On a different environmental front, Antrim Caskey reports through AlterNet on coal-ash spill in Tennessee

Legislature may see bill to protect public and environment from drilling-site waste

Something to consider supporting by contacting legislators and governor during the upcoming session.
Don't be shy about pointing weaknesses and strengths of the bill. Amendments will occur. Your comment can make a difference:

AN ACT TO AMEND ARKANSAS CODE § 8-4-203 TO REQUIRE FINANCIAL ASSURANCE FOR THE CLOSURE OR RESTORATION OF PERMITTED SITES IN THE STATE OF ARKANSAS THAT LAND APPLY OR STORE FLUIDS GENERATED OR UTILIZED DURING EXPLORATION OR PRODUCTION PHASES OF OIL OR GAS OPERATIONS; AND FOR OTHER PURPOSES.

AN ACT TO REQUIRE FINANCIAL ASSURANCE FOR LANDFARMS.

SECTION 1. Arkansas Code § 8-4-203 is amended to add a new subsection to read as follows:

8-4-203. Permits generally.

(c)(1)(A)(i) All facilities that land apply or store fluids generated or utilized during exploration or production phases of oil or gas operations shall be closed in a manner that ensures protection of human health and the environment.
(ii) As used in this subsection “land application or storage of fluids generated or utilized during exploration or production phases of oil or gas operations” means land-farming through the controlled and repeated application of drilling fluids to a soil surface or the practice of receiving and storing said fluids from offsite for waste management.
(iii) Surface facilities associated with Class II injection wells are specifically excluded from the requirements of this section.
(iv) Land applications at the drilling or exploration site that are authorized pursuant to any general permit issued by the Department are specifically excluded from the requirements of this section.
(B) Within sixty days after the effective date of this Act, each existing, permitted facility regulated under this section shall submit to the department the following:
(i) A plan to close the permitted facility and make any site restoration deemed necessary by the Department;
(ii) A detailed cost estimate to close and
restore the permitted facility that meets the requirements of this subsection and is approved by the Department; and
(iii) A financial mechanism that demonstrates, to the department’s satisfaction, the permittee’s financial ability to ensure adequate closure and any necessary restoration of the permitted facility in accordance with the requirements of this subsection.
(C) After the effective date of this Act, the department shall not issue, modify, or renew a permit for facilities regulated under this subsection without the permit applicant first demonstrating to the department’s satisfaction, the applicant’s financial ability to ensure adequate closure and any necessary restoration of the permitted facility in accordance with the requirements of this subsection.
(D) The amount of any financial assurance
required under this subsection shall be in an amount that is equal to or greater than the detailed cost estimate prepared by an independent professional consultant for a third party to close the permitted facility in accordance with closure plans approved by the department.
(i) For new permits, the applicant shall submit to the department, for approval, a detailed cost estimate to close and restore the facility based on the proposed operation and capacity of the facility from the date the permit is issued through the following October 1;
(ii) For renewal or modification applications, the permittee shall submit to the department, for approval, a detailed cost estimate to close and restore the permitted facility based on closure plans approved by the department; and
(iii) On or before August 15 of each year, all permittees shall submit to the Department for approval, a detailed cost estimate to close and restore the permitted facility in accordance with closure plans approved by the department.
(E) The financial assurance mechanism shall be renewable on October 1 of each year during the duration of the permit.
(F) Documentation that the required financial assurance mechanism has been renewed must be received by the department by September 15 of each year for the duration of the permit or the department shall initiate procedures to take possession of the funds guaranteed by the mechanism and suspend or revoke the permit under which the facility is operated. Any permit suspension shall remain in effect until a financial assurance mechanism is provided to the department in accordance with this subsection.
(G) The permittee is responsible for ensuring that documentation of annual renewal is received by the department by its due date.
(2) The permittee or applicant’s financial ability to adequately close or restore the land application or storage facility shall be demonstrated:
(A) By obtaining insurance that specifically covers closure and restoration costs;
(B) By obtaining a letter of credit;
(C) By obtaining a bond or other surety instrument;
(D) By creating a trust fund or an escrow account;
(E) Through the use of a combination of any of the above; or
(F) By any other financial instrument acceptable to the director.
(4) Any financial instrument required by this subsection shall:
(i) Be posted to the benefit of the department;
(ii) Provide that it cannot be cancelled without sixty days prior, written notice addressed to the department’s Legal Division Chief as evidenced by a signed, certified mail, return receipt; and
(iii) Be reviewed by the Department upon receipt of the cancellation notice, to determine whether to initiate procedures to revoke or suspend the facility’s permit and whether to initiate procedures to take possession of the funds guaranteed by the financial assurance mechanism.
(4) Before the department may release any financial assurance mechanism, it must receive a certification by a professional engineer that the permitted facility has been closed and restored in accordance with closure plans approved by the department.
(5) It is explicitly understood that the department shall not be responsible for the operation, closure, or restoration of any facility permitted under this subsection.
SECTION 2. EMERGENCY CLAUSE. It is found and determined by the General Assembly of the State of Arkansas that establishing financial assurance requirements for the closure of commercial facilities that land apply or store fluids generated or utilized during exploration or production phases of oil or gas operations is necessary to protect human health and the environment and that a delay in the effective date of this Act may result in harm to human health or the environment. Therefore, an emergency is declared to exist and this Act being necessary for the immediate preservation of the public peace, health, and safety shall be in full force and effect from and after the date of its passage or approval. If the bill is neither approved nor vetoed by the Governor, it shall become effective on the expiration of the period of time during which the Governor may veto the bill. If the bill is vetoed by the Governor and the veto is overridden, it shall become effective on the date the last house overrides the veto.

Drop in gas price makes severance-tax payoff uncertain

 
As tax on natural gas kicks in, intake unclear
BY SETH BLOMELEY
Posted on Thursday, January 1, 2009
URL: http://www.nwanews.com/adg/News/248190
Arkansas' increased severance tax on natural gas, approved in April after much debate, takes effect today amid questions about how many dollars it will produce for the state and what those dollars will do.
The tax is based on the price of natural gas, which has plummeted since the state last produced revenue estimates.
That means projections of $57 million to be collected in 2009 are uncertain.
The bulk of the revenue is to be spent on roads, but fluctuations in the price of oil have created more uncertainty on exactly how it will be used, said Cliff Hoofman of North Little Rock, a member of the Arkansas Highway Commission.
"We have talked about setting aside [severance tax revenue] for some identifiable project, but our discussions a few months ago was that we should put that on hold because we were experiencing a real calamity in the reduction in department revenue," Hoofman said. "Now, we don't know what's going to happen. We're sort of in a holding pattern."
Much of Highway Department revenue from the state is based on a gasoline tax of 22.5 cents per gallon. Fuel tax receipts for the department from July through October were $73.4 million, down from $77.9 million in the same period in 2007, said Randy Ort, department spokesman.
Highway off icials have blamed the decrease on the fact that people bought less gasoline because of the high prices earlier in 2008. But now that the price of gasoline has dropped from $4 a gallon to $1.50 a gallon, officials say it's unclear whether fuel tax revenue will go up.
Hoofman said the severance tax money may end up simply making up for the loss in the fuel tax revenue. He said it "would be irresponsible" to start new projects with the money until the department has a better idea of the amount of tax col- lections.
The severance tax was increased after a surge in drilling in the Fayetteville Shale natural gas deposits in north-central Arkansas.
The previous rate was 1 cent per 1,000 cubic feet of gas, which was set in 1957 and was based on volume so it hadn't increased since then. The tax raised about $600,000 a year.
Gov. Mike Beebe and the Legislature increased the tax to 5 percent of proceeds from the sale of gas by the producer less the cost of treating and transportation.
The state projects revenue to increase to about $100 million by 2013.
The proceeds are to be divided four ways, with 5 percent going into state general revenue. Of the remaining 95 percent, 70 percent is to go to state highways, 15 percent to counties and 15 percent to cities.
Beebe called a special legislative session to raise the tax after negotiating with natural-gas production companies on an increase. That led to consensus in the Legislature to approve it.
Little Rock attorney Sheffield Nelson had called for an initiated act to raise the tax by an even greater amount, if the Legislature and the governor failed to act.
Nelson said some have argued that Beebe's agreement with the gas companies is too soft and contains too many exemptions.
"But it's 100 times more than what the state has been getting up until this time," Nelson said. "It's quite an accomplishment."
Nelson, a former Republican gubernatorial nominee and former natural gas utility executive, said "time has proven" that he and his supporters were correct to back off pursuing a ballot initiative to raise the tax.
He said he thinks that the economic downturn could have made it harder to raise any tax.
"Had we fought a very tough battle from that time until November, even if we had won, there would have been negative consequences," Nelson said. "No one would come down with a good taste in their mouth. I think we would have won but we would have burned so many bridges."
For example, he said had a ballot initiative been successful he doubted that natural gas producer Southwestern Energy of Houston would have decided to build a $25 million regional headquarters in Conway, which was announced Dec. 18.
At the time of the severance tax's passage in April, the price of natural gas traded on the New York Mercantile Exchange was $10 per 1,000 cubic feet. Now, it's $6.
"That's probably artificially low," Nelson said. "It's tagged to a certain degree of what's happening with oil. It will go back up."
Oil is a major ingredient in asphalt. So even though the Highway Department would have gotten more severance tax money when the price of natural gas was high, roads were more expensive to build and fix because of the increased price for asphalt, Hoofman said.
Hoofman said it's unclear whether the price for asphalt will decline with the reduction in oil prices the past couple of months. He said there should be some indication of that next week when project bids are opened.
Beebe spokesman Matt De-Cample said the governor expected uncertainty in the price of natural gas.
"We'll just take it as it comes," he said.
State revenue estimates were based on $8 natural gas. Richard Weiss, director of the Department of Finance and Administration, said the state hasn't updated it's revenue estimates for the severance tax.
Beebe said in 2008 that he wanted the severance tax money to be spent at the Highway Department based on "money following the cars," meaning in areas of high traffic and in places where it could help economic development.
DeCample said that's Beebe's general philosophy on highway revenue but that the governor has no specific plan on spending the severance tax money.
"We accepted the adjustment of the Arkansas severance tax," said Danny Games, spokesman for Chesapeake Energy Corp. of Oklahoma City. "We and our royalty owners pay similar types of taxes in most of the other states where we operate."
A Southwestern Energy spokesman didn't return a message.
Also taking effect today are two proposals approved by the people at the Nov. 4 election:
An initiated act that bars unmarried people living together from adopting children or being foster parents. The American Civil Liberties Union has filed a lawsuit challenging the law in Pulaski County Circuit Court.
A constitutional amendment calling for annual sessions of the Legislature, which now meets in regular session every odd-numbered year. So the first additional session under the terms of the amendment would be in 2010.
Copyright © 2001-2009 Arkansas Democrat-Gazette, Inc. All rights reserved. Contact: webmaster@nwanews.com

Gas-lease cash to pay new inspectors of drilling sites

IT'S ABOUT TIME!

Agency says gas-lease cash to aid hiring of inspectors
BY L. LAMOR WILLIAMS
Posted on Thursday, December 18, 2008
URL: http://www.nwanews.com/adg/News/246962/

Gas-lease money to hire inspectors

The Arkansas Department of Environmental Quality is set to get $3.5 million from the Arkansas Game and Fish Commission that it will use to hire more inspectors to keep watch on the state's growing natural gas drilling industry.
Teresa Marks, director of the Department of Environmental Quality, said Wednesday that while a formal agreement has yet to be signed, she is looking forward to using the money to hire new inspectors to regulate drill-water disposal sites.
The money will come from leases issued by the Game and Fish Commission to natural-gas firms to drill on state-wildlife management areas.
Drilling for natural gas in the Fayetteville Shale geologic formation has led to the creation of at least 13 drill-water disposal sites, which are permitted to store the water and rock sediment discarded during drilling. Two sites recently were ordered to cease operation until violations have been remedied.
...
The department currently has 17 inspectors who only visit the disposal sites in response to complaints. Eight inspectors are assigned to the Fayetteville Shale.
The Game and Fish Commission earns about $30 million annually on the land leases.

Raft Creek pollution by gas-driller's waste kills fish in Wildlife Management Area

 
Dead fish spur state to ban site from taking driller wastewater
BY L. LAMOR WILLIAMS
Posted on Wednesday, December 17, 2008
URL: http://www.nwanews.com/adg/News/246862
Gas-drilling waste kills fish in Raft Creek

A second facility used to store and dispose of discarded water used by natural gas drillers can no longer accept the wastewater, the director of the Arkansas Department of Environmental Quality said Tuesday.
A property owner reported seeing dead fish on his property near the Griffithville disposal site operated by Searcy-based Central Arkansas Disposal, said Teresa Marks, director of the Department of Environmental Quality.
After investigating, the department issued an emergency order Friday after an inspection found a "large unlined, unpermitted waste treatment reservoir," being filled through an underground pipe from the licensed facility, the emergency order states.
On Dec. 3, the department closed a wastewater storage and disposal facility near Carlisle for improperly applying the water onto farmland.
Marks imposed a moratorium on new permits for drill fluid storage facilities until a study is completed examining the effects the operations have on soils and waterways. She said Central Arkansas Disposal was already scheduled for sampling.
The director said the complaint coincided with the ongoing study.
"We did have some sampling that was part of the scientific study, but also had a complaint about a reservoir that a citizen was concerned about," she said. "We went out to test as a result of the complaint and determined that it had high a level of chlorides."
The manager of Central Arkansas Disposal, Ron Carl, was traveling out-of-state Tuesday and was unavailable for comment, according to a man who answered the phone at the company's office in Searcy.
The unpermitted reservoir was emptying into Raft Creek, the emergency order says and an employee from Central Arkansas Disposal "stated that the fluid within the reservoir was from the Central Arkansas Disposal facility. The employee did not know if the fluid reached the reservoir by pumping or gravity flow."
A water sample also found high chloride levels in the stream. The creek feeds the Steve Wilson/Raft Creek Wildlife Management Area in White County.
Mike Armstrong, chief of fisheries for the Arkansas Game and Fish Commission, said because the fish found on the landowners property had been dead for at least a week or more, it was hard to determine the magnitude of the fish kill in the creek.
"We did delineate that between a one-mile and two-mile stretch of the creek was affected," Armstrong said. "We found several largemouth bass up to 4 pounds and quality sized crappie so there was a robust fish population in those ditches."
Armstrong said the commission would study data on similar habitats to make an estimation of how many fish should be in the area.
"I would suspect that kill would be in the thousands with dead bass in the 2- to 4-pound range," he said.
Land farms consist of at least two large plastic-lined ponds that hold drilling fluid - which is mainly water and rock sediment discarded during drilling. After obtaining a permit from the department, land farm owners are allowed to irrigate crops with the fluid, after sending samples to the department.
The fluid is generated by companies drilling for natural gas in the Fayetteville Shale, a geologic formation that stretches from north-central Arkansas to the Mississippi River. The formation is expected to have a $22 billion impact on the Arkansas economy by 2012, according to a University of Arkansas study.
Marks said she is unaware of any drinking water in the area that could be affected, but that the company now faces a penalty of up to $10,000 per day of being in violation of its permit.
She said the emergency order simply calls for the company to cease operation, but enforcement action will follow.
"We have a matrix at the water department and we can plug in such information as whether or not harm was done to the environment; whether or not it was an intentional act and whether or not the company has a history of violations, things like that."
Copyright © 2001-2008 Arkansas Democrat-Gazette, Inc. All rights reserved. Contact: webmaster@nwanews.com

AP says drilling waste from Fayetteville shale gas wells used for irrigation found to be oily

The Morning News

Local News for Northwest Arkansas
http://www.nwaonline.net/articles/2008/12/13/news/121308arfayshale.txt

Firm Ordered Not To Take Drilling Wastewater

By THE ASSOCIATED PRESS
CARLISLE -- A company that collects wastewater from natural gas companies drilling in the Fayetteville Shale has been ordered by environmental regulators to stop.

The Arkansas Department of Environmental Quality issued the emergency order to Fayetteville Shale Land Farms near Carlisle after an inspection found the fluid -- a mixture of water and sediment discarded from the drilling process -- was not adequately contained on the property and included oil in violation of the state permit.

Arkansas has 13 "land farms." The operations use large plastic-lined ponds to hold drilling fluid, which they then use to irrigate crops. The wastewater must be contained and absorbed on the property and cannot include oil-based drilling fluids, which are listed as hazardous waste.

In its Dec. 3 order, the department said Fayetteville Shale Land Farms improperly applied the fluid to crops, creating pools on the Lonoke County property. Also, an inspector found "what appeared to be a large amount of oil in the staging pond."

According to the order, "Oil should not be found in the staging pond for fluids that are to be land applied."

Deputy Director Steve Martin said the inspection most likely was prompted by a complaint from a nearby resident.

A spokesman for Fayetteville Land Shale Farms did not immediately return a call for comment.

Information on fight against coal-fired power plants in Arkansas

Carbon Caps Task Force Information

EPA newsletter on watershed issues and sources of information

A site to learn about watershed management

Arkansas Democrat-Gazette editorial on drilling for gas on Game and Fish Commission land

Democrat-Gazette editorial on gas drilling on Game and Fish Commission land

The Arkansas Democrat-Gazette reports that natural-gas drilling may increase in Arkansas in 2009

Democrat-Gazette reports that Chesapeake Energy will increase drilling for natural gas in Arkansas in 2009