Citizens Recommendations for a New Dallas Gas Well Ordinance A Summary of Recommendations Taken from Dallas, South Lake,

Flower Mound and Grand Prairie Ordinances and Dallas Citizen Input I. Introduction In 2006, the City of Dallas adopted forwardDallas!, a vision of what both residents and businesses want Dallas to follow for the future. Dallas is a city of neighborhoods. Residents say they "live in South Dallas" or "live in Lakewood" or "live in Uptown" in the same breath they say they're "from Dallas". Even though Dallas has many unique neighborhoods, there are two important things that we all share. Everyone in Dallas breathes the same air, and we all drink the same water. Dallas continues to make plans for the future that will improve livability in the city. Better transportation options, commercial centers, improved streets, and world-class arts and entertainment. Studies show patients heal faster, children learn better, the din of urban life becomes softer, the brutal summer heat lessens and air quality improves when cities embrace and connect with a healthy outdoor environment. Protecting Dallas natural environment is linked to policies throughout other elements of forwardDallas! Continued growth in all of these areas will not exist without carefully constructed shale gas production ordinances that provide security for not only the environment, but for residents, and businesses who have chosen to live, work, and invest in Dallas. The following recommendations are designed to protect and help meet the goals that were adopted in 2006 for everyone in Dallas. The following community groups have participated in the drafting of these recommendations: Dallas Area Residents for Responsible Drilling Downwinders at Risk Mountain Creek Neighborhood Alliance Greater Dallas Sierra Club Texas Campaign for the Environment II. Issues of Concern A. Land Use and Zoning In the early 1990s the city faced a wave of proposed hazardous and medical waste incinerators within its city limits. In response, the Mayor and City Council appointed an advisory committee to write a new ordinance governing where and under what circumstances any waste incinerators could operate within the city limits. Because it was widely recognized that such facilities were fundamentally incompatible with most of what a city is homes, parks and commercial businesses - incinerators were only allowed to locate in areas already zoned for heavy industry. Even then, setbacks and other special provisions were required as well. Gas mining and processing involves hazardous chemicals and activities, routinely releases hazardous and toxic chemicals into the environment, and has the potential for catastrophic disaster through accidents or sabotage. It is the very definition of heavy industry. As such, its fundamentally

at odds with what Dallas has proclaimed itself to be about in the 21st Century sustainable, green, renewable and family-friendly. Gas mining and processing should be restricted to areas already zoned for heavy industry and additional restrictions imposed to insure public safety and decision-making transparency. Recommendations Prior to the issuance of any new Gas Well SUP permits, a City Gas Inspector must be hired. A Gas Well SUP is required every well drilled. The City of Dallas will hire a gas inspector/staff who is employed by the City of Dallas on a full time basis, and whose duties are not shared with any other municipality. The gas inspector's office will be located in Office of Environmental Quality. All Gas Well SUP permit applications require the Operator to submit a Comprehensive Infrastructure Plan. This plan will include, but is not limited to: Detailed descriptions, drawings and maps of proposed pipelines, compressors, tanks and any other new facility or development connected to the drill site. Before drilling can begin, that plan must be approved by both the Planning and Zoning Commission, and the City Council. No wells will be allowed inside a residential area. No gas wells will be allowed within a 3,000 ft radius from: homes, schools, day care centers, hospitals, universities, colleges, nursing homes, parks, dams, overpasses, bridges, bus or train terminals, airports, nature preserves, escarpments, lakes, the Trinity River, or tributaries to the Trinity River, or any sources of drinking water. any historical, existing or possible future fresh water or wells. from any right-of-way. any structure that is not used for the everyday operation of the well. any institutional and community service use, recreation use (except trailers or mobile homes placed on the operation site as temporary residences for workers). any property line from the edge of the pad site. any other designated sensitive area No gas wells within a 100 ft radius from any storage tank or source of ignition on the pad site. Tanks and tank batteries must be spaced in at least a 100 ft radius from any combustible structure inside the pad site. No gas wells or pipelines on airport property that abuts residential or commercial buildings. 2

No gas wells or pipelines in a city or private park. No gas wells or pipelines, in part or whole, within a floodplain. Gas Drilling SUP permits will have no automatic renewals. All wells operating under Gas Well SUP permits issued before Sept 2007 must apply for a new Gas Well SUP permit under the current ordinance rules. Notice of a Gas Well SUP permit application shall be mailed to all residences, schools, churches, day care centers, nursing homes and business within a one mile radius of the facility. Notice shall also be published on the city web site. The Operator is responsible for the cost of the announcement and mail notice. Application for Gas Well original SUP $50,000. Subsequent SUP applications will have a graduated charge of 30%. These fees are non-refundable. SUP Violations will carry a penalty of $2,000.00 per day for each violation. Fines must be paid within 30 days of issuance. The well permit may be revoked immediately by the city for non-payment. B. GENERAL ENVIRONMENTAL PROTECTION Because gas mining and development is coming to Dallas relatively late in the Barnett Shale cycle, it can learn a lot from the failures of other municipalities to anticipate the accumulative environmental damage from gas development, specifically horizontal hydro-fracking. Dallas has never seen widespread oil and gas drilling within its city limits, and the gas industrys ephemeral economic benefits to the city make it absolutely necessary for Dallas to protect its natural and human resources against a short-sighted Faustian Bargain. Recommendations All Gas Well SUP permit applications require the Operator to submit a comprehensive Environmental Impact Study. The Study will be paid for by the operator and performed by City Staff or a third party hired by the City, and completed before the first vote on the permit or SUP. This Study will include, but is not limited to: a survey of areas within a 5,000 ft. radius of any proposed well to include: Baseline testing for all air and water contaminants Baseline soil testing along the boundary line on all sides of the proposed property where the well will be drilled Estimated water usage for each well over the entire life of the well and plans for sources of water to be used Plans for disposal of water contaminants Acreage affected, duration of well play and estimated amount of electrical use for each well during the entire life of the well

a Texas Parks and Wildlife Survey of Federal and State Protected Species, including but not limited to: an assessment of the hazards to wildlife and habitats a Native Species assessment, Tree Inventory and Botanical Registry an inventory of all historical sources of freshwater including ponds, rivers, streams, contributories, wells and perennial springs. any future sources of potential drinking or irrigation water in a 5,000 ft radius of the proposed well Identification of any state or federally protected endangered species using the site will result in permanent termination of operations within 30 days. The Environmental Impact Study for each Gas Well SUP permit shall be available on the Citys website. The cost of publishing this data will be paid by the Operator. A Geological Study commissioned by The City of Dallas to determine gas reserves under City of Dallas property is required for all Gas Well SUP permit applications. The cost will be paid by the Operator. Cementing casing is required all the way down to the horizontal turn of any well to prevent gas and toxic chemicals from leaking in to the sub terrain. Sealant shall be used around pipe threads to ensure and maintain the integrity of the seal. Lead-free, biodegradable pipe dope may be substituted for American Petroleum Institute (API) specified pipe dope. City will require radio isotopic marker elements be added to all fracturing fluids used at any pad site. Data created from the analysis of this process will be published on the City website as soon as it is available. Costs incurred in this process shall be paid by the Operator. Baseline testing for air quality, water quality and noise levels must be conducted for 7 consecutive days prior to the beginning of drilling at all pad sites. This data will be collected by a third party, chosen by the City of Dallas and paid by the Operator. Operator will comply with the City of Dallas Water Shed Protection Plan. No open pits of any kind are allowed on any pad site. In all cases, the operator shall install and utilize blowout prevention equipment on all wells being drilled, worked-over or in which tubing is being changed as required by the Texas Railroad Commission and recommended by the American Petroleum Institute. Batteries must be placed in drip pans. C. AIR QUALITY Dallas is part of a nine-county area that is currently in violation of the federal Clean Air Act because of its smog pollution. Dallas County itself has been in non-attainment since 1991. 4

Despite this, the Texas Commission on Environmental Quality states that gas mining is releasing large amounts of smog-forming emissions in the DFW area. Specifically, Volatile Organic Compounds, or VOCs from the gas industry over the last five years represent the largest increase in that category and now eclipse vehicles. Exclusions from past regional smog plans has exacerbated the problem. While other large industrial sources have had to off-set their new emissions with cuts in pollution, the gas industry has been exempt from this requirement. This needs to change. VOC pollution can also be toxic in its own right, including carcinogens like Benzene and Formaldehyde, and should be limited as much as possible. No amount of exposure to these chemicals is without risk to Dallas citizens. In 2006, the Mayor of Dallas signed the U.S. Mayors Climate Change Agreement, which committed the City of Dallas to reducing its greenhouse gas emissions to 7% below 1990 levels by the year 2012. Gas mining represents perhaps the largest threat to that goal since Dallas became a signatory to the Agreement. It releases prodigious amounts of Methane, a chemical thats over 20 times more potent than CO2 as a greenhouse gas. DFW saw its air quality get worse this year. Ozone levels shot back up to 2006 levels and we moved further away from being able to breathe safe and legal air. We need solutions to the chronic air pollution problem in North Texas, not more tons of smog-forming and toxic chemicals. Its in Dallas own self-interest to protect its air shed from the myriad of threats posed by gas mining. Recommendations Only electric motors will be allowed on all pad sites including electric powered drilling rigs and electric powered compressors. Only no bleed/low bleed pneumatic valves will be allowed on all pad sites. Base line downwind testing of air along the proposed pad site for a 1 mile radius is required and will be paid for by the Operator. Fence line monitors for Particulate Matter and VOC pollution during drilling with real time feed to city website paid for by the operator are required for all wells. External flaring and venting will be limited and monitored by the Gas Inspector. If available, a plan to recapture lost emissions will be implemented under the direction of the Gas Inspector. Internal Flaring is required whenever possible. Operator shall comply with Emission standards requiring 95% removal efficiency of total organics from all tanks. All pad sites will have 24/7 air monitoring, conducted by a third party, chosen by the City. Air monitoring data shall be published in real time on City of Dallas web site. The costs incurred from this monitoring will be paid by the Operator. Operator must use a Green Completion Plan of Operations that addresses equipment, techniques, practices and programs that will be implemented to reduce emissions. All vehicles doing business at the pad site are required to comply with the lowest-emitting federal emissions standard in their class. Maintenance records shall be made available to the Gas Inspector. 5

Operators are required to use a Closed Loop System.

D. PROTECTING WATER RESOURCES The City of Dallas has publically stated that it will focus on protecting Dallas' water quality and watersheds, promote energy efficiency, increase the urban tree canopy, improve air quality, protect and enhance open spaces, plan for more parks and maintain important views and vistas. The City of Dallas found that 73% of Dallas residents said that they were concerned about water pollution. More than 360 miles of streams run through the city. Unfortunately, most of these now flow through pipes. Nevertheless, many miles of streams remain relatively untouched by the effects of development. The 100-year floodplains of the Trinity River and other streams cover 33,672 acres. Of these, about 7,415 acres of floodplains have been developed. More than 10,000 acres of the citys floodplain, however, is vacant and should be protected from development through acquisition, restoration and dedication of open space. Living in the middle of the Trinity River watershed, it is vital that the City of Dallas initiate strong protections of our most precious resource: water from the many unanswered questions that coexist with shale gas drilling and its effect on our water sources. As our climate undergoes continued changes, the summer of 2011 has proven that we cannot count on the availability of water to meet not only our current and future growth, but industrial needs as well. Recommendations A graduated water charge will be in place for all pad sites and wells. Operators will pay 50% above the highest per gallon charge for all other water customers. Operator must disclose amount of water to be used for each well, prior to drilling. No water usage will be allowed at any pad site during drought, beginning at the voluntary restriction stage. Operator may use waste water from other industrial sites. Mandatory storm water run-off pollution prevention and capture plan meeting all federal requirements. Schematic drawings showing this plan must accompany all Gas Well SUP permit applications. Operator must disclose chemicals used for fracturing. Fracturing fluids will be tested by a third party. Samples of fluids will be obtained by the same third party, chosen by the City and paid by the Operator. A listing of fracturing chemical combinations must be published in the City website and available for viewing by the public. The cost of publishing the data will be paid by the Operator. No combination of fracturing fluids will be allowed to remain undisclosed, regardless of the novelty of the combination.

After disclosure, the operators fracturing fluids will be tested by a third party by for by the operator and selected by the City. Undisclosed elements found in the sample will be grounds for revoking the operators application and banning the operator from applying for any further applications to drill. It will be illegal for anyone to inject, dump, spill or leak any hazardous chemical into, or through the Trinity Aquifer within the Dallas city limits. Municipal water used on any pad site must be used on that specific pad site and cannot be transported to another pad site. E. NOISE Often an overlooked aspect of the damage drilling can do, noise can be an insidious form of pollution. During drilling, the volume can reach airport levels. If you live near a compressor, ultra-low frequency vibrations that cause nervous system damage can assault you any time of day or night. Recommendations Require that sound levels not exceed current ambient noise. Baseline ambient noise testing is required as part of the Gas Well SUP permit application. All noise monitoring shall be measured four feet above ground and at a distance of 600 feet from the wellhead. Drilling operations are only allowed between 7 a.m. and 7 p.m. No seismic thumping on city streets and rightsof-way. Operator will use noise muffling blankets during drilling and a masonry or precast concrete wall panel perimeter fence after drilling. No compressor stations will be allowed in within the City limits. F. SITE MAINTENANCE AND MITIGATION Once a well site is operational, its important to minimize its disruptive effects as much as possible. Street use, aesthetics, and land reclamation all need to be monitored. Recommendations City must have yearround access to all sites for testing and monitoring. Regular unannounced inspections will be scheduled and conducted by the Gas Inspector to conduct onsite monitoring of all well operations. All inspection reports are to be made public by posting on the City web site, within 7 days of visit. The cost of publishing this data will be paid by the Operator. Operator is responsible for repairs to city streets due to heavy truck traffic. Pictures of all roads used by trucks will be taken before and after drilling. Operator must post one million dollar bond for remediation and damages. Interest from these bonds will help pay for an Inspector. 7

Operator will have 30 days to clean up the pad site after completion of operations including damage to public property. If operator fails to comply there is a $2,000 fine for each violation per day. Operator will provide a site plan of existing conditions at the proposed pad site, as well as an Operation Plan and a Reclamation Plan. This plan will be submitted by the operator prior to the issuance of any SUP permit. The plan must be created by a third party, chosen by the City and paid by the Operator. The Reclamation Plan must be approved by a certified landscaper, determined by the City of Dallas and paid by the operator. Tree and soil restoration is required upon closure of the site. Trees must be replaced one-for-one with the approximate same size within one mile of the pad. This must be approved by City of Dallas arborist. For every ton of smog-forming Nitrogen Oxide (NOx) and Volatile Organic Compounds (VOCs) estimated to be emitted by the facilities covered under the application, an operator must reduce or fund reductions of 1.5 tons of the same pollutants generated within the DFW non-attainment area for ozone within 12 months of drilling beginning. Reductions will be verified by City Staff. For every ton of greenhouse gases estimated to be emitted the facilities covered under the application, an operator must reduce or fund reductions of 1.0 tons of greenhouse gases generated within the Dallas City limits within 12 months of drilling beginning. Reductions verified by City Staff. Soil and water analysis conducted by The City of Dallas monthly for 6 months after completion of mitigation. The Operator shall paint and maintain all production equipment at all times, including wellheads, pumping units, tanks, and buildings or structures. No site will be used for long-term storage of additives. Operator will not interfere with or damage existing utilities including but not limited to: water, sewer or gas lines, storm drains, electric lines or the facilities of public utilities located on, under or across the course of such right of way. Each operator shall meet annually with representatives of the City to review Emergency Response and Evacuation Plans. These reviews shall be in accord with U.S. Department of Transportation and Railroad Commission requirements and the plans and reviews posted to the city of Dallas website. The cost of publication will be paid by the Operator. In all cases, the Operator shall install and utilize blowout prevention equipment on all wells being drilled, worked-over or in which tubing is being changed as required by and in conformance with the requirements of the Railroad Commission and the recommendations of the American Petroleum Institute. G. PIPELINES Gas pipelines can be the cause of spectacular accidents as well as chronic routine exposures. They must be regulated with public safety in mind as well as future development. In DISH, southwest of 8

Denton, plans for an entire housing subdivision had to be scrapped because the land was crisscrossed with too many pipelines. Recommendations All Gas Well SUP permits will require disclosure of all underground gas pipelines. Operator shall provide the city with as-built or record drawings of the pipelines. All pipelines are required to have an automated pressure monitoring system that detects leaks and shuts off any line or any section of line that develops a leak. Prior to the issuance of such permit, the Pipeline Operator shall deposit with the city $15,000.00 for each regulated pipeline permit application approved. The plans must additionally show the elevation and location of all known public utilities within 15 feet of the centerline of the proposed pipeline Is this the norm? Should we go up to 250 feet? Pipeline Operator will show evidence of current liability insurance. Pipelines will be constructed out of new pipe; Pipeline Company will post a bond in the sum of $1,000,000.00 before the pipeline permits shall be issued. No pipelines will be laid in a residential area. Idled pipeline: A pipeline that has been inactive for at least two years, may be reactivated within two years. All drilling and pipeline Operators must have a pipeline and Well Emergency Plan. Pipeline plans must show the elevation and location of all known public utilities within 250 feet of the centerline of the proposed pipeline. H. ECONOMIC IMPACTS Dallas residents need to insure that gas mining delivers the best value for the resources spent on it. While a wells profit might be fleeting, its environmental and economic damage could be lasting. And if the mining of domestic energy is truly going to benefit US energy independence, it must be used in the US, not China or India. Recommendations All Gas Well SUP permit applications require the Operator to submit a comprehensive Economic Impact Study. The Study will be paid for by the operator and performed by City Staff or a third party hired by the City, and completed before the first vote on the permit or SUP. This Study will include, but is not limited to: a survey of areas within a 5,000 ft. radius of any proposed well to include: a detailed traffic plan of access to pad site and map/routes to injection sites. All municipalities outside of Dallas that are a part of this route must have same map in their possession. 9

any adverse as well as beneficial impacts of each well, including but not limited to impact to future development and property values. Operator for a well on city property must provide an estimate for total revenues and guarantee of a minimum total royalty payments to the city based on that estimate. Any product originating from well drilled on city property must be sold for use in the United States. Evidence or disclosure of foreign sales or use will result in automatic revocation of a wells permit. I. INSURANCE REQUIREMENTS In case something goes wrong at a gas facility the operator must have enough insurance to make it right again. Spelling out the required coverage needed to engage in this very hazardous activity, as well as limiting its own legal liability as a city is an obligation Dallas has to its citizens. Recommendations Require employer's liability coverage, including bodily injury by accident and by disease, for $500,000.00 combined single limit per occurrence and a 12-month aggregate policy limit of $1,000,000.00. Require commercial general liability coverage, including blanket contractual liability, products and completed operations, personal injury, bodily injury, broad form property damage, operations hazard, pollution, explosion, collapse and underground hazards for $5,000,000.00 per occurrence and a 12month aggregate policy limit of $10,000,000.00. Require well insurance to require minimum limit of $10,000,000.00 per occurrence, with a maximum deductible of $250,000.00 per occurrence. A certificate of insurance shall be furnished. Policy shall cover the cost of controlling a well that is out of control, re-drilling or restoration expenses, and seepage and pollution damage. Damage to property in the operator's care, custody and control with a sub-limit of $500,000.00 may be added. Require pipeline companies to carry public liability insurance with a carrier rated "A" or better by A.M. Best in a minimum amount of $1,000,000.00 for one person and $5,000,000.00 for one accident and property damage insurance in the amount of $10,000,000.00 for one accident, which shall remain in full force and effect and be carried so long as such pipeline is operated. A certificate of insurance shall be furnished. Require automobile liability insurance for automobiles used by the pipeline company and well operator in the course of its performance for $2,000,000.00 combined single limit per occurrence. A certificate of insurance shall be furnished No assumption of responsibility by city. Operator is accountable for all damages to private and city property around the pad.

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