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The Evolving Environmental Liability of the Energy Industry

DAVIS, PHILLIP R., American Envirolegal Services, Half Moon Bay, CA

Under traditional common law and statutory theories of liability, the concept of causation reduced the exposure to liability in the use of toxic or hazardous substances in the exploration, production, transportation, refinement, and marketing of oil and gas. While claims for damages may still be brought under traditional negligence, negligence per se, and public or private nuisance theories, the risks associated with hazardous substances were changed by the passage in 1980 of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). Since then, CERCLA has been amended and supplemented periodically with even more stringent legislation.

CERCLA created a new, broader form of liability deemed "antecedent environmental liability," which arises solely from one's status as an owner or operator of property. A lessee or operator is considered to be a current owner for the purposes of liability because they have control of the site at which releases of hazardous substances could occur. So now the acquisition of drilling sites with existing environmental clean-up problems located thereon or, in certain circumstances, contiguous thereto creates CERCLA liability, regardless of fault.

Furthermore, liability under CERCLA also attaches to past owners or operators if causation is proven. So to avoid expensive litigation to prove lack of causation, great care should be taken in the disposition of drilling muds and other exploration wastes.

There are certain very narrow defenses to CERCLA liability that have been so narrowly construed as to be characterized as "safe harbors without water." In addition there is nominally a petroleum exclusion from CERCLA liability that is just now being defined by the courts. While this exclusion was hard won and is jealously guarded by the oil and gas industry, it is being eroded by other federal and state regulatory schemes that affect operations and liabilities regarding production methods, fluid discharges and waste controls.

The Clean Water Act (CWA) regulates certain surface discharges of oil and production wastes by means of a permit system for planned discharges and regulations requiring spill prevention and control plans for unplanned discharges. Drilling fluids, cuttings, salt water, and produced sands are all under the broad definition of "pollutant." These wastes are excluded under the CWA if they are discharged via subsurface injection, but they are then regulated by the Safe Drinking Water Act (SDWA).

The SDWA protects underground waters through a regulatory scheme controlling the subsurface injection of substances. There are exclusions for gas storage operations, but the mineral brine and other connected fluids could be subject to regulation if deemed essential to the protection of aquifers.

The well-site use and disposal of solid wastes is regulated by the Resource Conservation and Recovery Act (RCRA), which provides for a "cradle to grave" regulation of solid "hazardous wastes." The EPA has ruled that most oil and gas fluid wastes should be exempted from treatment as "hazardous waste," but that does not preclude most states from regulating same. Moreover, a RCRA reauthorization bill

The texture of the veins suggests that these events were related to the process of stylolitization and occurred during the early formation of stylolites. The nature of the subsequent replacement of the veins by anhydrite and dolomite suggests that fluids emanating from the stylolites were responsible for this replacement. The same process that formed the veins may have opened the stylolites to fluids that caused the replacement of the veins as well as the later creation of secondary porosity.

 

AAPG Search and Discovery Article #91004 © 1991 AAPG Annual Convention Dallas, Texas, April 7-10, 1991 (2009)