Enertia Software

February 2017 Industry Digest

Bumble Bee Is Listed As Endangered Species

WASHINGTON–The U.S. Fish & Wildlife Service has declared the rusty patched bumble bee (RPBB) an endangered species, although the Jan. 11 Federal Register announcement says the agency is not designating any critical habitat at this time because “the information sufficient to perform a required analysis of the impacts of (habitat) designation is lacking.”

USFWS says the RPBB is the first bumble bee in the United States and the first bee of any kind in the lower-48 states to be listed as endangered.

Once abundant across 28 states from Connecticut to South Dakota, the District of Columbia and two Canadian provinces, according to the agency, RPBB populations have declined 87 percent since the late 1990s, leaving “small, scattered populations” in 13 states and one province. USFWS says that since 2001, RPBBs have been reported in Illinois, Indiana, Iowa, Maine, Maryland, Massachusetts, Minnesota, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, Wisconsin, and Ontario.

USFWS attributes the bees’ decline to loss of habitat, disease and parasites, use of pesticides, climate change, and extremely small population size.

In comments opposing an endangered listing, the Independent Petroleum Association of America says it highlighted the lack of scientific and commercial data. In comments it filed last year, IPAA suggested USFWS failed to effectively assess the RPBB’s population by relying on “inappropriate and unreliable data,” and by basing its evaluation on speculation rather than facts.

IPAA says it also suggested USFWS issue a special rule to help conserve the RPBB without placing unnecessary restrictions on commercial activities that have no significant impact on the bee. Instead, IPAA says it urged the service to work with the state, local and industry partners to conserve the RPBB without limiting economic activity.

The Federal Register notice indicates USFWS is still working on a recovery plan, which when final will be available on its website at http://www.fws.gov/endangered.

BLM Offers Draft Plan To Protect Sage Grouse Across 10 Million Acres

WASHINGTON–As part of its efforts to conserve habitat vital to the greater sage grouse population in Western states, the Bureau of Land Management says it is releasing a draft proposal to withdraw a subset of lands from future mining claims.

The agency’s draft environmental impact statement covers 10 million acres of federal locatable minerals in areas crucial to the greater sage grouse in six states: Idaho, Montana, Nevada, Oregon, Utah and Wyoming. It analyzes five alternatives, ranging from no action to withdrawing all 10 million acres.

BLM says it is accepting public comments on the proposal through March 30.

“We appreciate the input we have received from states, tribes and other important stakeholders to help develop this draft analysis of the proposed mineral withdrawal,” says Kristin Bail, BLM assistant director for resources and planning. “We look forward to working closely with the public in the coming months as we finalize a proposal to protect important greater sage grouse habitat from potential future disturbance resulting from mining claims.”

The bureau announced the proposed withdrawal in September 2015 as part of its landscape-scale effort to prevent the greater sage grouse from being listed under the Endangered Species Act, BLM says. In addition to public meetings in the six Western states, the bureau incorporated a mineral resource assessment prepared by the U.S. Geological Survey to help develop one development scenario.

Alongside the draft EIS, BLM published a notice of amended proposed withdrawal that would add 388,000 acres to the 10 million acres withdrawn for 20 years under a Sept. 24 notice. The bureau says those additional lands represent a Nevada proposal to swap areas of high mineral development potential within sagebrush focal areas for acreage outside them.

BLM states that neither the proposed segregation nor any subsequent withdrawal will prohibit ongoing or future mining exploration or extraction operations on valid pre-existing claims.

The plan is available at www.blm.gov/programs/fish-and-wildlife/sagegrouse/blm-sagegrouse-plans/minerals-withdrawals.

Kansas Landowner OKs Conservation For LPC

BOISE, ID.–The Western Association of Fish & Wildlife Agencies says it has finalized permanent conservation agreements with a private landowner to conserve 1,781 acres of lesser prairie chicken habitat in south-central Kansas, the first such agreement in the mixed-grass prairie region secured as part of the Lesser Prairie Chicken Rangewide Plan.

According to WAFWA, the conserved acreage is native rangeland used for livestock production, an historical use that will continue. The association adds the property is within one of the highest-priority LPC conservation areas identified in the rangewide plan.

The transactions include a conservation easement purchased by WAFWA and held by Pheasants Forever that legally restricts development and activities detrimental to the bird’s habitat, the association describes. WAFWA adds it has established an endowment that will provide the landowner with sufficient payments to implement a LPC conservation plan in perpetuity, and ensure the property remains a working cattle ranch.

“It took a lot of work on the part of WAFWA, Pheasants Forever and ourselves to find a balance between the needs of the LPC and maintaining historical use of the land,” says Tom Hammond, manager of the property. “The result is an innovative approach that acknowledges and rewards landowners for permanently conserving large tracts of habitat, while maintaining the integrity of the land for the long-term benefit of the landowner and the species.”

The rangewide plan was developed to ensure LPC conservation by providing a mechanism for voluntary cooperation by landowners and industry, with funding coming from voluntary mitigation payments by industry partners, including oil and natural gas producers, enrolled in the plan, WAFWA reports.

Obama Blocks Activity On Public Lands In Three Western States

WASHINGTON–During his final weeks in office, President Obama and his Department of Interior moved to stymie mineral development on public lands in Utah, Nevada and Montana.

With regard to Utah and Nevada, Obama blocked development by creating a pair of new national monuments: The Bears Ears National Monument in Utah, and the Gold Butte National Monument in Nevada. According to published reports, Bears Ears covers 1.35 million acres, and Gold Butte spans 300,000 acres. Existing authorized land uses that are environmentally benign may continue, as can valid existing rights for oil, gas and mining operations, as well as utility corridors and military training operations, the reports indicate.

According to the press accounts, a coalition of Native American tribes urged the administration to make the designations, which it did on Dec. 28.

A couple weeks later, on Jan. 10, the Bureau of Land Management under Obama’s Department of Interior canceled the final two oil and gas leases in the Badger-Two Medicine area within the Lewis and Clark National Forest in Northwest Montana. According to DOI, the cancellations address outstanding concerns about the potential for oil and gas development in a culturally and ecologically important area. Badger-Two Medicine is a 130,000 acre area, bounded by Glacier National Park, the Bob Marshall Wilderness, and the Blackfeet Indian Reservation. The canceled leases were issued in the 1980s, but there has been no drilling in the area.

Montana Petroleum Association Executive Director Alan Olson blames decades of political maneuvering by environmental groups and tribes for the lack of activity. “The announcement to cancel the remaining oil and gas exploration leases in the Badger Two Medicine comes as no surprise,” he conveys. “The leases are just another casualty of the Obama administration’s politicized energy agenda.”

In 2016, Interior Secretary Sally Jewell cancelled 16 leases in the area, which were held by Solenex LLC and Devon Energy. The newly cancelled leases are held by J.G. Kluthe Trust of Nebraska and W.A. Moncrief Jr. of Texas.

“We are proud to have worked alongside the Blackfeet Nation and the U.S. Forest Service throughout this process to roll back decades-old leases and reinforce the importance of developing resources in the right way and the right places,” relates Interior Secretary Sally Jewell. “The cancellation of the final two leases in the rich cultural and natural Badger-Two Medicine Area will ensure it is protected for future generations.”

EPA Agrees To Review Oil, Gas Waste Rules

WASHINGTON–The U.S. District Court for the District of Columbia on Dec. 28 signed a consent decree between the U.S. Environmental Protection Agency and a coalition of environmental organizations, requiring the agency to review and potentially update its rules for handling oil and gas wastes.

The consent decree is the result of a lawsuit, Environmental Integrity Project et al. v. McCarthy, which the environmental groups filed in May. The lawsuit alleged EPA “failed to meet continuing nondiscretionary duties under the Resources Conservation and Recovery Act . . . to review and revise regulations and guidelines to keep up with this growing source of wastes, and the threats these wastes pose to human health and the environment” (AOGR, June 2016, pg. 14).

The consent decree signed by U.S. District Judge John D. Bates obligates EPA, no later than March 15, 2019, to either begin a rule making to revise its Subtitle D regulations pertaining to oil and gas wastes, 40 CFR Part 257, or make a determination that it is not necessary to revise its regulations. If EPA determines a rule making is required, the consent decree mandates a final rule by July 15, 2021.

A statement from the Environmental Integrity Project (EIP) notes that the lawsuit challenges the disposal of “fracturing wastewater” in underground injection wells. It also urges EPA to ban the spreading of fracturing wastewater onto roads or fields, and “to require landfills and pits be built with adequate liners and structural integrity to prevent spills and leaks.”

Joining EIP in the lawsuit were the Natural Resources Defense Council, Earthworks, Responsible Drilling Alliance, San Juan Citizens Alliance, West Virginia Surface Owners’ Rights Organization, and the Center for Health, Environment and Justice.

BOEM Hits Pause On New Requirements For Financial Assurance

WASHINGTON–Oil and gas industry representatives are applauding a decision by the Bureau of Ocean Energy Management to postpone by six months new financial assurance requirements for facilities on the country’s Outer Continental Shelf. The higher bonding requirements, set in BOEM’s Notice to Lessees No. 2016-N01, Requiring Additional Security, regulate a lessee’s obligations for decommissioning wells, platforms and pipelines on the OCS.

In a Jan. 6 announcement, BOEM suggests lease and/or grant obligations with more than one responsible party entail less programmatic risk, and acknowledges the challenges and time requirements associated with arranging financial matters within multiparty business relationships. Moreover, it allows, since non-sole-liability properties may include several co-lessees and prior interest owners, their existing financial arrangements may require BOEM to assess the extent to which it can consider those in assessing the need for additional security.

“Therefore, in order to provide BOEM and industry the opportunity to focus on providing additional security for sole liability properties, and to allow an opportunity for additional time and conversation . . . regarding issues that arise in the context of non-sole-liability properties, BOEM will extend the implementation timeline for NTL 2016-01 by an additional six months as to leases, rights of way, and rights of use and easement for which there are co-lessees and/or predecessors in interest, except in circumstances in which BOEM determines there is a substantial risk of nonperformance of the interest holder’s decommissioning liabilities,” the agency states.

Among those lauding the decision are the California Independent Petroleum Association, Independent Petroleum Association of America, and the National Ocean Industries Association. CIPA indicates that staying additional bonding insurance for decommissioning recognizes tough market conditions for U.S. companies. “The announcement was welcome news, considering that CIPA, in conjunction with IPAA, has made this issue one of our top priorities for the offshore space,” the group says. “Together, we will work with the Trump administration to ensure new appointees are properly educated about the ramifications this NTL will have on our member companies.”

IPAA, NOIA, the Louisiana Mid-Continent Oil & Gas Association, and the Gulf Economic Survival Team filed Freedom of Information Act requests with BOEM and the Department of Interior regarding the bureau’s revised estimates for well plugging and abandonment and platform decommissioning costs in the Gulf (AOGR, Dec. 2016, pg. 22).

EPA Seeks To Add Gas Processing To TRI Requirements

WASHINGTON–In a notice published in the Jan. 6 Federal Register, the Environmental Protection Agency proposed a rule change for natural gas processors that specifically affects natural gas liquids extraction facilities and will categorize them in the Toxics Release Inventory under the Emergency Planning and Community Right Right-to-Know Act and the Pollution Prevention Act.

According to the agency, the proposal increases public information on releases and other waste management of listed chemicals for companies that meet the TRI threshold of 10 full-time employees and at least one TRI-listed chemical in volumes that exceed applicable thresholds, of which EPA projects there are at least 282 in the United States.

The move originated with an Oct. 24, 2012, petition by the Environmental Integrity Project and 18 other organizations, pursuant to section 553(e) of the Administrative Procedure Act, requesting EPA exercise its discretionary TRI sector authority to add oil and gas extraction to the scope of industrial sectors covered by TRI reporting requirements. On Oct. 22, 2015, EPA granted, in part, the petition insofar as it opted to commence the rule-making process to add natural gas processing facilities to TRI’s scope.

Press accounts indicate that the EPA says a triennial survey in 2012 by the U.S. Energy Administration counts 517 U.S. gas processing facilities in the lower-48 states, of which EPA estimates more than half probably meet TRI reporting thresholds for at least one of the 21 TRI chemicals.

Court Backs Contractor In Gulf Fight With BSEE

WASHINGTON–A federal district judge has ruled the Bureau of Safety and Environmental Enforcement lacks the statutory authority to enforce environmental or safety regulations against a nonlease or nonpermit holder.

Court documents say two employees for Gulf Island Operating Company Inc., working as contractors for an operator in the Gulf of Mexico, were transferring chemicals from a boat to a platform in June 2013 when the receiving tank overflowed and the chemicals ignited. The workers jumped from the burning platform into the Gulf and were rescued.

According to the National Ocean Industries Association, the operator was issued a notice of incident of noncompliance (INC) days after the incident, and Gulf Island was cited later.

In its lawsuit filed in the U.S. District Court, Western District of Louisiana, Lafayette Division, Gulf Island contends BSEE exceeded or violated its authority under the Outer Continental Shelf Lands Act. It claims the federal agency lacks authority to enforce OCSLA regulations against contractors, and asks the court to order BSEE to comply with the act and stop citing contractors.

The judge’s decision holds that the plain language of the OCSLA limits BSEE authority to lease holders and permit holders, and so any fines or penalties against Gulf Island are invalid. However, the decision is limited to this case, with the judge stating he would not compel BSEE to comply with OSCLA by not issuing INCs to contractors. “This court finds the request is overly broad. The legislature is free to act to extend the reach of the statute at any time,” the judge notes.

BLM Amends Its Rule For Oil Shale Royalties

WASHINGTON–The U.S. Bureau of Land Management released a final rule in January that designates royalty rates set in 2008 for oil shale as minimum rates, and that revises environmental stipulations for converting a research, development and demonstration (RD&D) lease to a commercial oil shale lease.

In its rule, which may be accessed through its website at www.blm.gov, BLM recalls that in 2008 it promulgated regulations for oil shale exploration, leasing and operations pursuant to the Energy Policy Act of 2005. In a settlement to a lawsuit filed by environmental groups, then Interior Secretary Ken Salazar agreed in 2011 to propose amendments to the oil shale regulations, which were released by BLM in March 2013.

This final rule, the agency continues, “makes explicit the BLM’s discretion to deny converting an RD&D lease to a commercial lease, or to withhold approval of a plan of development, based on impacts to the environment or natural resources. The amendments require plans of development to include plans to protect water resources, an airshed review based on reasonably available data, an integrated waste management plan, and an environmental protection plan.”

BLM notes its 2008 rule required a commercial oil shale operation to pay a 5.0 percent royalty during its first five years of production, increasing by 1.0 percent a year beginning in year six to a maximum of 12.5 percent in year 13. The new rule, the agency says, keeps the annual escalator clause for years 6-12, but allows the secretary to set the initial rate on a lease-by-lease basis.

“This allows (DOI) to consider all relevant factors, including geology, technology, costs, and market prices for oil and gas,” the agency explains. “Until there is a commercial domestic oil shale industry, we only can speculate about what royalty rates those factors would support. There are foreseeable circumstances in which a 5.0 percent royalty rate could be appropriate and others in which that rate would be too low.”

Obama White House Sets Vehicle GHG Standards

WASHINGTON–In its last week in office, the Obama administration announced carbon pollution standards for automobiles and light trucks would remain unchanged through 2025.

Gina McCarthy, administrator for the U.S. Environmental Protection Agency, says the final determination finds that a wide variety of effective technologies are available to reduce greenhouse gas emissions from those vehicles, and that automakers are well positioned to meet federal standards through model year 2025 at lower costs than predicted.

The standards are projected to result in average fleetwide consumer fuel economy sticker values of 36 miles a gallon by model year 2025, 10 mpg higher than the current fleet average, EPA says. McCarthy says the government’s corporate average fuel economy (CAFE) goals are 54.5 mpg for light-duty vehicles, which it says translates to the “sticker figure” of 36 mpg.

“The administrator is retaining the current standards to provide regulatory certainty for the auto industry, despite a technical record that suggests the standards could be made more stringent,” EPA says.

Oklahoma Attorney General Scott Pruitt, President Trump’s nominee to head the EPA, said in his confirmation hearing that the new administration will review the agency’s actions. According to media reports, automakers have been lobbying for an extension of the emissions review process to 2018.

The Heartland Institute says the decision by the Obama White House to finalize the CAFE standards is irresponsible and harmful to U.S. workers and consumers.

“These standards were supposed to be reviewed in April 2018 to determine the feasibility of the rules,” the institute says. “EPA’s decision to implement them now is nothing more than an obvious bad-faith attempt to throw up as many hurdles to the incoming administration as possible. It also will force Americans into smaller, more expensive cars that they do not want.”