09 August 2016

Sidley Shale and Hydraulic Fracturing Report

Vol. 5, No. 32

Topics discussed in this week’s Report include:

  • EPA’s methane rule for the oil and natural gas production sector challenged.
  • Presidential nominees support local regulation of hydraulic fracturing.
  • Group requests changes to chemical disclosure requirements in Montana.
  • UK government announces it is considering a plan to compensate individuals where fracking is conducted.

Federal

EPA’s methane rule for the oil and natural gas production sector challenged. States and industry groups have petitioned for review of the Environmental Protection Agency’s (EPA) methane rule governing the oil and natural gas sector, setting the stage for another court challenge to President Obama’s climate change policies. Multiple petitions for review have been filed challenging the new source performance standards that EPA published on June 3. As previously reported, the new rule sets standards the agency claims will reduce methane emissions, as well as emissions of volatile organic compounds, from a variety of new, modified or reconstructed emission sources in the oil and natural gas source category. In addition, EPA has stated its intention to follow up this new source standard, by setting guidelines for existing sources in the oil and natural gas sector and has issued a draft information collection request (ICR) to start that process. Stakeholders filed comments last week on the ICR, which is subject to further review by EPA and then must be approved by the Office of Management and Budget before it can be issued.

Presidential nominees support local regulation of hydraulic fracturing. At a recent campaign event, Republican presidential nominee Donald Trump stated that while he personally supports oil and gas development using fracking as beneficial to the economy, he believes state and local voters should be able to regulate and ban fracking. Trump’s position represents a departure from the platform of congressional Republicans and many industry groups that have endorsed him for president. Industry groups have contested local regulations, which often seek to prohibit all drilling. The Democratic presidential nominee Hillary Clinton, who has said she supports additional regulation of natural gas development, also stated that she supports state and local regulation of fracking.

States

Group requests changes to chemical disclosure requirements in Montana. A coalition of landowners, environmental groups and health advocates petitioned the Montana Board of Oil and Gas Conservation for greater public disclosure of the chemicals used in hydraulic fracturing operations. The Montana board already requires oil and gas operators to make public disclosures; however, disclosure is not required until after hydraulic fracturing is complete. As is common for states that require disclosures, the current Montana rules also allow operators to withhold information they claim to be a trade secret. The coalition argues that current rules frustrate the purpose of disclosure — to allow residents to accurately evaluate the risks to their property, environmental resources and health. The coalition is seeking greater state oversight of trade secret claims, similar to the regulations in Wyoming. The Montana board will have 60 days to respond to the petition.

International

UK government announces it is considering a plan to compensate individuals where fracking is conducted. The UK government announced it was considering a plan that would provide for direct cash payments from the country’s shale wealth fund to UK households in communities where hydraulic fracturing is conducted. The fund was established in 2014 to set aside a percentage of tax proceeds from hydraulic fracturing for communities where wells are located. UK Prime Minister Theresa May’s government is considering a proposal that would shift the payments from the communities to individual households. Some industry groups indicated their support for the shift, because they believe the cash payments will help stimulate local economies. Environmental groups criticized the plan, likening the payments to bribes and an effort to get around local communities that have rejected hydraulic fracturing, as well as questioning the economic benefit.

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