Activists Using Misinformation to Kill Fracking in Wayne National Forest

A large billboard has been placed by anti-fracking extremists across from the Wayne National Forest (“the Wayne”) headquarters on U.S. Rt. 33 near Nelsonville, Ohio. The billboard declares, “Frack our national forest? No WAY(ne)!” in stark text next to a picture of an owl and a link to known misinformation site Fracking Exposed, a group connected to the Athens County Fracking Action Network (ACFAN), is renting the billboard. It seeks to discourage federal officials from opening parts of the Wayne to fracking and other deep-shale oil and gas activities. Continue Reading

OSHA Announces New Silica PEL of 50 µg/m3, Gives Fracking Five Years to Comply

Today the U.S. Occupational Safety & Health Administration (“OSHA”) published the new Permissible Exposure Limit (“PEL”) for occupational exposure to respirable crystalline silica (“silica”).  The new standard sets a PEL of 50 micrograms per cubic meter (µg/m3) and an action level (“AL”) of 25 µg/m3.  These are the same levels proposed in 2013.  The final rule provides impacted industries more time to come into compliance than the proposed rule (two years for most industries and five years for hydraulic fracturing operations).  While some industries may be aided by additional time to develop and deploy engineering and work practice controls, additional time will not aid those industries without feasible control options and will not mitigate concerns about the inability to sample exposures as a low level which trigger obligations under the standard.  Most importantly, the new lower PEL does little to further protect workers. Continue Reading

Ruling on Pipeline Agreements in Sabine Chapter 11 Case Indicates Battles That Lie Ahead in Energy Company Bankruptcy Cases

This post is co-authored by Kelley Drye Bankruptcy attorney Ben Feder.

U.S. Bankruptcy Judge Shelley Chapman ruled last week in the chapter 11 case of Sabine Oil & Gas that Sabine could utilize the U.S. Bankruptcy Code to “reject” certain agreements with pipeline operators.  This decision will permit Sabine to walk away from its obligations under the agreements and leave the pipeline operators with nothing but a claim in the bankruptcy case for breach of contract damages (a claim that is likely to be virtually worthless).  It upends the generally held view regarding the nature of these types of agreements, which is that they create cognizable real property interests under applicable state law.  Such real property interests which have far stronger protections in bankruptcy cases than contractual rights.

Sabine, an exploration and production (E&P) company, filed for bankruptcy under chapter 11 of the Bankruptcy Code back in July 2015 in the Southern District of New York.  Similar to most E&P companies, it had arrangements with two midstream gathering and processing (G&P) companies that gathered, treated, transported and processed Sabine’s oil and gas productions.  As is typical with these arrangements (the “midstream agreements”), Sabine agreed to dedicate certain oil and gas production to the G&P companies, and they, in turn, committed at their own expense to construct, operate and maintain for Sabine a system of pipelines and facilities.  Sabine committed under the midstream agreements to deliver certain minimum amounts of oil and gas on an annual basis, or else to make deficiency payments and other fees over a term of ten years.  The midstream agreements specifically provided that they are covenants intended to “run with the land.”

After filing for bankruptcy, Sabine sought to reject the midstream agreements.  Section 365 of the Bankruptcy Code permits debtors to walk away from unexpired contracts and leases if they can demonstrate that such agreements are burdensome to their bankruptcy estates and that doing so would be in the best interests of the debtor and all of its creditors.  This is a crucial power under the Bankruptcy Code for troubled companies that are seeking to reorganize.   Continue Reading

Dunes Sagebrush Lizard Decision Upholds Importance of Conservation Agreements

On March 1, the oil and gas industry won a significant victory when the Court of Appeals for the D.C. Circuit upheld the U.S. Fish & Wildlife Service’s (“FWS”) decision that conservation agreements supported by the industry obviated the need to list the dunes sagebrush lizard under the Endangered Species Act (“ESA”).  Conservation Agreements are a critical means for responsibly developing oil and gas plays while protecting species in the surrounding ecosystem. Continue Reading

OSHA Issues Hazard Alert on Tank Gauging

The Occupational Safety and Health Administration (OSHA) and the National Institute for Occupational Safety and Health (NIOSH) have issued a new hazard alert for health and safety risks to workers who manually gauge or sample fluids on production and flowback tanks at oil and gas production sites. The alert, entitled Health and Safety Risks for Workers Involved in Manual Tank Gauging and Sampling at Oil and Gas Extraction Sites, offers recommendations to employers to help them protect workers that open tank hatches to manually gauge or sample hydrocarbon levels. Continue Reading

White House Completes Review of Wastewater Barge Pre-Rule

The Obama administration has completed its review of the Coast Guard’s pre-rule on the bulk transport of wastewater from hydraulic fracturing operations. The pre-rule itself has not been released, but its title (“Carriage of Conditionally Permitted Shale Gas Extraction Waste Water in Bulk”) is the same as that of a policy letter published by the Coast Guard in October 2013 and never finalized. That letter suggested a structure for permitting the bulk transport of shale gas production wastewater by barge owners. During its nine-month review, which began on May 14, 2015, no outside entities met with the Office of Management and Budget to discuss the pre-rule. However, the 2013 policy letter received more than 1,000 public comments, many adamantly opposed to the proposed regulatory regime.

With assistance from Andrew McNamee

Sierra Club Sues Over Oklahoma Earthquakes

The Sierra Club has filed suit against three oil and gas companies operating in Oklahoma, alleging that the companies’ wastewater injection practices were behind the recent uptick in earthquake activity in the state. The petition, which was filed in the U.S. District Court for the Western District of Oklahoma on February 16, seeks relief under the federal Resource Conservation and Recovery Act. It named Chesapeake Operating LLC, Devon Energy Production Co. LP, and New Dominion, LLC as defendants, and asked that the companies reduce the amount of production waste being injected into the ground to “levels that seismologists believe will not cause or contribute to increased earthquake frequency and severity.”

With assistance from Andrew McNamee

UPDATE: Texas RRC Agrees Earthquakes Not Caused by EnerVest, XTO Injection Wells

In a November 3 decision, the Texas Railroad Commission (RRC) agreed with an administrative law judge (ALJ) that two wastewater injection wells, one operated by EnerVest Operating LLC and the other by Exxon Mobil Corp. subsidiary XTO Energy Inc., did not cause a series of earthquakes near the towns of Reno and Azle from late 2013 through spring of 2014. (See our coverage of the EnerVest case here and the XTO case here.) The Commissioners’ unanimous decision found there was not enough evidence to link the wells to the seismic activity, and determined that the companies should be allowed to maintain their well permits. Continue Reading

Compliance with the Clean Air Act Increasingly Unlikely to Protect Companies from Nuisance Suits

A recent decision out of the Sixth Circuit found that the Clean Air Act (“CAA”) does not preempt common law claims brought against an emitter based on the law of the state in which the emitter operates. This decision, Merrick v. Diageo Americas Supply, Inc., No. 14-6198, 2015 WL 6646818 (6th Cir. Nov. 2, 2015), highlights the increasingly fractured regulatory landscape of preemption protection from state-law nuisance claims. Continue Reading