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Court Vacates BLM’s Postponement of Obama-Era Waste Prevention Rule 10-10-2017

On October 4, 2017, in a consolidated decision for Sierra Club, et al. v. Zinke, et al., No. 17-cv-03885, and State of California, et al. v. United States Bureau of Land Management, et al., No. 17-cv-03804, the U.S. District Court for the Northern District of California vacated the Bureau of Land Management’s (”BLM”) postponement of BLM’s 2016 final rule entitled “Waste Prevention, Production Subject to Royalties, and Resource Conservation” (the “Waste Prevention Rule”). The district court held that BLM’s postponement did not comply with Section 705 of the Administrative Procedure Act. The decision vacates BLM’s June 15, 2017 notice postponing the Waste Prevention Rule’s January 17, 2018 compliance deadlines pending a decision in Western Energy Alliance et al. v. Secretary of the U.S. Dep’t of the Interior et al, Case No. 16-cv-00280 in the U.S. District Court for the District of North Dakota, in which several industry groups and states have challenged the finalized Waste Prevention Rule’s legal validity. 

BLM’s Waste Prevention Rule, initially promulgated in November 2016, covers a number of methane emissions sources associated with oil and gas production activities on federal lands, including natural gas emissions from venting or flaring, gas leaks from equipment and facilities located at the well site, and well drilling and completions. While the Waste Prevention Rule called for operators to submit “waste minimization” plans by January 2017, the Rule’s leak detection and recovery, emission reduction, and reporting requirements are scheduled to go into effect on January 17, 2018. 
The BLM Waste Prevention Rule is currently in effect and compliance with those portions of the rule with initial compliance deadlines of January 2018 will be required absent additional administrative or judicial action in the interim. Several such actions remain possible, and Department of Interior officials have previously pledged to “suspend, revise or rescind” the rule in light of its “significant regulatory burden.” Primary among these efforts is BLM’s October 5, 2017 proposed rule that would extend the Waste Prevention Rule’s January 2018 deadlines to January 2019. The comment period for this proposed rule is currently open through November 6, 2017, leaving BLM with limited time following the comment period to promulgate a final rule in advance of the January 2018 deadlines. In addition, industry’s judicial challenge to the Waste Prevention Rule in Western Energy Alliance remains pending. Finally, appropriations bill HR 3354, which has passed the House of Representatives and has been placed on the Senate Legislative Calendar, would, if signed into law, prohibit BLM from using its funds to enforce the Waste Prevention Rule.

Scotland Expected to Ban Fracking 10-09-2017

On October 3, 2017 Scotland’s Energy Minister Paul Wheelhouse announced an effective ban on hydraulic fracturing. Hydraulic fracturing had already been prohibited in Scotland under a temporary moratorium in 2015 as a result of campaigns by various environmental and community groups. This was followed by a series of environmental and economic reports on fracking in 2016, as well as a full public consultation in early 2017. The environmental reports found that fracking’s impact on global emissions would be neutral, that the probability of an earthquake that can be felt is small, and that there is “inadequate” evidence to reach firm conclusions regarding the activity’s health impacts. On the economy, the reports determined that fracking could create anywhere from 470 to 3,100 jobs and contribute from £100 million to £4.6 billion to the Scottish economy through the year 2062. Reports aside, the primary driver of the ban appears to be the public consultation, which the energy minister described as showing “overwhelming” opposition. Indeed, 99% of the 60,000 respondents supported the ban. While the decision to ban fracking will not be final until Parliament endorses the ban in a vote after the October recess, commentators predict that the vote will be a formality.

D.C. Circuit Strikes Down EPA’s 90-day Stay – New Standards for Oil & Gas Sector 08-07-2017

On July 3, 2017, in Clean Air Council, et al. v. E. Scott Pruitt, No. 17-1145, the D.C. Circuit struck down EPA’s 90-day stay on the June 3, 2016 final rule entitled “Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources,” which amended and established updated new source performance standards (“NSPS”) for the oil and natural gas sector. This final rule was codified in EPA’s NSPS regulations as Subpart OOOOa to 40 C.F.R. Part 60 or “Quad Oa.” The D.C. Circuit later recalled its mandate in Clean Air Council, et al. v. E. Scott Pruitt, No. 17-1145, giving EPA until July 27, 2017 to file a petition for rehearing or petition for rehearing en banc. On July 31, 2017, after EPA failed to file a timely petition, the D.C. Circuit reissued its mandate. Consequently, all Quad Oa provisions are now in effect.

On June 16, 2017, the United States Environmental Protection Agency (EPA) published a proposed rule that would stay for two years parts of Quad Oa. EPA’s proposed two-year stay was intended to be an extension of the 90-day stay that EPA announced on June 3, 2016 to delay implementation of Quad Oa and that was struck down by the D.C. Circuit. Like the 90-day stay, the proposed two-year stay covers aspects of Quad Oa related to leak detection and reporting requirements for (1) fugitive emissions at well sites and compressor stations and (2) fugitive emissions from pneumatic pumps as well as (3) the requirement of a professional engineer certification in relation to the closed vent system design and capacity for a number of affected facilities (e.g., centrifugal compressors, reciprocating compressors, pneumatic pumps, and storage vessels). If finalized, the proposed two-year stay would effectively suspend Quad Oa’s compliance deadlines. In addition to proposing a two-year stay on these aspects of Quad Oa, EPA’s July 16, 2017 proposed rule would include a review of Quad Oa in its entirety. EPA has held open the June 16, 2017 proposed comment rule period until August 9, 2017 because it received and granted a request for hearing on the proposed rule. EPA held the hearing in question on July 10, 2017.

When the D.C. Circuit issued its mandate, two main deadlines under Quad Oa became effective. First, Quad Oa requires that facilities covered by the rule conduct an initial monitoring survey by June 3, 2017. 40 C.F.R. § 60.5397a(f). Second, Quad Oa requires facilities covered by the rule to submit their initial annual monitoring by 90 days after the “initial compliance period” defined under the rule ended. This compliance period ended, at the latest, on August 2, 2017, meaning that facilities covered by Quad Oa have 90 days from that date to submit their initial annual monitoring report. See 40 C.F.R. §§ 60.5420a and 60.5410a. It remains to be seen (1) whether EPA will finalize its proposed two-year stay before the reporting deadline in Quad Oa passes and (2) whether EPA’s two-year stay withstands judicial scrutiny.

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