On October 4, 2017, the United States District Court for the Northern District of California held that the Bureau of Land Management (“BLM”) cannot postpone implementation of natural gas methane emission rules because such action would violate the Administrative Procedure Act (“APA”). Plaintiffs – the State of California, the State of New Mexico, and a coalition of seventeen conservation and tribal citizens groups (jointly “Plaintiffs”) – initiated the lawsuit in two separate actions. Plaintiffs argued that postponing implementation of the BLM’s Waste Prevention, Production Subject to Royalties, and Resource Conservation Rule (“Final Rule”) after its effective date violated Section 705 of the APA.
Continue Reading Trump’s BLM Cannot Delay Implementation of Oil and Gas Methane Rules after Effective Date
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Federal Bill Proposes Streamlined Pipeline Permitting, Vesting Authority in FERC
By Mike Mills & Shannon Morrissey on
Posted in Oil & Gas
On July 19, 2017, Republicans in the U.S. House of Representatives passed legislation that grants the Federal Energy Regulatory Commission (“FERC”) increased autonomy over pipeline approvals. The bill, Promoting Interagency Coordination for Review of Natural Gas Pipelines Act (H.R. 2910), is aimed at streamlining the federal permitting process for pipeline approvals.
H.R. 2901 would specify timeframes and procedures for FERC and other affected agencies to follow in conducting environmental reviews related to natural gas pipelines. The bill would give FERC the authority to designate which other agencies will participate in the permitting and environmental review process, and FERC would hold primary authority by setting the terms of environmental reviews, requiring other federal agencies to defer to FERC. In addition, all National Gas Act reviews would be required to proceed concurrently and finish within 90 days of the environmental review, unless otherwise mandated by law.Continue Reading Federal Bill Proposes Streamlined Pipeline Permitting, Vesting Authority in FERC
Reconsidering Helium Production on Federal Lands Amid Privatization of Federal Helium Reserve
By Eric Martin on
On Wednesday the Bureau of Land Management (BLM) will auction helium stored in its Cliffside Field underground storage facility in west Texas (aka the Federal Helium Reserve). This annual auction under the Helium Stewardship Act of 2013 is part of a privatization effort that began back in 1996 and will culminate with the BLM divesting itself of that facility by 2021. At the same time, concerns about helium supply are again rising, as production from Qatar, which accounts for 25% of global helium supply, was interrupted last month by an economic boycott in the region. These events are prompting Congress to consider changing the nearly century-old treatment of helium under the Mineral Leasing Act of 1920.
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Some Not-So-Good News Out of Washington, D.C. for Pipeline Operators – Feds Increase Fines for Pipeline Safety Violations
By Mike Mills & Shannon Morrissey on
Posted in Oil & Gas
President Trump’s recent executive orders have benefited the oil pipeline industry in a number of ways, including most notably, giving the final “okay” to the Dakota Access Pipeline. But some legislative mandates have been out of the reach of the President’s pen. On April 27, the federal Pipeline and Hazardous Materials Safety Administration (“PHMSA”), within the Department of Transportation, released a final rule revising its maximum penalties for violations of pipeline safety laws. The rule titled, Pipeline Safety: Inflation Adjustment of Maximum Civil Penalties, was issued pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, which requires federal agencies to adjust their civil monetary penalties annually to account for changes in inflation. So what’s changed?
Continue Reading Some Not-So-Good News Out of Washington, D.C. for Pipeline Operators – Feds Increase Fines for Pipeline Safety Violations
BLM Proposes “Commonsense” Rule to Limit Methane Emissions from Oil & Gas Operations
By Shannon Morrissey, Mike Mills & Eric Skanchy on
Posted in Oil & Gas, Regulation
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.Continue Reading BLM Proposes “Commonsense” Rule to Limit Methane Emissions from Oil & Gas Operations
EPA Finds No Systemic Threat to Drinking Water from Fracking
By Mike Mills & Eric Skanchy on
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.”
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States Show Their True Colors on Fracking – One Enacts a Ban, While Two Others Prohibit All Local Bans
By Mike Mills & Eric Skanchy on
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
New Rules on MLPs & Qualifying Income: What Oil Services and Exploration Companies Need to Know
By Mike Mills & Eric Skanchy on
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.
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Department of Energy Report Calls for U.S. to Modernize Energy Infrastructure, Invest in Natural Gas Pipelines
By Mike Mills on
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
Industry Task Force Makes Proposals To Increase Natural Gas Capture In North Dakota
By Andrew Pieper on
In late-January, the North Dakota Petroleum Council’s task force on natural gas flaring released its much-anticipated recommendations to the North Dakota Industrial Commission, the administrative body that regulates oil and gas wells in the state. The task force made several proposals with the aim to increase the amount of natural gas captured at wellheads…
USGS Tool Could Predict, Prevent Wetlands Contamination By Sub-Surface Wastewater
By Andrew Pieper on
Posted in Uncategorized
While advances in hydraulic fracturing technology have resulted in an oil and gas boom in North Dakota and other parts of the U.S., the industry, federal and state regulators, and local communities have also had to contend with outgrowths of that development. One particular issue confronting those groups is how to handle and dispose of…