EPA Issues Expansive, Costly New Source Performance Standards for Oil and Gas Sector

Widely anticipated on both sides of the aisle, on May 12, 2016, the U.S. Environmental Protection Agency (“EPA”) released final regulations to curb emissions of methane and volatile organic compounds (“VOC”) from additional new, modified, and reconstructed sources in the oil and gas industry.  The Final Rule, titled,  ‘Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources’ (“Final Rule”), amends the new source performance standards (“NSPS”) for the oil and natural gas source category.  This action follows EPA’s publication of proposed regulations in August 2015, and is extremely significant because it is the first instance of such regulation of VOC and methane emissions by the EPA.  In addition to yesterday’s announcement, the EPA is completing final Control Techniques Guidelines for reducing VOC emissions from existing oil and gas sources in ozone nonattainment areas, which are expected to be released later this spring.

Background: The Climate Action Plan

Over the past few years, the Obama Administration has taken an aggressive stance on climate change regulation, and the Final Rule is the Administration’s most recent action to specifically address methane and short-lived climate pollutants.  In June 2013, the Administration released the Climate Action Plan which directed the EPA and other federal agencies to develop a comprehensive regulatory scheme to reduce methane emissions.  In March 2014, as a follow-up to the Climate Action Plan, the Obama Administration issued the Climate Action Plan: Strategy to Reduce Methane Emissions.

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Environmentalists Sue EPA to Force Update of Drilling Waste Regulations

On May 4, 2016, a coalition of environmental organizations (“Plaintiffs”) filed suit against the U.S. Environmental Protection (“EPA”) in U.S. District Court for the District of Columbia to compel the EPA to promulgate revised regulations and guidelines for the disposal, storage, transportation, and handling of oil and gas wastes.  Environmental Integrity Project et al. v. Gina McCarthy (Case No. 1:16-cv-00842).  In the Complaint, Plaintiffs state that the Resource Conservation and Recovery Act (“RCRA”) requires the EPA to review and revise regulations for drilling wastes every three years.  42 U.S.C. § 6912(b).  According to Plaintiffs, the EPA last conducted a review of the regulations in 1988, but has since failed to update the regulations.  Further, the EPA has not updated the guidelines for state solid waste management plans as required under RCRA.

The environmental organizations are the Environmental Integrity Project, Natural Resources Defense Council, Earthworks, Responsible Drilling Alliance, San Juan Citizens Alliance, West Virginia Surface Owners’ Rights Organization, and the Center for Health, Environment and Justice. Continue Reading

Colorado Court Strikes Down Local Fracking Bans that Conflict with State Law

On May 2, 2016, the Colorado Supreme Court issued opinions in two separate cases challenging local bans on hydraulic fracturing (“fracking”).  A win for the oil and gas industry in the state, the Supreme Court held that the challenged fracking bans were preempted by state law in both cases.  These decisions highlight the legal principle or doctrine of “preemption” – if  state law allows a process, like fracking, a local government is not permitted to ban or outlaw it.

In City of Fort Collins v. Colorado Oil and Gas Association (No. 15SC668, 2016), the Colorado Oil and Gas Association, an industry trade association, sued the City of Fort Collins seeking a declaratory judgment that Fort Collins’ moratorium on fracking was preempted by state law.  In November 2013, the citizens of Fort Collins approved a citizen-initiated ordinance that placed a moratorium on “hydraulic fracturing and the storage of its waste products within the City of Fort Collins or on lands under its jurisdiction for a period of five years, without exemption or exception, in order to fully study the impacts of this process . . .”  Opinion, at 5.  In finding that the State of Colorado has an interest in regulating fracking, the court held that Fort Collins’ fracking moratorium “renders the state’s statutory and regulatory scheme superfluous” because it prevents oil and gas operators from complying with state law that permits and regulates fracking.  “In doing so, the moratorium materially impedes the effectuation of the state’s interest in the efficient and responsible development of oil and gas resources.”  Id. at 14.

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Why California’s New Groundwater Management Law is a Game Changer for Mine Operators

Ready or not, California’s new Sustainable Groundwater Management Act (“SGMA”) is here and mine operators should be vigilant in monitoring and actively participating in developments under the law. Previously, the use of groundwater was largely unregulated.  Now local agencies are in the driver’s seat when it comes to addressing a very complex problem: managing groundwater to ensure sustainability.

Earlier this week, environmental consultant Bob Anderson, of Geosyntec and Stoel Rives attorneys Wes Miliband and Tom Henry hosted a webinar about the implications of SGMA for mine operators.  You can view a recording of the webinar here.  Below are a few key take away points for operators as they tackle SGMA.

The Compliance Timeline is Aggressive

SGMA requires the formation of local Groundwater Sustainability Agencies (“GSAs”) that must assess conditions in their local water basins and adopt locally-based groundwater sustainability plans (“GSPs”). GSAs have already started to form and will be developed by June 30, 2017.  Operators should investigate the proposed GSAs affecting their sites.  The Department of Water Resources has developed a useful interactive map showing the proposed GSAs.  Operators and the general public have the opportunity to be involved in the formation of GSAs and preparation of GSPs. Continue Reading

BLM Fights Back Against Activists’ Criticisms of CA Resource Management Plan

The Bureau of Land Management (“BLM”) recently filed a Motion for Summary Judgment in a lawsuit brought by a coalition of environmental activists who have challenged the BLM’s Resource Management Plan (“RMP”) for public lands and minerals in California managed by the Bakersfield Field Office.  The activists asked a California federal judge to strike down the BLM’s RMP, claiming that the BLM never considered the effect of “unconventional drilling methods,” such as hydraulic fracturing on the land.

The BLM responded by pointing out that hydraulic fracturing is not a new, unproven technology and has been routinely used in California for over 50 years. It is estimated that only 25% of new wells in the Bakersfield planning area are expected to undergo hydraulic fracturing.  Furthermore, the BLM noted that 98% of new wells on federal mineral lands in the planning area are projected to be drilled on existing leases that have been producing for over 30 years and not on pristine, undisturbed lands.

The activists claimed that the BLM failed to take a “hard look” at the environmental impacts associated with fracking as required by the National Environmental Policy Act (“NEPA”). However, any claim that the BLM did not comply with NEPA in developing the RMP is particularly weak under these facts.  The BLM developed a comprehensive, 1,000-page environmental impact statement (“EIS”).  Additionally, before issuing a final decision, BLM commissioned an independent review of well stimulation technologies in California to ensure that its EIS accurately reflected the potential impacts of fracking.  And finally, the independent review concluded that overall, the direct environmental impacts of well stimulation practice are relatively limited in California. Continue Reading

Alaska Department of Natural Resources Seeks Input on Mining Regulations – Comments Due 4/29/16

The Alaska DNR is requesting public comments on its mining regulations for establishing and maintaining mining claims – 11 AAC Chapter 86. These regulations (as well as related regulations at 11 AAC 82 and 11 AAC 88) establish or address many of the requirements for locating claims on state lands, performing assessment work, paying rent, filing production royalty returns, and paying production royalties to DNR. DNR’s authority regarding at-risk state claims and offshore mining rights also comes under these regulations. DNR has not proposed draft regulations but is asking the public to provide comments on issues that should be addressed in any revised regulations. Please consider submitting a proposed revision in redline or drafting a proposed new regulation, accompanied by an explanation of the issue the proposal is meant to address.

Comments can be submitted by email or mail through April 29, 2016. For more information from DNR, visit the DNR Notice of Public Scoping. This is a unique opportunity to help shape DNR’s mining regulations. If you have any questions or would like assistance in preparing comments, please contact Veronica Keithley, Ramona Monroe, or Joe Perkins in Stoel’s Anchorage office.

Proposed Rules Coming Down the Pipeline for Gas Gathering and Transmission Lines

In one of the most sweeping proposals since the creation of the Pipeline and Hazardous Materials Safety Administration (“PHMSA”), the agency has announced proposed regulations to update requirements relating to gas gathering and transmission lines.  We find that there are four main areas our readers definitely should be aware of.

First, the proposed regulations would add new assessment and repair criteria for gas pipelines.  Most notably, the proposal will subject thousands of miles of pipelines built before 1970 to verification and testing requirements. These older pipelines had previously been exempt from such requirements.  This new requirement would mean that operators of older pipelines will need to make safety assessments on pipelines which were largely unregulated.  This may be challenging and costly for operators given the lack of records and age of many of these pipelines.

Second, the proposal also expands the agency’s definition of a “gathering line” that is subject to the new safety standards, potentially embracing pipelines previously classified as unregulated production lines. This is an expansive extension of federal authority into oil and gas production areas that have previously been regulated by individual state agencies and state law. Continue Reading

Minerals – Building Blocks for Energy Resources

Minerals are part of virtually all the products we use every day, acting as the raw materials for manufacturing processes or as the end products themselves. Not surprisingly, minerals also are used in the energy generation that we rely on every day.  Emerging energy technologies like wind, solar and nuclear heavily rely on minerals to produce energy for our society.

The quality of life that Americans enjoy today depends largely upon an abundant supply of affordable energy. Minerals play a central role in the production of energy resources which power our society.  From oil and gas drilling equipment, to wind turbines, minerals are there.

The Institute for Energy Research projects that global energy demand will nearly double in less than 25 years. This growing demand for energy underscores the importance developing a stable and reliable supply chain of minerals for the continued growth and success of our economy.

In 2010 and 2011, the Department of Energy (“DOE”) issued two Critical Materials Strategy reports that examined the importance of minerals to energy development. This year, DOE is planning an update to its previous analysis.  In an effort to learn more about the importance of minerals to energy development, the DOE has released a Request for Information soliciting information on minerals used in energy technologies.  Responses are due by April 11, 2016.

For more information on how minerals shape our energy future, see the new infographic from Minerals Make Life.

Financial Assurance Requirements are on the Horizon for Hard Rock Miners

On January 29, 2016, the U.S. Court of Appeals for the District of Columbia Circuit ordered the Environmental Protection Agency (“EPA”) to finalize the long-awaited “financial assurance” regulations under section 108(b) of the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”).  The hard rock mining industry is first in line to be subject to  the new requirements.

The D.C. Circuit’s order is the result of a case brought by several environmental groups against the EPA seeking to force the EPA to put into effect the so-called “financial assurance regulations.”

In enacting CERCLA in 1980, Congress directed the EPA to ensure that companies remain financially capable of cleaning up contaminated sites. These financial assurance rules were intended to prevent companies from creating toxic sites and then becoming financially unable to clean them up, often causing the cleanup to be delayed for years.

In the intervening thirty years since CERCLA took effect, the EPA made little progress toward promulgating any financial assurance regulations, that is, until a court ruling in 2009 (brought by many of the same groups) ordered them to start. Pursuant to the 2009 ruling, the EPA published a notice in the Federal Register designating the hard rock mining industry as its priority for the development of financial responsibility requirements.  In making this determination, the EPA cited a heightened “risk” associated with hard rock mining which increases the likelihood of releases of hazardous substances. Continue Reading

BLM Proposes “Commonsense” Rule to Limit Methane Emissions from Oil & Gas Operations

On Friday, January 22, 2016 the federal Department of the Interior’s (“DOI”) Bureau of Land Management (“BLM”) issued a proposed rule on reducing waste and methane emissions in oil and gas operations.  The rule would limit oil and gas flaring, venting, and leaking on federal and Indian lands.  While the U.S. has become the largest natural gas producer in the world and U.S. oil production is at its highest level in nearly 30 years, the current regulations  hearken back to the mid-1980’s, when gas production and greenhouse gas concerns were very different than they are today.

The proposed rule is composed of “commonsense and cost-effective measures,” according to Janice Schneider, Assistant Secretary for Land and Minerals Management.  Broadly, the proposed rule would require operators to adopt currently available technologies in order to limit the rate of flaring at oil wells, and would require operators to inspect for leaks and replace equipment that vents methane emissions into the air.

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