Sidley Austin provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship. Attorney Advertising - For purposes of compliance with New York State Bar rules, our headquarters are Sidley Austin LLP, 787 Seventh Avenue, New York, NY 10019, 212.839.5300; One South Dearborn, Chicago, IL 60603, 312.853.7000; and 1501 K Street, N.W., Washington, D.C. 20005, 202.736.8000. VOLUME 5, NO. 27, JULY 6, 2016 SIDLEY UPDATE Shale and Hydraulic Fracturing Federal BLM and environmental groups appeal decision vacating regulations for hydraulic fracturing on federal lands. The U.S. Bureau of Land Management (BLM) and a group of environmental nongovernmental organizations (NGOs) including the Sierra Club, Earthworks and Western Resource Advocates filed separate appeals of a district court decision vacating BLM regulations for hydraulic fracturing on federal lands. As previously reported, the district court decision held that BLM lacked authority to regulate hydraulic fracturing after finding that Congress, in the Energy and Policy Act of 2005, had left regulation of hydraulic fracturing to the states. Both BLM and the environmental NGOs are expected to argue that other federal laws, including the Mineral Leasing Act, independently give the BLM authority to regulate resource extraction activities on federal lands. In a separate action, the successful challengers to the BLM’s hydraulic fracturing rule filed motions to dismiss appeals of a prior district court decision to stay implementation of the hydraulic fracturing regulations, arguing that the district court’s vacatur of the rule rendered the appeals moot. While none of the other parties opposed dismissal of the appeal, intervenor NGOs requested that the court also vacate the appealed preliminary injunction because it made preliminary rulings on issues that were not ultimately resolved by the district court’s decision on the merits. BLM and BSEE increase penalties for violations of oil and gas rules. In response to the Bipartisan Budget Act of 2015, both BLM and the Bureau of Safety and Environmental Enforcement (BSEE) issued interim final rules to increase penalties for violating oil and gas rules. The interim final rules are intended to adjust existing penalties upward to account for inflation. BLM last adjusted penalties for onshore oil and gas activities in 1987, and the rule increased penalties by 105 percent. BSEE last adjusted penalties for offshore oil and gas activities in 2011, and the rule increased penalties by 5 percent. The new penalty provisions went into effect on June 28; agencies will accept comments on the interim final rules until August 29. EPA prohibits shipment of hydraulic fracturing wastewater to municipal sewage treatment plants. The Environmental Protection Agency (EPA) published a final rule prohibiting the discharge of hydraulic fracturing wastewater into municipal sewage treatment plants. In the final rule, EPA states that hydraulic fracturing wastewater often contains chemical constituents that could be harmful to public health and the environment. The agency also reported that many of those constituents are not commonly treated by municipal sewage treatment plants and could either be discharged untreated or inhibit biological treatment processes at the facilities. While EPA acknowledged that hydraulic fracturing wastewater is not currently SIDLEY UPDATE Page 2 discharged to municipal sewage treatment plants, the agency asserted that the rule was necessary to ensure that such discharges do not occur in the future. States Nebraska court reverses permit authorizing disposal of hydraulic fracturing wastewater. A Nebraska state court reversed a permit issued by the Nebraska Oil and Gas Conservation Commission authorizing the disposal of hydraulic fracturing wastewater at an out-of-service oil well in northwestern Nebraska. While agreeing that the Commission had authority to permit disposal of hydraulic fracturing wastewater as part of its authority to regulate oilfield waste, the court held that the Commission’s authority was limited to wastewater associated with oil and gas production in Nebraska. The court then revoked the permit because it was intended to dispose of hydraulic fracturing wastewater produced in other states. If you have any questions regarding this Sidley Update, please contact the Sidley lawyer with whom you usually work, or Roger Martella Partner +1 202 736 8097 rmartella@sidley.com Sam Boxerman Partner +1 202 736 8547 sboxerman@sidley.com Jim Wedeking Counsel +1 202 736 8281 jwedeking@sidley.com Joel Visser Associate +1 202 736 8883 jvisser@sidley.com Ben Tannen Associate +1 202 736 8574 btannen@sidley.com The Environmental Practice of Sidley Austin LLP Our Environmental Practice consists of approximately 40 lawyers who concentrate on environmental and natural resources law. Established more than 35 years ago, our group is now one of the largest environmental practices in the United States, with extensive experience in all aspects of environmental and natural resources law. The depth and range of our practice and the frequency with which we address cutting-edge issues enable us to advise clients quickly and cost-effectively. For further information on our Environmental Practice, please contact David T. Buente (+1 202 736 8111, dbuente@sidley.com), Robert M. Olian (+1 312 853 7208, rolian@sidley.com) or Judith M. Praitis (+1 213 896 6637, jpraitis@sidley.com). The Energy Practice of Sidley Austin LLP Sidley has a diversified and global Energy practice. We represent clients in virtually every aspect of the energy industry, including upstream, midstream and downstream oil and gas companies, oilfield service companies, oil and natural gas, refined products and CO2 pipelines, electric utilities, merchant electric transmission companies, independent power producers, alternative energy developers, suppliers and contractors, energy trading companies and the financial institutions that serve companies in all of these industry segments. Our energy practice encompasses all types of transactional, litigation and regulatory matters. Sidley’s energy transactional practice includes representing clients in a broad range of mergers and acquisitions, capital markets, project development, project finance and syndicated, structured and master limited partnership financing transactions. Our energy litigation practice includes representation of energy industry clients in all types of federal and state litigation and arbitration proceedings. Sidley’s energy regulatory practice includes matters before the Federal Energy Regulatory Commission and state regulatory commissions as well as the U.S. Departments of Energy, Transportation and State. For more information on energy-related matters see Energy Landscape: Energy and Commodities Law, Sidley’s energy law blog. To receive Sidley Updates, please subscribe at www.sidley.com/subscribe. BEIJING ∙ BOSTON ∙ BRUSSELS ∙ CENTURY CITY ∙ CHICAGO ∙ DALLAS ∙ GENEVA ∙ HONG KONG ∙ HOUSTON ∙ LONDON ∙ LOS ANGELES MUNICH ∙ NEW YORK ∙ PALO ALTO ∙ SAN FRANCISCO ∙ SHANGHAI ∙ SINGAPORE ∙ SYDNEY ∙ TOKYO ∙ WASHINGTON, D.C. Sidley and Sidley Austin refer to Sidley Austin LLP and affiliated partnerships as explained at www.sidley.com/disclaimer. www.sidley.com
