The legal consequences of European Commission recommendations on minimum principles for shale gas in Poland.
Author: Michal Tarka
Lawyer and doctoral candidate at Faculty of Law, Adam Mickiewicz University (UAM) in Poznań, Poland
Published: February 18, 2014
On 22 January, 2014 the European Commission published a recommendation specifying minimum principles for the exploration and production of hydrocarbons using high volume hydraulic fracturing1. The Recommendation is primarily the result of over two years of works and analyses related to the issues of human health and environmental protection, in connection with the growing development of prospection, exploration and production of unconventional hydrocarbons in European Union Member States. The works involved mainly public consultation2 at European level, as well as relevant actions in the European Parliament and the Council.
What are the recommendations?
First, the legal nature of recommendations as a source of European legislation should be specified. They are adopted pursuant to Article 292 of the Treaty, on the Functioning of the European Union3, and basically they form one of the non-binding secondary legislation acts that can also be adopted directly by the European Commission. Given their non-binding nature, there are no sanctions that could result in Member States being obliged to adopt and implement such recommendations. However, according to a decision of the Court of Justice, recommendations should be taken into consideration; one example would be the process of adjudication by national courts, in particular if the recommendations refer to the clarification of internal law provisions or supplement binding provisions of EU legislation. This position stems from the principle of solidarity valid in EU legislation4. Consequently, a Recommendation becomes a specific interpretation directive for courts and national administrative authorities involved in formal legal processes related to shale gas in our country (Poland).
Furthermore, it should be noted that the European Commission expects the minimum principles set out in the Recommendation to be implemented within six months of the publication date (i.e. the deadline expires on 22 July, 2014) and Member States are expected to inform the Commission annually of the implemented measures (starting from December, 2014). Based on the data collected, the European Commission will review the effectiveness of the measures put in place by Member States 18 months after the Recommendation's publication date. Failure to implement the minimum principles laid down therein may result in the Commission putting forward legislative proposals with legally-binding provisions on the exploration and production of hydrocarbons using high volume hydraulic fracturing.
Minimum principles
As for the minimum principles presented on 22 January in respect of processes related to hydraulic fracturing, it is worth noting that the European Commission has put an emphasis on the following issues: 1) the need for greater public participation in the decision making processes, 2) protection of groundwater, 3) seismicity, 4) the need for monitoring of the relevant environmental components potentially affected by high volume hydraulic fracturing, as well as 5) adequate control of chemical substances used and 5) rational use of water. Importantly, the Recommendation shows that the Commission aims to develop binding industry best practices and to promote the exchange of available information between authorities, business operators and representatives of the local communities concerned.
In order to protect groundwater against potential impact from hydraulic fracturing, Member States should establish minimum depth limitations between the area to be fractured and groundwater (paragraph 3(2) of the Recommendation) and implement the requirement of risk assessment before the commencement of any operations related to the exploration and production of hydrocarbons; thus anticipating geological layers separating the reservoir from groundwater (paragraph 5(3)(b) of the Recommendation) and respecting the aforementioned minimum vertical distance between the zone to be fractured and the groundwater (paragraph 5(3)(c) of the Recommendation).
The need to determine the status of existing fractures and individual geological layers before starting operations is particularly important since it helps with the evaluation of potential substance emissions during fracturing (e.g. geological layers with higher permeability will be taken into consideration, which in turn may affect the location of particular wells).
Analysis of seismicity and its constant monitoring (before, during and after fracturing operations) is one aspect of environmental protection so far omitted in the legislation of most Member States. It should be noted that the United Kingdom is the only state that has adopted regulation imposing an obligation on the operator to carry out seismic monitoring on a permanent basis. Its inclusion in the Recommendation’s minimum principles should be viewed positively (determining a baseline for seismicity - paragraph 6(2)(f) of the Recommendation; pressure control and adjustment during hydraulic fracturing operations – paragraph 9(2)(d) of the Recommendation; regular monitoring of the installation and the underground area before, during and after hydraulic fracturing – paragraph 11(1) of the Recommendation).
Moreover, requirements concerning comprehensive monitoring of relevant components of the environment on a current basis have been introduced. It has also been emphasised that such monitoring (carried out before, during and after fracturing operations) should include information on 1) the precise composition of the fracturing fluid used for each well, 2) the volume of water used for the fracturing of each well, 3) the pressure applied during fracturing, and 4) the return fluids as well as air emissions of methane and other volatile organic compounds. Results from monitoring should be reported each time to the relevant authorities.
One of the most controversial issues in relation to fracturing operations is the composition of the fracturing fluids used. Only a few Member States have implemented a requirement to disclose the components of these substances. In the Recommendation under consideration, the European Commission has emphasised again that manufacturers, importers and downstream users are obliged to comply with their obligations under the REACH5 Regulation concerning the Registration, Evaluation, Authorisation and Restriction on Chemicals. Quite often operators conducting hydraulic fracturing operations ignore, for example, the requirement to verify whether the substance used by them has been properly registered. Additionally, relevant information on the chemical substances used should be publically disseminated – this obligation has been imposed directly on well operators but also indirectly on the relevant national authorities (paragraph 15 of the Recommendation).
The Recommendation also includes requirements concerning the need to determine a so called baseline. Interestingly, the Recommendation also provides guidelines that suggest well integrity tests (conducted at all stages of operations) should be reviewed and evaluated by an independent and qualified third party. Moreover, the Recommendation offers itself as a foundation for the development of an information database of best practices in the mining industry. It is worth noting that this solution is quite common in the Unites States of America where the mining industry provides and maintains so-called good practice databases.
Quick application of some recommendations
With reference to Poland, it should be noted that in the legislative sphere the Commission’s proposals may soon be adopted, under a procedure of amendment to the Geological and Mining Law, conducted by the Minister for the Environment. As for the organisational suggestions, there are at least two tools available that, after certain modifications, could be used to adopt the Recommendation’s provisions. First, the permanent monitoring of wells could be carried out, irrespective of licensees, by the Polish Geological Institute. Second, a public communication programme titled "Together about shales" has already been implemented, and after its extension to the area of all licences and introduction of the principle of full transparency of actions, taken by both operators and national authorities, this programme may meet the Recommendation’s provisions. As a local platform for the exchange of knowledge, it would give organised groups of local communities a chance to participate in legal procedures.
To sum up, it should be emphasised that the European Commission has decided to take action in the form of non-binding legal acts, relating to the exploration and production of hydrocarbons using high volume hydraulic fracturing, thus casting new light on the interpretation of already existing provisions of law. This non-binding act does not mean that Member States need not actually adopt the minimum principles set out in the Recommendation. One gets the impression that the Commission has only postponed more restrictive legislative proposals concerning shale gas in Europe until it finds additional arguments for the need to develop detailed regulations for this industry. In Poland, people responsible for the execution of the shale project may now focus on working out measures to implement the Recommendation in a way that prevents the Commission from finding such arguments. What can be done to achieve this? It seems that the following may be of help:
- amendment of Geological and Mining Law;
- extension of well-monitoring with new locations under the programme implemented by the Polish Geological Institute;
- extension and modification of the public communication programme "Together about shales".
1the English version of the Recommendation is available;
2results of the public consultation are available in the report of the European Commission;
3Official Journal of the EU, 30.3.2010, C 83/47; Eur-lex/el;
4M. Kenig-Witkowska, Prawo instytucjonalne Unii Europejskiej, Warsaw 2011, pp. 191-192; judgment of the Court of Justice of 13.12.1989 – Case C-322/88 – Salvatore Grimaldi v. Fonds des maladies professionnelles, ECR 1989, p. 4407;
5Regulation (EC) No. 1907/2006 of the European Parliament and of the Council of 18 December 2006; Eur lex/el.
