American Oil and Gas Reporter - September 2020 - 18

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IndustryDigest
and natural gas produced from federal
leases, valuing coal produced from
federal and Indian leases, and assessing
civil penalties for certain violations
associated with mineral leases.
"This proposal provides regulatory
certainty and clarity to states, tribes and
stakeholders, removing unnecessary and
burdensome regulations for domestic
energy production," stated Interior
Secretary David Bernhardt when
announcing the proposed amendments
to the 2016 Consolidated Federal Oil &
Gas and Federal & Indian Coal
Valuation Reform Rule on Aug. 7.
According to ONRR, the NOPR
would:
· Simplify processes, provide
clarity regarding royalties owed, and
better explain ONRR's civil penalty
practices;
· Better align ONRR regulations
with President Trump's executive
orders, EO 13783, Promoting Energy
Independence and Economic Growth,
released in March 2017, and EO 13795,
Implementing an America-First
Offshore Energy Strategy, released in
April 2017, as well as Secretarial Order
3350 responding to the offshore energy
EO; and
· Respond to a court ruling that
temporarily enjoined the coal portions
of the 2016 valuation rule.
Among changes impacting crude oil
and natural gas royalties, the NOPR
would reinstate the ability of lessees to
request permission to exceed the 50%
limit on transportation costs and the
66.67% limit on processing costs. It
would allow lessees to claim certain
gathering costs as transportation
allowances in waters 200 meters or
deeper, and to request approval to claim
certain gathering costs as transportation
allowances in waters shallower than 200
meters where "deepwater-like" subsea
movement occurs.
It also proposes to extend the indexbased valuation option to all federal gas
royalty valuations, and to change the
royalty calculation under the indexbased option for unprocessed and
residue gas from the highest bid week
price to the average bid week price.
The proposed rule may be accessed at
https://www.onrr.gov/Laws_R_D/2020Pr
oposedValRule.pdf. ONRR says it will
accept comments on the rule for 60 days
from its publication in the Federal
Register. r
18 THE AMERICAN OIL & GAS REPORTER

Federal Judge Refuses
To Halt Construction
On Permian Pipeline
AUSTIN, TX.-A federal judge in
Texas has denied the Sierra Club's
attempt to stop construction on the
430-mile Permian Highway Pipeline,
which is being built to carry Permian
Basin natural gas from Waha, Tx., to
the Gulf Coast.
U.S. District Judge Robert Pitman
issued his ruling Aug. 28 in the U.S.
District Court for the Western District
of Texas. In it, he concludes that much
of the impairment from constructing the
pipeline alleged by the Sierra Club
already has occurred, and other alleged
damage is too speculative to justify a
preliminary injunction.
Court documents point out that the
Sierra Club filed its lawsuit on April 30,
15 days after the U.S. District Court for
the District of Montana vacated the
Army Corps of Engineers' Nationwide
Permit 12, which is used to authorize
dredging work in waterways by
pipelines, transmission lines and cables.
The Sierra Club then filed for a
preliminary injunction on June 10.
In his ruling, Judge Pitman notes that
much of the Permian Highway
Pipeline's harm is alleged by a Sierra
Club member who owns a deer-hunting
ranch near Fredericksburg, Tx., where
pipeline construction already is
complete. Thus, "Sierra Club's
members allege harms that already have
occurred and cannot form the basis of
injunctive relief," Pitman writes.
The lawsuit also raises concerns
about the potential for pollution from
the inadvertent release of drilling fluids
during horizontal drilling. Pitman says
the Sierra Club's position "tends toward
speculation that cannot form the basis
of a showing of irreparable harm." r

Judge Stays Vacatur
Of Wyoming Leases
GREAT FALLS, MT.-A federal
judge who in May invalidated 440 oil
and gas leases in 10 Western states has
agreed to allow affected leases in
Wyoming to remain in effect pending
appeal, but continues to suspend all
operations or production on them.
Ruling in Montana Wildlife
Federation v. David Bernhardt, Chief

District Judge Brian Morris for the
U.S. District Court for the District of
Montana invalidated the leases by
finding a 2018 Bureau of Land
Management internal memorandum
stating the agency no longer would
prioritize leasing outside of sage
grouse habitat management areas
before it leased lands within habitat
management areas impermissibly
upended sage grouse habitat
management plans adopted in 2015
(AOGR, June 2020, pg. 21).
The U.S. Department of Interior,
state of Wyoming and the Western
Energy Alliance all asked Morris to stay
vacatur of the Wyoming leases, court
documents point out. Wyoming and
DOI agreed with suspending operations
pending appeal, although the Western
Energy Alliance did not, the court notes.
Morris granted DOI's and
Wyoming's motions, saying they had
"made a substantial case for relief on
the merits," and also acknowledging
that Wyoming's claim it could be liable
for repaying up to $17.5 million in lease
payments constituted irreparable harm.
But the judge also found that allowing
any operations or production on the
leases could substantially injure the
plaintiffs' interests by disturbing and
fragmenting sage grouse habitat.
Thus, "Suspending production and
operation on the Wyoming leases while
staying lease vacatur . . . strikes the proper
balance between all interests and harms
present in this case," Morris concluded. r

Enviros Sue To Stop
LNG By Rail Final Rule
WASHINGTON-Six environmental
groups are suing the federal Pipeline
and Hazardous Materials Safety
Administration over its final rule
authorizing bulk transportation of
liquefied natural gas by rail.
The lawsuit was filed Aug. 18 by
Earthjustice in the U.S. District Court for
the District of Columbia on behalf of the
Center for Biological Diversity, Clean Air
Council, Delaware Riverkeeper Network,
Environmental Confederation of
Southwest Florida, Mountain Watershed
Association and the Sierra Club.
An Earthjustice spokesman tells the
Associated Press the lawsuit contends
PHMSA did not adequately study the
new rule to ensure transporting LNG by


https://www.onrr.gov/Laws_R_D/2020ProposedValRule.pdf https://www.onrr.gov/Laws_R_D/2020ProposedValRule.pdf

American Oil and Gas Reporter - September 2020

Table of Contents for the Digital Edition of American Oil and Gas Reporter - September 2020

Contents
American Oil and Gas Reporter - September 2020 - Intro
American Oil and Gas Reporter - September 2020 - 1
American Oil and Gas Reporter - September 2020 - 2
American Oil and Gas Reporter - September 2020 - 3
American Oil and Gas Reporter - September 2020 - 4
American Oil and Gas Reporter - September 2020 - Contents
American Oil and Gas Reporter - September 2020 - 6
American Oil and Gas Reporter - September 2020 - 7
American Oil and Gas Reporter - September 2020 - 8
American Oil and Gas Reporter - September 2020 - 9
American Oil and Gas Reporter - September 2020 - 10
American Oil and Gas Reporter - September 2020 - 11
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