26 May 2015

Sidley Shale Gas and Hydraulic Fracturing Report

Vol. 4, No. 21

Topics discussed in this week’s Report include:

  • Industry Trade Associations Seek to Block Implementation of BLM Hydraulic Fracturing Regulations.
  • Texas Prohibits Local Regulation of Oil and Gas Development.
  • North Carolina: Court Halts Issuance of New Hydraulic Fracturing Permits.

Federal

Industry Trade Associations Seek to Block Implementation of BLM Hydraulic Fracturing Regulations. On May 15, 2015, the Independent Petroleum Association of America and the Western Energy Alliance sought a preliminary injunction that would prevent the Bureau of Land Management (BLM) from implementing new regulations for hydraulic fracturing on federal land. The motion contends that the final rule is inconsistent with BLM’s “multiple use mandate,” under which the Congress has directed BLM to manage public lands and their various resource values in a manner that will best meet the present and future needs of the American people. The plaintiffs specifically seek preliminary relief arguing not only that BLM has underestimated the costs the rule will impose, but that the significant additional costs the rule will impose immediately on oil and gas developers could not be recovered later if the plaintiffs’ challenge is subsequently sustained by the court. If a preliminary injunction is not granted, the rule will take effect on June 24, 2015.

States

Texas Prohibits Local Regulation of Oil and Gas Development. On May 15, 2015, Texas Governor Greg Abbot signed a law that gives the Texas Railroad Commission exclusive jurisdiction over oil and gas operations and preempts local ordinances that ban or otherwise restrict hydraulic fracturing. The law, which is effective immediately, was passed in response to a recent ordinance in Denton, Texas that prohibited hydraulic fracturing inside the city limits. The law prohibits all local regulation of subsurface oil and gas operations, but includes limited exceptions that allow municipalities to impose commercially reasonable regulation of surface activities that are incidental to oil and gas development. Several local communities have expressed concern about effect of the new law on setbacks and other long-standing regulations that are applicable to oil and gas development.

North Carolina: Court Halts Issuance of New Hydraulic Fracturing Permits. A North Carolina judge issued a preliminary injunction that prohibits the state’s Mining and Energy Commission from issuing permits allowing oil and gas developers to use hydraulic fracturing in the state. The ruling effectively reinstates a moratorium on hydraulic fracturing in North Carolina. The lawsuit, which was filed by the Haw River Assembly and a local landowner, alleges that the Commission’s membership violates the separation of powers requirement in the North Carolina state constitution, because the legislature appoints a majority of the commissioners. The injunction will remain in place until the North Carolina Supreme Court issues a decision in a similar challenge to the composition of a different state commission.

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

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