Insight and Information on the Oil, Gas, Pipeline, & Mining Industries
Several more key filings have come into the federal litigation challenging the Bureau of Land Management’s (BLM) final rule regulating hydraulic fracturing on public lands in advance of the June 23 consolidated preliminary injunction hearing. These briefs are summarized below:
BLM’s Opposition To The Preliminary Injunction Motions Filed By The States Of Wyoming And Colorado…
Since our last update on federal litigation in Wyoming challenging the Bureau of Land Management’s (BLM) final rule to regulate hydraulic fracturing on public lands, the flurry of activity continues in advance of the June 23 preliminary injunction hearing. We’ve summarized several key filings below:
BLM’s Opposition To Preliminary Injunction
On June 1, the BLM filed its brief opposing the preliminary injunction motion entered by the two industry group plaintiffs—the Independent Petroleum Association of America and the Western Energy Alliance. The BLM primarily focuses on two arguments.
First, the BLM contends the industry groups are unlikely to succeed on the merits of their litigation against the rule, and, as a result, a preliminary injunction is unwarranted. In support of its position, the BLM argues:
The BLM also maintained that the public interest would not favor a preliminary injunction, because entering one would deny the BLM tools to prevent environmental harm, including putative groundwater contamination. And, according to the BLM’s arguments, an injunction would detrimentally affect the orderly administration of federal energy policy, causing confusion among the public and the industry as to whether and when its final fracking rule would become effective.Continue Reading Preliminary Injunction Arguments Pour Into Litigation Against BLM’s Final Fracking Rule
June 5, 2015 marked the deadline for lawmakers to pass bills out of their house to the opposite house. Bills that did not pass in their house of origin by that date have effectively died (unless such bill has been identified as a 2-year bill). Below is the status and summary of the oil and gas related bills Stoel Rives is monitoring. Stoel’s Oil & Gas Team will continue to monitor these bills, among other environmental related legislation, throughout the 2015-2016 Legislative Session and provide periodic updates as the bills move through the legislative process.
SENATE BILLS
SB-13 (Pavley): Groundwater
UPDATE: This bill passed the Senate on April 30, 2015, and is pending in the Assembly Committee on Water, Parks and Wildlife.
If passed by the legislature and signed into law, this bill would:
In addition, if the Department of Water Resources determines that all or part of a basin or subbasin is not being monitored, this bill would require the Department of Water Resources to determine whether there is sufficient interest in establishing a groundwater sustainability plan.
Finally, SB-13 would eliminate the provisions requiring a local agency or combination of local agencies that elect to be a groundwater sustainability agency for a basin to submit a prescribed notice of intent to the Department of Water Resources.Continue Reading Status of Oil and Gas-related Bills Proposed in California’s 2015-2016 Legislative Session
On Thursday, the Environmental Protection Agency (“EPA”) released a long awaited, and congressionally mandated, study detailing the relationship between hydraulic fracturing and drinking water. The EPA found no signs of “widespread, systemic” drinking water pollution from hydraulic fracturing.
“It is the most complete compilation of scientific data to date,” says Dr. Thomas Burke, with the EPA’s Office of Research and Development, “including over 950 sources of information, published papers, numerous technical reports, information from stakeholders and peer-reviewed EPA scientific reports.”
“After more than five years and millions of dollars, the evidence gathered by EPA confirms what the agency has already acknowledged and what the oil and gas industry has known,” said Erik Milito, with the American Petroleum Institute. “Hydraulic fracturing is being done safely under the strong environmental stewardship of state regulators and industry best practices.”
Continue Reading EPA Finds No Systemic Threat to Drinking Water from Fracking
On the heels of a preliminary injunction motion filed in the action by two industry groups challenging the federal Bureau of Land Management’s (BLM) final rule regulating hydraulic fracturing on public lands, the states of Wyoming and Colorado likewise filed a preliminary injunction motion in their related case last Friday.
In their brief, the…
Three states have recently taken a stand for or against controversial bans on hydraulic fracturing. Oklahoma, Texas, and Maryland have all passed laws within the past month relating to hydraulic fracturing bans.
Oklahoma
Last Friday, Oklahoma Governor Mary Fallin signed Senate Bill 809, which prohibits local governments from choosing whether to have oil and gas operations within their jurisdictions. Oklahoma’s law allows exceptions for “reasonable” restrictions for setbacks, noise, traffic issues and fencing. Governor Fallin said “A patchwork of regulations that vary across the state would be inconsistent with the goal of reasonable, easily understood regulations and could damage the state’s economy and environment.” Senate Bill 809 reaffirms that the Oklahoma Corporation Commission is the primary entity charged with establishing a unified regulatory framework for the energy industry. Chad Warmington, president of the Oklahoma Oil and Gas Association, said “This bill was a good compromise for all involved. It maintains the Corporation Commission’s role in regulating oil and gas activities, without limiting cities’ ability to protect their residents.” Senate Bill 809 passed with wide margins in both the House and the Senate.
Continue Reading States Show Their True Colors on Fracking – One Enacts a Ban, While Two Others Prohibit All Local Bans
Last Friday, the Independent Petroleum Association of America (IPAA) and the Western Energy Alliance (WEA) opened their arguments on a preliminary injunction motion to halt the federal Bureau of Land Management’s (BLM) final rule regulating hydraulic fracturing on public lands until resolution of the litigation.
In its supporting memorandum, the IPAA and WEA detail the…
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
Minerals Make Life – an initiative created by the National Mining Association – has recently developed an informative infographic on the important role silver plays in our society. Out of all metals, silver is unique in that it has the highest electrical and thermal conductively. These characteristics make silver an important ingredient in products we…
