Will EPA Expand TRI to the Oil and Gas Extraction Sector?

Posted on March 1, 2013 by Molly Cagle

The Environmental Protection Agency (EPA) is planning a rulemaking to expand its Toxic Release Inventory (TRI) program in March 2013. Will the oil and gas extraction sector be included in the program’s expansion?

As part of the Emergency Planning and Community Right-to-Know Act (EPCRA), the TRI program gathers and makes public information about chemical and waste management activities at a wide variety of facilities. EPA touts TRI reporting as one mechanism to reduce the release of chemicals into the environment. It claims that the information gathered helps companies keep up with competitors’ efforts to reduce and recycle waste, and that the public dissemination of information can lead to citizen and EPA enforcement.

EPA considered including the oil and gas extraction sector in TRI in 1997, but decided against it due to technical issues in determining whether individual wells spread out over large geographic areas would be considered a “facility” under EPCRA. A petition filed by environmental groups claims these technical issues are resolved and points to the basin-level definition of facility in EPA’s greenhouse gas (GHG) reporting rule as an example of how oil and gas production operations can be aggregated. Meanwhile, the GHG reporting rule is still under administrative reconsideration and the definition of facility under that rule is a key point of contention between EPA and industry.

As recently as last week, EPA’s Inspector General “recommend[ed] that EPA develop and implement a comprehensive strategy for improving air emissions data for the oil and gas production sector.” If oil and gas production is included in TRI, how will it affect the sector? Will it be a way to get at chemical ingredients used in hydraulic fracturing that are otherwise protected from disclosure as trade secrets? Will the aggregation of data for TRI purposes spill over into air and waste permitting decisions? At a minimum, TRI would require industry to gather more information on chemicals, wastes and emissions and make it publicly available. Thus, industry should prepare for the corresponding public attention and regulation that may accompany TRI expansion.

The Recent Proposal to List the Lesser Prairie Chicken as Threatened and the Effect of a Final Listing on the Energy Industry

Posted on December 13, 2012 by Donald Shandy

On November 30, 2012, the United States Fish and Wildlife Service (“FWS”) announced its proposal to list the Lesser Prairie Chicken (“LPC”) as threatened under the Endangered Species Act (“ESA”).  The proposed rule resulted from a comprehensive 2011 settlement agreement approved by the D.C. Circuit in In re Endangered Species Act Section 4 Deadline Litigation 2011, whereby FWS agreed to review over 250 candidate species and make a determination as to each species whether to issue a proposed listing rule or to issue a finding that the listing is not warranted, over a six-year period.  Under the ESA, an endangered species is one that is in danger of extinction throughout all or a significant portion of its range, while a threatened species is likely to become endangered within the foreseeable future.  FWS will make a final determination on whether to list the LPC as threatened by September 30, 2013. 

The LPC is found across a five-state span, including Colorado, Oklahoma, New Mexico, Texas, and Kansas. Activities identified by FWS as threats to the species include habitat loss, fragmentation, modification, and degradation within the species’ range.  Other threats include land uses related to wind energy and transmission development.  If FWS ultimately lists the LPC as a threatened species, energy industry operations that could potentially harm the species would be affected.  Specifically, due to the species’ avoidance of tall, vertical objects, FWS has identified oil and gas wellheads and wind turbines as features that may cause habitat displacement for the bird.  Section 9 of the ESA prohibits the “take” of a listed wildlife species by a private or public entity.  Because “take” is defined quite broadly under the ESA, even activities that are not designed or intended to harm a species, but could do so indirectly, such as operation of these tall structures, could potentially constitute a violation.

Unlike endangered species, in regard to a species listed as threatened, FWS has the authority under ESA Section 4(d) to tailor the “take” prohibitions to the conservation needs of the species. The FWS may use its Section 4(d) authority to incentivize participation in conservation plans that will support recovery of the LPC.  Additionally, there are conservation plans that may be entered into by energy companies before a species is listed under the ESA.  Called Candidate Conservation Agreements with Assurances (“CCAAs”), these agreements, allow non-federal property owners to commit to implement voluntary conservation measures for a candidate species in return for regulatory assurances that additional conservation measures will not be required, and additional land, water, or resource use restrictions will not be imposed, should the species become listed in the future.  Furthermore, the proactive conservation efforts performed through CCAAs may remove or reduce threats to the covered species, so that listing the species under the ESA may become unnecessary.  CCAAs, therefore, provide a significant opportunity for a compliant energy company to potentially insulate itself from liability in the event the LPC is listed as threatened.  CCAAs have been developed for the LPC in New Mexico and Texas, and Oklahoma, under the leadership of the Oklahoma Department of Wildlife Conservation, has submitted a CCAA to FWS for review.  Notably, because the final listing determination for the LPC must be made September 30, 2013, time is of the essence for energy companies to consider entering into a CCAA.

See the FWS’s Proposed Listing
See the FWS’s News Release Regarding the Proposed Listing
See the FWS’s Facts Regarding the Proposed Listing

Effect of Endangered Species Act Listing on the Oil and Gas Industry and the CCAA Option

Posted on April 30, 2012 by Donald Shandy

The oil and gas industry has lately been at the center of the debate over the scope and reach of the Endangered Species Act (“ESA”).  (See, for example, an August 2011 blog by Pamela Giblin).  Creative approaches will be needed to insulate against potential liability. 

When the U.S. District Court for the District of Columbia approved two settlements in multidistrict ESA litigation (MDL No. 2165) on September 9, 2011, the U.S. Fish and Wildlife Service (“FWS”) committed to, among other things, review over 250 candidate species and determine whether to issue a proposed listing rule or to issue a finding that listing is not warranted by the end of fiscal year 2016.  Among those first on the list to be decided are species located in areas of significant oil and gas development and potentially impacted by oil and gas operations.  For example, the Dunes Sagebrush Lizard (also known as the Sand Dune Lizard), a candidate species under the ESA, is known to exist in the energy-rich Permian Basin.

Once a species is listed as endangered or threatened, protective measures apply to the species and its habitat under Section 9 of the ESA.  The ESA prohibits the possession, sale, import, and/or export of endangered species, as well as the “take” of a listed wildlife species by a private or public entity.  Section 3 of the ESA defines the term “take” broadly to mean “harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such conduct.”  Even activities that are not designed or intended to harm a species, but that could do so indirectly, such as servicing a well, can constitute a take prohibited by the ESA. The ESA subjects any person who violates the statute or its implementing regulations to an array of civil and criminal sanctions.

A decision on whether or not to list the Sand Dune Lizard is due in June 2012.  Thus, oil and gas companies operating in areas of lizard habitat, or where other candidate species may exist, need to be thinking proactively about the impacts of a listing.  Some of the tools available to operators can be utilized in advance of listing and can provide important protections and assurances if the species is ultimately listed.  One significant opportunity for an oil and gas company to potentially insulate itself from ESA liability is a conservation agreement. 

Specifically, a Candidate Conservation Agreement with Assurances (“CCAA”) is an agreement, whereby non-federal property owners commit to implement voluntary conservation measures for a candidate species, and in return receive regulatory assurances that additional conservation measures will not be required and additional land, water, or resource use restrictions will not be imposed should the species become listed in the future.  Furthermore, the proactive conservation efforts performed through CCAAs may remove or reduce perceived threats to the covered species, so that FWS could determine that listing the species under the ESA is unnecessary. 

For example, CCAAs have been developed for the Sand Dune Lizard in Texas and New Mexico, and the Lesser Prairie Chicken in New Mexico.  Since assurances under these agreements are only available to operators and land owners who enroll before a species is listed, time is of the essence for projects or operations that may harm candidate species currently under evaluation, particularly the Sand Dune Lizard. 

For oil and gas operators who fail to take any action, the listing of a candidate species affected by development as threatened or endangered could immediately bring their operations to a halt.  FWS estimates that it could take as long as a year or more for an operator to obtain its own individual “take” permit.  Thus, whether or not these species become listed is certainly something to keep an eye on for oil and gas operators and their counsel.