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What to Expect in 2016 – Federal Environmental Regulatory Outlook for the Oil and Gas Industry

Rough business conditions will continue to buffet the oil and gas industry in the new year. At the time of writing, a barrel of Brent crude oil was priced at $33.51, and natural gas was selling at $2.11 MM/Btu. Industry watchers do not forecast a dramatic turnaround for oil and gas prices anytime soon. This turbulence will be compounded by the many federal environmental regulations and other initiatives that the Obama Administration plans to finalize in 2016 impacting upstream and midstream operations.

The Obama Administration in its first term touted the benefits of domestic oil and gas production for strengthening U.S. energy security and driving job creation, and hailed natural gas as a vital bridge fuel. The Administration identified “expand[ing] safe and responsible domestic oil and gas” as a lynchpin of the White House energy policy in its 2011 “Blueprint for a Secure Energy Future.”1 In his 2012 State of the Union Address, the President specifically recognized shale gas exploration as a vital engine in developing the nation’s vast energy reserves.

After winning a second term, however, the White House quickly moved to put building blocks in place for an aggressive climate change agenda. In 2013, the White House issued its “Climate Action Plan,” followed by the “Strategy to Reduce Methane Emissions” (Methane Strategy) in 2014. Notably, the White House Methane Strategy specifically targeted oil and gas operations as a focus sector for U.S. Environmental Protection Agency (EPA) and Department of the Interior (DOI) regulatory programs.

In its final year, the Obama Administration appears committed to cementing its environmental legacy with an unprecedented and sweeping set of regulations. Both the EPA and DOI are slated to finalize oil and gas regulations in 2016 that will impose significant compliance obligations and costs on regulated facilities. Some highly controversial federal environmental rules are already the subject of intense litigation involving dozens of parties. This litigation will not only affect the rules directly at issue, but also those under development. A clearer picture will emerge this year regarding these lawsuits and any litigation over new environmental rules finalized in 2016.

The industry will also learn in 2016 whether EPA will renew its national enforcement priority focused on the oil and gas sector, continuing heightened federal scrutiny on these operations. Finally, EPA is expected to finalize its landmark study of the relationship between hydraulic fracturing and water resources.

This report will highlight these and other key federal environmental initiatives affecting the oil and gas industry. In this report, the Vinson & Elkins Environmental and Natural Resources Group provides an “insider’s perspective” based on our attorneys’ deep knowledge of the federal government’s activities regarding the oil and gas sector, our Executive Branch contacts, and extensive experience with regulatory and litigation matters. Regulated companies should contact the firm’s Environmental and Natural Resources Group with specific questions regarding any of the matters addressed in this report. To read the full report, click here.

Topics covered in the report include: 

The White House, Blueprint for a Secure Energy Future 5 (Mar. 30, 2011), https://www.whitehouse.gov/sites/default/files/blueprint_secure_energy_future.pdf.

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This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.