California Governor Signs Bill Regulating Oil by Rail

On September 25, 2014, California Governor Jerry Brown signed legislation that will provide California’s emergency responders with more information about trains carrying crude oil and require railroad companies to provide more information about potentially hazardous cargo to the state’s Office of Emergency Services (“OES”).  In summary, Assembly Bill 380 requires:

  • a rail carrier to prospectively estimate and submit to OES notification of the weekly movements of trains through a county, as specified and to update that notification once every 6 months;
  • a rail carrier to update and notify OES within 30 days of the rail carrier determining that there will be a material change in the estimated volume of Bakken oil, as defined, plus or minus 25% per week relative to the most recent estimate previously submitted OES;
  • each rail carrier to maintain a response management communications center, as specified;
  • OES to disseminate information necessary for developing emergency response plans from the reports it receives pursuant to this act to each unified program agency, as defined, when OES determines a unified program agency area of responsibility may be impacted by a hazardous material or oil cargo spill;
  • each rail carrier to provide OES with a summary of the rail carrier’s hazardous materials emergency response plan, as specified;
  • OES to provide a copy of each summary report of a rail carrier’s hazardous materials emergency response plan to each unified program agency when OES determines a unified program agency area of responsibility may be impacted by a rail carrier spill of hazardous material or oil cargo, as specified; and,
  • prohibits a recipient of the reports and hazardous materials emergency response plan from divulging or making known that information to unauthorized recipients, as specified.

Co-authored by Michael N. Mills and  Kimberly J. Hellwig

Mineral Law Blog Launches New Responsive Design and Enhanced Reader Features

Dear Mineral Law Blog Readers. Sharing analysis and insight about key oil, gas, pipeline and mining law developments has been our mission since launching our Blog in late 2010. While our commitment to keep you informed hasn’t changed, technology certainly has. Back when we first started posting, it was still largely a desktop- and RSS-dominated world. Today, more and more of you are reading our posts on tablets and smartphones. As readers ourselves, we understand your need for news on-the-go and at your convenience.

So we’re very excited to announce to you today a completely new – and improved – blog design, along with new feature sets we think will enhance your content experience.

  • First, Mineral Law Blog now uses a responsive design format. So no matter where – or on what device – you visit us, you can be assured of a consistent, clean and crisp reader experience.
  • Second, we’ve added new social sharing features to our posts. With easy-to-read social icons, sharing Mineral Law blog posts with your social networks is now a snap.
  • Third, we’ve improved our content subscription options. We’ve expanded the number of RSS subscription feeds, optimized the look and feel of our email subscription service, and added links to our Twitter feed as an alternative content consumption option.

We hope you enjoy these readership experience improvements. Thanks again for visiting and keeping us on your list of go-to mineral law news sites.

Alaska Voters Reject Referendum Regarding Oil and Gas Production Taxes

Last Tuesday, Alaska voters rejected a referendum proposal that would have repealed oil and gas production tax legislation signed into law by Governor Sean Parnell in May 2013, known as the “More Alaska Production” Act.

With the referendum rejected, we thought our readers would appreciate a review of what this might mean for the oil and gas industry in Alaska. A recent article we published in Alaska Business Monthly discussed in detail the trends and specifics of the production tax credits that remain in effect after the vote. Read on for the full discussion at “Alaska Tax Credits Promote Financing Opportunities.”

For a point-by-point discussion of Alaska’s oil and gas production tax structure, see our June 2013 Tax Law Alert

Zinc: It’s Not Just for Lifeguards

Minerals Make Life – an initiative created by the National Mining Association – has recently developed an infographic explaining the importance of the mineral zinc. Many consumers do not know it, but minerals are present in products we all use on a regular basis. That includes the mineral zinc, which is used in sunscreen, swimming pools, electric vehicles and many other products as noted on the infographic.

According to the U.S. Geological Survey, domestic zinc mine production slightly increased in 2013; however, the United States remains 74 percent import reliant for zinc. Imported zinc primarily comes from Canada, Mexico, and Peru.

For more information regarding the importance of zinc and domestic mineral production, visit Minerals Make Life.

Co-authored by Mike Mills and Michael Sherman.

U.S. House Hearing Supports Legislation for Development of Domestic Minerals (H.R. 761)

On Wednesday, July 23, 2014, the U.S. House of Representatives Subcommittee on Energy and Mineral Resources held an oversight hearing, titled “American Metals and Mineral Security: An examination of the domestic critical minerals supply and demand chain.”  During the hearing, a panel of witnesses spoke on the benefits of securing a supply of minerals through domestic mining.  This panel included representatives from GE Global Research and the National Defense Industrial Association, among others.

The hearing demonstrated support for H.R. 761, the National Strategic and Critical Minerals Production Act.  H.R. 761 passed the House (246-178) on September 18, 2013, and is awaiting Senate approval.  The purpose is to “more efficiently develop domestic sources of the minerals and mineral materials of strategic and critical importance to United States.”  Key sections of H.R. 761 introduce mandates for streamlining the permitting process for mineral development and limits the permitting review period to 30 months. 

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USDOT Proposes New Rules for Rail Transport of Fossil Fuels

On Wednesday, July 23, 2014 the Pipeline and Hazardous Materials Safety Administration (“Administration”), an agency within the U.S. Department of Transportation (“USDOT”), issued a Notice of Proposed Rulemaking (“NOPR”) for rail transport of crude oil and ethanol.  The NOPR, titled “Enhanced Tank Car and Operational Controls for High-Hazard Flammable Trains,” is available online, but has not yet been published in the Federal Register. 

There are three main provisions of the NOPR: “(1) new operational requirements for certain trains transporting a large volume of Class 3 flammable liquids; (2) improvements in tank car schedules; [and] (3) revision of the general requirements for offerors to ensure proper classification and characterization of mined gases and liquids.”  (NOPR, at p. 1.)  Notably, the USDOT proposes to phase out the use of older USDOT tank cars for the shipment of certain liquids within two years, unless the tank cars are retrofitted to comply with new tank car design standards.  (See USDOT, U.S. DOT Announces Comprehensive Proposed Rulemaking for the Safe Transportation of Crude Oil, Flammable Materials.)  This rule would include gradual prohibition on transport of most Bakken crude oil.

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EPA Delays Potential Fracking Chemical Disclosure Mandates

On Friday, July 11, 2014 the U.S. Environmental Protection Agency (“USEPA”) extended the public comment period for its advanced notice of proposed rulemaking (“ANPR”) for hydraulic fracturing chemical disclosure rules.  The USEPA initially requested public comment on May 9, 2014 by issuing the ANPR.  This set a 90-day public comment period, slated to end on August 18, 2014.  The July 11 announcement extends the public comment period for 30 days, setting the new deadline for September 18, 2014.

The USEPA issued the ANPR in response to a citizen petition under Section 21 of the Toxic Substances Control Act (“TSCA”).  The purpose of the ANPR is to solicit public comments in order for the USEPA to gather information to “develop an approach to obtain information on chemical substances and mixtures used in hydraulic fracturing.”  ANPR, EPA-HQ-OPPT-2011-1019; FRL-9909-13, at 1.  According to the USEPA’s recommendations in the ANPR, the “mechanism” for obtaining chemical information may be both regulatory and/or voluntary, under TSCA Sections 8(a) and 8(d).  Id.

The USEPA’s goal in this process is to develop and ensure external transparency.  Additionally, the agency seeks incentives to “support the development and use of safer chemical substances and mixture in hydraulic fracturing.”  Extension of Comment Period, EPA-HQ-OPPT-2011-1019; FRL-9912-42.  The USEPA announced that it aims to avoid duplicative federal and state regulation on this issue.

By Mike Mills (mnmills@stoel.com) and Shannon Morrissey.  Ms. Morrissey is a Law Clerk/Summer Associate with Stoel Rives LLP and is not currently licensed to practice law in California.

Water Board Announces Meeting to Develop SB 4 Groundwater Monitoring Criteria

On Wednesday, July 9, 2014, the State Water Resources Control Board (“Water Board”) announced that it will be holding a “Stakeholder Meeting to Develop Groundwater Monitoring Model Criteria for Oil & Gas Areas.”  The meeting is scheduled for Thursday, August 7, 2014 from 8:00 am to 5:00 pm in the Kern County Supervisors Chambers in Bakersfield.  The Water Board is required to develop model groundwater monitoring criteria by July 1, 2015 pursuant to Senate Bill 4 (“SB 4”).  (Wat. Code, § 10783, subd. (c).) 

Interim well stimulation regulations, issued by the Department of Conservation’s Division of Oil, Gas & Geothermal Resources (“DOGGR”) came into effect on January 1, 2014.  DOGGR is on schedule to publish permanent regulations on January 1, 2015.  Under the interim regulations, well operators must submit a groundwater monitoring plan, or request an exemption from the Water Board if the operator can show the absence of protected waters.  (Interim Regulations, § 1783.1, subd. (b)(4).)  If the exemption is granted, the Water Board issues a written concurrence.  (§ 1783.4, subd. (c).)

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With Increased Federal Scrutiny, State Governments Look To Expand Oil-By-Rail Oversight

With the federal Department of Transportation’s recent emergency order impacting those who transport crude oil by rail, state governments are likewise considering additional regulatory oversight that could affect the industry in the wake of recent train derailments such as the one yesterday in Virginia.

In Minnesota, where more than 800 tank cars carrying oil from North Dakota pass through daily, the state legislature has held hearings on the volatility of  Bakken crude and is considering several proposals related to rail safety.  These initiatives include employing more state rail inspectors and making improvements to rail crossings, particularly those that have a high frequency of trains carrying crude oil and other hazardous substances.  Other proposals call for training and response preparedness for derailments, discharges, and spills from trains carrying crude oil or hazardous substances.  With the regular end of the annual legislative session just weeks away, it remains to be seen what specific rail safety provisions the Minnesota legislature will ultimately adopt, but increased scrutiny is all but assured. 

North Dakota, on the other hand, has long left rail inspections to federal authorities.  But after the trail derailment and explosion last December in Casselton, North Dakota, the state has begun to take a closer look at expanding state rail regulation, including employing its own rail inspectors.

And in New York, Governor Andrew Cuomo ordered a full review of safety procedures and emergency preparedness plans in January, and, in March, ordered rail inspections designed to enforce safety regulations and urge changes to spill response plans.

These moves by individual states follow in the footsteps of Canadian regulators, who moved quickly after an accident involving rail cars carrying crude oil derailed in Quebec.  Last week, Canada’s transportation minister announced measures requiring rail carriers to establish emergency plan for responding to catastrophic explosions, and force the use of stronger models of tank cars within the next three years.

Construction Aggregate Production Rebounds in California; Gold Production Declines

On April 29th, the California Geological Survey (CGS) released production data from 2012 indicating that the production of construction aggregate (sand, gravel and crushed stone) increased for the first time since 2007 in California.  Construction aggregate production increased by 7.3 percent to 121.3 million tons (valued at $1.162 billion).  Portland cement production also increased by 10.7 percent to 9.3 million tons (valued at $621.1 million). 

Gold production – California’s 3rd largest non-fuel mineral commodity by value after construction aggregate and Portland cement — continued to decline with production down by 6 percent to 186,980 ounces (valued at $312.7 million). 

For more information about California’s non-fuel mineral production data, see the CGS press release and the CGS Annual Report for California Non-Fuel Minerals (2012).

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