American Oil and Gas Reporter - September 2016 - 105

ConventionCoverage: Kansas Independent Oil & Gas Association

Obama Administration
Races The Clock
By Del Torkelson
WICHITA, KS.-Whether it was mentioned by presenters at the podium or attendees on the trade show floor, the approaching conclusion of Barack Obama's
presidency was a recurring topic at the
Kansas Independent Oil & Gas Association's 79th annual convention, held Aug.
14-16 at Wichita's Century II Convention
Center.
The number and extent of public policy
obstacles the Obama administration has
erected against U.S. oil and gas production
offered a backdrop for much of the conference, but KIOGA President Ed Cross
noted at the Board of Directors meeting
on the first day that the administration
knew its days were numbered, and had
shifted to an even higher gear in its final
stretch.
During his remarks, KIOGA Chairman
Nick Powell, President of Colt Energy in
Mission, Ks., marveled at the public
policy hydra menacing the country's oil
and gas producers.
"The number of issues we are monitoring is huge, and as soon as one is
under control, two more pop up," he
mused. "I do not see this letting up until
we get someone (in the White House)
who understands the importance of our
industry to the well-being of the U.S.
economy, and who has a realistic view of
regulations' costs and benefits. The president and the press refuse to weigh the

tremendous known benefits of fossil fuels
(against) the unknown future effects of
carbon dioxide, which are based on computer models that have not been very accurate. Suppressing CO2 has imposed a
huge cost on the US economy."
Federal Regulations
Cross' report included an examination
of the Environmental Protection Agency's
methane regulations for new, modified
and reconstructed sources contained in a
New Source Performance Standard under
section 111 of the Clean Air Act and
published June 3. That action also included
an information collection request under
section 114 of the CAA in which the
EPA expresses plans to gather data on
existing-facility sources from more than
22,000 companies (see related story, page
28).
KIOGA's strongest objections to the
methane rule include EPA's decision to
drop an exemption for marginal wells,
Cross indicated. He said the agency based
its decision on an analysis by the Environmental Defense Fund that severely
misinterpreted the data.
"(EDF) presented the data in a manner
that made it look as if marginal wells'
methane emissions were as high or higher
than some large-volume wells," he recounted. "I met with EPA in late 2015 to
encourage it to include the marginal well
exemption. At that time, people at EPA
told me, 'Doing nothing or doing some-

Conversing before the
congressional panel on
the second day of KIOGA's annual convention
are, from left, KIOGA
Chairman Nicholas Powell, Congresswoman
Lynn Jenkins, R-Ks., and
Mary Ann Powell. During
the forum, Jenkins told
KIOGA that the House
Ways & Means Committee was considering tax
reform that would embrace a consumptionbased model.

thing small is not an option.'"
EPA's arguably capricious move to
drop that exemption before obtaining industry input provides some of the rationale
for the litigation in which KIOGA has
joined 18 other industry groups, Cross
reported. He added that the regulation
also left open the possibility of administrative reconsideration under the CAA.
"This administration is nearing the
end of its term and there is somewhat
less optimism EPA will be flexible,"
Cross acknowledged. "EPA denied five
of the six petitions for reconsideration
on the Clean Power Plan."
Ultimately, Cross forecast a fierce
legal battle. "Environmental groups consider inclusion of marginal wells to be
the single greatest victory in the methane
rule," he related. "That means they are
likely to defend it very strongly."
Another pending legal confrontation
deals with green groups suing EPA to
force the agency to regulate oil and gas
waste under Subtitle D of the Resource
Conservation and Recovery Act, Cross
observed. "If EPA developed Subtitle D
regulations and the states opted not to
enforce them . . . it would create a pathway
for environmental groups to file citizen
suits against oil and gas producers, even
if they complied with state regulations,"
Cross noted. "This is the true objective
of the litigation."
At the board meeting and in a seminar
on the convention's second day, Cross
also discussed a notice of proposed rule
making from the Pipeline and Hazardous
Material Safety Administration that he
said had some important and direct implications for the upstream industry (see
"Producers Among PHMSA Objectors
AOGR, August 2016). "At issue is how
PHMSA is going to define gathering in
production facilities for the purpose of
federal pipeline safety jurisdiction," he
detailed. "(PHMSA) would like to push
regulated gathering all the way to the
wellhead."
Federal Tax Reform
Cross devoted significant attention to
the subject of federal tax reform during
SEPTEMBER 2016 105



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