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Rules on BOPs, Arctic, Sage Grouse Pushed Into 2015

Several proposed rules from agencies within the Department of Interior (DOI) -- including those covering blowout preventers (BOP), the Arctic, royalty payments, flaring and venting -- appear headed for delays into 2015 and, in some cases, 2016, according to the Obama administration's latest Unified Agenda, released on Nov. 21.

But the DOI's Bureau of Land Management (BLM) appears on track to finalize a rule governing hydraulic fracturing (fracking) on federal land by the end of the month. Outside the DOI, the Securities and Exchange Commission (SEC) has delayed a controversial proposed rule under the Dodd-Frank Wall Street Reform and Consumer Protection Act, which would require the disclosure of foreign payments for oil and natural gas development. Several proposals by the Environmental Protection Agency (EPA) also face delays.

"At first blush, the new agenda...appears to fulfill our expectation that [President Obama] might take a greener turn in his 'give a little, take a little' energy policy during his final two years in office," analysts at ClearView Energy Partners LLC told their clients in a note last Monday.

As the Obama administration begins to slowly head toward the exits at the end of 2016, the pressure is on to complete action on key issues. Typically, there is a rush to finalize federal rules and directives as the takeover by a new administration draws closer.

In response to the Macondo well blowout and Deepwater Horizon Rig explosion, DOI's Bureau of Safety and Environmental Enforcement (BSEE) had planned to issue a proposed rule to upgrade regulations for designing, manufacturing and repairing BOPs last March (see Daily GPINov. 27, 2013). The latest Unified Agenda said a notice of proposed rulemaking (NPRM) will be issued in February, followed by final action in July.

BSEE and sister agency, the Bureau of Ocean Energy Management, are jointly promulgating regulations to govern oil and gas operations on the Alaska Outer Continental Shelf. Both agencies still anticipated issuing an NPRM before the end of November (2014), but final action is not expected until October, the agenda indicated.

The agenda said BLM will have an advanced NPRM on the royalty rate for new federal onshore competitive oil and gas leases completed by December. Meanwhile, an NPRM for a separate proposed rule at BLM "to limit the waste of vented and flared gas" is expected in April, with final action to follow in April 2016 (see Shale DailyMay 15).

DOI’s U.S. Fish and Wildlife Service, is expected to take final action on designating critical habitat for the Gunnison Sage Grouse before the end of November (2014), and for a bi-state distinct population segment for the Greater Sage Grouse next March (see Daily GPISept. 10).

According to the latest agenda, the BLM planned to take final action on a rule to regulate hydraulic fracturing on public and Indian land in November (see Shale DailyNov. 27, 2013). An extended public comment period for a supplemental NPRM ended on Aug. 23.

"The final rule would provide for disclosure to the public of chemicals used in hydraulic fracturing on public land and Indian land, strengthen regulations related to well-bore integrity, and address issues related to recovered water," the BLM said. "This rule is necessary to provide useful information to the public and to assure that hydraulic fracturing is conducted in a way that adequately protects the environment.

At the EPA, one issue that has been debated for years is lurching forward. A rulemaking on effluent limitations guidelines and standards -- specifically, for pretreatment standards for wastewater from unconventional oil and gas drilling -- is expected in February, with a final rule issued in March 2016 (see Shale DailyNov. 18, 2011).

A rulemaking on the EPA's proposed hazardous air pollutants risk from oil and gas wells is planned for May, with a final rule to follow in May 2016. Rules were first promulgated in 2012, but the agency received several petitions to reconsider, clarify and amend them (see Shale DailyDec. 30, 2011). "At this time we are evaluating potential issues to reconsider," EPA said in the agenda. Similar petitions brought the EPA to reconsider rules covering New Source Performance Standards (NSPS); an NPRM will be unveiled in May, with a final rule in June 2016.

Also at EPA, a proposed rulemaking to revise Subpart W of the Petroleum and Natural Gas Systems source category of the Greenhouse Gas Reporting Rule is expected in December, with a final rule issued in October (see Daily GPIApril 17, 2013). Meanwhile, a proposed rulemaking for defining “source terms within the Prevention of Deterioration and nonattainment new source review programs as they apply to the oil and gas extraction industry" is expected by May.

The SEC's proposed rule governing the disclosure of "payments made to foreign governments or the federal government for the purpose of commercial development of oil, natural gas or minerals" was vacated and remanded to the commission by the U.S. District Court for the District of Columbia in July 2013. According to the agenda, the SEC now plans to issue an NPRM next October.

Oxfam America, an international relief and development organization, sued the SEC in September for delaying the rule.

"The SEC remains bound by the statutory deadline to produce a rule 270 days after the enactment of the Dodd-Frank Act. It has now been out of compliance with that deadline for a total of three years," Oxfam senior adviser Isabel Munilla said. "Investors with more than $6 trillion in assets, and more than 500 civil society groups from around the world have written to the SEC calling on the prompt release of a strong rule.

"Other markets like the UK are moving quickly ahead, leaving the U.S., and U.S. companies, far behind. These rules are more important than ever, as new oil, gas and mineral development quickly expands in places like Burma, Kenya, Cambodia, and in the Gulf of Mexico -- meaning millions of dollars in payments will be shrouded in secrecy."

Elsewhere, according to the agenda, the Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA) is planning to unveil a proposed rule on amending and clarifying hazardous materials regulations in August. The review comes after concerns over the flammability of Bakken Shale oil and a series of railcar accidents (see Shale DailyJuly 24; May 7). PHMSA will also issue an NPRM on oil spill response plans for high-hazard flammable trains next August.

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