28 June 2016

Sidley Shale and Hydraulic Fracturing Report

Vol. 5, No. 26

Topics discussed in this week’s Report include:

  • District court strikes down BLM rule governing hydraulic fracturing.
  • President Obama signs bill reauthorizing PHMSA.
  • Oregon: State DOT asks Federal Railroad Administration to prohibit most oil trains from traveling in the state.
  • Pennsylvania: Governor signs bill that authorizes new regulatory scheme governing oil and gas development.
  • German house of parliament passes a ban on hydraulic fracturing.

Federal

District court strikes down BLM rule governing hydraulic fracturing. On June 21, the District of Wyoming struck down the U.S. Bureau of Land Management’s (BLM) rule governing hydraulic fracturing operations on public and Native American lands, finding that Congress had never authorized the agency to regulate hydraulic fracturing. The district court cited the Energy Policy Act of 2005’s exemption of hydraulic fracturing operations from regulation under the Safe Drinking Water Act as part of the rationale for its decision. Several Western states, Native American tribes and industry groups had challenged the rule, issued in March 2015, which had established a variety of new federal requirements on top of existing state regulations. The Department of Justice, on behalf of BLM, has already appealed the ruling to the 10th Circuit.

President Obama signs bill reauthorizing PHMSA. The newly enacted Protecting Our Infrastructure of Pipelines and Enhancing Safety (PIPES) Act reauthorizes U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) through fiscal year 2019 and makes several changes to that agency’s powers. The PIPES Act requires PHMSA to prioritize outstanding regulations pursuant to its previous authorizing statute and, for the first time, authorizes the agency to impose “emergency restrictions, prohibitions, and safety measures” on a pipeline if there is an “imminent hazard.” The statute also requires the U.S. Department of Transportation (DOT) to establish safety standards for underground natural gas storage facilities. Congress passed the PIPES Act in part to respond to last year’s methane leak from an underground storage facility in Southern California.

States

Oregon: State DOT asks Federal Railroad Administration to prohibit most oil trains from traveling in the state. In response to the derailment earlier this month in Mosier, Oregon, of a train carrying oil from North Dakota to a refinery in Washington State, the Oregon DOT sent a letter requesting the federal government to temporarily ban oil trains from traveling on railroad tracks in Oregon containing rectangular head timber coach screws. Oregon DOT noted that many of these broken screws were found at the Mosier derailment site and that oil could be safely transported on track containing this type of screw only after the underlying cause of their failure is understood.

Pennsylvania: Governor signs bill that authorizes new regulatory scheme governing oil and gas development. Governor Tom Wolf signed the Pennsylvania Grade Crude Development Act, which repeals any regulations that the state Department of Environmental Protection’s (DEP) Environmental Quality Board (EQB) had approved in 2016 as they apply to conventional oil and gas development and requires the EQB to address conventional and nonconventional oil and gas production in the future in separate rulemakings. The Act also creates the Pennsylvania Grade Crude Development Advisory Council, with which the DEP is required to consult before establishing any policies concerning oil and gas development.

International

German house of parliament passes a ban on hydraulic fracturing. Germany’s lower house of parliament passed a bill that would effectively ban the use of hydraulic fracturing within the country’s borders, except for certain uses of the technology for scientific purposes. The prohibition would have an indefinite duration, although the new legislation instructs the parliament to reevaluate it in 2021. The upper house of parliament will consider the bill in July.

If you have any questions regarding this Report, please contact us.

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