On December 11, 2013, the Colorado Department of Public Health (CDPHE) issued its Draft Colorado Greenhouse Gas Inventory – 2013 Update (the GHG Update); a report required every five years. The GHG Update summarizes all of Colorado’s GHG emissions and sinks from 1990 to 2030. To generate the GHG Update, CDPHE used the Environmental Protection Agency’s (EPA’s) model for assigning emission factors and making emission projections. EPA’s model contains Colorado-specific default values, but still relies on numerous assumptions and uncertainties that affect the accuracy of the projections. For example, CDPHE states that for the final inventory, it “will consider how to customize values to more accurately reflect Colorado GHG emissions.” For affected industry participants wishing to comment on the GHG Update, comments on the report are due January 31, 2014.
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The Winds of Climate Change are Blowing
The winds of legal, regulatory, and policy responses to climate change are blowing perhaps more than ever before. The consequences for all stakeholders, and particularly those companies operating in the energy sector, are significant.
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For Ohio Assignments, Beware the
A recent decision from the Ohio Court of Appeals clarifies that a prohibited assignment of an oil and gas agreement (including an oil and gas lease) containing a “soft consent” may be invalidated in the same manner as if the oil and gas agreement contained a “hard consent.”
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The New ASTM Standard — A Catch-22 for Property Transactions Needing a Phase I Site Assessment
On November 6, 2013, ASTM International (“ASTM”) issued its revised Standard Practice for Phase I Environmental Site Assessments (“Phase I site assessments”) or “audits,” used in most commercial property transactions. While the new standard is generally a good development, it has created a true catch-22 for prospective purchasers.
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Where There’s Smoke There’s Fire? – How it Just Got Harder for Colorado Oil and Gas Operators to Meet Air Emissions Requirements
The Air Pollution Control Division (Division) has again revised its P.S. Memo 10-02: “Oil & Gas Atmospheric Condensate Storage Tank Batteries System Reporting Guidance (P.S. Memo)” to make several significant changes regarding reportable air emissions under Air Quality Control Commission Regulation No. 7, § XII. The revised P.S. Memo likely will make it more difficult for oil and gas owners and operators to comply with the system-wide volatile organic compound (VOC) emission reduction requirements applicable to condensate storage tanks in the Denver-Metropolitan Area and North Front Range 8-Hour Ozone Nonattainment Area (Nonattainment Area).
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Rebuilding After the Colorado Floods – Complying With Clean Water Act § 404
The recent devastating floods in Colorado have created significant challenges for a wide variety of companies. In the aftermath, affected businesses must quickly make important decisions related to response activities that may be subject to a variety of regulatory programs, including Section 404 of the Clean Water Act (CWA). Section 404 regulates the discharge of any dredged or fill material (including dirt and debris) into wetlands, streams, and other CWA-regulated Waters of the United States (WOUS). As companies rebuild damaged bridges, utility structures, railroad tracks, well pads, pipelines, access roads, and other structures in or around regulated WOUS, it will be critical to be mindful of the requirements and options for doing so under the 404 program.
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USPTO Launches IP Awareness Assessment Tool
The United States Patent and Trademark Office (USPTO), in partnership with the National Institute of Standards and Technology/Manufacturing Extension Partnership, has rolled out a so-called “IP Awareness Assessment,” which is a free, web-based tool designed to help users identify and provide information regarding the users’ intellectual property rights.
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SEC Approves General Solicitation and Advertising for Accredited Investor-Only Securities Offerings: Excludes
On July 10, 2013, the U.S. Securities and Exchange Commission (“SEC”) fulfilled its Congressional mandate by adopting new rules that will dramatically affect the landscape for unregistered securities offerings in the United States. These new rules authorize the use of general advertising and general solicitation methods in accredited investor-only offerings under the newly amended Rule 506. Historically, securities offerings that were not registered with the SEC were uniformly described as “private offerings,” because that was their common identifying feature – the securities could not be publicly offered. With the adoption of new Rule 506(c), that common understanding has been eliminated.
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Court Strikes SEC Rule Requiring Disclosure by Resource Companies of Payments to Governments
On July 2, 2013, the U.S. District Court for the District of Columbia vacated the rule adopted by the Securities and Exchange Commission implementing the statutory provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act mandating disclosure by oil and gas and mining companies of payments to certain governments. The regulation required disclosure on a new Form SD for fiscal years ending after September 30, 2013. The matter was remanded back to the SEC to draft a new rule more consistent with the statutory intent.
The statute had been adopted with the stated Congressional intent of “supporting the commitment of the Federal Government to international transparency promotion efforts relating to the commercial development of oil, natural gas, or minerals”. On September 12, 2012, the SEC adopted its implementing rule, which was challenged by the American Petroleum Institute on a number of grounds, including violation of the First Amendment and of various Administrative Procedure Act (APA) provisions. The court decided the case based on APA grounds, stating that the SEC had (i) misread the statute as requiring public disclosure by resource companies of governmental payments, and (ii) acted in an arbitrary and capricious manner in refusing to grant requests from companies seeking to be exempt from disclosure of payments to foreign governments, such as China, Qatar, Angola and Cameroon, which prohibit disclosure of such payment information. According to the court, the statute left open the possibility that payment disclosures could be made confidentially to the SEC, with only summarized data being made public, and the SEC erred by refusing to consider that possibility. With respect to disclosures prohibited by foreign governments, while the SEC acknowledged that the competitive burden on companies doing business in these countries would be increased, it stated that an exercise of exemptive authority in these cases would defeat the Congressional intent. The court disagreed, reading the statute as requiring compliance with the disclosure mandate only “to the extent practicable,” and imposing an obligation on the SEC to exercise its discretionary authority and consider the costs and burdens on competition in its rulemaking.
The SEC has not announced whether it will appeal the decision or, if no appeal is forthcoming, what the timetable might be on a new rulemaking process. Given the public comment and other procedures required in connection with rule-making, it seems unlikely that rules could go into effect on the original timetable, which required filings on Form SD by May 2014. However, absent Congressional action, some form of reporting of government payments by resource issuers is likely to be mandated in the future.
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Master Limited Partnership Parity Act Would Include Clean Energy Companies
On April 24, 2013, a bipartisan group of senators and representatives reintroduced a revised version of the Master Limited Partnership Parity Act (the MLP Parity Act) to the Senate and House. Currently, a company can qualify as a master limited partnership (MLP) only if at least 90 percent of its gross income consists of “qualifying income,” including income form the production and sale of oil and natural gas, coal extraction, and pipeline projects.