Regulations
The Hill | 23 May 2017

Court Pauses Lawsuit Over Obama Methane Rule

A federal court on 18 May formally paused a lawsuit over an Obama administration methane regulation.

Credit: Getty Images.

The order, from the Court of Appeals for the District of Columbia, halts consideration of an oil industry suit challenging the Environmental Protection Agency’s (EPA) rules cracking down on methane emissions from oil and gas drilling wells.

President Trump signed an executive order in March asking the EPA to review that regulation as part of an effort to undo several Obama-era environmental rules he argues hurt the energy industry.

In early April, Trump administration lawyers asked the court to hold the case in abeyance because they had started the process of reviewing the rule.

“Pursuant to the executive order, EPA is initiating its review of this rule and providing advanced notice of forthcoming rulemaking proceedings consistent with the president’s policies,” federal lawyers wrote in a motion then. “If EPA’s review concludes that suspension, revision, or rescission of this Rule may be appropriate, EPA’s review will be followed by a rulemaking process that will be transparent, follow proper administrative procedures, include appropriate engagement with the public, employ sound science, and be firmly grounded in the law.”

A three-judge panel formally paused the rule in a one-paragraph ruling on 18 May.

Read the full story here.

The Hill | 23 May 2017

Former Louisiana Official Tapped as Lead Offshore Drilling Regulator

The Trump administration has tapped a former Louisiana utility regulator to lead the agency responsible for offshore oil and natural gas drilling safety.

Angelle

Scott Angelle, most recently vice-chairman of Louisiana’s Public Service Commission, is now the head of the Interior Department’s Bureau of Safety and Environmental Enforcement (BSEE), the agency said on 22 May.

“Scott Angelle brings a wealth of experience to BSEE, having spent many years working for the safe and efficient energy production of both Louisiana’s and our country’s offshore resources,” Interior Secretary Ryan Zinke said in a statement.

“As we set our path towards energy dominance, I am confident that Scott has the expertise, vision, and the leadership necessary to effectively enhance our program and to promote the safe and environmentally responsible exploration, development, and production of our country’s offshore oil and gas resources.” Zinke has the power to appoint Angelle without Senate confirmation.

“It is an exciting and challenging time for BSEE; I look forward to leading our efforts to empower the offshore oil and gas industry while ensuring safe and environmentally responsible operations,” Angelle said in the statement.

Read the full story here.

Reuters | 18 May 2017

US Industry Seeks Faster Permits, Simpler Rules in Trump Regulation Reset

US industry groups have told President Donald Trump’s administration that they want two main things from his promised regulatory overhaul: a speedier permit process and simpler environmental rules.

US President Donald Trump gestures as he walks on the South Lawn of the White House upon his return to Washington on 17 May. Credit: Yuri Gripas/Reuters.

Associations representing the drilling, refining, mining, and building industries have submitted hundreds of pages of documents to the Commerce Department and Environmental Protection Agency (EPA) in recent weeks, outlining regulations they want to see eliminated or modified.

The comments, many targeting the EPA, come in response to a pair of executive orders Trump signed during his first weeks in office, meant to cut the regulatory burden on companies. Trump and the Republican-controlled Congress have already moved to rescind a slew of Obama-era environmental protections, including some aimed at combating global climate change.

The EPA’s regulatory reform office alone has received remarks from more than 65,000 people and groups, many of them criticizing the regulatory rollback plan as a potential threat to public health. But business groups have embraced the plan, calling it the best chance in more than a decade to reshape the regulatory landscape and boost growth without undermining air and water quality.

“Last time I remember this was 2001. That was the last big opportunity to make some changes,” said David Friedman, vice president of regulatory affairs for the American Fuel and Petrochemical Manufacturers industry group.

That year, then Vice President Dick Cheney chaired an energy task force that produced a National Energy Policy report, a road map to boosting domestic systems and supplies. Much has changed since: US oil and gas production hit all-time highs during the administration of former President Barack Obama, helped by high crude prices and improved drilling technology.

This time around, industry groups appear focused on easing the permitting process for new facilities and installations, according to a Reuters review of the comments.

Read the full story here.

Reuters | 11 May 2017

Bid To Revoke Obama Methane Rule Fails in Surprise US Senate Vote

The US Senate on 10 May rejected a resolution to revoke an Obama-era rule to limit methane emissions from oil and gas production on federal lands, dealing a blow to President Donald Trump’s efforts to free the drilling industry from what he sees as excessive environmental regulation.

A pumpjack brings oil to the surface in the Monterey Shale, California, in a file photo. Credit: Lucy Nicholson/Reuters.

The Congressional Review Act resolution received just 49 votes after Republican leaders scrambled for weeks to secure the 51 needed to pass it. The resolution would have revoked the rule and prevented similar regulations from being introduced.

Getting the Trump administration to repeal the Bureau of Land Management (BLM) rule had been a top priority of the oil and gas industry. Companies said it was unnecessary and would could cost them tens of thousands of dollars per well and hinder production.

But not all Republicans supported the measure, in part because it would have made regulating methane waste more difficult in the future.

Republican Senator John McCain of Arizona made a surprise vote against the resolution, joining fellow Republicans Lindsey Graham of South Carolina and Susan Collins of Maine in opposition to torpedo it.

“While I am concerned that the BLM rule may be onerous, passage of the resolution would have prevented the federal government, under any administration, from issuing a rule that is ‘similar’,” McCain said in a statement.

He said the Interior Department should issue a new rule on to replace the existing one on methane leaks, which he called a public health and air quality issue.

Gray Reed and McGraw via Mondaq | 5 May 2017

Column: A Development In Earthquakes and Hydraulic Fracturing

Sierra Club v. Chesapeake Operating LLC et al.  is news more shocking than “Man Bites Dog.” A federal court has acknowledged that others are better equipped to address certain issues than the judiciary.

Sierra Club alleged that that deep injection of liquid waste from operations by Chesapeake, Devon, and New Dominion has contributed to earthquakes throughout Oklahoma and southern Kansas. Sierra asserted that waste disposal activities present an imminent and substantial endangerment to the public health or environment. This was a citizen suit under the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act (RCRA).

Sierra Club alleged

  • Earthquakes in Oklahoma increased more than 300-fold from before 2009 to 2015, from 167 to 5,838.
  • The severity has increased.
  • Seismologists say a magnitude 7 quake is possible in the Nehama fault.
  • Earthquake risks in Oklahoma are now the highest in the nation.

Sierra Club wanted an order requiring defendants to

  • Reduce “immediately and substantially” the amount of wastes injected into the ground
  • Reinforce vulnerable structures that would be affected by a large magnitude earthquakes
  • Establish independent earthquake monitoring and prediction

The defendants urged the court to

  • Allow the Oklahoma Corporation Commission to take action in response to increased seismicity in the state
  • Dismiss, because Sierra did not join every company that disposes of liquid wastes
  • Dismiss, because the claims fall outside the “zone of interests” Congress intended to protect under RCRA

The court sided with the defendants, concluding that dismissal is appropriate under the Burford abstention and primary jurisdiction doctrines. Here’s why:

  • In 1981, the US Environmental Protection Agency gave primary enforcement responsibility for underground injection control to the state of Oklahoma.
  • Oklahoma vests that authority in the Oklahoma Corporation Commission.
  • The OCC exercises exclusive jurisdiction over injections wells.
  • The OCC has an extensive regulatory structure in place for injection well control.

Read the full story here.

Stikeman Elliott via Mondaq | 3 May 2017

Alberta Court of Appeal Rules That Receivers and Trustees Can Orphan “Bad” Wells

In a much anticipated decision, a 2–1 majority of the Alberta Court of Appeal (ABCA) has upheld the Alberta Court of Queen’s Bench decision in Re Redwater Energy Corporation, 2016 ABQB 278. The ABCA found in favor of receivers, trustees, and secured creditors on the basis that the Bankruptcy and Insolvency Act takes precedence over the provincial oil and gas regulatory schemes, making such schemes inoperative to the extent that they purport to require trustees and receivers to comply with abandonment, reclamation, and remediation requirements of disclaimed assets.

This decision will continue to prevent the Alberta Energy Regulator (AER) from refusing to transfer licensed assets in an insolvency process unless ongoing environmental obligations tied to disclaimed licensed assets are met. The ABCA’s split decision also likely signals a period of continued uncertainty because it is reasonable to expect that the AER and the Orphan Well Association will be seeking leave to appeal this decision to Canada’s top court. Moreover, whatever happens in Alberta will affect policy in the other western Canadian provinces.

Read the full story here.

The Associated Press | 24 April 2017

EPA Chief Delays Methane Rule at Behest of Oil and Gas Firms

The Environmental Protection Agency (EPA) is again moving to derail Obama-era regulations aimed at reducing pollution from the fossil fuel industry.

Environmental Protection Agency headquarters building in Washington, D.C. Credit: Getty Images.

EPA Administrator Scott Pruitt announced on 19 April that he’s issued a 90-day delay for oil and gas companies to follow a new rule requiring them to monitor and reduce methane leaks from their facilities. Pruitt said the agency will now reconsider the 2016 measure, which the companies were required to comply with by June.

It was the latest in a slew of actions by Pruitt to set aside environmental regulations opposed by corporate interests. The American Petroleum Institute, the Texas Oil and Gas Association, and other industry groups petitioned Pruitt to scrap the requirement.

“American businesses should have the opportunity to review new requirements, assess economic impacts, and report back before those new requirements are finalized,” Pruitt said in a statement.

Read the full story here.

Reuters | 19 April 2017

Trump’s EPA To Reconsider Oil and Gas Emissions Rule

The US Environmental Protection Agency will reconsider a rule on greenhouse gas emissions from oil and gas operations and delay its compliance date, the agency said on 19 April in the Trump administration’s latest move to reduce regulations.

US President Donald Trump speaks between Vice President Mike Pence, left, and EPA Administrator Scott Pruitt before signing an executive order on ”Energy Independence,” eliminating Obama-era climate change regulations. Credit: Carlos Barria/Reuters.

Oil interest groups, including the American Petroleum Institute and the Texas Oil and Gas Association, had petitioned the EPA a year ago to reconsider the rule limiting emissions of methane and other pollutants from new and revamped oil and gas wells and systems.

The EPA said in a statement that it would delay the rule’s 3 June compliance date by 90 days and take public comments during that period.

Under Democratic President Barack Obama, the EPA released the first methane limits on the facilities in May 2016, saying it would cost energy companies USD 530 million but would lead to USD 690 million in benefits, including lowering medical bills.

Scott Pruitt, the EPA chief in the administration of Republican President Donald Trump, joined dozens of other states in challenging the rule when he was attorney general of oil-producing Oklahoma. Pruitt has said he does not believe that greenhouse gas emissions are the main driver of climate change.

Read the full story here.

Houston Chronicle | 17 April 2017

Do Oil Companies Want Looser Regulations? Some Don’t

On the morning of 28 March, President Donald Trump signed an executive order that gutted the US Clean Power Plan, eliminating restrictions on fossil fuel production and promising to reinvigorate the energy industry.

Wind turbines. Credit: Rafa Irusta Machin.

That very morning, on a lush oil business campus along the Energy Corridor in Houston, several dozen oil and gas leaders met in private to discuss quite the opposite: how they could help their companies and the industry create a lower-carbon “cleaner energy” future, despite the rhetoric of the new administration.

Multinational oil giant Royal Dutch Shell called the meeting. Several large oil and gas companies sent representatives, including Anadarko Petroleum and Apache, both based in the Houston area, and the Swiss oil services technology provider ABB. Shell called it an “exclusive, invitation-only event.”

The goal: First, to build the “economic and environmental case for natural gas as the essential pathway to lower carbon energy systems,” according to the meeting’s agenda. Second, to raise a coalition of companies able to develop, advocate and implement the strategy.

There are two camps emerging in the energy industry, attendees said. One is giddy with each cut to environmental regulation, hopeful that Trump will usher in a low-regulation era for fossil fuels. But the second camp worries about that philosophy, believing instead that world is already walking a path to a low-carbon future; electric cars, solar panels, and windmills will keep coming, despite any change in US regulations.

Read the full story here.

The Associated Press | 7 April 2017

Maryland Governor Signs Hydraulic Fracturing Ban Into Law

Maryland Gov. Larry Hogan signed a bill on 4 April to ban hydraulic fracturing in Maryland, the first state where a legislature has voted to bar the practice that actually has natural gas reserves.

Maryland Gov. Larry Hogan, a Republican, shakes hands with Del. David Fraser-Hidalgo on April 4 in Annapolis, Maryland, after signing a bill to ban hydraulic drilling in the state. Fraser-Hidalgo, a Democrat, sponsored the bill. Credit: Brian Witte/AP.

The Republican governor signed the measure into law about a week after the bill was passed by the Democrat-controlled legislature. Hydraulic fracturing isn’t being conducted in Maryland now, but a moratorium was set to end in October, which is when the ban technically takes effect.

Supporters of the ban said it was the first in the nation approved by a legislature in a state that has natural gas underground. Neighboring West Virginia and Pennsylvania allow hydraulic fracturing.

New York has banned it by executive order, and Vermont’s legislature has passed a ban in a symbolic gesture, because the state doesn’t have any oil or natural gas reserves to drill for.

Hydraulic fracturing opponents cited health and environmental concerns. The technique forces pressurized water and chemicals underground to break up rock and release the gas. Critics say the process and disposal of tainted waste water pose risks of air pollution, earthquakes, and property devaluation.

Read the full story here.

Reuters | 24 March 2017

California Board Adopts Strictest US Methane Rules

California’s air quality board voted unanimously on 23 March to approve methane regulations touted as the strictest adopted yet in the United States for controlling emissions of the second-most prevalent greenhouse gas in the atmosphere.

The rules, approved by the California Air Resources Board, tighten efficiency requirements for production and transportation of natural gas and for some oil-handling equipment, including installation of emissions-recapture technology.

They also mandate more stringent monitoring and reporting of potential gas leaks as a means of pinpointing and repairing them quickly.

Methane, the main component of commercially distributed natural gas, is also a byproduct of oil extraction. Pound for pound, it traps significantly more heat in the atmosphere than carbon dioxide, the most prevalent greenhouse gas, though its effects are shorter-lived.

Read the full story here.

Scientific American | 16 March 2017

EPA Drops Request for Methane Information From Oil and Gas Industry

US EPA Administrator Scott Pruitt has swiftly complied with a request from GOP leaders in oil-and-gas-producing states to scrap an Obama-era request for industry information about reducing greenhouse gas emissions.

Credit: Doranjclark/Getty Images.

The agency on 2 March withdrew a formal survey of oil and gas companies that required them to provide information about onshore equipment and controls that could reduce emissions of greenhouse gases, including methane. Industry and state officials complained that the information collection request (ICR) was time-consuming and expensive.

“By taking this step, EPA is signaling that we take these concerns seriously and are committed to strengthening our partnership with the states,” Pruitt said in a statement. “Today’s action will reduce burdens on businesses while we take a closer look at the need for additional information from this industry.”

Eleven Republican state leaders, led by Texas Attorney General Ken Paxton, sent a letter on 1 March urging Pruitt to toss the information request.

Industry groups were “overjoyed” at the news, calling the ICR an eleventh-hour attempt by the Obama administration to gather excessive data.

“We’re overjoyed,” Western Energy Alliance President Kathleen Sgamma said in an email. “The ICR was an ill-conceived action that was extremely burdensome not just on industry, but EPA career employees were struggling to figure out how to handle reams of meaningless data.”

Read the full story here.