Regulation to watch for in 2015

It appears that the federal government intends to pass a number of regulations regarding the oil and gas industry this year. Several federal agencies are currently in various stages of the rulemaking process. Members of the oil and gas industry should anticipate rules or proposals from the following agencies: the Environmental Protection Agency (EPA), the Department of the Interior (DOI), the Bureau of Land Management (BLM) and the Department of Transportation (DOT).

The EPA intends to announce regulations that will reduce the volatile organic compound and methane emissions associated with the oil and gas industry. These new regulations should be announced at some point during the summer of 2015. Commentators have suggested that the EPA will propose that the industry reduce emissions by at least 45% by 2025. In addition, the EPA will circulate Control Techniques Guidelines to assist states that have been unable to meet the ozone limits.

The EPA is also expected to update the Renewable Fuel Standards (RFS). The RFS sets forth the percentage of gasoline that must consist of renewable fuels. The Renewable Fuel Program was established by the Energy Policy Act of 2005 and mandates that renewable fuel be incorporated into gasoline on an increasing basis. In 2007, the Energy Policy Act was amended by the Energy Independence and Security Act of 2007 to increase the amount of renewable fuel to be incorporated.

The BLM has indicated that it will issue several new rules this year. The BLM will likely finalize a proposed rule it released in 2013. The new rule would mandate that companies engaging in hydraulic fracturing on federal or tribal lands disclose the composition of their fracking fluids, manage flowback waters and satisfy heightened standards for well construction. Under the proposed rule, companies would not be forced to disclose trade secrets. This rule has garnered significant criticism from the oil and gas industry. Many in the industry have complained of the significant cost that will be imposed by the rule. Commentators expect the BLM to finalize the rule in early 2015. Commentators also anticipate that the BLM will issue rules governing flaring and venting. These regulations will target methane emission. Additionally, the BLM will issue a notice of proposed rulemaking concerning the royalty rate for new Federal onshore competitive oil and gas leases. The BLM is considering whether public interest requires a higher royalty rate.

The DOI is also expected to circulate proposed rules on several issues this year. In response to the Deepwater Horizon accident, the DOI will issue rules to govern blowouts. The DOI has not released a great deal of information on this issue. However, commentators have suggested that the rules will regulate well design, casing, cementing, drilling margins, well control, monitoring and subsea containment. These rules are expected to be released in early 2015. The DOI has also indicated that it will issue rules governing drilling in the Arctic region. The OMB is currently reviewed the DOI’s proposed rules for the Arctic region.

In addition, the DOT will likely finalize its rules governing crude oil rail transportation this year. Last year, the DOT issued proposed rules imposing heightened standards on the quality of tank cars permitted to transport crude oil. The proposed rules also impose, among other things, speed limits and notification requirements on crude oil shippers.