On Thursday, September 15, the Senate voted 95-3 in favor of the Water Resources Development Act of 2016, S. 2848 (WRDA). The headline feature of the bill is funding for cities dealing with lead emergencies like the one that affected Flint, Michigan, but the bill also contains provisions that are important to businesses in sectors including construction, transportation, and electric utilities. It is unclear whether the House will consider the bill before the November election. Continue Reading
The gloves are off in a lawsuit in the Southern District of New York where an insurer and an oil and gas company disagree about whether the company’s insurance policy covers claims that fracking causes earthquakes. On June 27, 2016, insurer Lloyd’s sued New Dominion, arguing that the Lloyd’s pollution liability policies do not provide coverage because fracking is not a “pollution condition.” (See: Complaint for Declaratory Relief.) The Lloyd’s lawsuit relates to five other Oklahoma lawsuits addressing the same issue. (See: Complaints in Oklahoma lawsuits.)
With this lawsuit, the fracking debate moves into a new arena: insurance coverage disputes.
The Earthquake Lawsuits
The underlying Oklahoma cases pit Oklahoma residents and an environmental group against oil and gas companies. These plaintiffs argue that the companies caused significant earthquakes across the state, including in central Oklahoma, by injecting fracking waste water into disposal wells. Some of the lawsuits cite scientific studies or journals, including United States Geological Survey (USGS) studies and Oklahoma Geological Survey presentations, to argue that (1) there is a correlation between increased fracking and increased earthquakes, and (2) waste water injection induces large earthquakes.
The Insurance Action
Cross country to New York: The parties to the New York insurance dispute disagree about whether the fracking claims in the Earthquake Lawsuits are covered “pollution conditions” in the Lloyd’s insurance policies. The policies specifically require Lloyd’s to defend and indemnify New Dominion for lawsuits that seek damages for injury or property damage that “result from pollution conditions” at New Dominion’s fracking sites. The policies define “pollution condition” as “the discharge, dispersal, seepage, migration, release or escape of pollutants” and “pollutant” as “any solid, liquid, gaseous or thermal irritant or contaminant.”
Lloyd’s argues the policies do not cover the Earthquake Lawsuits. It argues it doesn’t have insurance obligations to New Dominion because the waste water is not a “pollutant” under the policies, and the lawsuits do not claim there was property damage that “resulted” from a “pollution condition.” New Dominion disagrees, and argued in a recent motion to dismiss that there is insurance coverage because the Earthquake Lawsuits claim a “pollutant”—fracking waste water—caused the earthquakes. So far, the court has not ruled on whether the insurance policies cover fracking-induced earthquakes.
There is an ongoing debate about whether fracking activities cause significant earthquakes that endanger the public. In February 2015, an EPA workgroup released a report on seismicity and the injection of waste water from oil and gas activities into disposal wells. The study was designed to help EPA program managers address whether disposal wells could impact waste containment and affect drinking water. Although the study did not examine the extent to which oil and gas production causes earthquakes, it acknowledged that disposal wells have the potential to induce earthquakes and briefly noted there was a “low likelihood” fracking could cause significant earthquakes. It then identified approaches to reduce the likelihood of significant seismic events caused by disposal wells.
Similarly, the USGS has recognized that waste water disposal wells for oil and gas operations can cause earthquakes, and is currently conducting studies that evaluate the hazards of human-induced earthquakes.
Those impacted by fracking will need to wait for answers to these scientific and legal questions. Insurers will be waiting too, as they face lawsuits claiming that fracking activities have caused earthquakes.
On September 7, 2016, the United States Environmental Protection Agency (EPA) issued a final rule updating the Cross-State Air Pollution Rule (CSAPR) ozone season trading program. The rule promulgates more stringent ozone season NOx budgets in several states. CSAPR was promulgated to implement the “good neighbor” provision of the Clean Air Act, which requires states to address the transport of pollution across state lines. Continue Reading
On August 5, 2016, the Environmental Protection Agency (EPA) denied two petitions by environmental and industry groups to reconsider startup and shutdown issues under the Mercury and Air Toxics Standards (MATS) rule and the Utility New Source Performance Standards (NSPS). These regulations, finalized in February 2012, impose operational requirements to minimize emissions during periods of start-up and shutdown in lieu of numeric limits. Continue Reading
As we wrote about previously, in February 2016 the International Civil Aviation Organization (ICAO) proposed international standards to limit the emissions of greenhouse gas (GHG) emissions from airplane engines. Last week, the EPA finalized the first step to create domestic emissions standards for airplanes when it officially found that GHG emissions from certain types of aircraft engines contribute to climate change. Now that EPA has issued this determination — known as an “Endangerment Finding” — it is required to regulate these emissions under the Clean Air Act. EPA may propose new domestic emissions rules before the end of President Obama’s term and it has announced the limits will be at least as stringent as the international standards ICAO proposed in February. Continue Reading
On June 21, 2016, the Federal Energy Regulatory Commission (FERC or Commission) issued three orders related to the North American Electric Reliability Corporation’s (NERC) critical infrastructure protection reliability standards (CIP reliability standards). The Commission issued a final rule directing NERC to develop a new or modified reliability standard, an Order Denying Rehearing and a Notice of Inquiry. Continue Reading
On July 21, 2016, the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR) in Docket No. RM16-17-000 to revise regulations regarding the collection of data for analytics and surveillance purposes from market-based rates (MBR) sellers and entities trading virtual products or holding financial transmission rights (Virtual/FTR Participants). FERC also withdrew two earlier NOPRs in Docket Nos. RM15-23-000 and RM16-3-000. FERC indicated that the newly-issued NOPR would address many of the issues in the withdrawn NOPRs. Continue Reading
In 2013, President Obama issued the Climate Action Plan. Its goal: to reduce greenhouse gas emissions from a broad range of economic sectors. Moreover, the Climate Action Plan is the key set of initiatives necessary to achieve the United States’ GHG reduction commitment set out in the 2015 Paris Agreement, an international accord.
We covered the initiation of a wide range of rulemakings in a blog post dated September 28, 2015, and, as the Obama Administration comes to a close, climate change rulemakings continue to move forward. The most contentious rule—the Clean Power Plan—has moved from rulemaking to litigation. Many other rules (e.g. new rules limiting methane emissions from the oil and gas industry and the renewable fuel standards) have moved from proposal to final rules. We summarize the status of 10 different rules, standards, or programs meant to implement the Climate Action Plan below. Continue Reading
On June 22, 2016, President Obama signed the Lautenberg Chemical Safety Act into law. The Act is the first significant change to the 1976 Toxic Substances Control Act in 40 years and amends the Environmental Protection Agency’s (EPA) methods for reviewing chemical substances before they are marketed and allowed to be used in consumer products.
The Act has several new key features: Continue Reading
In a long awaited release, on June 21, 2016, the Federal Aviation Administration (FAA) issued a Final Rule to allow for increased commercial operation of small, unmanned aircraft systems (UAS or drones) in the National Airspace System (NAS). Existing regulation mandated that commercial users of UAS apply to the FAA for a case-by-case review for permission to use drones deterring widespread use of emerging drone technologies. The Final Rule tracks the Notice of Proposed Rulemaking issued in February 2015 and closes the regulatory gap that thwarted the use of drone technology by many utilities. Continue Reading