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Mike Mills

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Mike Mills is an experienced environmental attorney who represents his clients in complex regulatory, compliance and litigation matters. His scientific background in environmental toxicology, as well as his contacts within California’s state regulatory agencies, make him ideally suited to provide effective and practical solutions to environmental, regulatory and sustainability challenges that his clients confront.

Mike is a former co-chair of the firm’s Energy and Natural Resources Industry Group, and his deep connections within California’s oil and gas industry span over two decades. Oil and gas clients appreciate Mike’s experience as they manage business growth and risks in the challenging regulatory environment in which they operate in California.

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Today, May 8, 2015, the Pipeline and Hazardous Materials Safety Administration published a final rule for rail transport of crude oil in the Federal Register. These rules come after several high-profile oil train derailments, including one recently in North Dakota that caused the evacuation of a nearby town.

The final rule applies to “high-hazard flammable trains,” defined as trains with a continuous block of 20 or more tank cars loaded with a flammable liquid or 35 or more tank cars loaded with a flammable liquid dispersed through a train. The final rule regulates: (1) tank car design standards, (2) braking systems, (3) speed restrictions, (4) routing restrictions, (5) classifications of unrefined petroleum-based products, and (6) notification requirements.

Tank Car Design

New tank cars constructed after October 1, 2015 are required to meet new design criteria. Tank cars must be constructed with 9/16 inch steel walls and a head shield with a minimum thickness of 1/2 inch. The entire protection system must be covered with a metal jacket of at least 11 gauge steel. Tank cars must also include improved pressure relief valves and bottom outlet valves. All existing tanks must be retrofitted according to a risk based schedule in the next three to five years.
Continue Reading New Federal Oil-By-Rail Regulations Published

On Tuesday, May 5, 2015, the Internal Revenue Service (“IRS”) released proposed regulations defining qualifying income for Master Limited Partnerships (“MLPs”). MLPs are publicly traded partnerships that are taxed as a partnership rather than a corporation.

Being taxed as a MLP has many advantages. While shareholders in a corporation face double taxation  ̶  paying taxes first at the corporate level, and then at the personal level when those earnings are received as dividends  ̶  owners of a partnership are taxed only once, when they receive distributions. The absence of taxes at the company level gives MLPs a lower cost of capital than is typically available to corporations, allowing the MLPs to pursue projects that might not be feasible for corporations.

To qualify as a MLP, at least 90% of the entity’s gross income must be “qualifying income.” Previously, there had been no detailed list of what constitutes qualifying income.

These proposed regulations use the term “qualifying activities” to describe activities relating to minerals or natural resources that generate qualifying income. The IRS has now provided an exclusive list of operations that constitute qualifying activities. The activities addressed include exploration, development, mining or production, processing, refining, transportation, and marketing of any natural resource.
Continue Reading New Rules on MLPs & Qualifying Income: What Oil Services and Exploration Companies Need to Know

On Tuesday, April 21 the Obama Administration released the first Quadrennial Energy Review (“QER”) as a component of President Obama’s Climate Action Plan.  The extensive report analyzes energy infrastructure in the United States, and “identifies the threats, risks, and opportunities for U.S. energy and climate security, enabling the federal government to translate policy goals into a set of integrated actions.”  The primary purpose of the QER is to “modernize” the U.S. energy sector by replacing crumbling infrastructure, by increasing reliance on domestic energy sources, and by implementing a “clean energy economy built to last.”

The report highlights the United States’ complex and advanced energy production system, and includes descriptions and analysis of the different energy sectors.  For example, the report notes that the U.S. is the world’s leading producer of oil and natural gas, and the country is less dependent on foreign oil than it has been in over 40 years.Continue Reading Department of Energy Report Calls for U.S. to Modernize Energy Infrastructure, Invest in Natural Gas Pipelines

On Tuesday, April 7, the U.S. Environmental Protection Agency (“USEPA”) published a proposed rule in the Federal Register for regulation of wastewater from unconventional oil and gas operations (“UOG”), which includes hydraulic fracturing.  The rule, titled “Effluent Limitations Guidelines and Standards for the Oil and Gas Extraction Point Source Category,” is a Clean Water Act (“CWA”) regulation and imposes pretreatment requirements for existing and new sources.  In accordance with the prescribed standards, oil and gas operators would be required to pretreat their wastewater fluid before it is transferred into publicly owned utilities.  The proposed rule contains technology-based pretreatment standards.
Continue Reading USEPA Releases Proposed Rule on Fracking Wastewater Treatment; Says There Will be No Costs to Industry

On Wednesday, April 1, the state of North Dakota filed a motion to intervene in Wyoming’s lawsuit challenging the Bureau of Land Management’s (“BLM”) federal hydraulic fracturing regulations.  (Wyoming v. U.S. Dept. of Interior, Case No. 15-CV-43-5 (Mar. 26, 2015).)  The BLM’s Final Rule, released on March 26, 2015, governs fracking on Federal and…

Today, Friday, March 20, the Bureau of Land Management (“BLM”), an agency within the Department of the Interior, published regulations for hydraulic fracturing on Federal and Indian lands.  The Final Rule becomes effective in 90 days and will impact about 2,800-3,800 wells each year.  In 2013, 90% of the 2,800 new wells on Federal and Indian lands were stimulated using hydraulic fracturing techniques, according to the BLM.  (Hydraulic Fracturing on Federal and Indian Lands, Final Rule, at p. 14.)  The regulations do not apply to fracking activity on private and state-owned land, where most of the fracking in the United States occurs.

Requirements under the Final Rule

The overarching purpose of the Final Rule is to provide a “baseline for environmental protection.”  (Id. at p. 12.)  Principally, a permit is required under existing oil and gas regulations.  Before beginning operations, an operator must submit an Application for a Permit to Drill (“APD”) to the BLM and wait for approval.  As the new regulations supplement the existing regulations, and do not replace them, this permit requirement will continue under the new regulations.Continue Reading Obama Administration Releases Federal Fracking Regulations

In a closely watched, 4-3 decision issued yesterday, February 17, the Ohio Supreme Court ruled that the ‘Home Rule Amendment’ to the Ohio Constitution does not grant the city of Munroe Falls the power to enforce its own oil and gas permitting scheme simultaneously with a state-wide permitting regime. (State ex rel. Morrison v.

On Wednesday, January 28, the Senate voted against Amendment 48 which would allow the federal Environmental Protection Agency (“EPA”) to regulate hydraulic fracturing (“fracking”) on state and private lands.  The measure was presented by Senator Kirsten Gillibrand (D-NY) as a negotiated amendment to the Keystone XL Pipeline Act.  The amendment would have repealed sections of…

On January 20, 2015 a U.S. District Judge overturned New Mexico’s ban on hydrocarbon extraction, which included a prohibition on hydraulic fracturing (“fracking”) in the state.  (SWEPI, LP v. Mora County et al., Case No. 1:14-cv-00035-JB-SCY, filed Jan. 19, 2015.) Mora County, a political subdivision of the State of New Mexico, enacted the ban through a local ordinance in April 2013.  It was the first such prohibition in the country.

Federal District Court Judge James O. Browning based his decision on federal preemption:  “Historically, a county cannot enact or supersede federal law. The Ordinance thus goes beyond Mora County’s historical lawmaking just to deprive corporations of their rights.”  (Id. at p. 157.)  The Mora County ban clashed with both state and federal law regulating the drilling of oil and gas.  Under the Constitution’s Supremacy Clause, any local or state law that conflicts with federal law is invalid.Continue Reading Federal Judge Rules that State and Federal Law Preempts New Mexico’s Fracking Ban

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Here Stoel Rives shares insight and analysis about key mineral law developments. Drawing on a very active natural resources practice, we aim to keep readers informed about the legal aspects of news that impacts exploration and development of all things mineral.