Fracking Bills Fail in California Legislature

Since February 2011, the California legislature has been considering two bills that would regulate hydraulic fracturing operations throughout the state.

AB 591 would require operators to disclose fracking activities and the contents of all fracking fluids, subject to exemptions for proprietary and/or trade secret information. 

AB 972 would impose a moratorium on all fracking operations in the state pending adoption of regulations being developed by the California Department of Conservation, Division of Oil, Gas and Geothermal Resources. 

This week both bills failed to make it out of the Senate Appropriations Committee, effectively killing both bills for the current legislative session, if not permanently. 

AB 972 was strongly opposed by industry and found little or no support from the Brown administration. 

This lack of support was due in part to the estimate that, if enacted, the moratorium would cost the state approximately $9 million in delayed or lost revenues. 

In essence, by placing these proposed bills into the Senate’s Appropriations Suspense File, the legislature has simply deferred to the Department of Conservation regulation of all oil and gas activities in California, including hydraulic fracturing.

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This article was prepared by Barclay Nicholson (bnicholson@fulbright.com / 713 651 3662) from Fulbright's Energy Law Practice.

Summit Petroleum (6th Cir. Aug. 7, 2012): EPA’s Aggregation of Oil and Gas Emissions Based on “Mere Functional Relatedness” is Unreasonable

A three-judge panel of the U.S. Court of Appeals for the Sixth Circuit* in Summit Petroleum Corporation v. U.S. Environmental Protection Agency (Nos. 09-4348; 10-4572) vacated EPA's order aggregating Summit's sour gas wells and sweetening plant into a single major source.

The Court agreed with American Petroleum Institute and American Exploration and Production Counsel that EPA’s determination that the physical requirement of “adjacency” in an aggregation determination can be established through mere functional relatedness is unreasonable and contrary to the plain meaning of the term “adjacent.” 

The court remanded the case to EPA for a reassessment of Summit's Title V source determination in light of the proper, plain-meaning application of the requirement that Summit's activities be aggregated only if they are located on physical contiguous properties. 

Judge Moore dissented from the opinion, stating that EPA’s consideration of functional interrelatedness was “both reasonable (and thus worthy of deference) and correct,” and that she would have affirmed the agency’s decision to aggregate Summit’s stationary sources.

It is not yet known whether EPA will seek a rehearing en banc or a petition for certiorari from the U.S. Supreme Court.

* The states within the geographic boundaries of the Sixth Circuit are Ohio, Kentucky, Michigan, and Tennessee.

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This article was prepared by Barclay Nicholson (bnicholson@fulbright.com / 713 651 3662) from Fulbright's Energy Law Practice.