Flaring has the attention of RRC, Producers and Stakeholders

Flaring has the attention of the Texas Railroad Commission (RRC), oil and natural gas companies and stakeholders such as royalty owners, investors and environmental groups. Requests for RRC authorization of flaring has been on the increase in the Permian Basin. As a result, a number of interested parties are looking at regulatory changes. Some interested parties voice concern that a valuable resource is being wasted, others state that the definition of natural gas ‘waste’ is too limited, still others are concerned about methane emissions and some all of the above. Though the interested parties may not always be aligned, there is a general sense that regulatory amendments are needed.
Continue Reading RRC Flaring Rules – Still Up in the Air

The Treasury Department and IRS have issued long-awaited Proposed Regulations regarding the tax credit for carbon capture and sequestration under Section 45Q of the Code1 (the “section 45Q credit”).

Generally, the amount of the section 45Q credit and the party that is eligible to claim the credit depend on whether the taxpayer captures qualified carbon oxide using carbon capture equipment originally placed in service at a qualified facility before February 9, 2018 (“Old 45Q Facility”), or on or after February 9, 2018 (“New 45Q Facility”), and whether the taxpayer disposes of the qualified carbon oxide in geological storage (“sequestration”), uses it as a tertiary injectant in a qualified enhanced oil or natural gas recovery project (“EOR”), or utilizes the carbon oxide in certain specified ways (“utilization”). The effective date of the amendments to the Code extending and expanding the section 45Q credit is February 9, 2018 (the “Credit Effective Date”). The Credit Effective Date appears throughout the Proposed Regulations to distinguish between Old 45Q Facilities and New 45Q Facilities and establishing the effective date for certain provisions.
Continue Reading Treasury Issues Proposed Regulations on Section 45Q Tax Credit for Carbon Capture

In its ruling today in Atlantic Richfield Company v. Christian, the Supreme Court upheld a decision by the Montana Supreme Court allowing owners of contaminated residential properties at one of the nation’s largest Superfund sites to pursue state law claims for damages in the form of restoration of their properties beyond the cleanup mandated by the U.S. Environmental Protection Agency, rejecting claims by the defendant in the state court action that these claims were barred by the terms of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The Court also held that the property owners, although never pursued by EPA to contribute to any of the CERCLA response costs at the site, nonetheless were “potentially responsible parties” within the meaning of the statute, and therefore would be required to obtain approval from EPA for any additional cleanup arising under state law.
Continue Reading Supreme Court Green Lights State Law Claims for Broader Cleanup at Superfund Sites, but only with EPA’s OK

Commentary regarding the US Environmental Protection Agency’s (EPA) Office of Enforcement and Compliance Assurance (OECA) memorandum articulating a temporary policy applying enforcement discretion in light of the COVID-19 pandemic has been significant this week. Proponents and critics alike have misinterpreted the scope of the policy as reaching far beyond what OECA’s memorandum actually stated. As we stated in Deciphering EPA’s Temporary Enforcement Discretion Policy for COVID-19 and as the EPA has now confirmed, the “temporary policy” of exercising enforcement discretion for noncompliance “resulting from the COVID-19 pandemic” is not a free pass to pollute, despite opponent’s musings to the contrary.

Continue Reading Misconceptions About EPA’s Temporary Enforcement Discretion Policy for COVID-19

Regulated industry has been expressing significant concern about disruption as a result of the COVID-19 pandemic and seeking assurance from the US Environmental Protection Agency (EPA) that the extraordinary circumstances across the United States would be taken into account in the event of any unanticipated noncompliance. Yesterday, March 26, 2020, EPA’s (EPA) Office of Enforcement and Compliance Assurance (OECA) Assistant Administrator Susan Parker Bodine responded to these concerns with the issuance of a memorandum addressing the impact of the current global COVID-19 pandemic on EPA’s enforcement program. In it, OECA commits EPA to a “temporary policy” of exercising enforcement discretion for noncompliance “resulting from the COVID-19 pandemic,” provided that regulated entities follow the steps required in the policy.

Continue Reading Deciphering EPA’s Temporary Enforcement Discretion Policy for COVID-19

As the country responds and adapts to unprecedented change as a result of the COVID-19 pandemic, companies are, understandably, attempting to sort out what these shifts mean for operations now and in the near future. One operational aspect that companies must address is management of environmental compliance programs and responsibilities. Although it can be challenging to maintain compliance with environmental requirements during periods of uncertain or disrupted operations, doing so remains necessary as environmental regulatory requirements remain in force, despite disruptions to government functions. The current operational and regulatory climate is fluid and changing daily (at least), making it incumbent upon companies to remain vigilant in monitoring for updates and understanding the status of rules and requirements at any given moment. The keys to successfully navigating compliance challenges during the pandemic are preparedness, situational awareness, and early and frequent communication with regulatory agencies as appropriate, with the assistance of counsel as needed.

Continue Reading Maintaining Environmental Compliance During the Coronavirus Pandemic

All three branches of the federal government are currently considering the question of whether the Migratory Bird Treaty Act (MBTA) prohibits the take of protected birds that is incidental to some otherwise lawful activity. The latest development is a proposal by US Fish and Wildlife Service (USFWS or Service) to issue a regulation expressly defining the scope of the MBTA to exclude take “that results from, but is not the purpose of, an action (i.e., incidental taking or killing).” 85 Fed. Reg. 5915 (Feb. 3, 2020). This proposal is the latest effort by the USFWS to bring clarity and certainty to a question that has been the subject of dispute for years and is currently both the subject of pending lawsuits and proposed legislation before Congress. If adopted, the rule should bolster the current administration’s effort to defend its interpretation of the statute, but the question is likely to be litigated further, assuming Congress does not intervene (seemingly unlikely for now).
Continue Reading USFWS Makes Another Move to Exclude Incidental Take from the Migratory Bird Treaty Act

On December 20, 2019, the Supreme Court of The Netherlands ruled in a climate case brought against the state by Urgenda, a non-governmental organization for “a fast transition towards a sustainable society.” The Court of Appeal and the Court of The Hague had previously ruled on Urgenda’s claims. In both instances, the courts granted Urgenda’s claim that the Dutch state should reduce emissions of CO2 from its territory by at least 25% by the end of 2020. The Supreme Court rejected the state’s appeal and confirmed the ruling.
Continue Reading Dutch Supreme Court’s Climate Judgement

Texas policymakers continue to focus on produced water beneficial reuse. On January 22, 2020, the Texas Senate Committees on Natural Resources and Economic Development and Water and Rural Affairs held a joint hearing to consider Lt. Governor Dan Patrick’s 2019 interim legislative charge related to one of the most pressing matters facing the state—future water supply issues. This interim charge requires that these legislative committees make recommendations to promote the state’s water supply, including the development of new sources.
Continue Reading Texas Policymakers Continue Focus on Produced Water Beneficial Reuse