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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Utah Congressmen Unveil Landmark Public Land Bill

On January 20, Congressmen Rob Bishop and Jason Chaffetz unveiled a “discussion draft” of the Utah Public Lands Initiative Act. The proposed bill undertakes the difficult task of balancing economic development and conservation on public land in the State of Utah.

Congressmen Bishop and Chaffetz began working together on the bill in February 2013. Since that time, more than 120 different stakeholders have submitted more than 65 detailed proposals regarding land management in eastern Utah. Altogether, their offices have held more than 1,200 meetings with local and tribal leaders, interested parties, and subject matter experts.

The bill is organized in two parts: “Division A” covers land protection and conservation and “Division B” covers recreation and economic development opportunities.

Division A creates forty-one new wilderness areas covering 2,274,373 acres of federal land. Wilderness is a legal designation designed to provide long-term protection and conservation of public lands. Wilderness areas are protected and managed so as to preserve the area’s natural surroundings in an unimpaired condition. Generally, motor vehicles and mechanical transport are prohibited in wilderness areas. However, the proposed bill makes certain exceptions for maintaining grazing facilities and access to water resource facilities. Continue Reading

Two Frackquake Lawsuits Filed in Oklahoma

Two lawsuits were filed within days of each other in Oklahoma, claiming that energy companies engaged in hydraulic fracturing and underground disposal of produced water are causing earthquakes throughout the state. These lawsuits probably come as no surprise to the industry after the Sierra Club recently threatened to sue four oil companies for contributing to increased earthquakes in Oklahoma and southern Kansas.

A pair of Oklahoma residents, in a class-action lawsuit, have accused four energy companies of causing “a dramatic increase” in earthquakes throughout the state during the last five years. The lawsuit names Sandridge Exploration and Production, Chesapeake Operating, Devon Energy Production Company, and New Dominion as the defendants.

The plaintiffs claim that hydraulic fracturing and underground disposal of produced water are causing earthquakes across the state by increasing the pore pressure within faults making the fault more prone to slip.

The lawsuit alleges that the companies are liable to the plaintiffs and the class for nuisance, trespass, negligence, and engaging in an ultra-hazardous activity. The plaintiffs are seeking not only compensatory damages, but also punitive damages and attorneys’ fees. Continue Reading

Congress Repeals Crude Oil Export Ban, a Legacy of 1970s Oil Embargo

Before leaving Washington, D.C. for the holidays, President Obama signed H.R. 2029 (Consolidated Appropriations Act, 2016), which repealed the ban on U.S. exports of crude oil.  The repeal occurred just few days before today’s 40th anniversary of President Ford signing the ban into law.  According to historical data from the U.S. Energy Information Administration, when President Ford picked up his pen in December 1975, crude oil cost $63.48/barrel (in 2015 dollars) compared to less than $37/barrel today.

During the ban’s tenure, the President had discretion to authorize crude oil exports deemed to be in the national interest, and limited exceptions to the ban have existed for decades.  In fact, U.S. exports of crude oil dramatically increased in the years right after the ban was enacted.

U.S. Crude Oil Exports

The U.S. exported more crude oil in 2014 than in any prior year—a total of over 128 million barrels or about 4% of the nearly 3.2 billion barrels that were produced in the U.S. last year.

Under H.R. 2029, the President has authority to ban crude oil exports to countries subject to sanctions, including any country that is a state sponsor of terrorism.  The new law also gives the President authority to impose licensing requirements or other restrictions on exports in two other situations.  First, restrictions can be imposed for national security reasons.  Second, restrictions can be imposed if the export of U.S. crude oil causes a “sustained material oil supply shortage” or sustained oil price increase, either of which then has (or is likely to have) “sustained material adverse employment effects” on the U.S.

Court Denies Move For Final Judgment On Order Delaying BLM Hydraulic Fracturing Rule; Environmental Groups Proceed Anyway

Following a Wyoming federal court’s order temporarily halting the Bureau of Land Management’s (BLM) final rule regulating hydraulic fracturing on public lands, Sierra Club and several other environmental groups requested the court enter final judgment and delay proceedings while they pursue an appeal through the Tenth Circuit Court of Appeals.  (Our complete coverage of this case is available here.)  The BLM indicated it did not oppose the environmental groups’ request for entry of final judgment, but did not want to delay the district court’s proceedings pending an appeal; industry groups and the North Dakota, Wyoming, Colorado, and Utah state governments all opposed the request in favor of litigating their rule challenge to finality before an appeal goes forward.

Yesterday, the Wyoming court denied the environmental groups’ motion.  It found the motion was procedurally improper, and that pausing the district court proceedings in favor of an appeal would prejudice the industry groups and state governments because they do not have the benefit of the BLM’s entire administrative record.  The court also found the outcome of the case is not limited to purely legal questions and that it must still consider factual evidence related to the BLM’s regulatory practices before it can issue a final judgment on the merits of the rule challenge.

Undeterred, the environmental groups have proceeded to seek review by the Tenth Circuit Court of Appeals and filed a notice of appeal in November.  This means that the environmental groups will pursue an appeal of the district court’s decision to preliminarily delay implementation of the BLM’s final rule as it relates to fracking on public lands, while the parties simultaneously continue to litigate the final rule in the district court.

Mineral Law Blog will continue to monitor and report on these legal challenges to the BLM’s new public lands hydraulic fracturing rule as they move forward.

New Law Streamlines Federal Permitting and Environmental Review Processes

6738-Sacramento state capitol

Major infrastructure developers received a notable holiday gift from Capitol Hill and the White House earlier this month with the December 4, 2015 enactment of the Highway Authorization Act. Title XLI of the Act promises to streamline both the authorization (license, permit, approval, etc.) and environmental review processes for covered projects.

Who Benefits?

To benefit from the Act’s streamlined process, an infrastructure project must (1) fall within a covered project category, (2) be subject to NEPA, (3) be likely to require a total investment of more than $200,000,000, and (4) not qualify for abbreviated authorization or environmental review under another statute. Covered project categories include:

  • Renewable or conventional energy production
  • Electricity transmission
  • Surface transportation
  • Aviation
  • Ports and waterways
  • Water resource projects not already covered under the Water Resources Development Act of 2007 (33 U.S.C. 2348)
  • Broadband
  • Pipelines
  • Manufacturing

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Uranium – A little element with a lot of power

Minerals Make Life – an initiative created by the National Mining Association – has recently developed an infographic summarizing the many benefits of uranium.

Uranium is found in many areas of the United States. In fact, uranium is more common than tin, about 40 times more common than silver and 500 times more common than gold. Normally the amount of uranium in a given area is very small, but in certain areas, uranium is highly concentrated and may be economically recovered. Today uranium production is primarily focused in Arizona, Nebraska, New Mexico, Texas, Utah, and Wyoming.

One atom of uranium-235 can release 50 million times more energy than the combustion of a single carbon atom. Twelve percent of the world’s electricity is generated from uranium, totaling to more than 2,500 billion kilowatt-hours (kWh) of electricity annually. While production of nuclear energy consumes most of the uranium produced in the U.S., uranium is a key ingredient in a host of other applications. Uranium has played a key role in medical science and is used in x-rays, MRIs, and radiation treatment. Additionally, uranium is used in agriculture, military, and computer technologies.

As of September, the U.S. produced 2.7 million pounds of uranium in 2015. This allows the U.S. to meet the energy sector’s needs and be a leader in global energy production. Uranium is vital to our nation’s economy and energy needs.

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

 

Presidential Memo Imparts “Moral Obligation” on Agencies to Mitigate Impacts of Natural Resource Development

On Tuesday, November 3, the White House released a Presidential Memorandum: “Mitigating Impacts on Natural Resources from Development and Encouraging Related Private Investment” (“Memorandum”).  The Memorandum was sent to the Secretaries of Defense, Interior and Agriculture and the administrators of the Environmental Protection Agency and the National Oceanic and Atmospheric Administration, and purports to establish a general “no net loss” goal for natural resources impacted by federal actions.  The Memorandum recognizes “a moral obligation to the next generation to leave America’s natural resources in better condition than when we inherited them” and establishes the following policies applicable to identified federal departments and agencies (and all bureaus and agencies within them):

  • To avoid and to minimize harmful effects to land, water, wildlife and other ecological resources (natural resources), and to require compensatory mitigation for the projects they approve.
    Agency mitigation policies should establish a net benefit goal or, at a minimum, a no net loss goal for natural resources each agency manages that are important, scarce, sensitive, or “consistent with [an] agency[’s] mission.”
  • For compensatory mitigation, agencies are directed to give preference to advance compensation mechanisms, such as mitigation bank approaches. “Advance compensation” is defined to mean a form of compensatory mitigation for which measurable environmental benefits (defined by performance standards) are achieved before a given project’s harmful impacts to natural resources occur.
  • Agencies are encouraged to use large-scale plans to identify areas where development is most appropriate, where natural resource values are irreplaceable and development policies should require avoidance, and where high natural resources values result in the best locations for protection and restoration.

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Sierra Club Issues Notice of Intent to Sue over Frackquakes in Oklahoma

On Monday, November 2, the Sierra Club issued a Notice of Intent to Sue (“Notice”) four oil companies, alleging ongoing violations of the Resource Conservation and Recovery Act (“RCRA”).  Specifically, the Notice states that the injection and disposal of hydraulic fracturing waste fluids into the ground is a “past and present handling and disposal of Production Wastes in a manner that may present an imminent and substantial endangerment to health and the environment,” in violation of RCRA.  The Notice claims that fluid injection by oil companies, Sandridge Exploration and Production, New Dominion, Devon Energy Production Co. and Chesapeake Operating, is contributing to increased earthquakes in Oklahoma and southern Kansas.

This Notice follows a recent publication by the U.S. Geological Survey (“USGS”).  On October 20, the USGS released a report, A Century of Induced Earthquakes in Oklahoma?, that reviews the increased rate of seismicity in the central and eastern U.S. since 2009.  The report attempts to link industrial activity to the incidence of large earthquakes in the region.  As the Sierra Club Notice points out, the report states that injection of wastewater in deep disposal wells “potentially” induces earthquakes.  Additionally, a research letter published in October 2015 examined the two Cushing, Oklahoma earthquakes that occurred in October 2014, stating that a study of earthquake hazards and “its relationship to wastewater injection is important in order to understand potential damage to critical infrastructure in the region.”

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