BakerHostetler via Mondaq | 19 November 2015

Column: Do You Dare To Flare? A North Dakota Field Office Provides a View Into the Federal Regulatory Future

While high-profile regulatory efforts focused on hydraulic fracturing, waters of the United States, sage grouse, and greenhouse gas emissions have grabbed media headlines over the last several months, a potent stew of seemingly mundane technical initiatives has been simmering under the noses of domestic energy companies.

Taken individually, narrow regulatory proposals related to oil and gas accounting, permitting and planning requirements, procedural rules for administrative appeals, royalty reporting, weights and measures, bonding requirements, and infrastructure development have been of interest to only a small group of regulatory and legal technocrats. But understood collectively, these less glamorous initiatives have the potential to fundamentally change the scale and nature of oil and gas development in the United States.

Safety+Health | 12 November 2015

OSHA Delays Enforcement of New PSM Policy

The Occupational Safety and Health Administration (OSHA) will delay enforcing a new interpretation of its Process Safety Management (PSM) Standard, prompting a bipartisan group of lawmakers to call for the agency to withdraw that interpretation.

In a July 22 memorandum, OSHA announced it had revised the interpretation that exempted retail facilities from PSM requirements. The exemption originally was intended only for retail establishments that sold hazardous chemicals in small quantities, such as gas stations, but the agency had been applying the exemption to establishments that made more than 50% of their income from direct sales of those chemicals to end users.

The new interpretation states that only facilities with North American Industry Classification System codes of 44 and 45 will be exempt. OSHA announced on 20 October that it will focus efforts on compliance assistance and, in most cases, will not cite newly nonexempted facilities for failing to comply with the PSM rule.

In response to the interim enforcement policy, 38 congressmen on 22 October sent a letter to Secretary of Labor Thomas Perez asking OSHA to rescind the memo and begin a formal rule-making process. The representatives claim that the interpretation is arbitrary and will impose a great cost on small and medium-sized businesses.

ReedSmith | 29 October 2015

Pennsylvania Federal Court Strikes Down Ordinance Banning Disposal of Waste Water as Unconstitutional

In Pennsylvania General Energy Co. L.L.C. v. Grant Township, Magistrate Judge Susan P. Baxter of the United States District Court for the Western District of Pennsylvania, in an unpublished opinion, held that several provisions of an ordinance enacted by Grant Township establishing a Community Bill of Rights were invalid or preempted by state law. The ordinance banned corporations from disposing of waste water from hydraulic fracturing within Grant Township.

Plaintiff Pennsylvania General Energy Company (PGE) is involved in the exploration and development of oil and natural gas. In 1997, PGE drilled a deep gas well in Grant Township. In May 2013, PGE filed a permit application with the US Environmental Protection Agency (EPA) seeking to convert the well into a brine-injection well. Upon learning of PGE’s permit application, Grant Township enacted an ordinance entitled Community Bill of Rights. The ordinance provided that corporations should not have more rights than the people of its community and that people have the right to regulate all activities pursuant to a right of local self government.

PGE filed an action challenging the constitutionality, validity, and enforceability of the ordinance adopted by Grant Township, arguing that the ordinance violated several state statutes, including Pennsylvania’s Second-Class Township Code—Grant Township is a second-class township—and Pennsylvania’s Limited Liability Companies Law. Further, PGE argued that the ordinance violated state law as an impermissible exercise of police power because it is exclusionary. Grant Township filed a counterclaim, alleging that challenging the ordinance violated the rights of the people to “local community self government.”

Norton Rose Fulbright via Mondaq | 15 October 2015

Rules and Regulations of the Oil and Gas Industry in Australia: Navigating the Governance Maze

As the regulation of the oil and gas industry around Australia becomes increasingly complex, unconventional resources legal expert Liz Allnutt breaks down the regulatory process state by state and highlights some of the key legal principles guiding the development of the unconventional sector around the country.

General Legislative Framework
In Australia, all six states and the Northern Territory have their own legislative power to govern onshore petroleum exploration and production activities within their boundaries. State legislation also regulates activities within coastal waters extending up to three nautical miles from the coastal baseline. The onshore petroleum regimes in each state are broadly similar but not identical. The onshore petroleum regimes in Australia start from a fundamental position of treating unconventional gas resources in the same manner as conventional petroleum resources.

In addition to the petroleum-specific legislation, there is other legislation that applies to petroleum exploration and production activities. This includes environment and heritage protection legislation (at state, territory, and Commonwealth level), legislation governing the allocation of onshore water rights, native title and Aboriginal heritage protection legislation, legislation governing industrial relations and workplace health and safety, planning legislation, and general land tenure legislation.

The Standing Council on Energy and Resources, comprising Australia’s energy and resources ministers, has endorsed and implemented a harmonized framework for the regulation of coal seam gas. The National Harmonised Regulatory Framework provides a suite of leading-practice principles to be used as a guidance and reference tool for Australian Commonwealth, state and territory government regulators for the coal seam gas industry.

The framework focuses on four key areas of operations, covering the life cycle of the development of natural gas from coal seams: well integrity, water management and monitoring, hydraulic fracturing, and chemical use. The framework acknowledges that, although shale gas and coal seam gas have some common exploration and development procedures, the geological and hydrological issues that apply to different forms of unconventional gas are also significant.

There is no expectation that the harmonized regulatory framework developed for coal seam gas will be extended to apply to shale gas. However, it would be reasonable to expect that a similar harmonization process may subsequently be implemented for the shale gas industry, and that some of the recommendations in the coal seam gas framework could be incorporated into that process.

ReedSmith via Mondaq | 15 October 2015

Column: UK Courts Get Tough on Environmental Crime

There is a widely held belief that environmental laws in the UK are toothless in practice because enforcement authorities are under-resourced and typical levels of fines and penalties imposed are far too low.

This view is particularly prevalent among those with first-hand experience of jurisdictions where environmental enforcement has historically tended to be stricter (for example, the United States).

Although they ignore the significant reputational damage that can occur from environmental noncompliance, such views have considerable basis in historical fact in the UK. Often, environmental crime in the UK has been seen to pay. This has been a frequent source of complaint by the majority who strive, at considerable cost, to comply whilst seeing those who apparently “get away with it” all too often.

However, such views need to be reappraised in light of recent new sentencing guidelines and senior judicial statements equating serious breaches of environmental law with financial services offenses. A recent decision of a unanimous Court of Appeal that included the Lord Chief Justice presages a much tougher approach in the future.

This is particularly true in the case of environmental offenses committed by large commercial organizations.

EHS Journal | 7 October 2015

The Risks and Challenges of Accrediting EHS and Sustainability Performance

In the past few decades or so, there has been a revolution in third-party programs and standards certifying, recognizing, or accrediting companies’ environmental, health and safety, and sustainability performance. This has included numerous International Organization for Standardization (ISO) standards and guidelines such as those for Environmental Management (ISO14000), Occupational Health and Safety (ISO45001), and Social Responsibility (ISO26000). Coincidentally, a number of similar recognition programs have been initiated by organizations such as the US Environmental Protection Agency (EPA), the US Occupational Safety and Health Administration (OSHA), and Dow Jones.

The basic intent of all of these certification and recognition programs is to demonstrate to shareholders and other interested stakeholders that companies are managing their businesses in a socially responsible way. And this is a good thing. However, there have been some issues, especially with the recognition programs, that have affected their credibility and, hence, the credibility of the accreditations. This article discusses three of those recognition programs, one of which was terminated due to credibility issues; one of which has been subject to recent criticism stemming from an internal audit; and one of which has had three notable, and formally recognized, companies experience significant environmental catastrophes.

  • The US EPA Performance Track Program
  • The OSHA Voluntary Protection (“Star”) Program
  • The Dow Jones Sustainability Indices

Read the full story here.

The Associated Press | 1 October 2015

Judge Blocks Federal Oil, Gas Drilling Rules Pending Lawsuit

A judge on 30 September blocked new nationwide regulations for oil and gas drilling on federal lands from taking effect while a lawsuit moves ahead, pointing to a law that prohibits the US Environmental Protection Agency (EPA) from regulating hydraulic fracturing.

Just because the EPA lacks authority to regulate hydraulic fracturing does not mean the US Bureau of Land Management has leeway to do so, US District Judge Scott Skavdahl wrote. “In the absence of a statute conferring authority, an administrative agency has none,” he wrote.

The preliminary injunction means the already postponed rules might not take effect for years, if at all. Skavdahl found the rules’ opponents likely will prevail on the merits of their arguments.

The Bureau of Land Management announced the rules in March. Areas covered include hydraulic fracturing and pressure testing wellbores to make sure they will not leak.

Petroleum developers would be required to disclose to regulators the ingredients in the chemical products they use to improve the results of fracking.

DNV GL | 8 September 2015

Report Examines the Future of Regulations

Oil and gas industry regulatory regimes are evolving, allowing both active and planned offshore operations to progress efficiently, while ensuring that due attention is given to health, safety, and environmental (HSE) performance.

Discussion of the history and future for regulation around the world is described in a new DNV GL report:, “Regulatory Outlook: The Way Forward for Offshore Regulatory Safety Regimes.” It outlines possible future developments and what DNV GL believes an effective offshore safety regime should look like.


Dynamically Positioning Deepwater Crews for Success Amid New Regulations

Growth in deepwater exploration and development activity over the past 10 years has driven an unprecedented wave of floating rig construction. The global ultradeepwater floater fleet has increased in number from less than 40 units 10 years ago to more than 160 today.

Virtually all of the 120+ drilling rigs added are dynamically positioned (DP), as conventionally moored vessels are largely bound to mid-water depths now (>3,000 ft). And facilities and vessels beyond the drilling rig also use DP systems. Computerized DP systems have become essential components in the deepwater arena.

The US Coast Guard is on the cusp of implementing the first federal regulations addressing DP/power management (PM) systems integrity—slated for 4Q15 or 1Q16—which crystallizes the central role these systems serve in the deepwater space.

Oilpro recently visited with Lloyd’s Register Energy-Drilling’s principal DP/PM marine specialist Kevin Comeau to discuss the role that these systems play in the deepwater sector, as well as the nature of the impending federal regulations.

E&E Publishing | 6 September 2015

The Hydraulic Fracturing “Loophole” That Just Keeps Growing

Like a fish story, the “Halliburton loophole” grows a little with every telling.

It started 10 years ago as a narrow, little-known exemption to a federal environmental law embedded in sweeping energy legislation.

In the intervening years, it has grown to be an all-purpose bogeyman for environmentalists raging against hydraulic fracturing. And, in a new twist, even hydraulic fracturing boosters have now cast it as a bulwark against federal regulation of oil and gas drilling.

The one-paragraph section of the 551-page Energy Policy Act of 2005 exempted hydraulic fracturing from the Underground Injection Control (UIC) provisions of the Safe Drinking Water Act (SDWA). The UIC portion regulates holes drilled to inject contaminants deep underground and wells used to force oil and gas to the surface.

It does not cover the Clean Air Act, the Clean Water Act or any other environmental law. It does not cover other aspects of oil and gas, such as drilling or production. And, if an oil company is found to be polluting drinking water, the US EPA can still use SDWA to penalize it.

But to some, particularly the harshest critics of domestic production, the Halliburton loophole turned the oil field into the Wild West.

“Certain groups have used it to suggest there is no federal regulation of fracturing, which is not fully accurate,” said Hannah Wiseman, a Florida State University professor of law who studies regulation of oil and gas. “There are many other ways for states and the federal government to regulate hydraulic fracturing.”

Morgan Lewis via Mondaq | 28 August 2015

EPA Issues Proposed Rules on VOC and Methane Emissions From Oil and Gas Operations

On 18 August, the US Environmental Protection Agency published proposed changes to the new source performance standards (NSPS) and draft amendments to the control techniques guidelines (CTGs) for the oil and natural gas industry, seeking to further reduce volatile organic compound (VOC) and methane emissions by 40–45% from 2012 levels by 2025. NSPS are established for many industry sectors and establish minimum performance standards for new or modified sources of air pollution. CTGs are guidelines recommended by EPA to achieve NSPS. Once CTGs are finalized, states are required to evaluate the CTGs to determine if they must change their regulatory programs to accomplish EPA’s recommendations for controls as presented in the CTGs.

Rigzone | 19 August 2015

Groups Say Proposed EPA Rules Would Add Costly Burden to Oil, Gas Industry

The US Environmental Protection Agency’s (EPA) proposed rule to limit methane emissions from domestic oil and natural gas operations would add costly, duplicative, complex regulations to existing rules that would yield few environmental benefits and threaten to derail the US shale renaissance, energy industry groups said on 18 August.

The EPA said its “common sense” proposed standards—part of the Obama administration’s strategy under President Obama’s Climate Action plan—would reduce emissions of greenhouse gases and volatile organic compounds (VOC) from oil and gas operations by 40 to 45% from 2012 levels by 2025. To achieve this goal, the oil and gas industry would be required to find and repair leaks; capture gas from the completion of hydraulically fractured oil wells; limit emissions from new and modified pneumatic pumps; and limit emissions from several types of equipment used at natural gas transmission compressor stations, including compressors and pneumatic controllers.

As part of the proposal, EPA will update the 2012 New Source Performance Standards to address methane as well as VOC emissions for sources covered in that rule. The oil and gas industry would be required to reduce VOC and methane emissions from hydraulically fractured and refractured oil wells. The proposal also means that methane and VOC reductions downstream from wells and production sites, covering equipment in the natural gas transmission segment of the industry that was not regulated in EPA’s 2012 oil and gas rules.

EPA also intends to clarify and streamline Clear Air Act permitting requirements in states and Indian country. EPA also will propose guidelines for states to reduce VOC emissions from existing oil and gas sources in certain ozone non-attainment areas, as well as mid-Atlantic and Northeast states that are part of the Ozone Transport Region.

Energy industry groups pointed out that the oil and gas industry already uses technology that reduces methane emissions, and that methane emissions from hydraulic fracturing have declined in recent years while US oil and gas production has climbed. The American Petroleum Association (API) noted that methane emission from hydraulically fractured natural gas wells have fallen nearly 79 percent since 2005, and carbon dioxide emission is down to 27-year lows. API credited the declines to oil and gas industry leadership and significant investments in new technologies.