|
|
Home
| Databases
| WorldLII
| Search
| Feedback
New Zealand Journal of Environmental Law |
Last Updated: 29 January 2023
243
Hydraulic Fracturing and Protection in Law from
Negative Effects in New Zealand
Yangmay Downing*
Hydraulic fracturing is a high-pressure drilling technique that frac- tures rocks underground to release gas or oil that was previously thought impractical to extract. Nonetheless, various environmental and public health concerns are associated with this technique — in particular, groundwater pollution. The aim of this article is to examine two questions. Firstly, whether the Resource Management Act 1991 and Crown Minerals Act 1991 provide adequate protection from the negative effects of hydraulic fracturing. Secondly, whether, if these do not provide adequate protection, other tortious causes of action could be applied. This issue is of contemporary importance due to the proliferation of this technique abroad as traditional sources of gas and oil become scarce. The current regulatory status relating to hydraulic fracturing may lead to suboptimal environmental protection. This article concludes that a moratorium followed by dedicated National Environmental Standards directed at hydraulic fracturing would be the most appropriate and effective solution.
1. INTRODUCTION
Hydraulic fracturing, otherwise known as hydrofracturing, hydrofracking or fracking, is a controversial method of oil and gas extraction. It is a highpressure drilling technique that fractures rocks underground to release gas or oil that was
*LLB (Hons)/BSocSc (Major in Resources and Environmental Planning) University of Waikato. The article was submitted as a paper for the LLM (specialisation in Environmental Law) programme at the University of Auckland 2011.
previously thought impractical to extract. The major environmental concern surrounding this technology is the potential for groundwater pollution. The topic is of contemporary importance due to the proliferation of this technique abroad, and as traditional sources of gas and oil become scarce.
This article will examine two questions of particular importance. The first question is whether the Resource Management Act 1991 (RMA) and Crown Minerals Act 1991 (CMA) provide adequate protection from the negative effects of hydraulic fracturing. The second question is whether, if these do not provide adequate protection, what other measures under common law could be used.
In exploring this inquiry, the article does four things. Firstly, it describes the practice of hydraulic fracturing and its effects on the environment. Secondly, it considers the application of the RMA and the CMA as they relate to hydraulic fracturing. The article then provides an overview of the relevant tortious causes of action that could be applied where there has been environmental damage caused by hydraulic fracturing. In particular, nuisance, Rylands v Fletcher, negligence, and trespass to land. Finally, it considers further regulatory measures that might be necessary to address the issue of hydraulic fracturing in New Zealand.
2. HYDRAULIC FRACTURING
Hydraulic fracturing is a wellstimulation process that involves injecting fluids down a well under high pressure to artificially fracture a reservoir rock, particularly deep shale formations.1 The force of the fluid creates a fracture in the rock, thereby producing fissures throughout the rock strata.2 During the procedure, large amounts of hydraulic fracturing fluid — a mixture of water, chemicals and proppants — are injected at extreme pressures through the formation.3 The fracturing fluid used in the process varies from pure water to water mixed with solvents or gel to hydrochloric acid,4 and in some circum stances diesel oil.5
The proppants, otherwise known as propping agents, such as “wellsorted sand or aluminum oxide pellets are suspended in the fluid and are used to hold
1 Norman J Hyne Dictionary of Petroleum Exploration, Drilling and Production (PennWenn Publishing, Oklahoma, 1991) at 249.
2 At 249.
3 Hannah Wiseman “Untested Waters: The Rise of Hydraulic Fracturing in Oil and Gas Production and the Need to Revisit Regulation” (2009) 20 Fordham Envtl L Rev 115 at 117–118.
4 At 118.
5 Hyne, above n 1.
the fissures open”.6 As a result of this procedure, permeability is increased as oil and gas is more easily liberated from the rock holding the deposits, allowing it to flow towards the well-head where it is pumped out, thus increasing the rate of production.7
Hydraulic fracturing was developed in 1948;8 however, it is not until recently that it is becoming more heavily relied upon. Hydraulic fracturing allows for the extraction of oil and gas that would otherwise be unrecoverable by conventional methods. For example, throughout the United States, most of the easier and more porous formations, which do not require fracturing, have been exhausted.9 The low natural permeability of shale has historically been the limiting factor to the production of gas shale resources. Low natural permeability means only minor volumes of gas are capable of flowing to a wellbore and “without today’s hydraulic fracturing technology to increase the permeability, this would still be true today”.10 Consequently, hydraulic fracturing techniques are necessary to exploit unconventional reservoirs with low porosity and low permeability that had previously been underdeveloped.11 It is nonetheless important to remember that with any benefits of hydraulic fracturing also comes the potential for negative environmental effects.
2.1 Environmental Effects
Hydraulic fracturing is an intensive process that involves significant environ- mental disturbance. It changes the “very nature of the rock formation through brute force, uses millions of gallons of fresh water, produces more waste than conventional drilling, and is implemented on a huge scale”.12
There is concern over fractures that extend further beyond the target formation and into neighbouring property.13 What is problematic is that an operator cannot be certain that the fractures he or she is creating, and the
6 At 249.
7 At 249.
8 At 249.
proppants injected within them, have not crossed underneath an adjacent landowner’s property.14 The length of a fracture can only be estimated, because the “geological nature of the rock strata will influence how far it will travel”.15 Additionally, “determining the fracture height and length after they have been created is both expensive and uncommon”.16 In concurrence with this, Yew explains that due to limitations in test facilities and lack of a scale law, it is also “difficult to simulate the propagation of hydraulic fractures in a laboratory specimen”.17 Moreover, the “characteristics and geometry of a hydraulic fracture at a great depth are verifiable only at a great expense”.18
Because hydraulic fracturing is applied to different types of formations, using an array of methods and fluids, the environmental effects clearly differ depending on various factors.19 These factors include:20
the toxicity of the fluid used; the closeness of the fracture zone to the under- ground drinking water; the existence of a barrier between the fractured formation and other formations; whether or not the fracing service withdraws groundwater from the area or transports it in; and whether the service company recycles [the] wastewater, filters it and disposes of it on the surface, or sends it to a treatment plant.
The longterm environmental impacts of hydraulic fracturing are poorly studied. In the United States, the rapid expansion of hydraulic fracturing has not allowed researchers to keep up, and the effects of hydraulic fracturing vary widely by region, making a comprehensive study difficult.21
2.2 Water Contamination
Of major concern is that fractures may extend into water aquifers, allowing oil or gas, contaminants naturally occurring in formation water, and fracturing fluids to migrate from the target substrate into surrounding rock and eventually into and contaminating groundwater sources for waterways and drinking supplies.22
14 At 604.
15 At 604.
16 At 604.
20 At 121.
21 At 140.
22 Mark Zoback, Saya Kitasei and Brad Copithorne Addressing the Environmental Risks from Shale Gas Development (World Watch Institute, Briefing Paper 1, 2010) at 7.
In the United States, there have been allegations that hydraulic fracturing has led to the contamination of drinking water in many communities.23
Failure of the cement or casing surrounding the wellbore also poses a risk to water supplies. If the annulus of the well is improperly sealed, natural gas or oil, fracturing fluids and formation water may be “communicated directly along the outside of the wellbore among the target formation, drinking water aquifers, and layers of rock in between”.24 For example, in 2007, a well that had been drilled into a tight sand formation in Bainbridge, Ohio was not properly sealed with cement, allowing gas from a shale layer above the target tight sand formation to travel through the annulus into an underground source of drinking water.25
As noted earlier, fracturing fluids are often mixed with many different chemicals. These chemicals are used to “improve the treatment’s effectiveness, such as thickeners and friction reducers, and protect the production casing, such as corrosion inhibitors and biocides”.26 Bailey explains that a statistic commonly used in the industry is the percentage breakdown of fracturing fluid
— a typical fracturing fluid treatment in a shale formation can be 90 per cent water, 8 to 9 per cent sand, with the remaining 1 to 2 per cent of the chemical cocktail referred to as “other”.27 Thus, industry representatives often state there is little cause for concern because of the low concentrations of chemicals used in their operations. However, while this percentage may seem insignificant, it is not when considering the fact that hydraulic fracturing requires between two to eight million gallons of water per well fractured.28 Matthews accordingly points out that “even if ninety-nine percent of fracturing fluid is composed of water and sand, the remaining one percent of two million gallons of water would constitute 20,000 gallons of chemicals”.29
In addition, pathways that could deliver chemicals in toxic concentrations at less than one part per million are not well studied and many of the chemicals used in hydraulic fracturing operations listed by the industry “should not be ingested at any concentration”.30 Some of the chemicals in these solutions are harmless, for example, salts, but some such as formaldehyde and benzyl chloride31 can cause health problems in humans and other animals.32 Petroleum
26 At 10.
31 At 1050.
32 Wiseman, above n 3, at 118.
products, such as diesel, which contain benzene, toluene, ethylbenzene and xylene (as a group, called BTEX), have also been used as additives in stimu lation fluids.33
2.3 Air Pollution
In addition to the land and water contamination issues, at each stage of production, tonnes of toxic volatile organic compounds (VOCs), BTEX, other hydrocarbons and fugitive natural gas can escape and mix with nitrogen oxides from the exhaust of dieselfuelled, mobile and stationary equipment, to produce groundlevel ozone.34 Gas field ozone has created a previously unrecognised air pollution problem in rural areas, similar to that found in large urban areas, and can spread beyond the immediate region where gas is being produced.35 Ozone not only causes irreversible damage to the lungs, it is similarly damaging to various flora.36 In addition, trucks used to transport equipment, fracturing fluid ingredients and water to the well pad, drilling rigs, compressors and pumps will also emit air pollutants, including carbon dioxide, nitrogen and sulphur oxides, and particulate matter.37
2.4 Flowback Concerns
With regards to wastewater, while some of the injected hydraulic fracturing fluids remain trapped underground, 60 to 80 per cent returns to the surface as “flowback” after the fracturing treatment.38 After each fracturing stage, the fracturing fluid, along with any water originally present in the shale formation, is “flowed back” through the wellbore to the surface. Flowback water can contain naturally occurring formation water that can also display high concentrations of salts, naturally occurring radioactive material and other contaminants including arsenic, benzene and mercury.39 The “flowback” period typically lasts for periods of hours to weeks, although some injected water can continue to be produced along with gas several months after production has commenced.40
35 At 1042.
36 At 1042.
40 At 10.
The disposal of wastewater presents another challenge in hydraulic fracturing operations. In the western United States it has been common practice to “hold these liquids in open evaporation pits until the wells are shut down, which could be up to 25 years”.41 Of further concern, these pits have rarely been examined to ascertain their chemical contents outside of some limited parameters, primarily metals, chlorides and radioactive materials.42 In the eastern United States these liquids are being “reinjected underground, creating yet another potential source of extremely toxic chemical contamination”.43
2.5 Other Issues
Hydraulic fracturing is a waterintensive procedure, requiring large volumes of water. For example, in the Barnett Shale of North Central Texas, an average of almost three million gallons of water was used per well.44 Since the development of this resource will require “tens of thousands of shale gas wells to be drilled, the required volumes of water are dramatic”.45
Recent gas well blowouts in Pennsylvania and West Virginia during drilling operations in the Marcellus Shale, the most expansive shale play in the United States, underscores the “environmental and public risks associated with drilling into highly pressurised zones of hydrocarbons and introducing pressurised fluids during hydraulic fracturing”.46
Another subsurface risk that has received attention is that the hydraulic fracturing process can create a number of microseismic events, or micro earthquakes.47
In the United Kingdom, 50 separate earth tremors were caused in the Blackpool area by the hydraulic fracturing of shale.48 The hydraulic fracturing company, Cuadrilla Resources, admitted that the seismic events “were due to an unusual combination of geology at the well site coupled with the pressure exerted by water inject”.49
41 Colborn and others, above n 30, at 1053.
42 At 1053–1054.
43 At 1054.
44 Zoback and others, above n 22, at 12.
45 At 12.
(online ed, Auckland, 4 November 2011).
3. THE RMA
3.1 Introduction
The RMA is the principal statutory means of regulating the use and protection of land, air and water. Thus, an application to undertake hydraulic fracturing must comply with its requirements. The Act provides a framework of integrated effectsbased policy, planning and decisionmaking that, in general terms, may afford protection from the negative effects of hydraulic fracturing. Under the RMA, various “proactive” and “preventative”50 methods are employed, including the use of standards, policy statements, plans and resource consents to prevent or otherwise lessen negative effects, specifically, contamination.
3.2 Section 5
All resource management plans created pursuant to the RMA and all resource consents issued must be consistent with the general purpose of the Act. The purpose of the Act generally entails that the Act is “forwardlooking”.51 The purpose of the RMA, pursuant to s 5, is to “promote the sustainable manage ment of natural and physical resources”.52 Nonetheless, the language of s 5 can be used to both favour and negate developments. Section 5(2) provides that sustainable management means:53
[M]anaging the use, development, and protection of natural and physical resources in a way, or at a rate, which enables people and communities to provide for their social, economic, and cultural wellbeing and for their health and safety while—
(a) sustaining the potential of natural and physical resources (excluding minerals) to meet the reasonably foreseeable needs of future generations; and(b) safeguarding the lifesupporting capacity of air, water, soil, and eco systems; and
(c) avoiding, remedying, or mitigating any adverse effects of activities on the environment.
These are the three points that assist in assessing whether an application for a resource consent complies with the purpose of the Act. In Trio Holdings v
51 At 99.
Marlborough District Council, Judge Skelton affirmed that s 5(2) required managing the use and development of natural resources in a way that enabled people to provide for their social and economic wellbeing, “whilst achieving the caveats in s 5(2)(a), (b), and (c)”.54 The use of the word “caveat” implies that no resource use or development can proceed unless the provisions of s 5(2)(a),
(b) and (c) are satisfied.
Taking these requirements into account, the actual and potential adverse effects of hydraulic fracturing to air, water and soil, as outlined above, would offend sustainable management under the Act pursuant to s 5(2)(b). The effects of hydraulic fracturing on natural and physical resources would need to be assessed. In particular:
(a) That there is a risk that oil or gas, contaminants naturally occurring in formation water, and fracturing fluids will migrate and contaminate groundwater, air or soil.
(b) That VOCs, hydrocarbons and other pollutants associated with oil or gas can enter the air from wells or evaporation pits.
(c) Hydraulic fracturing is also a waterintensive procedure, requiring large quantities of water for each well.
Obviously, lifesupporting capacity may be threatened by pollution of air, water or soil. There are also ancillary matters such as trucks used to transport equipment, fracturing fluid ingredients and water to the well pad, drilling rigs, compressors and pumps which all emit air pollutants. Palmer accordingly notes that “more commonly, there will be a diminution of life supporting capacity and the question will be one of degree”.55 It is however expected that the abovementioned adverse effects would be avoided, remedied or mitigated by some means, as per s 5(2)(c). This would need to be achieved, for example, through resilient wellcasings, control technologies and improved monitoring.56 The Environment Court has nonetheless gone on to find that s 5 of the RMA should be interpreted by applying an overall broad judgement. This approach appears to be the most widely followed. For example, in North Shore City
Council v Auckland Regional Council the Environment Court held that:57
The method of applying s 5 then involves an overall broad judgment of whether a proposal would promote the sustainable management of natural and physical resources. That recognises that the Act has a single purpose ... Such a judgment allows for comparison of conflicting considerations and the scale or degree of them, and their relative significance or proportion in the final outcome.
Thus, in deciding the grant of resource consent the question of whether the scale of negative impact upon the environment as a result of hydraulic fracturing is disproportionate to the limited economic benefit would also need to be considered.
3.3 Planning Considerations
Planning considerations are important in the context of hydraulic fracturing as they are in place to help prevent water, air or soil contamination from ever occurring. Part V of the RMA provides for the development of National Environmental Standards, National Policy Statements and plans. Each of these planning mechanisms could be used to reduce the likelihood of contamination from hydraulic fracturing.
Under s 43(1)(a) of the RMA, technical standards can be prescribed relating to the use, development and protection of natural and physical resources, including noise, contaminants, water quality, level or flow, air quality and soil quality in relation to the discharge of contaminants.58 For example, the National Environmental Standards for Sources of Human Drinking Water is intended to reduce the risk of contaminating drinking water sources including groundwater.59 It requires Regional Councils to ensure that effects on drinking water sources are considered in decisions on resource consents and regional plans. Specifically, councils are required to decline discharge or water permits that are likely to result in community drinking water becoming unsafe for human consumption following existing treatment.60 The regulations also require Regional Councils to impose a notification requirement on certain resource consents in the circumstances where an unintended event occurs that may adversely affect a drinkingwater source.61 Indeed, such standards could be of great assistance in limiting future contamination arising from hydraulic fracturing.
58 RMA, s 43(1)(a).
As per s 59, Regional Policy Statements are to provide an “overview of the resource management issue of the region and policies and methods to achieve integrated management of the natural and physical resources of the whole region”.62 Most Regional Policy Statements will include strategies for dealing with the regulation of contamination within a region. Regional Councils also prepare plans. These plans set out rules, aimed at allowing the local authority to carry out their functions and fulfil the objectives and policies of the plan.
As per s 30(1)(f ) of the RMA, the control of discharges of contaminants into or onto land, air or water and discharges of water into water are under the control of Regional Councils.63 As hydraulic fracturing has the potential to contaminate these mediums, and could give rise to contamination issues, it should require resource consent approval. These are considered in more detail below.
3.4 Resource Consents
Part VI of the RMA covers the granting of a resource consent. They are required to undertake controlled, restricted discretionary, discretionary and noncomplying activities. The local authority has to grant a resource consent for a controlled activity, with some exceptions, but can refuse to grant a resource consent for a restricted discretionary, discretionary or noncomplying activity.64 No resource consent can be granted for activities classed as prohibited.
An application for a resource consent refers to an application for either a landuse consent, subdivision consent, coastal permit, water permit or discharge permit. In relation to hydraulic fracturing, a landuse consent, discharge permit, and depending on the quantity of water required, a water permit, would be the most relevant.
Local authority decisionmakers decide whether an activity that does not comply with the plan can be granted resource consent in order for it to proceed. An assessment of the proposed activity’s “actual and potential effects on the environment” is to be made.65 Taking into account the broad definition of environment in the RMA,66 the assessment can include a wide range of effects including the effects of the proposed activity on the neighbourhood.67 Thus, an assessment of the effects of hydraulic fracturing on the neighbourhood would seem necessary. In addition, any application for a resource consent requires
65 Section 104(1)(a).
an Assessment of the Environmental Effects (AEE).68 The AEE must contain detail consistent with “the scale and significance of the effects that the activity may have on the environment”.69 This requires an assessment of, inter alia, the “nature of the discharge and the sensitivity of the proposed receiving environment to adverse effects”,70 and a description of mitigation measures to be undertaken to “help prevent or reduce the actual or potential effect”.71
A consent authority may, in its discretion, decide whether to publicly notify an application for a resource consent for an activity.72 The only situations whereby public notification is mandatory is if it decides that the activity will have or is likely to have adverse effects that are more than minor;73 or the applicant requests public notification of the application;74 or a rule or national environmental standard requires public notification of the application.75
Any person may make a submission on a notified resource consent application within the applicable time limit.76 Therefore, in any notified consent application, all individuals concerned about the risks of hydraulic fracturing would be given the opportunity to be heard. Nonetheless, as notification is in the consent authority’s discretion, the opportunity to make submissions is not guaranteed. There have already been instances of subsurface discharge of contaminants associated with hydraulic fracturing in the Taranaki region, falling under the “discretionary” activity class, and all non-notified consents.77 This demonstrates the ease of such an intensive practice to bypass the additional scrutiny of local input. On the one hand, failure to notify allows for diminished local input that threatens to result in suboptimal environmental protection. On the other hand, concerns about the potential impacts of hydraulic fracturing in general may generate intense fear and public criticism with regard to the method, which itself could lead to underdevelopment of natural gas or oil in areas where it may not be environmentally unsafe and problematic. All in all, because overseas experience has shown the serious environmental and public health effects that hydraulic fracturing can trigger, it is important that transparency through notification exists.
Councils can also impose conditions on any resource consent granted.78 Consent authorities may require the consent holder to supply information relating to the consent, to make and record measurements, supply samples, carry out analyses, surveys and investigations at specified times or by specified techniques, and comply with these conditions at the consent holder’s own expense.79 In the context of hydraulic fracturing, such measures could help in controlling contamination. Resource consent conditions may help to ensure that groundwater contamination and air pollution are kept below “acceptable” standards and that contamination impacts do not occur.
3.5 Other Measures of Control
Other sections in the Act also provide further “preventative” methods to circumvent negative effects. For example, section 15(1) requires that no person may discharge any:80
(a) contaminant or water into water; or
(b) contaminant onto or into land in circumstances which may result in that contaminant (or any other contaminant emanating as a result of natural processes from that contaminant) entering water; or
(c) contaminant from any industrial or trade premises into air; or
(d) contaminant from any industrial or trade premises onto or into land— unless the discharge is expressly allowed by a national environmental standard or other regulations, a rule in a regional plan as well as a rule in a proposed regional plan for the same region (if there is one), or a resource consent.
This further reinforces that unless named as a permitted activity in the regional plan, hydraulic fracturing would indeed require a resource consent.
3.6 Precautionary Approach
As there are various threats of serious environmental impact inherent in hydraulic fracturing, including the potential for contamination of groundwater, air pollution as well as evidence of seismic risks, it is necessary to examine the precautionary approach. In addition, s 32(4)(b) of the RMA requires that when a local authority or a Minister is making a decision under the Act the evaluation must take into account “the risk of acting or not acting if there is uncertain or
78 RMA, s 108.
insufficient information about the subject matter of the policies, rules or other methods”.81
Internationally, the precautionary principle has been described as follows:82
Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing costeffective measures to prevent environmental degradation.
In other words, the principle means that where there is scientific doubt over any adverse effect on the environment, preventative measures should be taken. The precautionary approach, not to be confused with the precautionary principle, is implicit in the Act in regard to the potential effects of activities on
the environment.
As held by the Environment Court in Shirley Primary School v Telecom Mobile Communications, the “correct position is that the RMA is precautionary and thus justifies a precautionary approach”, and the precautionary principle is accordingly a “subset of the precautionary approach”.83 In particular, s 3 of the RMA deals with the meaning of the word “effect”, which includes any potential effect of high probability and any potential effect of low probability which has high potential impact.84 Furthermore, s 104(1)(a) requires consent authorities, and the Environment Court on appeal, to have regard to “any actual and potential effects on the environment of allowing the activity”.85 As stated by Judge Jackson in Shirley Primary School, if “the Court applies the ‘precautionary principle’ as another matter under section 104(1)(a) then the need for caution will have been considered twice”.86
Shirley Primary School deals with the application of the precautionary principle in considering whether to grant a resource consent for a cellular radio base station on a site adjacent to a primary school where there was a risk of adverse health effects from the radio frequency radiation. In this case the Court found that the risks to the Primary School community were very low and acceptable and accordingly allowed the cellular radio base station to proceed. Furthermore, the Environment Court accepted that to fall within s 3(f ) of the Act as a potential effect of low probability and high potential impact an effect
“must not be simply a hypothesis: there must be some evidence supporting the hypothesis”.87 This evidence may consist of at least one of:88
(1) consistent sound statistical studies of a human population; or
(2) general expert acceptance of the hypothesis; or
(3) persuasive animal studies or other biomechanistic evidence accompa nied by an explanation as to why there is no epidemiological evidence of actual effects in the real world; or
(4) (possibly) a very persuasive expert opinion.
Indeed, hydraulic fracturing is quite distinct from electromagnetic emissions from cellular radio base stations. This is because the adverse effects created by hydraulic fracturing are more easily measurable, and scientifically provable. Moreover, there are already recognised risks and a growing amount of expert acceptance that hydraulic fracturing can cause negative environmental effects.89 Applying the precautionary approach to avoid the negative effects of hydraulic fracturing would be necessary, as it constitutes an effect of low probability and high potential impact as espoused in s 3(f ) of the RMA.
In Ngati Kahu Ki Whangaroa Co-operative Society Ltd v Northland Regional Council 90 it was stated that:91
The Court makes a judgment on such an application after finding facts based on evidence of probative value. The precautionary approach may be applied in making the judgment where, on the totality of evidence, it finds that due to scientific uncertainty, exercise of the consent would be likely to cause serious or irreversible harm to the environment.
Applying this approach, it would therefore be necessary to point out more than merely an absence of research identifying the effects of hydraulic fracturing. Those potentially affected would need to provide any material of probative value that would tend to show that allowing hydraulic fracturing to occur would be likely to cause harm to the environment.92
92 At 333.
3.7 Enforcement
Offences against the RMA are set out in s 338. Here, a hierarchy of offences is provided, with penalties varying according to the offence. As noted by Grinlinton, the Act establishes three grades of offences, Grade I, II and III.93
The RMA also provides that principals can be personally liable for the conduct of their agents. Section 340 provides that the principal is liable in the same manner, and to the same extent, as if the principal had “personally committed the offence”.94 The principal will have a defence if they did not know or could not have reasonably been expected to know that the offence was to be or had been committed, or took reasonable steps to prevent the offence from occurring.95
Grade I offences are the most serious and include breaches of obligations imposed under Part III of the Act relating to duties and restrictions on the use of land, water, the coastal marine area, rivers and, of particular relevance in the hydraulic fracturing context, other water bodies, and discharges of contaminants.96 The contravention of an enforcement order, an abatement notice or a water shortage direction is also deemed an offence.97 The most serious offences can attract imprisonment of up to two years and fines of up to $300,000 and $10,000 a day for continuous offences.98
Where s 338 applies, it is generally unnecessary to prove knowledge or intent to commit the offence. Intention or “mens rea” is not required to be proven by the prosecution to establish liability.99 The RMA treats the offence as one of “strict liability”.100 However, the defendant can escape liability by proving the action was necessary, reasonable in the circumstances, and that the effects of the action were adequately mitigated; or that the offence was due to the occurrence of an event beyond the control of the defendant,101 including for example “natural disaster, mechanical failure and sabotage”.102
In McKnight v NZ Biogas Industries Ltd,103 there was no evidence that the defendant was aware of the facts giving rise to the discharge of waste that
93 David Grinlinton “Enforcement Mechanisms Under the RMA” (1992) 105 Planning Quarterly 15 at 17.
94 RMA, s 340.
95 Section 340(2)(a), (b). 96 Section 338(1).
100 RMA, s 341.
101 Section 341(2).
102 Section 341(2)(b).
103 McKnight v NZ Biogas Industries Ltd [1994] 2 NZLR 664 (CA).
was to be treated in a digester prior to release into a sewer. Nevertheless, the defendant was liable for the discharge. The Court of Appeal held that:104
A person may discharge contaminant within s 15(1) though not intending to do so. That follows from s 341 which says that it is not necessary for intention to be proved. Any requirement that the person foresee, or be aware of, the discharge would not be consistent with the available defences. It is difficult therefore to see room for any mental element in the act of discharge.
The Court of Appeal accordingly found no “straining of language in saying that a person allows a contaminant to escape who fails to take precautions that a reasonably prudent person in the position would take to prevent that escape”.105 The second most severe offences, Grade II offences, concern breaching an abatement notice for unreasonable noise, failure to provide information to an enforcement officer under s 22 of the Act, or failure to comply with sensitive information under s 42 of the Act.106 Any person committing these offences is liable to “a fine not exceeding $10,000, and, if the offence is a continuing one, to a further fine not exceeding $1,000 for every day or part of a day during
which the offence continues”.107
Grade III offences include the wilful obstruction, hindrance, resistance or deception of any person in the execution of powers conferred under the Act.108 The penalty for this conduct is a fine not exceeding $1,500.
A local authority may authorise any enforcement officer to enter onto land or any structure, except a dwelling house, at any time without a warrant or prior notice to determine whether the Act or any obligation or duties imposed pursuant to it are being complied with.109 Samples of water, soil, air or vegeta tion can also be taken away.110 This could have application in the present context in relation to enforcing compliance with the Act and facilitating the acquisition of evidence that may be critical to the successful prosecution of an offence under the Act in relation to hydrofracturing.
The most serious offences that might attract imprisonment or higher levels of punitive fines could be regarded as true criminal offences. Grinlinton observes that these are more than just “misdemeanours” or “simple offences”
106 RMA, s 338(2).
that breaches or contraventions of public welfare regulatory offences such as breaches of environmental legislation were traditionally regarded.111
In addition to the above measures of enforcement, abatement notices and enforcement orders are issued to ensure compliance with the RMA or plan regulations. These can be applied to a “wide range of situations where activities generate unacceptable effects”.112 Abatement notices are issued by local authority enforcement officers and cannot be applied for by members of the public.113 From the perspective of a person potentially affected by hydraulic fracturing, an abatement notice issued by an enforcement officer of the local authority represents a quick option to solve a nuisance problem.
An enforcement order, contrary to an abatement notice, can be initiated by any person and is issued by the Environment Court.114 The RMA has thus provided the public with a “direct right to seek enforcement orders”.115 As this option will take time to go before a hearing at the Environment Court, the RMA has also provided for interim enforcement orders to be issued by the Court without a hearing when there is an immediate risk or danger to the environment.116
Overall, the RMA appears to provide a raft of techniques to enforce compli ance and deal with environmental contamination that may arise from hydraulic fracturing. Boys notes that although “criminal” offences are useful, they are limited in their ability to get contamination remediated, as the provisions are “more concerned with punishing the contaminator than with restoring the environment”.117 The sufficiency of fines is also questionable, as the cost of remediation of contaminated sites can far outweigh the cost of the fine awarded. In relation to hydraulic fracturing operations, there is also the issue of some serious harms being irreversible,118 or otherwise taking substantial time and cost to remediate. Thus, fines may be insufficient.
113 RMA, ss 322–325.
116 RMA, s 320.
3.8 Effectiveness of the RMA in Relation to Hydraulic Fracturing
The RMA allows all of the potential effects of hydraulic fracturing to be considered, including effects on water, air and soil. The planning measures described above could be potentially effective in controlling the negative effects from hydraulic fracturing and could in some instances prevent it from ever occurring. The ability to impose conditions is important, especially in relation to monitoring to ensure contamination has not taken place. In addition, the RMA provides a variety of techniques for enforcing compliance.
More critically, nonetheless, there is the fact that local government has essentially been left to apply the RMA in the absence of any National Environ mental Standards directed at hydraulic fracturing. Regional Councils do not have expertise in deep subsurface geology and the implications of hydraulic fracturing in New Zealand are largely unknown.119 To date, there are no National Environmental Policies or National Environmental Standards specifically targeted at hydraulic fracturing, and Regional Councils, who have limited resources and expertise in the area, are entrusted with the task of granting resource consents. At minimum, standards need to be set in this area.
As mentioned earlier, the subsurface impacts may take years to take place and may require longterm monitoring. Regulation is thus left largely to Regional Councils. Consequently, Regional Councils have the responsibility to strike a balance between the potential economic benefits of oil or gas production, and uncertain harms to public health and the environment — some of them potentially longlasting and extremely serious. This could result in inadequate environmental protection.
In a study undertaken on the monitoring provisions in Regional Policy Statements issued by Regional Councils under the RMA, Ericksen and others have described the policy statements as “lightweight” and lacking in “indicators for tracking the performance of policies within them”.120 Moreover, monitoring can also be expensive and timeconsuming and this can discourage departments with limited funding from undertaking enforcement in an adequate manner.121
Compliance with planning regulations is the first significant step in the prevention of negative environmental effects. The second step in prevention
comes through the resource consent process. These essentially require that those wishing to undertake hydraulic fracturing demonstrate that such activities will not result in environmental harm.
While it is clear that the application of planning controls will mean that the occurrence of negative environmental effects from hydraulic fracturing will be lessened, they are still not completely removed as the RMA still allows for some “acceptable” levels of pollution. Local authorities still have the potential to provide inadequate protection. In terms of enforcement, Besier appropriately notes that complete reliance on the RMA is only “satisfactory when a local authority is able and willing to respond to end a nuisance”.122
Overall, the measures put in place under the RMA may be insufficient on their own and without any specific directives, such as National Environmental Standards, to fully address potential issues of hydraulic fracturing in New Zealand and to prevent negative effects.
4. THE CMA
The regulation of hydraulic fracturing would also be covered under the Crown Minerals Act 1991. The allocation and access of Crownowned minerals123 is governed by the CMA, while environmental regulation of their development is subject to the RMA. Thus, anyone wishing to undertake hydraulic fracturing must not only obtain resource consent for any environmental externalities,124 but also a mining permit.
One of the basic purposes of the CMA is the efficient allocation of rights to Crownowned minerals.125 The other purpose of the Minerals Programme is to establish policies, procedures and provisions that provide for “the obtaining by the Crown of a fair financial return from its minerals”.126 However, far from suggestive of an economic bias, the Minerals Programme for Petroleum defines “efficient allocation” as “referring to the process of efficiently allocating rights to permit holders, rather than the concept of economically efficient extraction of the resource”.127
The Minerals Programme for Petroleum states that:128
128 At [5.4.32].
Having determined that the application containing the best staged work programme is acceptable following a technical evaluation, then the minister must also be satisfied that the applicant will comply with the conditions of, and give proper effect to, the permit.
The Minister may grant a permit on “such conditions as the Minister thinks fit”.129 The Minister will also take into consideration the potential applicant’s “technical capability, which may include proposed use of technical experts”.130 The technical aspects of hydraulic fracturing would most likely be covered within the mining permit as conditions therein.
Clause 35 of the Crown Minerals (Petroleum) Regulations 2007 also requires that all “welldrilling operations carried out under a permit must be carried out in accordance with recognised good exploration and mining practice”.131
In relation to this, the Minerals Programme for Petroleum also points out that:132
Natural gas is an important fuel to assist New Zealand in its transition to a sustainable energy future and, even in small volumes, should not be wasted. It is also important for the Crown as recipient of the petroleum royalty stream that all gas should be efficiently produced and marketed to maintain a flow of revenue, in accordance with good oilfield practice. Although the Resource Management Act 1991 controls the environmental effects of flaring and venting, the Minister is mindful of questions about the efficiency of solution gas flaring, the nature of the byproducts of incomplete combustion, and the potential of emissions from flares to cause health effects in humans and animals.
This recognises the effect gas extraction may have on public health. The identification of the importance of both efficiency and safety, along with the requirement of good exploration and mining practice, can be usefully applied towards hydraulic fracturing activities, particularly for gas. However, at present, hydraulic fracturing is not adequately catered for under the current Minerals Programme for Petroleum.
While the Minerals Programme for Petroleum has established policies for the management of flaring and venting that would be applicable to the hydraulic fracturing of gas,133 more would need to be fulfilled in terms of
133 At [6].
addressing the other associated effects of hydraulic fracturing — namely the risk of groundwater contamination. One simple way this could be achieved is through determining the areas and rock formations in which fracturing must not occur with a high potential for causing contamination and thus health effects in humans and animals. This would fall in accordance with good mining practice and satisfy the requirements of both efficiency and safety as outlined above. All in all, uniform objectives and standards need to be set to ensure hydraulic fracturing is more adequately dealt with.
5. COMMON LAW PROTECTION
While the adverse negative effects of hydraulic fracturing may be mitigated or controlled by the granting of a resource consent, the granting of a resource consent along with the ownership of a mining permit does not, however, in and of itself create an exemption from tortious liability.134 Common law remedies may therefore provide a “reactive” measure to any potential environmental harm caused by hydraulic fracturing.
A legal issue may arise if the fissures in the rock strata created during the hydraulic fracture treatment extend beyond the property boundaries and intrude beneath neighbouring land, and further, if gas or oil, hydraulic fracturing fluid or flowback water enters and contaminates groundwater supplies. The potential effects of hydraulic fracturing could give rise to more than one type of common law action. For example, in Halsey v Esso Petroleum,135 the judgment was given for damages and injunctions for the plaintiff upon theories of private nuisance, public nuisance and Rylands v Fletcher. An overview of the main tortious remedies that could be applied to contamination arising from hydraulic fracturing is provided below.
5.1 Nuisance
There are two main types of nuisance: public and private nuisance. Private nuisance involves an invasion of the right to use and enjoy land. In comparison, public nuisance must:136
... seriously interfere with the health, convenience, or comfort of the public generally, and must, therefore, actually affect a not inconsiderable number of
people, or interfere with rights which members of the community generally might otherwise enjoy.
The interference must be substantial, and not “merely trifling or fanciful”.137 The distinction of public and private nuisance is best summarised by Turner J, who stated that: “In cases of private nuisance the injury is to individual property, and in cases of public nuisance the injury is to the property of mankind.”138 In R v Rimmington, Lord Rodger emphasised that a public nuisance “should affect the community, a section of the public, rather than simply individuals”.139
Considering that a public nuisance is dealing with interference with a right common to the general public140 and that the rights of the general public would be seriously affected if groundwater sources are polluted and rendered unsafe for consumption through hydraulic fracturing contamination, it seems logical that a public nuisance would be applicable in the context of hydraulic fracturing. The AttorneyGeneral always has standing to sue for an injunction to restrain a public nuisance. The AttorneyGeneral may act personally, or may act on the behalf of some private individual or local authority.141 An action by an individual citizen is more difficult in that to have standing the plaintiff must show that he or she sustained some “special” or “particular” damage over and
above that suffered by the public generally.142
Defences to both public and private nuisance claims arise when there has been either consent by the plaintiff, contributory negligence, or where Parliament has authorised the defendant to undertake a particular activity.143 It must be noted however that the granting of a resource consent under the RMA is not a defence in itself, and does not have the effect of licensing nuisances that may be created by use of the consent.144 As noted in Wilson v Selwyn, the process of granting resource consent is directed at preventing the creation of nuisance by separating incompatible uses and imposing conditions to minimise the impact of potential nuisances.145
Remedies for a claim in nuisance include either an injunction or damages, or a combination of both. Damages may be granted as compensation for the discomfort caused by the nuisance in the period preceding an injunction.146
139 R v Rimmington [2005] UKHL 63; [2006] 1 AC 459 (HL) at 486–487.
Because an injunction is an equitable remedy a decision to grant one is at the court’s discretion, although where a nuisance is a continuing one the plaintiff is entitled to an injunction almost as a matter of course.147 As noted by Boys, damages are generally nominal where there is no property damage.148 Accordingly, the calculation of damages usually relies on commercial valua tions of quantifiable loss, which leaves “no room for ‘unquantifiable’ costs such as damage to wildlife and nature”.149
Rylands v Fletcher 150 established a common law doctrine of strict liability for the escape of dangerous substances. Rylands v Fletcher concerned the escape of water, whereby Rylands constructed a reservoir that broke, and flooded some of Fletcher’s mineshaft. The House of Lords151 approved the appeal brought to them and agreed with Blackburn J who stated that:152
We think that the true rule of law is that the person who, for his own purposes, brings on his land, and collects and keeps there anything likely to do mischief if it escapes, must keep it at his peril, and if he does not do so, he is prima facie answerable for all the damage which is the natural consequence of its escape. He can excuse himself by showing that the escape was owing to the plaintiff’s default; or perhaps that the escape was the consequence of vis major, or the act of God.
The New Zealand Court of Appeal has recognised that the rule in Rylands v Fletcher is a special form of private nuisance.153 In doing so, the Court has followed the House of Lords’ approach that sees that the rule in Rylands v Fletcher was essentially part of the law of nuisance relating to isolated escapes and that foreseeability of damage was required,154 instead of the Australian view that the rule be absorbed by the principles of ordinary negligence.155 Hamilton v Papakura District Council provides instruction on the matter, where the Court
149 At 16.
of Appeal confirmed that the Rylands v Fletcher principle was to be considered a subset of private nuisance, meaning foreseeability of harm must be proven.156 The use of the strict liability rule in Rylands v Fletcher has been applied
in cases involving: damage caused by explosive or combustible materials;157 escape of sewage and effluent;158 water pollution;159 damage caused by industrial or mechanical failure;160 and as Halsey v Esso Petroleum determined, air pollution.161
McMullin J in Matheson v Northcote College Board of Governors stated that liability in Rylands v Fletcher would arise if: (a) a thing which is dangerous per se escapes causing damage; or (b) there is a nonnatural use of land, as a result of which damage is caused by the escape of a thing which, although not dangerous in itself, proves to be dangerous in all the circumstances.162 Thus, in any potential environmental harms caused by hydraulic fracturing, the Rylands v Fletcher principle would be useful as such a procedure involves inherently dangerous contaminants, and escape of oil or gas could indeed cause damage. Moreover, the storage of large quantities of water mixed with chemicals under the surface of the earth should be regarded as a clear example of nonnatural use.
Hamilton v Papakura District Council 163 has confirmed that, although liability is strict, the plaintiff is still required to show that it was foreseeable that damage would result, however, the defendant need not show any carelessness or negligence. This cause of action is available only to a person who is in occupation of land.164 Remedies available under Rylands v Fletcher are similar to those available for a nuisance claim as outlined above.
5.3 Negligence
Negligence is defined as a “lack of proper care and attention or carelessness”.165 The law of negligence was established in the case of Donoghue v Stevenson:166
You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in
156 Hamilton v Papakura District Council, above n 153, at 282–284. 157 Mason v Levy Auto Parts of England Ltd [1967] 2 All ER 62 (QB). 158 Spear v Newham [1926] NZGazLawRp 92; [1926] NZLR 897 (SC).
162 Matheson v Northcote College Board of Governers [1975] 2 NZLR 106 (SC) at 117. 163 Hamilton v Papakura District Council, above n 153, at 265.
164 Delta Projects Ltd v North Shore City Council [1996] 3 NZLR 446 (HC). 165 Todd, above n 141, at [5.1].
166 Donoghue v Stevenson [1932] AC 562 (HL) at 580 per Lord Atkin.
law is my neighbour? The answer seems to be — persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question.
These principles were further developed in Anns v London Borough of Merton 167 where Lord Wilberforce stated that there are two stages to the inquiry of whether a defendant prima facie owes the plaintiff a duty of care:168
First, one has to ask whether as between the alleged wrongdoer and the person who has suffered damage there is a sufficient relationship of proximity or neighbourhood ... Secondly, if the first question is answered affirmatively, it is necessary to consider whether there are any considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed.
If this test is satisfied, a prima facie duty of care is established and the courts then consider if there are any factors negating that duty. The standard of care to which the defendant must conform is generally what the reasonable and prudent person would do in the circumstances of the defendant.
Cases which have turned on the defendant’s negligence include cases of water usage169 and release of dangerous matter. For example, in Beckett v Newalls Insulation Co Ltd 170 the defendant had failed to adequately secure the valve of a gas container cylinder, and this was held to amount to negligence. Singleton LJ accordingly noted that:171
The law expects of a man a great deal more care in carrying a pound of dynamite than a pound of butter; the law expects greater care if there is introduced on to an enclosed space in a ship a container with gas inside it which may escape if precautions are not taken.
In the context of hydraulic fracturing, a greater level of care is thus expected on the part of those undertaking the activity.
167 Anns v London Borough of Merton [1977] UKHL 4; [1978] AC 728 (HL). 168 At 751–752.
171 At 259.
5.4 Trespass
Todd defines trespass as “[a]n unjustified interference with land in the pos- session of another”,172 requiring a “positive voluntary act”.173 In contrast to nuisance, where the entry is usually indirect or consequential, trespass involves a direct physical invasion on the land of another.174 The plaintiff must be in possession of the land in order to bring an action in trespass to land.175
The action is available where a defendant personally enters the plaintiff’s land, or where the defendant causes something else to enter onto the plaintiff’s land. The Court of Appeal decision in Mayfair Ltd v Pears provides instruction on the foreseeability requirements.176 In this case the defendant trespassed on the plaintiff’s land by leaving his car parked there. It caught fire and caused damage to the plaintiff’s building. The Court found that the defendant was not liable, and held that a trespasser will be liable for intended and foreseeable consequences of his or her acts and for damage that could reasonably be described as a direct or immediate result of the trespass.177
“Land” includes not only the surface of the earth, but the subsoil beneath and airspace above the surface. Accordingly it is a trespass to tunnel under the plaintiff’s land to mine coal.178 A trespass to land action has been successfully utilised in relation to: rock anchors protruding into the plaintiff’s subsoil;179 the use of a tunnel under the plaintiff’s land;180 and drilling through the substrata of the plaintiff’s property to extract oil.181 This is the traditional view that the legal concept of “land” embraced the whole column of space from the centre of the earth to the heavens, as expressed in the Latin maxim cuius est solum eius est usque ad coelum et ad inferos.182
American courts have addressed hydraulic fracturing trespass claims — Texas being the most active jurisdiction for this type of litigation. In 1961, the Supreme Court of Texas decided the case of Gregg v Delhi Taylor 183 and found that a fracture treatment that extended across boundary lines constituted an
172 Todd, above n 141, at [9.2.01].
173 At [9.2.02].
174 See Nobilo v Waitemata County [1961] NZLR 1064 (SC). 175 Cousins v Wilson [1994] 1 NZLR 463 (HC).
176 Mayfair Ltd v Pears [1986] NZCA 476; [1987] 1 NZLR 459 (CA).
177 At 466.
178 Bulli Coal Mining Co v Osborne [1899] UKLawRpAC 10; [1899] AC 351 (PC) at 361. 179 Di Napoli v New Beach Apartments Pty Ltd [2004] NSWSC 52. 180 Waugh v Attorney-General [2006] NZHC 352; [2006] 2 NZLR 812 (HC).
actionable subsurface trespass.184 However, the Supreme Court of Texas recently reversed its precedent in Coastal Oil & Gas Corp v Garza Energy Trust 185 by concluding that the rule of capture bars any recovery for damages of actionable trespass resulting from hydraulic fracturing.186 The rule of capture is a common law doctrine that permits a landowner to extract as much oil and gas as possible from a well located on his own property regardless of whether the oil and gas extracted were originally located under his land or under neighbouring tracts.187 In this case, Garza alleged trespass in that hydraulic fracturing invaded beneath their tract causing substantial drainage. The Court expressed two major fears about allowing liability for hydraulic fracturing trespasses. The first being that hydraulic fracturing trespass actions would weaken the rule of capture, which oil and gas jurisprudence is dependent upon in Texas.188 Secondly, the Court feared that the potential of trespass actions would stifle the use of hydraulic fracturing, leading to a reduction in hydrocarbon extraction that may result in negative economic consequences.189
It is doubtful that this approach would be taken in New Zealand. This is because the Crown Minerals Act vests ownership of petroleum in its natural condition in the Crown.190 This legislation provides a licensing regime whereby the Crown can grant to licensees rights to extract petroleum and acquire ownership of it. In other words, it is the State that regulates the protection of the correlative rights of owners above a common reservoir. Consequently, there is insufficient support for “advocating the existence of the rule of capture as a rule of common law, but legislation vesting ownership in the Crown leaves little room for the application of the rule”.191
Moreover, according to Todd, it is generally accepted in the Commonwealth that any intrusion into the subsoil beneath the plaintiff’s land will constitute trespass, and “there appears to be no case in the Commonwealth where a plaintiff has failed on the basis that the area of subsoil invaded was so deep that the surface occupier’s possessory rights did not extend that far”.192
184 At 416.
185 Coastal Oil & Gas Corp v Garza Energy Trust 268 SW 3d 1 (Tex 2008). 186 At 14.
192 Todd, above n 141, at [9.2.03].
5.5 Obstacles
Considerable obstacles are likely to be encountered by using the common law actions outlined above to resolve environmental damage caused by hydraulic fracturing. One of the major obstacles is the prospect of high legal costs. Boys notes that often a prospective plaintiff will face large legal and evidentiary costs; for example, the costs involved in hiring an expert witness, as well as personal costs.193 Another deterring factor is that if the plaintiff is unsuccessful, there is a substantial risk that the plaintiff will be ordered to pay the defendant’s costs.194 Gearty aptly notes that such difficulties exist throughout the law, but are “especially relevant here, where often a big business concerned is the defendant and where the alleged pollution may be the result of complicated scientific process”.195 Moreover, as noted by DayaWinterbottom, enforcement procedures under the RMA “will often be a cheaper and more expeditious way” of obtaining redress when compared to bringing a common law action.196
Gearty notes further obstacles in the form of “causation, the burden of proof and the courts’ rules on locus standi”.197 Boys additionally observes that civil remedies are “often inappropriate for resolving contamination and environmental disputes”.198 Remedies usually focus on returning the plaintiff to the position they would be in if the contamination had not occurred. These remedies are anthropocentric and primarily concerned with damage to property or economic loss, thus failing to “recognise the intrinsic value of natural resources”.199
In addition, statute has placed time limits on the bringing of common law claims. Section 4(1) of the Limitation Act 1950 stated that actions founded on tort “shall not be brought after the expiration of 6 years from the date on which the cause of action accrued”.200 The accepted rule is that a cause of action accrues when “every fact exists which it would be necessary for the plaintiff to prove in order to support his or her right to the judgment of the court”.201 In contamination arising from hydraulic fracturing there is the obvious problem
ss 11, 12.
(CA) at 678.
that a plaintiff may be unaware that contamination has occurred. Furthermore, the plaintiff may be “aware of the event but unaware of its extent or toxicity”.202
5.6 Conclusions
Despite the limitations outlined above, the application of common law remedies for environmental damage arising from hydraulic fracturing may provide some redress to those affected by the activity. It provides a “second chance” in circumstances where the RMA fails to provide for redress. However, the use of common law remedies may be restricted in the context of environmental damage caused by hydraulic fracturing due to the different criteria that must be met.
Boys furthermore points out that “the proprietary focus of the remedy does not address the need to remedy damage to commonly owned resources, such as the environment”.203 Nonetheless, if the RMA does not satisfy in providing adequate solutions to negative environmental effects arising from hydraulic fracturing, there is still the additional safeguard of recourse to common law remedies and the assistance that may be provided therein.
6. THE QUEENSLAND APPROACH TO FRACKING
In 2010, traces of benzene and toluene were detected in fractured wells in Queensland.204 This resulted in a growing public concern and demands for regulation. In response to these concerns, the Natural Resources and Other Legislation Amendment Act (No 2) 2010 (NROLA Act) was introduced.205 This amended s 312W of the Environmental Protection Act 1994, which deals with the “statutory conditions of environmental authority” and now states that an environmental authority is “taken to include a condition prohibiting the use of restricted stimulation fluids”.206 “Restricted stimulation fluids” are defined under the Act as:207
... fluids used for the purpose of stimulation, including fracturing, that contain the following chemicals in more than the maximum amount prescribed under a regulation—
203 At 22.
(Sydney, 19 November 2010).
207 Section 312W(2).
(a) petroleum hydrocarbons containing benzene, ethyl benzene, toluene, or xylene;
(b) chemicals that produce, or are likely to produce, benzene, ethylbenzene, toluene or xylene as the chemical breaks down in the environment.
There is however currently no regulation in Queensland specifying the maxi mum amount of BTEX.
Other measures to address the negative effects of hydraulic fracturing have been provided under the Petroleum and Other Legislation Amendment Regulation 2011 (POLAR). Under this regulation, those with the right to undertake hydraulic fracturing must notify each landowner and each occupier at least ten days before carrying out activities.208
Furthermore, the POLAR stipulates that within two months of any hydraulic fracturing activity, permit holders must lodge a completion report with the Department of Employment, Economic Development and Innovation that includes a “hydraulic fracturing fluid statement”. This must state the composition of the hydraulic fracturing fluid, including:209
(a) the quantity of each component of the hydraulic fracturing fluid in kilograms, litres, or kilolitres, as appropriate; and
(b) the concentration of each component in the hydraulic fracturing fluid; and
(c) the name of any chemical compound contained in the hydraulic fracturing fluid.
The completion report must also include an assessment of “the implications of the hydraulic fracturing activities for each well for the future management of the natural underground reservoir involved”.210 The assessment must include, inter alia, the “distance separating a geological interval over which hydraulic fracturing activities were carried out from an aquifer”.211
The obvious advantage of the POLAR is that it allows for greater trans parency on the part of those undertaking hydraulic fracturing. In New Zealand, while the completion of an AEE under the RMA would require those undertaking hydraulic fracturing to provide a full description of their activities, there is no pronounced obligation on such parties to disclose the chemical constituents that will be used in the process.
Mandatory notification, restricting the use of BTEX chemicals in the fracturing process, and the requirement of an assessment of the implications of
hydraulic fracturing demonstrates that Queensland has implemented quite strict regulations, especially in comparison to New Zealand.
7. FUTURE DIRECTIONS
In reference to hydraulic fracturing, Wiseman appropriately comments that:212
In the rush to extract essential resources, a process which itself contributes to human wellbeing, other aspects of human wellbeing — the quality of the environment and public health — must not be cast aside as a mere impediment to progress.
While New Zealand’s regulatory framework does provide some protection from the negative effects of hydraulic fracturing, there is much more that needs to be achieved. This is crucial, as overseas experience has shown the huge environmental impacts caused by this activity.
Thus far, there are no specific policy directives aimed at hydraulic fracturing in New Zealand. Choosing to adopt regulations similar to those in Queensland would be a useful step towards creating an improved legal environment that strikes a balance between environmental protection and providing for industry and development. This could come in the form of a National Environmental Standard that specifically addresses hydraulic fracturing in New Zealand. This would be beneficial in giving Regional Councils stronger direction on how to deal with hydraulic fracturing. Section 95A(2)(c) of the RMA states that consent authorities must notify applications if a National Environmental Standard so requires.213 Indeed, New Zealand needs to consider adopting regulations like those in Queensland, that require mandatory notification and full disclosure of chemicals used in hydraulic fracturing, as these allow for greater transparency and better environmental management. A National Environmental Standard requiring mandatory public notification of hydraulic fracturing activities would allow for local input and extend the process of scrutiny to ensure optimal environmental protection.
It is, nonetheless, put forward that a moratorium on hydraulic fracturing is required in the interim. A moratorium is a temporary prohibition or suspension of an activity.214 This is obviously the most effective measure to ensure the negative effects from hydraulic fracturing do not occur. The moratorium could
214 Tony Deverson and Graeme Kennedy The New Zealand Oxford Dictionary (Oxford University Press, Auckland, 2005) at 731.
continue until further investigation into the practice of hydraulic fracturing, and how to effectively prevent negative effects thereof, has taken place. Pressure by political parties for an independent investigation into hydraulic fracturing215 has led the Parliamentary Commissioner for the Environment to begin an official investigation, to be completed at the end of 2012.216 This would further inform the need for regulation and the level of regulation required. Indeed, a moratorium could continue until such time as the identification of sensitive areas in New Zealand where hydraulic fracturing activities would pose an environmental risk has been documented. It would give more time for the long term effects of hydraulic fracturing to be studied.
Moreover, if an investigation were to find that hydraulic fracturing is benign in certain regions, operators can use the results to allay public concerns. Wiseman also notes that any study on the environmental effects needs to focus not only on hydraulic fracturing occurring in regions where fracturing formations are close to human populations and aquifers, but also areas that “may later experience population growth”.217
Whatever regulatory path the Government decides to take, through either a moratorium or more strictly regulated use, hydraulic fracturing activities need to be subject to tighter regulations. The potential negative effects associated with hydraulic fracturing are far too grave to be dealt with under the current regulatory framework.
8. CONCLUSION
This article has looked at two important questions. The first question was whether the RMA and CMA provide adequate protection from the negative effects of hydraulic fracturing. The answer to this is that they do, though somewhat marginally, as it is dependent on local authorities that are making decisions without the guidance of specific National Environmental Standards. The measures put in place under the RMA may be insufficient on their own and without any specific directives, such as National Environmental Standards, to fully address potential issues of hydraulic fracturing in New Zealand and to prevent negative effects. The second question was whether, if these do not provide adequate protection, other measures under common law could be used. Common law remedies in the form of nuisance, Rylands v Fletcher, negligence
and trespass may provide a “reactive” measure to environmental harm caused by hydraulic fracturing.
This article has described the practice of hydraulic fracturing, associated environmental disturbance and known risks to public health. It has also shown that the potential negative effects arising from using this technique in New Zealand have not been adequately addressed. While some provision can be found under the RMA and CMA that could help in reducing the environmental effects, these are not sufficient on their own. While common law remedies exist to provide redress in circumstances where the RMA may be inadequate, there are still many barriers to their use. In brief, the current regulatory status relating to hydraulic fracturing may lead to suboptimal environmental protection.
A moratorium followed by dedicated National Environmental Standards directed at hydraulic fracturing would be the most appropriate and effective solution. Objectives and standards need to be set to ensure hydraulic fracturing is more adequately dealt with, and hydraulic fracturing measures similar to those used in Queensland could be suitably applied in New Zealand. It remains to be seen, nonetheless, whether the New Zealand Government will take action and resolve to implement such measures in the near future.
NZLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.nzlii.org/nz/journals/NZJlEnvLaw/2012/8.html