Europe Issues “Minimum Principles” on Hydraulic Fracturing

While the European Union (EU) has been able to reach agreement on carbon trading, currency, and other tricky political and economic issues, the use of hydraulic fracturing has proven to be somewhat divisive with the United Kingdom (UK) and Spain supporting it and France banning it.  Consequently, rather than proceeding with legislation that might be too restrictive for countries seeking to develop domestic energy sources the EU released a “Recommendation” on January 22, 2014, setting forth “minimum principles” for hydraulic fracturing that its “Member States” should utilize in their hydraulic fracking operations.  The EU will review information developed by Member States for an eighteen month period and reconsider whether further legal action is necessary or appropriate.

The EU was created in the aftermath of World War II to foster economic cooperation among countries to facilitate trade and foster economic interdependence which would make it less likely that disagreements would lead to armed conflict.  The European Economic Community created in 1958 with only six member countries (Belgium, France, Germany, Italy, Luxembourg and the Netherlands) grew in size and scope with the addition of other countries and consideration of political as well as economic issues, evolving into the EU in 1993.  Because the EU strives to operate as a political and economic partnership between the 28 member countries it operates by agreement (treaties) voluntarily and democratically agreed to by the Member States.

Hydraulic fracturing has proven to be controversial in Europe.  France banned the practice in 2011 forcing the cancellation of three permits the government had issued to Total SA for shale gas exploration projects in southern France.  In May 2011, the UK enacted a moratorium on hydraulic fracturing after complaints that drilling in Lancashire had caused two earthquakes.  The British government adopted safety practices requiring an assessment of seismic risk and the existence of faults and lifted the moratorium in December 2013.  While the British government has granted tax incentives to promote operations, many landowners oppose the practice due to the lack of private ownership of mineral rights (landowners are not paid royalties) and fact that England is densely populated.  Spain revised its regulatory review process to accelerate review and approval of shale drilling and limit the environmental review process to six months.  Prior to the regulatory revisions, the review process could take a few years.

Mindful that hydraulic fracturing is controversial and Europe lacks any experience with this practice to serve as a platform for legislation, the EU decided to proceed cautiously with a Recommendation and consider the experience of Member States before taking any further legal action.

The press release explains the reasoning and the minimum principles:

Today the European Commission adopted a Recommendation aiming to ensure that proper environmental and climate safeguards are in place for “fracking” – the high-volume hydraulic fracturing technique used notably in shale gas operations. The Recommendation should help all Member States wishing to use this practice address health and environmental risks and improve transparency for citizens. It also lays the ground for a level playing field for industry and establishes a clearer framework for investors.

The Recommendation is accompanied by a Communication that considers the opportunities and challenges of using “fracking”, to extract hydrocarbons. Both documents are part of a wider initiative by the Commission to put in place an integrated climate and energy policy framework for the period up to 2030.

Environment Commissioner Janez Potočnik said: “Shale gas is raising hopes in some parts of Europe, but is also a source of public concern. The Commission is responding to calls for action with minimum principles that Member States are invited to follow in order to address environmental and health concerns and give operators and investors the predictability they need.”

Building on existing EU legislation and complementing it where necessary, the Recommendation invites Member States in particular to:

  • Plan ahead of developments and evaluate possible cumulative effects before granting licences;
  • Carefully assess environmental impacts and risks;
  • Ensure that the integrity of the well is up to best practice standards;
  • Check the quality of the local water, air, soil before operations start, in order to monitor any changes and deal with emerging risks;
  • Control air emissions, including greenhouse gas emissions, by capturing the gases;
  • Inform the public about chemicals used in individual wells, and
  • Ensure that operators apply best practices throughout the project.

The Commission will continue facilitating the exchange of information with Member States, industry and civil society organisations on the environmental performance of shale gas projects.

Next steps

EU Member States are invited to apply the principles within six months and, from December 2014 onwards, inform the Commission each year about measures that they have put in place. The Commission will monitor the application of the Recommendation with a publicly available scoreboard that will compare the situation in different Member States. It will review the effectiveness of this approach in 18 months.

The EU’s approach to announce non-binding principles and allow Member States to report on their experience recognizes that hydraulic fracturing is controversial and is consistent with the EU’s consensus-based self-governance.  It will be interesting to see what experience is developed by the Member States and how the EU reacts.  Will future legislation be enacted and, if so, will it be prescriptive, restrictive or prohibitive?   Is it just a coincidence that on the same day it issued the Recommendation, the EU issued a press release urging Member States “to mainstream industry-related competitiveness concerns across all policy areas” to create a “European Industrial Renaissance” and reverse the trend in the decline of manufacturing.  European Commission, IP/14/42, January 22, 2014.

Stephen Smith focuses his practice on environmental and energy-related matters including regulatory counseling and litigation, administrative law, governmental affairs and lobbying. He represents clients before federal and state courts and administrative agencies. He provides client counseling and advice on compliance, permitting and agency communications as well as business transactions.
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