 U.S.C.S 2702(b).

5. Therefore, private parties seekingreimbursement for their losses caused bya release of oil will surely attempt toemploy an expansive definition of "watersof the United states."

6. It is not clear whether any remediationwork needs to be conducted in order toclaim damages.

a. OPA S 1002 (a) provides "eachresponsible party for a vessel or afacility from which oil isdischarged, or which poses thesubstantial threat of a discharge of

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oil, into or :upon the navigablewaters •• is liable for theremoval costs and damages •••• "

b. This means that the OPA may providea landowner or lessor with astatutory right to recover for"[d]amages for injury to ••• realor personal property" because, forexample, of the mere existence of anunpluqqed well which devalues theirproperty [a "threat" of a dischargeof ail into waters of the Unitedstates].

D. "Incidents" After August 18, 1990

1. The OPA only applies to "an incidentoccurrinq after the date of the enactmentof • • • [the OPA]." oil Pollution Actof 1990, Pub. L. No. 101-380, 104 stat.484, 506 (1990) (OPA S 1020).

2. section 1017(e) states:

"Nothing in this title shall applyto any cause of action or right ofrecovery arisinq from an incident whichoccurred prior to August 18, 1990. Suchclaims shall be adjudicated pursuant tothe law applicable an the date of theincident." OPA S 1017(e), 33 U.S.C.S 2717(e).

3. "Incident" is defined as "any occurrenceor series of occurrences havinq the sameorigin • • • resulting in the dischargeor substantial threat of discharge ofoil." OPA S 1001(14), 33 U.S.C. S 2701(14) •

a. This limits the OPA to incidentsthat occur after August 18, 1990.

b. However, this should not limitaction when the problem creating thethreat of a discharge continuesafter the August 18, 1990 effectivedate.

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c. This analysis c.ould be applied toleaking underground storage tanks.

(1) Although they have leaked forseveral years before the August18 effective date, this shouldnot exempt the responsibleparty from liability fordischarges--incidents--thatoccur after August 18.

(2) Also , with the leakingunderground storage tanks thereis a present "threat" ofcontinuing discharges that cangive rise to OPA cleanupactions.

B. causation Requirement

1. Even though the required discharge, orsubstantial threat of a discharge, takesplace after August 18, 1990, the statutelimits the responsible party's liabilityto removal costs and damages "that resultfrom such incident." OPA S 1002 (a), 33U.S.C. S 2702(a).

2 • This seems to impose a causationrequirement for removal costs anddamages.

3 • Therefore, a party claiming removal costswill have the burden of proof that such-costs were in response to the dischargeor threat.

4 • A party claiming damages will have theburden of proof that they resulted fromthe discharge or threat.

5. However, this limited causationrequirement does not alter the strictliability nature of the statute--itdoesn't matter ~ the discharge orthreat occurred.

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P. Der.n•••

1. The OPA specifically defines the limitedsituations in which a discharge will notgive rise to liability.

2. OPA S 1002(C) excludes discharges"permitted by a permit issued underFederal, state or local law" ordischarges from a "public vessel" or anonshore facility subject to the Trans-Alaska Pipeline Authorization Act. OPAS 1002(c) , 33 U.S.C. S 2702(c).

3. The OPA also contains the same CERCLA-type defenses to liability when thedischarge or threat, and the resultingcosts and damages, were caused solely byan act of God, act or war, or an act oromission of· an unrelated third party.OPA S 1003(a), 33 U.S.C. S 2703.

4. section 1009 authorizes ·contribution"against any other person who is liableor potentially liable under this chapteror another law." OPA S 1009, 33 U.S.C.S 2709.

5. section 1017(f) of the OPA requires thatactions to collect damages be broughtwithin 3 years after "the date on whichthe loss and the connection of the losswith the discharge" are reasonablydiscoverable. OPA S 1017 (f) (1) (A), 33U.S.C. S 2717(f) (l)(A).

6. Actions to recover removal costs must becommenced within 3 years after completionof the removal. action. S 1017(f) (2).

7 • The OPA relies upon the NationalContingency Plan to guide cleanupactivities and establishes the proceduresprivate parties must follow to recouptheir cleanup costs. OPA S1002 (b) (1) (B), 33 U.S.C. S 2702(b) (1) (B).

8. The statute also creates a "superfund"for oil, called the "Oil Spill LiabilityTrust Fund." OPA S 1001(11), 33 U.S.C.S 2701(11).

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v. LIABILITY ASSOCIATBD WXTB OWNING INTERBSTS IN OILAND GAS PROPERTIBS

A. comprehensive Bnvironmental RespoDs.,compeDsation and Liability Act (CERCLA)

1. 42 U.S.C. 55 9601 to 9675 (1988).

2 . Imposes liability on certain groups to"fix" an environmental problem.

3. Liability based uponinstead of fault,causation.

party's "status"contribution, or

4. The requisite "status" that can triggerCERCLA liability:

a. CUrrent "owners" of the place wherehazardous substances are found (the"facility").

b. CUrrent "operators" of the placewhere hazardous substances arefound.

c. Owners and operators of the facilityat any time when hazardoussubstances were disposed of at thefacility.

d. Persons who created (generated) ahazardous substance found at thefacility.

e. Persons who arranged for thedisposal of a hazardous substancefound at the facility.

f. Persons who transported a hazardoussubstance and selected the facilityas the disposal site.

9. Persons who are not current owners,nor owners at the time of disposal,but an .intermediate owner whoobtained knowledge of prior disposalactivities and failed to disclose itto a SUbsequent purchaser of theproperty. See CERCLA S 101(35) (C),

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42 u.s.c. 5 960~(35) (C) (1988).

h. See CERCLA S 107(a), 42 U.S.C. S9607 (a) (1988) (establishing thegeneral categories of statusliability).

5 • The CERCLA game is simple:

a. Try to avoid attaining the requisitestatus.

b. If you can't avoid the status, tryto define the risk involved beforeattaining the status.

(1) Define problems so the risk canbe evaluated.

(2) Remedy known problems beforeassuming the status.

c. Leverage the risk throughcontractual agreements with thirdparties.

6 • Petroleum Exclusion: if the substance isuncontaminated crude oil, gasoline, orother petroleum products made from crudeoil, CERCLA will not apply. CERCLA S101(14), 42 U.S.C. 5 9601(14) (1988).Wilshire Westwood Associates v. AtlanticRichfield Corp., 881 F.2d 801, 805 (9thCir. 1989).

a. However, the CERCLA petroleumexclusion does not offer anyprotection when the substance isused oil, contaminated petroleum("mixed" with hazardous sUbstances) ,or materials merely associated withoil and qas development.

b. The CERCLA-excluded petroleum may beSUbject to the oil Pollution Act, 33U.S.C.A. 55 2701 to 2761 (West Supp.1992).

c. The CERCLA-excluded petroleum may beSUbject to the Solid Waste DisposalAct (Resource Conservation and

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Recovery Act), 42 U.S.C. 55 6901 to6979b (1988).

d. state law CERCLA counterparts maynot have as broad a petroleumexclusion. See, e.g., Mont. CodeAnn. 5 75-10-701(6) (1991).

B. oil Pollution Act (OPA)

1. Imposes liability on the owner oroperator of a facility from which thereis a discharge, or substantial threat ofa discharge, of "oil" into "waters of theUnited states." OPA S 1002(a), 33U.S.C.A. S 2702(a) (West Supp. 1992).

2. Applies to "incidents" that occur afterAugust 18, 1990. OPA S 1017(e), 33U.S.C.A. S 2717(e) (West Supp. 1992).

a. NOTE: Reporting, cleanup, andpenalty obligations can be imposedupon owners or operators of afacility under S 311 of the CleanWater Act (CWA) without regard towhen the " incident" occurred. CWAS 311, 33 U.S.C.A. S 1321 (WestSupp. 1992).

b. See generally Quaker state Corp. v.u.s. Coast Guard, 681 F. Supp. 280(W.D. Pa. 1988) (surface owner heldto be "owner" under the Clean Water ·Act and therefore responsible forcleanup of an oil containment pit).

3. If the incident occurs after August 18,1990, and the requisite nexus with"waters of the United states" can beestablished, the actual, or threatened,discharge of oil will require thefacility owner or operator to clean upthe affected area and pay a broad rangeof damages provided by the Act.

c. 80lid 1Iaste Disposal Act/Resource Conservationand Recovery Act (RCRA)

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1. Although the petroleum substance may beexcluded from CERCLA, it may triggerhazardous waste regulation requirementsunder RCRA.

2. Courts have generally held that each ofthe environmental statutes, particularlyCERCLA and RCRA, operate independently ofone another.

a. Exclusion under CERCLA does notnecessarily exclude regulation ofthe waste under RCRA.

b. Exemption under RCRA does notnecessarily exempt the substancefrom CERCLA.

3. The waste, in any event, does not need tobe classified as "hazardous" to beregulated under RCRA.

a. RCRA's "imminent hazard" authoritygives the Administrator of the EPA,and third parties, the ability tobring suit against any "past orpresent" generator or transporter,or any "past or present" owner oroperator of a facility , who hascontributed to disposal or handlingof any "solid waste or hazardouswaste, II Which "may present animminent and substantialendangerment to health or theenvironment • • • ." RCRA 55 ·7002(a) , 7003(a), 42 U.S.C. 556972 (a) , 6973 (a) (1988).

b. See generally Zands v •. Nelson, 779F. Supp. 1254,1257 (S.D. Ca. 1991).

VI:. ODBRSBZP' OPBRATZOB %B DB OZL· DD GAS CON'l'BX'1'

A. The Bic.tie. of oil aDd Ga. Law

1. When defining a party's "status" underCERCLA, OPA, CWA, and RCRA, will thecourts honor the same distinctions thatare recognized by traditional state oiland gas law concepts?

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a. will a nonexecutive mineral interest"owner" be treated differently fromsomeone who owns the minerals infee?

b. will a nonparticipating royaltyinterest "owner" be an "owner" underCERCLA, OPA, CWA, or RCRA?

2 • Members of the oil and gas bar may haveto adjust to new policy-driven federalconcepts of property, contract, andcorporate law designed to promoteenvironmental goals.

3 • In the oil and gas context the term"owner" can include several classes ofparties.

a. Surface owners.

b. Mineral owners.

c. Lessees.

d. Assignees.

e. Interest owners in pooled orunitized areas.

4 • In the oil and qas context the term"operator" can include several classes ofparties.

a. Operator desiqnated under operatingagreement.

b. Nonoperators who conduct operationsthrough their contractor--theoperator.

c. Drilling contractor and othercontractors who exercise controlover operations at various stages ofdevelopment.

S • In the oil and qas context the"qenerator" or "arranqer" of wastes thatare disposed at a facility can includeseveral classes of parties.

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a. Operator.

b. Nonoperators.

c. Drilling and other contractors.

d. Mineral interest owner/ lessor ( isthe lessee merely their contractorfor development?).

B. The CBRCLA "OWDer"

1. CERCLA defines "owner or operator" tomean, in the case of a facility, "anyperson owning or operating suchfacility." CERCLA S 101(20) (A), 42U.S.C. S 9601(20) (A) (1988).

a. Congress intended to give the termstheir "ordinary" meaning. EdwardHines Lumber Co. v. Vulcan Chemicals~, 861 F.2d 155, 156 (7th.' eire1988).

b. Courts will "generally resolveambiguities in CERCLA's language infavor of imposing the most expansiveliabil