Monday, January 29, 2018

Shale Law Weekly Review - January 29, 2018

Written by:
Jacqueline Schweichler - Education Programs Coordinator
Errin McCaulley - Research Assistant

The following information is an update of recent local, state, national, and international legal developments relevant to shale gas.

Federal Lands: California Sues BLM for Repeal of Hydraulic Fracturing Rule
On January 24, 2018, California filed a lawsuit against the Bureau of Land Management (BLM) over BLM’s repeal of its 2015 rule regarding hydraulic fracturing operations on federal lands. The 2015 rule, among other things, established new requirements concerning wellbore integrity, water quality, and public disclosure of chemicals used in the hydraulic fracturing process. On March 28, 2017, President Trump issued Executive Order 13,783 (82 Fed. Reg. 16,093) ordering the Secretary of the Department of the Interior to review the 2015 rule. Citing high compliance costs, BLM concluded the 2015 rule was unjustified and rescinded the rule on December 29, 2017. In its complaint, California argues BLM’s repeal of the 2015 rule violates BLM statutory mandates, ignores environmental considerations relating to hydraulic fracturing, and violates several federal statutes, including the Administrative Procedure Act.

Pipelines: Louisiana Court Rules that Record Laws Do Not Apply to Bayou Bridge Pipeline
On January 25, 2018, the U.S. District Court for the Middle District of Louisiana refused to compel Bayou Bridge Pipeline LLC to turn over  pipeline project records because they are a private, for-profit company, according to Pipeline & Gas Journal. According to the article, the judge states there are no public funds at issue and, therefore, public record laws don’t apply here. The article also states that the judge will allow fifteen days for the plaintiffs to amend their complaint. The lawsuit was brought by several environmental groups that are concerned that the Bayou Bridge pipeline will negatively affect the health of the forested swamps within the Atchafalaya Basin. In their complaint, the environmental groups argue that the permits and authorizations issued by the Army Corps of Engineers are invalid.

Water Quality: Wyoming Landowners Reach Settlement With Encana Over Groundwater Contamination Lawsuit
On January 24, 2018, a Wyoming family reached a settlement with Encana Corporation in a case regarding alleged well water contamination, according to Star Tribune. The case was filed in 2014 by Jeff and Rhonda Locker who allege that Encana negligently drilled oil and gas wells in the vicinity of the Locker’s home, causing their well water to become contaminated (Locker et al v. Encana Oil & Gas Inc, 1:14-CV-00131). The Lockers obtained water samples from their well when they purchased their family farm in 1988 and later in 1992. The second water sample showed that the total dissolved solids, sulfate concentrations, and sodium concentrations had increased almost ten-fold. Encana operates natural gas wells in the oil and gas reservoir under the Locker’s land, known as the Pavillion Field. According to the Star Tribune article, details of the settlement have not yet been released.

Air Quality: EPA Issues New Guidance Memorandum Changing Hazardous Air Pollutant Standards
On January 25, 2018, the U.S. Environmental Protection Agency (EPA) announced that the reclassification of major sources of hazardous air pollutants in a new guidance memorandum. The EPA is withdrawing the “once in, always in” policy under section 112 of the Clean Air Act which required major sources to remain subject to the control standards even if they reduced their emissions below the defined standards. Under the new guidance memorandum, “sources of hazardous air pollutants previously classified as ‘major sources’ may be reclassified as ‘area’ sources when the facility limits its potential to emit below major source thresholds.” Major sources are defined as sources that emit at least 10 tons per year of hazardous air pollutants.

Production and Operation: EIA Releases Reports on Natural Gas Consumption and Costs for 2018 and 2019
On January 25, 2018, the U.S. Energy Information Administration (EIA) announced that 2018 and 2019 natural gas consumption in the U.S. is expected to increase while natural gas and crude oil prices remain constant.  For 2018, residential and commercial natural gas consumption is expected to increase by 1.3 Bcf/d and consumption will be similar in 2019. In addition, EIA expects that the increase in dry natural gas production will exceed domestic consumption of natural gas during this time period. Prices for U.S. gasoline at regular retail are forecasted to average $2.57/gal in 2018 and $2.58/gal in 2019. Crude oil prices are expected to average $60 per barrel in 2018 and $61/barrel in 2019.

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