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

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

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

Senate Fails to Pass Resolution on Waste Reduction Rule

By: Michael K. Reer

On May 10, 2017, a Senate resolution that would nullify the Bureau of Land Management’s “Methane and Waste Reduction Rule” failed a procedural vote in the U.S. Senate 49-51. Under the Congressional Review Act, Congress can nullify recent federal regulations by passing a joint resolution signed by the President or over the President’s veto. The Waste Reduction 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.
Thursday, May 11, 2017

States Sue Over Valuation Rule Delay

By: Michael K. Reer

On April 26, 2017, the states of California and New Mexico filed a lawsuit in the U.S. District Court for the Northern District of California that challenges the Bureau of Land Management’s February 22, 2017 decision to delay the effective date of the “Consolidated Federal Oil & Gas and Federal & Indian Coal Valuation Reform Rule.” BLM’s decision to postpone the effective date of the final rulemaking was made in light of a lawsuit filed by several trade associations challenging the rule in the U.S. District Court for the District of Wyoming. BLM has since published a proposal to repeal the rule in its entirety.

BLM previously stated that the Valuation Rule would increase royalty collections on federal lands between $71.9 million and $84.9 million annually. According to California and New Mexico, because the final rule became effective January 1, 2017, it was improper for BLM to postpone the effective date on February 22, 2017 – after the final rule was already effective. The states argue that Section 705 of the Administrative Procedure Act does not permit the federal government to delay a rule that is already effective.
Wednesday, May 03, 2017

Trump to Sign Order on National Monuments

By: Michael K. Reer

On April 24, 2017, the New York Times reported that President Donald Trump is expected to sign an executive order today that orders a review of the national monument designations made within the last 20 years. The Antiquities Act of 1906 authorizes the president to designate “objects of historic or scientific interest that are situated upon the lands owned or controlled by the Government” to be national monuments. A national monument designation is generally considered to greatly restrict certain land uses, including oil and natural gas development. President Trump’s executive order, if signed, would continue a controversy surrounding President Barack Obama’s designation of Bears Ears National Monument in 2016 – an area that oil and natural gas operators had expressed interest in developing. The review is expected to be overseen by Secretary of the Interior Ryan Zinke and to take approximately four months to complete.
Wednesday, April 26, 2017

BLM to Withdraw Hydraulic Fracturing Rule


On March 15, 2017, the U.S. Department of the Interior, Bureau of Land Management, stated in a legal filing that it will withdraw its contested final rule that would have updated the Bureau’s regulations applicable to hydraulic fracturing operations on Federal and Indian Lands. The rule was published as final in the Federal Register on March 26, 2015 but enjoined by the U.S. District Court for the District of Wyoming preliminarily in September 2015 and finally in June 2016. Under the Obama Administration, BLM pursued an appeal of the district court injunction, which found that Congress has not delegated to BLM the authority to regulate hydraulic fracturing, to the U.S. Court of Appeals for the Tenth Circuit.

Had the rule taken effect, it would have required, among other items, that operators: submit detailed information regarding the proposed hydraulic fracturing operation, including wellbore geology information and the estimated length of fracture propagation; design and implement a casing and cementing program that meets certain best management practices and performance standards; manage recovered fluids in rigid enclosed, covered, or netted and screened aboveground storage tanks, with some exceptions; and disclose the chemicals used in hydraulic fracturing to BLM and the public, with limited exceptions for trade secrets.
Thursday, March 16, 2017

No Temporary Stay for BLM Flaring Rule


On January 16, 2017, the U.S. District Court for the District of Wyoming denied a motion for a preliminary injunction requested by three states and three trade associations that would have stayed the Department of the Interior, Bureau of Land Management’s “Waste Prevention, Production Subject to Royalties, and Resource Conservation” rule. Although the states and trade associations contend that the Waste Prevention Rule represents unlawful agency action because it exceeds BLM’s authority and is otherwise arbitrary and capricious, the District Court determined that the petitioners did not establish a “clear and unequivocal” right to relief.

BLM states

that the Waste Prevention Rule is intended to reduce waste of natural gas from venting, flaring, and leaks during oil and natural gas production activities on onshore federal and Indian leases. Specifically, the rule amends federal regulations with respect to when produced gas lost through venting, flaring, or leaks is subject to royalties. Any gas flared in excess of the final rule’s capture requirements is deemed an avoidable loss and subject to royalties. Moreover, the final rulemaking also requires operators to inspect equipment twice per year, timely repair any leaks found, and update certain equipment that BLM believes contributes to lost gas such as storage vessels, well maintenance, drilling, and completion.

Wednesday, January 25, 2017

Fall 2016 Regulatory Agenda Released


Last week, the U.S. General Services Administration released the Fall 2016 Unified Agenda of Federal Regulatory and Deregulatory Actions.  The Unified Agenda is released twice yearly, and lists the status of major rule proposals, including those with the potential to affect oil and natural gas development operations. 
 
In particular, operators might be interested in the following rule proposals.  After each proposal, the anticipated release date of the final rule is listed.
 
U.S. Environmental Protection Agency
  • National Pollutant Discharge Elimination System (NPDES) Application and Program Updates Rule (final in August 2016)
  • Toxics Release Inventory (TRI); Addition of Natural Gas Processing Facilities (final in August 2018)
  • Modernization of the Accidental Release Prevention Regulations Under Clean Air Act (final in December 2016)
Bureau of Land Management
  • Onshore Oil and Gas Order 1:  Approval of Operations (final in November 2016)
  • Onshore Oil and Gas Order 3:  Site Security on Federal and Indian Oil and Gas Leases (final in November 2016)
  • Onshore Oil and Gas Order 4:  Oil Measurement (final in November 2016)
  • Onshore Oil and Gas Order 5:  Gas Measurement (final in November 2016)
  • Waste Prevention, Production Subject to Royalties, and Resource Conservation (final in November 2016)
  • Non-Federal Oil and Gas Rights (final in December 2016)
  • Oil Shale Management (final in February 2017)
Wednesday, November 23, 2016

Western Energy Alliance, IPAA Challenge BLM Methane Regulations

By: Michael K. Reer


On November 15, 2016, the Western Energy Alliance and the Independent Petroleum Association of America filed suit in the U.S. District Court for the District of Wyoming, challenging the Bureau of Land Management's final rule; "Waste Prevention, Production Subject to Royalties, and Resources Conservation."


While the rule has been finalized by BLM, it has yet to be published in the Federal Register. As proposed, the rule would regulate venting, flaring, and leaks during oil and natural gas production activities on onshore federal and Indian leases. The regulations would also clarify when produced natural gas lost through venting, flaring, or leaks is subject to royalties, and when oil and natural gas used on site would be royalty-free.

The lawsuit alleges that the final rule seeks to regulate air quality from oil and natural gas production facilities on non-federal lands, which the plaintiffs allege is a function delegated exclusively to the U.S. Environmental Protection Agency. The lawsuit also alleges that the final rule is an abuse of discretion, arbitrary and capricious, not supported by the administrative record, and procedurally deficient.
Thursday, November 17, 2016

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