HBW Resources’ Brent Greenfield Summarizes Fed Activities Affecting O&G

On January 8, 2013, the General Services Administration’s Regulatory Information Service Center released a semiannual 2012 summary of the regulations that the Obama administration is considering or reviewing that may have a likely significant economic impact on a substantial number of small entities. In addition, individual federal entities including the Environmental Protection Agency and the Departments of Interior, Commerce, Homeland Security, and Agriculture released their own semiannual regulatory agendas.

A summary of federal actions of interest that may impact onshore and/or offshore oil and gas activity is provided below. Estimated timeframes for action are noted in bold in those instances where such dates were provided.

Bureau of Land Management
• Revise “antiquated” hydraulic fracturing regulations that “do not reflect modern technology” by requiring public disclosure of chemicals used in hydraulic fracturing on public and Indian lands, strengthening well-bore integrity requirements, and addressing flowback water issues
• Revising existing Onshore Orders 3, 4, and 5 to (1) adopt new oil and gas industry standards to reflect current operating procedures used by industry; and (2) require proper verification and accounting practices to be implemented consistently
• Issue new Onshore Order 9 to cover the prevention of waste and beneficial use of the oil and gas resource to ensure that proper royalties are paid on oil and gas removed from federal and Indian lands

Bureau of Ocean Energy Management
• New proposed rule reorganizing BOEM regulations in “more logical” manner and “better clarify[ing]” the agency’s functional responsibilities with respect to lessees and operators
• Final rule updating and streamlining existing OCS leasing regulations to better reflect policy priorities, including incentivizing diligent development; to include provision implementing a two-term leasing process under which leases are issued subject to a requirement that drilling begins within a specific timeframe (or the lease reverts back to the government)
• Update BOEM air quality program in light of new authority over air emissions from OCS sources operating off the north coast of Alaska
• Upon completion of task force reviews of Financial Assurance and Risk Management (FARM) and bonding regulations applicable to OCS lessees and operators, prepare series of updates to existing FARM and bonding regulations
• Rulemaking to adjust liability limits for damages from offshore facilities under the Oil Pollution to reflect consumer price index increases since 1990 and to ensure environmental protection in the event of an incident

Bureau of Safety & Environmental Enforcement
• Finalize revisions of rule on production safety systems and expand use of lifecycle analysis of critical equipment, addressing subsurface safety devices, safety device testing, and requirements for operating OCS production systems
• Update regulations for offshore oil spill response planning and preparedness
• Proposed revisions to the current Safety and Environmental Management Systems rule, collaborating with Coast Guard in the development of the rule
• Proposal to modernize requirements for blowout prevention systems
• Proposed rule to assess leading and lagging performance indicators to indentify OCS risks and near-miss incidents

Office of Natural Resource Revenue
• Simplifying regulations for establishing the value for royalty purposes of oil and natural gas produced on from federal leases by using a “market-based approach…that could dramatically reduce accounting and paperwork requirements and costs on industry and better ensure proper royalty valuation by creating a more transparent royalty calculation method”
• Finalize regulations governing collection of delinquent royalties, rentals, bonuses, and other amounts due under federal and Indian oil, gas, and other mineral leases
• Address oil valuation for Indian lands through negotiated rulemaking process involving key stakeholders in order to increase royalty certainty

Fish & Wildlife Service
• Proposed rule to impose “reasonable controls on operations that affect federally owned or controlled lands and/or waters” by ensuring that all operators conducting oil or gas operations on National Wildlife Refuge System lands do so in a manner that prevents or minimizes damage to the lands, visitor values, and management objectives (ANPRM: January 2013)
• Regulations to carry out responsibilities for administering National Wildlife Refuge System, such as the development of Comprehensive Conservation Plans, acquisition planning, and implementation of “Conserving the Future” vision
• Rules to list, delist, and reclassify species and designate critical habitat for certain listed species set forth by the Multi-District Litigation
• Rules to “transform” the process for listing species and designating critical habitat
• Rules revising the timeframe for issuance of economic analyses related to critical habitat designations
• Rules clarifying definitions of “critical habitat” and “destruction or adverse modification”
• Rules to “improve” consultation process regarding the issuance of incidental take statements
• “Improvements” to critical habitat designation process
• Revision of list of migratory bird species based on new information

National Marine Fisheries Service
• Rulemaking to address Gulf of Mexico Fishery Management Council proposal to designate offshore oil and gas structures as essential fish habitat (Advanced NPRM: January 2013)
• Designate critical habitat for North Atlantic and North Pacific right whales
• Rulemaking to address potential changes to regulations governing the issuance of Marine Mammal Protection Act permits for scientific research and enhancement activities and implementation of a “permit application cycle” for all MMPA permit application submissions and processing (NPRM: May 2013)
• Proposed rule to renew existing requirement that imposes speed restrictions of 10 knots for all vessels 65 feet or greater in length in certain locations and at certain times of the year along the U.S. east coast of the Atlantic seaboard; designed to reduce threat of ship collisions with North Atlantic right whales (NPRM: February 2013)

• Advanced Notice of Proposed Rulemaking on the reporting of hydraulic fracturing chemicals under the Toxic Substances Control Act (May 2013); intention to initiate stakeholder process on the design and scope of such reporting
• Proposed decision on whether to retain or revise the national ambient air quality standards for ozone (NPRM: October 2013; Final rule: September 2014)
• Rulemaking to address (1) regulation of hazardous air pollutant emissions from petroleum refinery sources that are subject to maximum achievable control standards; and (2) new source performance standards for petroleum refineries whose construction, reconstruction, or modification commenced after 5/14/2007 (NPRM: March 2013; Final rule: December 2013)
• Proposed rule addressing State Implementation Plan requirements for implementation of the 2008 National Ambient Air Quality Standards for ozone (NPRM: April 2013)
• Rulemaking to address work practice standards related to flare performance and efficiency at petroleum refineries (NPRM: November 2013)
• Rulemaking on the potential revision of National Oil and Hazardous Substances Pollution Contingency Plan to address the efficacy, toxicity, environmental monitoring, authorization, and use of dispersants and other spill mitigating substances (NPRM: March 2013)
• In conjunction with the Army Corps of Engineers, development of proposed clean water protection rule addressing which water bodies are subject to the Clean Water Act
• Rulemaking on criteria and standards for cooling water intake structures, including proposed controls intended to reduce fish mortality (Final rule: May 2013)

Coast Guard
• Interim final rule on the design, manning, carriage of personnel, and related topics for offshore supply vessels of at least 6,000 gross tonnage to ensure the safe carriage of oil, hazardous substances, and individuals and crew (April 2013)
• Final rule that (1) requires owners or operators of non-tank, self-propelled vessels of 400 gross tons or greater that operate on navigable U.S. waters and carry oil of any kind as fuel for main propulsion to prepare and submit oil spill response plans; and (2) updates International Shipboard Oil Pollution Emergency Plan requirements that apply to certain nontank and tank vessels (April 2013)
• Regulations requiring an owner or operator of a marine transportation-related facility transferring bulk hazardous substances to develop and operate in accordance with an approved response plan
• Regulations 1) requiring an owner or operator of a tank vessel carrying hazardous substances to develop and submit to Coast Guard a response plan and operate in accordance with the plan; and (2) updating shipboard marine pollution emergency plans for noxious liquid substance requirements that apply to certain tank and nontank vessels
• Final rule amending regulations on vessels carrying oil, oil pollution prevention, oil transfer operations, and marine environmental protection regarding oil tank vessels in order to reflect changes to international oil pollution standards (MARPOL Annex 1); would also update shipping regulations to require Material Safety Data Sheets

Forest Service
• To publish for comment internal guidance on how to implement the Land Management Planning rule issued in April 2012; directives will “enable” National Forests to begin revising their management plans under the new rule
• Development of Ecological Restoration Policy to recognize adaptive capacity of ecosystems, including the role of natural disturbances and uncertainty related to climate and other environmental change; would provide definition of “restoration”