Via my colleague Sarah Johnson Phillips:

Mineral Law blog readers will be interested in a summary of key discussion points that emerged at a recent frac sand mining CLE I attended with my colleagues Kevin Johnson and Thomas Braun. Organized by the Minnesota State Bar Association’s Environment, Natural Resources, & Energy Section, the CLE featured presentations by Greg Korstad of Larkin, Hoffman, Daly & Lindgren, Daniel Flo from Barr Engineering, Frank Kohlasch of the Minnesota Pollution Control Agency, and James Peters of the Law Office of James P. Peters PLLC.

Stoel Rives has been involved in several Midwest frac sand mining projects recently, including leasing, financing, environmental review and permitting issues, so this CLE presented us with a good industry review opportunity. Here are some of the key issues the presenters raised:

• Minnesota’s industrial sand industry is composed of companies with long track records in the industrial business as well as many new entrants enticed by the new demand for industrial sand for use as frac sand. Many of these developers are under pressure to develop projects quickly in order to take advantage of the currently lucrative market for sand.
• The size and volume of proposals for new and expanded sand mining facilities are challenging the resources and capabilities of local governments charged with permitting and reviewing these projects. In addition to zoning/land use authority, local governments (i.e. cities, counties, townships) in Minnesota are the responsible government units for environmental review. Several counties and cities in Minnesota and Wisconsin have instituted or are considering moratoria on new or expanded sand mining facilities to allow time to study the potential impacts of these operations.
• Complicating the regulatory landscape further, state agencies, including the Minnesota Pollution Control Agency and the Minnesota Department of Resources, also play a role in issuing air and water permits for many frac sand projects. To address the need for better information about environmental, health, and safety issues and better coordination across layers of government, the state’s Environmental Quality Board is a request to order a Generic Environmental Impact Statement (GEIS). However, there are concerns that a GEIS may not be able to adequately address some of highly location-specific (e.g. traffic) impacts of these projects.

Due to the oil and gas industry’s heavy reliance on fracking technologies, the explosive demand for frac sand and these complex issues are not going away. Industry players will seek greater predictability in the permitting and approval process, while responsible government units will look for better information in managing the flood of new sand mine proposals. Stay tuned for more updates, as we continue to track these issues.