Regulations

 

Under the Commerce Clause of the Constitution, Congress has jurisdiction over waters of the United States, a concept that has been held to cover not only navigable waters but also other waters that may in some way impact interstate or international commerce.  That jurisdiction was exercised by Congress through passage of the Clean Water Act.  But determinations of which waters impact interstate commerce (like determinations in many other areas to which the Commerce Clause applies) sometimes lend themselves to tortured and arbitrary reasoning as justification for expanded federal authority.  Implementation of the final rule adopting an expansive definition of “waters of the United States,” which was issued by the Corps of Engineers and EPA in June 2015 (80 FR 37053), was enjoined by an October 9, 2015, order of the U.S. Court of Appeals for the 6th Circuit in State of Ohio v. U.S. Army Corps of Engineers.  The Corps and EPA, on March 6, 2017 (82 FR 12532), published a notice announcing their intention to review and rescind or revise this rule; and on July 27 (82 FR 34899), those agencies published a proposed rule rescinding the 2015 definition, and returning to the status quo prior to that definition, pending a further review of the proper regulatory definition of “waters of the United States.”  The 6th Circuit’s ruling meanwhile was under review by the Supreme Court; so in an effort to keep the 2015 definition from going into effect before a final rule rescinding that definition could be implemented, the Corps and EPA published a further proposed rule on November 22 (82 FR 55542) that would defer the applicability of the 2015 definition for two years.  And upon the Supreme Court’s determination, on January 22, 2018, that only the District Courts, and not the Court of Appeals, had jurisdiction to consider this matter, a final rule was published on February 6 (83 FR 5200) setting the applicability date for the 2015 rule as February 6, 2020.  However, the delay in the 2015 rule’s applicability date was then struck down by decisions of the U.S. District Courts in South Carolina (in August) and Washington (in November).  Meanwhile, though, preliminary injunctions against the 2015 rule had been issued by U.S. District Courts in North Dakota, Georgia, and Texas, which together applied to 28 States; and so those 28 States are currently subject to the pre-2015 definition of “waters of the United States,” while the definition in the 2015 rule — with its potential to criminalize activities affecting waters that until then had never been imagined to be “waters of the United States” — now applies to the other 22.  Most recently, on February 14, 2019 (84 FR 4154), the Corps and EPA published a proposed rule to establish a new definition of “waters of the United States,” bearing many similarities (although some differences) to the pre-2015 definition.

Final rules to reduce waste of natural gas from venting, flaring, and leaks, as well as to clarify when lost gas is subject to royalties, were published by BLM on November 18, 2016 (81 FR 83008, as corrected at 81 FR 88634), effective January 17, 2017.  The rules also clarify when on-site use of production is royalty-free.  In addition — although unrelated to the rest of the rulemaking — the new rules include an amendment of the regulation on royalty rates, to conform it to the statutory provision for royalty payments on competitive leases of not less than 12.5% (which has the potential for considerable mischief if it is interpreted as empowering the Secretary to increase royalty rates without amending the regulations).  Executive Order 13783 of March 28, 2017, directed a review of the 2016 rules, for possible suspension, revision, or rescission.  As a part of that review, BLM, on June 15 (82 FR 27430), published a notification that those compliance dates that had not yet passed under the rule were being postponed in light of pending litigation.  And on December 8 (82 FR 58050), BLM published a final rule, effective January 8, 2018, postponing implementation of the provisions in question for one year — i.e., to January 17, 2019.  That, however, did not end the matter because, on February 22, 2018, the U.S. District Court for the Northern District of California issued a preliminary injunction against the postponement.  But meanwhile BLM, on that same date, published proposed rules (83 FR 7924) that would replace provisions of the 2016 rules with requirements similar to those that were in effect previously.  And in light of the process initiated by the proposed rulemaking of February 22, the U.S. District Court for the District of Wyoming, on April 4, granted a stay of the provisions of the 2016 rules while the revision of those provisions is pending.  A final rule rescinding certain provisions of the 2016 rules, and modifying others, was published on September 28 (83 FR 49184), effective November 27, 2018.  (Regrettably, the final rule does not address the change that was made by the 2016 rules to the regulation on royalty rates, 43 CFR 3103.3-1, setting a rate of “not less than” 12.5% that could be interpreted as eliminating the need to amend the regulations before imposing future royalty rate increases.)

The Fish and Wildlife Service published a notice of revisions to its mitigation policy with regard to adverse impacts on fish, wildlife, plants, and habitats on November 21, 2016 (81 FR 83440); and a notice of its Endangered Species Act compensatory mitigation policy on December 27, 2016 (81 FR 95316).  On November 6, 2017 (82 FR 51382), FWS published a request for comments to determine whether and how these policies should be revised.  By notice of July 30, 2018 (83 FR 36472), FWS withdrew the mitigation policy revisions that had been announced on November 21, 2016, specifically eliminating “net conservation gain” as a planning goal.

The Bureau of Land Management, on May 17, 2019 (84 FR 22379), issued a final rule making an annual adjustment for inflation to the amounts charged for civil monetary penalties for violations relating to lease operations (43 CFR Part 3160).  A similar annual adjustment for inflation to the Office of Natural Resources Revenue’s charges for civil monetary penalties resulting from violations of statutes, regulations, orders, or lease terms relating to royalty payments (30 CFR Part 1241) was made by final rule issued on March 8, 2019 (84 FR 8416).

BLM, on September 28, 2018 (83 FR 48957), published a final rule updating its fees for activities relating to federal mineral resources (43 CFR 3000.12), effective October 1.

A proposed rule was published by the Interior Department on December 28, 2018 (83 FR 67175), to streamline the Department’s procedures for responding to Freedom of Information Act requests, in the face of a growing backlog due to increasing requests and litigation.

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A number of regulatory actions affecting the oil and gas industry are now under consideration by agencies in the Interior Department and elsewhere.

The Fish and Wildlife Service, on November 25, 2016 (81 FR 85250), published a notice of intent to prepare an environmental impact statement relating to issuance of an incidental take permit under the Endangered Species Act, in connection with a habitat conservation plan that is being developed to streamline permitting for oil and gas exploration, production, and maintenance activities in Ohio, Pennsylvania, and West Virginia.

A review was directed, by Executive Order 13783 of March 28, 2017, for possible suspension, revision, or rescission of the rules that were published by the National Park Service on November 4 (81 FR 77972), and by the Fish and Wildlife Service on November 14, 2016 (81 FR 79948), governing the management of non-federal oil and gas rights on lands under their respective jurisdictions.

On April 3, 2017 (82 FR 16222), the Secretary announced the establishment of a Royalty Policy Committee, to provide advice on fair market value determinations and revenue collections for federal and Indian energy and mineral resources.  (In practice, the work of that committee has been expanded to address issues that relate only tangentially to royalty collections — e.g., increased use of categorical exclusions in the environmental analysis of applications for permit to drill, and streamlining of APD review for wells drilled directionally from non-federal lands into federal minerals, both of which have led to the issuance of instruction memoranda implementing those recommendations.  See the Recent Developments page of this website.)

Included in Executive Order 13783 of March 28, 2017, was a directive to agencies to review and report on existing regulations and policies “that potentially burden the development or use of domestically produced energy resources,” in order to identify those requirements that are unnecessary and appropriately should be suspended, revised, or rescinded.  Reports in compliance with this directive have been published by the Forest Service, the Department of the Interior, and the Corps of Engineers.  Recommendations for the Forest Service include revision of the regulations on categorical exclusions and environmental analysis for oil and gas leasing (36 CFR 220.6, 228.102), and revision of the memorandum of understanding with the Interior Department regarding the agencies’ environmental review roles and responsibilities for leasing.  Recommendations for the Interior Department include revision of Onshore Oil and Gas Orders Nos. 3 (site security), 4 (oil measurement), and 5  (gas measurement); revision and replacement of current BLM policies for processing nominations of lands for leasing (which, as the report accurately notes, have “resulted in longer time frames in analyzing and responding to protests and appeals, . . . longer lead times for BLM to clear and make available parcels for oil and gas lease sales . . . , [and] increased workload and staffing needs to conduct additional upfront environmental analysis”), and elimination of the 2013 requirement for master leasing plans as a part the leasing process; and rescinding or modifying the 2013 requirement for environmental review in reinstatements of terminated leasesRecommendations on land use planning and lease parcel reviews in the Interior Department report have now been implemented by Instruction Memorandum 2018-034 of January 31, 2018, as discussed in detail on the Recent Developments page.  The Corps of Engineers report makes recommendations for changes to certain nationwide permits under the Clean Water Act.

By notice of June 22, 2017 (82 FR 28429), the Interior Department requested public input, on an ongoing basis, regarding Departmental regulatory reform in general. Comments may be submitted either by mail or through the www.regulations.gov website.  By notice of July 17, 2017 (82 FR 32649), the Agriculture Department (which includes the Forest Service) similarly requested comments on regulatory reform.  The Corps of Engineers did the same by notice of July 20, 2017 (82 FR 33470).

The Secretary of the Interior, by Order No. 3358 of October 25, 2017, established an Executive Committee for Expedited Permitting to identify and recommend improvements that can be made to energy permitting policies.

The Bureau of Ocean Energy Management, on January 8, 2018 (83 FR 829), announced a draft proposed outer continental shelf leasing program for 2019-2024.  Even though this website does not generally cover OCS leasing, BOEM’s announcement is noteworthy both for its principled stance, and for the abrupt abandonment of principle that ensued.  The principle on which the announcement was premised is that, if OCS leasing is a proper component of the country’s domestic energy strategy, then all OCS areas that are not off-limits by law (i.e., everything besides the North Aleutian Basin in Alaska) ought to be open to consideration for their potential contribution to production.  But within a few days of the announcement, the administration acquiesced in a request by the governor of Florida to exempt that State’s OCS areas from the leasing program.  And unsurprisingly, that was followed by demands from several other coastal-state governors for similar not-in-my-backyard treatment.

The Forest Service, on April 19, 2018 (83 FR 17359), announced the initiation of a planning process that will lead to the issuance of a revised Forest Plan for the Wayne National Forest in Ohio.

On September 13, 2018 (83 FR 46458), the Forest Service published an advance notice of proposed rulemaking to revise its regulations affecting oil and gas leasing and operations on National Forest lands.  This appears to be an opportunity for the Forest Service to align its procedures with the reforms recently implemented by BLM.