Mineral Law Blog - Insight and information for the industrial mineral, aggregate and hardrock mining industry

Senate Bill 34 (Carbon Capture and Storage Act of 2013), which would close certain key legal gaps that hinder carbon capture and storage in California, lost its sponsor late last week when Senator Rubio (D - East Bakersfield) suddenly resigned.  Earlier this week the Senate Environmental Quality Committee decided to postpone its hearing on SB-34. 

For futher information, please see the attached blog posted to the California Environmental Law http://www.californiaenvironmentallawblog.com/california-carbon-sequestration-bill-faces-uncertain-future/

Co-authored by Michael Mills, Jerry Fish and Eric Martin.

Via my colleague Erin Anderson:

Liquefied natural gas (“LNG”) exports will benefit the U.S. economy according to a NERA Economic Consulting study commissioned by the U.S. Energy Department (“DOE”). Posted on Wednesday, December 5, the two-part study concluded that the economic benefits of LNG export will outweigh the impact of potentially higher natural gas prices. The DOE said it would take the report and public comments on the same into account in its review of 15 pending LNG export application dockets. Under federal law, grant export authorization to countries without a free trade agreement with the United States can be denied if inconsistent with the “public interest”. Economic factors are an element that must be evaluated in making the public interest determination.

The DOE study assessed a range of different assumptions about global markets, export volumes, pricing points and domestic production costs, and concluded that the US economy will experience a net positive effect after consideration of multiple scenarios. The study does not claim that there is a win-win for all socioeconomic stakeholder groups, however, noting that "[o]verall, both total labor compensation and income from investment are projected to decline, and income to owners of natural gas resources will increase."

The possibility of exporting volumes roughly equivalent to one-third of present U.S. natural gas production has generated opposition among natural gas customers, currently benefitting from a flush market of extraordinarily cheap gas resulting from hydraulic fracking. Some in the manufacturing sector fear that directing large quantities of domestic natural gas out of the US market will drive up domestic supply costs, negatively affecting manufacturing and jobs creation during the fragile economic recovery. The Industrial Energy Consumers of America issued a press release (PDF) on Wednesday challenging the report’s methodology. Dow Chemical has also taken a leading role in raising questions about the report.

Proponents of LNG exports have responded by noting that global LNG consumption will at some point decline as US costs increase beyond those of competing supplies, thus alleviating concerns that the US domestic market will be held hostage to an insatiable global market.

The Department of Energy will be accepting initial comments on the Macroeconomic Impacts of LNG Exports from the United States (PDF) study until January 24, 2012. See the Federal Register notice (PDF) for more details.

Via my colleague Sarah Johnson Phillips:

Mineral Law blog readers will be interested in a summary of key discussion points that emerged at a recent frac sand mining CLE I attended with my colleagues Kevin Johnson and Thomas Braun. Organized by the Minnesota State Bar Association’s Environment, Natural Resources, & Energy Section, the CLE featured presentations by Greg Korstad of Larkin, Hoffman, Daly & Lindgren, Daniel Flo from Barr Engineering, Frank Kohlasch of the Minnesota Pollution Control Agency, and James Peters of the Law Office of James P. Peters PLLC.

Stoel Rives has been involved in several Midwest frac sand mining projects recently, including leasing, financing, environmental review and permitting issues, so this CLE presented us with a good industry review opportunity. Here are some of the key issues the presenters raised:

• Minnesota’s industrial sand industry is composed of companies with long track records in the industrial business as well as many new entrants enticed by the new demand for industrial sand for use as frac sand. Many of these developers are under pressure to develop projects quickly in order to take advantage of the currently lucrative market for sand.
• The size and volume of proposals for new and expanded sand mining facilities are challenging the resources and capabilities of local governments charged with permitting and reviewing these projects. In addition to zoning/land use authority, local governments (i.e. cities, counties, townships) in Minnesota are the responsible government units for environmental review. Several counties and cities in Minnesota and Wisconsin have instituted or are considering moratoria on new or expanded sand mining facilities to allow time to study the potential impacts of these operations.
• Complicating the regulatory landscape further, state agencies, including the Minnesota Pollution Control Agency and the Minnesota Department of Resources, also play a role in issuing air and water permits for many frac sand projects. To address the need for better information about environmental, health, and safety issues and better coordination across layers of government, the state’s Environmental Quality Board is a request to order a Generic Environmental Impact Statement (GEIS). However, there are concerns that a GEIS may not be able to adequately address some of highly location-specific (e.g. traffic) impacts of these projects.

Due to the oil and gas industry’s heavy reliance on fracking technologies, the explosive demand for frac sand and these complex issues are not going away. Industry players will seek greater predictability in the permitting and approval process, while responsible government units will look for better information in managing the flood of new sand mine proposals. Stay tuned for more updates, as we continue to track these issues.

The U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice recently announced the latest proposed settlement in EPA’s Clean Air Act enforcement initiative against petroleum refiners. Hess Corporation will pay an $850,000 civil penalty and spend more than $45 million on new pollution controls at its Port Reading, New Jersey refinery to resolve alleged CAA violations.

This settlement includes several measures related to New Source Performance Standards and flaring. EPA has declared flaring an enforcement priority, and this settlement reflects the agency’s focus and will require Hess to adopt a number of new compliance and monitoring requirements.

This latest settlement follows April’s settlement with Marathon Petroleum Company for several CAA violations and continues a trend that has seen now 31 such agreements with petroleum refineries in the U.S. since 2000. As a result of these settlements, refiners have invested more than $6 billion in new pollution controls to reduce sulfur dioxide, nitrogen dioxide, and other emissions.

Click here to continue reading this alert including details on this latest settlement.

One of the few sectors that consistently added jobs in 2011 was U.S. minerals mining. Today, this industry supports 1.1 million American jobs nationwide and has enabled modern products such as aircrafts, medical equipment and state-of-the-art electronics to come to fruition. Some of the fastest growing industries in America—including high tech, automotive manufacturing and renewable energy—rely on minerals to operate.

In a December 2011 PricewaterhouseCoopers study, 67 percent of respondents—senior executives in these industries worldwide—said they expect their companies to be affected by minerals and metals supply scarcity in the next five years.

Reflecting on the PricewaterhouseCoopers study, Hal Quinn, president of the National Mining Association, stated, “If we are to foster American ingenuity, build a stable economy and create jobs in 2012 and beyond, the U.S. portfolio for growth must include a secure, domestic minerals supply. We must not allow our nation’s minerals needs to go unmet, especially when these very resources help put Americans back to work and drive our economy.”