BLM to Rescind 2015 Hydraulic Fracturing Regulations

By: Blair L. Park

On July 25, 2017, the DOI Bureau of Land Management published “Oil and Gas: Hydraulic Fracturing on Federal and Indian Lands: Rescission of a 2015 Rule” in the Federal Register. If finalized, the purposed rule would rescind BLM’s 2015 rule regulating hydraulic fracturing on certain public and Indian lands. The 2015 rule required operators to (a) obtain BLM approval prior to conducting hydraulic fracturing operations; (b) submit information regarding the proposed source of water in each proposed hydraulic fracturing application; (c) submit certain information about nearby production wells; (d) conduct cement testing prior to hydraulic fracturing; (e) isolate and protect usable water, in part, by demonstrating 200 feet of cement between the bottom of the closest usable aquifer and the top of the fractured formation; (f) monitor and record annulus pressure during fracturing; (g) submit lists of chemicals (excluding trade secret chemicals) used in the hydraulic fracturing process; and (h) store recovered fluids in above-ground rigid tanks of no more than 500-barrel capacity, with few exceptions.

“The BLM believes that the 2015 final rule unnecessarily burdens industry with compliance costs and information requirements that are duplicative of regulatory programs of many states and some tribes,” the BLM stated in the proposed rule – echoing arguments by states and industry groups challenging the rule. “Considering state regulatory programs, the sovereignty of tribes to regulate operations on their lands, and the preexisting authorities in other federal regulations, the proposed rescission of the 2015 final rule would not leave hydraulic fracturing operations entirely unregulated.”

The BLM will gather public comments on the proposed rule through September 25, 2017, after which BLM may make revisions to the proposed rule and publish it as final.
Thursday, August 10, 2017

Supreme Court Grants Temporary Relief to Denbury

By: Michael K. Reer

On July 26, 2017, the Supreme Court of Texas granted Denbury Green Pipeline-Texas, LLC’s motion for temporary relief, ordering a district court to allow Denbury to complete federally-required inspections of the pipeline at issue. On July 12, 2017, Denbury had filed a petition for writ of mandamus with the Texas Supreme Court, seeking immediate possession of a contested pipeline easement in Jefferson County, Texas. The district court had denied Denbury’s request for a temporary restraining order, finding that no writ of possession to Denbury has been entered because the landowner is currently enjoined from accessing the eminent domain award. Denbury contends that it has fully satisfied the requirements in the Texas Property Code for full possession of the property and notes that immediate access is required for Denbury to comply with federal regulations. The case is In re Denbury Green Pipeline-Texas, LLC, No.17-0556 (Tex. July 26, 2017).
Monday, August 07, 2017

Environmental Groups Challenge TCEQ Permits

By: Michael K. Reer

On July 20, 2017, four environmental groups filed five lawsuits in the U.S. District Court for the District of Columbia, alleging that EPA failed to prevent the Texas Commission on Environmental Quality from granting improper major source permits under the Clean Air Act to several petroleum refineries and power plants. Specifically, the lawsuits allege that the permits issued by TCEQ contain “unenforceable . . . loopholes” that do not comply with the Clean Air Act. The cases are Envtl. Integrity Project et al. v. Pruitt, Nos. 1:17-cv-01439, 1:17-cv-01440, 1:17-cv-01442, and 1:17-cv-01443 (D.D.C. filed July 20, 2017).
Friday, August 04, 2017

Interior to Increase Oil and Gas Leasing

By: Michael K. Reer

On July 6, 2017, U.S. Department of the Interior Secretary Ryan Zinke signed Order No. 3354, which is designed to ensure that DOI consistently holds quarterly oil and gas lease sales as required by the Mineral Leasing Act of 1920. Although the MLA requires quarterly lease sales “for each state where eligible lands are available,” DOI has not consistently met this requirement. The Order also requires DOI personnel to develop “a strategy to process the large number of currently pending permitting applications and improve the permitting process.” While most states issue drilling permits within 60 days of a complete application, DOI permitting can take up to two years. Order 3354 was followed by a July 13, 2017 announcement by Secretary Zinke that DOI will offer 79.5 million acres offshore Texas, Louisiana, Mississippi, Alabama, and Florida for leasing
Thursday, August 03, 2017

Trump to Nominate Two for FERC Openings

By: Michael K. Reer

On June 28, 2017, the Trump Administration announced plans to nominate Richard Glick as a commissioner of the Federal Energy Regulatory Commission. Glick currently serves as Democratic general counsel on the Senate Energy and Natural Resources Committee and would replace Democratic Commissioner Colette Honorable. On July 13, 2017, the Trump Administration announced plans to nominate Kevin J. McIntyre as a Republican FERC commissioner. McIntyre serves as an attorney at the law firm Jones Day and would fill a currently vacant commissioner seat. When at capacity, FERC has five commissioners, three of whom may be the same party as the President. President Trump has now nominated four potential FERC commissioners, including three Republicans. If confirmed by the Senate, the four will join Democratic Commissioner Cheryle LaFleur, thus filling all commissioner vacancies. FERC has operated without a quorum of at least three commissioners since February 2017. The agency’s inability to approve major infrastructure projects without a quorum has resulted in a backlog of $14 billion worth of permit applications. On July 26, 2017, Texas Railroad Commissioner Wayne Christian wrote a letter to U.S. Senators Cornyn and Cruz, advocating for the U.S. Senate to confirm the Trump Administration’s nominees.
Wednesday, August 02, 2017

Dallas Court of Appeals Reverses $535 Million Verdict

By:  Michael K. Reer


On July 18, 2017, the Dallas Court of Appeals overturned a $535 million jury verdict related to breach of joint enterprise and breach of fiduciary duty causes of action. The plaintiff and defendant are pipeline companies that jointly investigated the economic feasibility of an oil pipeline that would run from Cushing, Oklahoma to Houston, Texas. During open season, the defendant had discussions with a third-party pipeline company about forming a partnership for a pipeline from Canada to Houston should the open season fail. After the open season failed, the defendant and third-party formed a partnership to purchase and operate the Seaway Pipeline, which runs from Cushing to Houston. The Dallas Court of Appeals found that the formation of a partnership between the plaintiff and defendant was precluded by their written agreement, which contained conditions precedent before a partnership could form. The conditions precedent were never fulfilled, and therefore no partnership formed. The case is Enterprise Prod. Partners., L.P. v. Energy Transfer Partners, No. 05-14-01383-CV (Tex.App.—Dallas July 18, 2017, no pet. h.).
Tuesday, July 25, 2017

Denbury Seeks Supreme Court Relief

By:  Michael K. Reer


On July 12, 2017, Denbury Green Pipeline-Texas, LLC filed a petition for writ of mandamus with the Texas Supreme Court, seeking immediate possession of a contested pipeline easement in Jefferson County, Texas. The District Court denied Denbury’s request for a temporary restraining order, finding that no writ of possession to Denbury has been entered because the landowner is currently enjoined from accessing the eminent domain award. Denbury contends that it has fully satisfied the requirements in the Texas Property Code for full possession of the property and notes that immediate access is required for Denbury to comply with federal regulations. The case is In re Denbury Green Pipeline-Texas, LLC, No.____ (filed July 12, 2017).
Monday, July 24, 2017

HFB Publishes Texas Supreme Court Update

By: Michael K. Reer

On July 17, 2017, the American Oil and Gas Reporter published “Texas Supreme Court Decision Clarifies Surface Estate Rights,” a Harris, Finley & Bogle analysis of three recent Texas Supreme Court decisions, Lightning Oil, Forest Oil, and Red Deer Resources. In Lightning Oil, the Texas Supreme Court determined that, based on the facts presented, permission from the surface estate owner alone was sufficient to allow a nonlessee operator to drill through the subsurface to reach minerals on an adjoining tract. In Forest Oil, the Texas Supreme Court addressed whether the Texas Railroad Commission has exclusive or primary jurisdiction over claims for environmental contamination. In Red Deer Resources, the Texas Supreme Court considered the application of a shut-in royalty clause to a 2,000 acre lease held by a well that produced fewer than 10Mcf per day.
Tuesday, July 18, 2017

BLM Postpones Waste Prevention Rule

By: Michael K. Reer

On June 15, 2017, the U.S. Department of the Interior, Bureau of Land Management, published a notice of postponement of compliance dates in the Federal Register for the final rule “Waste Prevention, Production Subject to Royalties, and Resource Conservation.” Immediately after BLM published the Waste Prevention Rule in November of 2016, several industry associations filed petitions for judicial review, which are now consolidated in the U.S. District Court for the District of Wyoming. BLM states in the Federal Register notice that “[i]n light of the existence and potential consequences of the pending litigation, the BLM has concluded that justice requires it to postpone the compliance dates for certain sections of the Rule pursuant to the Administrative Procedure Act, pending judicial review.” According to BLM, new compliance dates will be announced at the conclusion of judicial review.

The Waste Prevention Rule is designed to reduce venting, flaring and leaks during production activities on federal and Indian lands by amending federal regulations that specify when produced gas lost through venting, flaring or leaks is subject to royalties. Operators must pay BLM royalties on natural gas flared in excess of the capture requirements stated in the final rulemaking. The final rulemaking also requires operators to inspect certain equipment twice a year, make timely repairs to any leaks found, and update certain equipment that BLM believes contributes to lost gas.
Friday, July 14, 2017

EPA Files Suit Against Colorado Operator

By: Michael K. Reer

On June 26, 2017, the U.S. Environmental Protection Agency filed suit against a Colorado operator in the U.S. District Court for the District of Colorado. Specifically, the suit alleges that the operator failed to ensure that vapor control systems on 86 batteries of storage tanks were sufficiently retaining volatile organic compounds. The suit represents one of the first post-Obama enforcement actions by EPA concerning the Oil and Gas National Enforcement Initiative. The lawsuit seeks injunctive relief and penalties each day each violation occurred. Even if only one violation occurred per day, EPA’s requested damages would exceed $150 million.
Thursday, July 13, 2017

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