Rick Etter, Airports Acquisition Specialist FAA Office of Airports, Planning and Environmental Washington, DC Federal Aviation Administration Guidance on the Extraction of Gas & Oil on Federally Obligated Airport Property Advisory Circular FAA Eastern Region 35 th Airport Conference Hershey, PA April 3, 2012

2 Federal Aviation Administration Guidance on Extraction of Gas and Oil on Airport Property AEA 35 th Airport Conference April 3, 2012 Background Technological advances combined horizontal drilling & hydraulic fracturing in early 2000s –Deposits previously not tapped are now accessible –Current gas and oil boom Natural gas extraction is the principal focus of hydraulic fracturing.

3 Federal Aviation Administration Guidance on Extraction of Gas and Oil on Airport Property AEA 35 th Airport Conference April 3, 2012 What is Hydraulic Fracturing?

4 Federal Aviation Administration Guidance on Extraction of Gas and Oil on Airport Property AEA 35 th Airport Conference April 3, 2012 Mineral Shale Deposits in the US

5 Federal Aviation Administration Guidance on Extraction of Gas and Oil on Airport Property AEA 35 th Airport Conference April 3, 2012 Current Regulatory Environment Mineral extraction activities are permitted by state agencies or local municipalities. Statutory exemptions for gas and oil extraction activities from Federal Law* –Clean Water Act - oil and gas operations exempt except treatment of flowback or produced water returning to surface if they violate water quality standards. –Clean Air Act – exemption for aggregation of emissions from oil and gas exploration and production operations –Safe Drinking Water Act – hydraulic fracturing exempted unless the fluids contain diesel fuel *These may be regulated by individual states.

6 Federal Aviation Administration Guidance on Extraction of Gas and Oil on Airport Property AEA 35 th Airport Conference April 3, 2012 Public Concerns Public is concerned with potential impacts –Water quality and Emissions are primary concerns Scranton, PA

7 Federal Aviation Administration Guidance on Extraction of Gas and Oil on Airport Property AEA 35 th Airport Conference April 3, 2012 Changes to the Regulatory Environment Congress and EPA are currently considering or reviewing changes to aspects of the statutory and regulatory framework.

8 Federal Aviation Administration Guidance on Extraction of Gas and Oil on Airport Property AEA 35 th Airport Conference April 3, 2012 Changes to the Regulatory Environment DOE created a Natural Gas Subcommittee to make recommendations to improve the safety and environmental performance of natural gas hydraulic fracturing from shale formations as part of the Presidents Blueprint for a Secure Energy Future. –Committee issued final report on November 18, In February 2012, BLM has issued draft rules on hydraulic fracturing on federal lands requiring: -disclosure of chemicals used; -the amount and source of fracking water; -the plan of disposal and reporting actual disposal materials; and -tests to ensure well bores maintain their integrity.

9 Federal Aviation Administration Guidance on Extraction of Gas and Oil on Airport Property AEA 35 th Airport Conference April 3, 2012 FAA guidance on gas and oil leases Gas and oil operators, as well as airport sponsors, are interested in extracting oil and gas resources located under airport land. Airport sponsors must maintain safe airport operations and adhere to grant obligations and assurances. –Preserve Rights and Powers / Good Title –Fair Market Value Revenue –Prevention of Hazards and Obstructions The guidance does not encourage gas and oil leasing on-airport property.

10 Federal Aviation Administration Guidance on Extraction of Gas and Oil on Airport Property AEA 35 th Airport Conference April 3, 2012 Gas and Oil Operation on-Airport Current Oil and Gas Operations on-Airport –FAA Airports Regions who have or are currently reviewing gas and oil leases for on-airport AEA – New York, Pennsylvania, and West Virginia AGL - North Dakota, Ohio and Michigan DFW and surrounding areas –DFW is a large scale on-airport shale gas development –DEN is conducting its own gas and oil operations It is anticipated that more airports will be approached by developers as areas are tapped. –Most active shale formations currently Marcellus Shale in the North East Barnett Shale in Texas Haynesville/Bossier Shale in Louisiana Bakken Shale in North Dakota

11 Federal Aviation Administration Guidance on Extraction of Gas and Oil on Airport Property AEA 35 th Airport Conference April 3, 2012 Background on Guidance AEA Region prepared mineral extraction Guidance in October 2010 New York delegation visited in January and May 2011 FAA committed to establishing National Guidance to facilitate consistent application of FAA requirements for gas and oil leasing and on-airport development.

12 Federal Aviation Administration Guidance on Extraction of Gas and Oil on Airport Property AEA 35 th Airport Conference April 3, 2012 Background on Guidance Established a working group to draft guidance (January 2011). –APP 400 –ACO 100 –AAS 300 –AGC -Region and ADO representatives AEA, ASW, AGL and ANM

13 Federal Aviation Administration Guidance on Extraction of Gas and Oil on Airport Property AEA 35 th Airport Conference April 3, 2012 Advisory Circular – Goals / Objectives Provide consistent guidance for airport sponsors to develop gas and oil leases and development proposals in compliance with their Federal obligations; Incorporating existing FAA requirements for: – Airspace/Aeronautical Studies and Notifications; – On-airport Construction and Development; – Airport Planning; – Environmental Documentation; and – FAA revenue use policies. Provide FAA field offices on what is needed for gas and oil project review

14 Federal Aviation Administration Guidance on Extraction of Gas and Oil on Airport Property AEA 35 th Airport Conference April 3, 2012 Its an Airport not a Gas/oil Field Any exploration or development on Airport Surface Land must be subordinated to FAA Safety and Operations Standards and Requirements. Gas and oil leases must restrict access and use of airport operational and aeronautical development land. (No drill zones defined) Airport Design and Construction Rules must be applied. (airspace, hazard elimination/prevention, environmental compliance, etc). FAA must Approve Changes to the Airport Layout Plan (ALP). Lease is Contingent on ALP approval NEPA Review for FAA Approval Gas and Oil leases terms and provisions must be at Fair Market Value (Signing bonus, royalty, surface land rents, terms and expiration provisions.)

15 Federal Aviation Administration Guidance on Extraction of Gas and Oil on Airport Property AEA 35 th Airport Conference April 3, 2012 Outline of Guidance Chapter 1 provides a brief overview of gas and oil production in the United States. Chapter 2 provides the airport sponsor with FAA requirements and recommendations on how to develop acceptable on-airport gas and oil development plans and proposals. Chapter 3 provides an overview of the FAA review process and submittal documentation requirements Addendums: –Listing of Recommended and Required Gas and Oil Lease Terms and Restrictions –Listing of Government Agency References and Authorities Associated with Shale Gas and Oil Development (i.e., EPA, DOE, BLM, state gas and oil development agencies, etc.)

16 Federal Aviation Administration Guidance on Extraction of Gas and Oil on Airport Property AEA 35 th Airport Conference April 3, 2012 Next Steps Finalize a Draft Advisory Circular Guidance on the Extraction of Gas and Oil on Federally Obligated Airport Property Meet with Resource Agencies Circulate for internal FAA review (ARP, Regions, other FAA Offices) Federal Register notice for public review and comment

17 Federal Aviation Administration Guidance on Extraction of Gas and Oil on Airport Property AEA 35 th Airport Conference April 3, 2012 Thank You!