REGULATORY: Environmental: Proposed Rules in Texas Expected to Encourage Recycling of Used Fracking-Fluids By Harold Shaw

by King & Spalding

Recognizing that its existing rules for the oil and gas industry do not adequately address developing trends involving fracking-fluid recycling, the Texas Railroad Commission has proposed some significant regulatory changes. 37 Tex. Reg. 7541, 7555 (Sept. 28, 2012). Notably, the Railroad Commission’s proposal would make it relatively simple (from a regulatory perspective) to conduct “on-lease, non-commercial recycling of produced water and/or hydraulic fracturing fluid.” Id. The proposal also would “clarify requirements for off-lease or centralized non-commercial recycling of produced water and/or hydraulic fracturing flowback fluid.” Id.

The Railroad Commission’s proposed rules would specify: (a) which of these recycling activities will require permits; and (b) what can be done with the recycled fluids after treatment. Under the proposal, the on-lease, non-commercial recycling of fracking-fluid could be performed without a permit if the treated fluids are: (i) recycled for use as hydraulic fracturing fluid or for use in place of some other oilfield fluid in a wellbore; or (ii) treated to drinking water standards and used or disposed of in any manner except discharge to surface waters or use as irrigation water for edible crops. While non-commercial, centralized recycling units and commercial recycling units handling produced water and/or hydraulic fracturing flowback would require permits, the Railroad Commission would also allow treated fluids from non-commercial centralized units to be put to the same two types of uses described above for treated fluids from on-lease, non-commercial units.

In addition to explaining which fracking-fluid recycling activities would require permits and authorizing certain uses of treated fluids, the proposal also would set standards for constructing and operating produced water and/or hydraulic fracturing flowback fluid recycling pits. These provisions would: (i) limit the types of materials and equipment that can be placed in the pits; (ii) ensure that the pits are adequately sized; (iii) require at least two feet of freeboard; (iv) mandate pit liners that meet particular design specifications; (v) prohibit pit construction within a 100-year flood plain; and (vi) require owners to conduct periodic pit inspections, stop unauthorized discharges, and report unauthorized discharges to appropriate Railroad Commission personnel.

The Texas Railroad Commission developed these proposed rules in response to recent industry requests for guidance concerning fracking-fluid recycling issues. Other driving forces for the proposal likely included the Railroad Commission’s recognition that fracking-fluid recycling may become a more important issue given the large amounts of water involved in fracking a single well, the effects recent drought conditions in Texas have had on the state’s water supplies, and the recognition that fracking-fluid recycling technology has been improving and is likely to lead to additional benefits. In addition, environmental groups have been interested in promoting fracking-fluid recycling, and some have asked for mandatory recycling. See e.g., Environment Texas, EARTHWORKS’ Oil and Gas Accountability Project, Public Citizen’s Texas Office, and Sustainable Energy and Economic Coalition, October 28, 2012, Joint Comments to Proposed Rulemaking on Oil and Gas Docket No. O&G 20-0277739.

The Railroad Commission’s proposed rules may serve multiple purposes that can help support future fracking activities in Texas and elsewhere. Assuming they are adopted, the proposed rules should make it easier for companies conducting fracking within Texas to increase their fluid-recycling activities. As these recycling technologies improve and their use becomes more widespread, the cost of recycling may come down. A recent Wall Street Journal article reported that more and more companies are becoming involved in recycling fracking-fluids, and the opportunities for additional recycling activities are expected to grow as the price of fresh water increases, disposal options for fracking-fluids become more limited and/or costly, and environmental restrictions may come to restrict current fracking and associated waste-management practices. Alison Sider, Russell Gold, and Ben LeFebvre, Drillers Begin Reusing “Frack Water,” Wall St. J. Nov. 18, 2012. Accordingly, other states faced with these fracking-fluid issues might look to the final Texas recycling rules as a guide for their own efforts to promote and properly control fracking-fluid recycling activities.

 Harold M. Shaw, III
 Washington, D.C.
 +1 202 626 5603

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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