American Oil and Gas Reporter - October 2015 - 132

challenges so we can comment on them
as we need. But, with the regular state
legislative session over, the Texas Alliance
is concentrating more on federal issues."
Alliance President and Chief Executive
Officer Alex Mills says the association
is monitoring more than 40 state and
federal issues. Association leaders and
members will discuss which issues will
be given priority during their annual
Board of Directors meeting Nov. 4-5 at
Fort Worth's Downtown Hilton Hotel.
Mills clarifies that all Alliance members
are welcome to attend.
"The most timely and important issue
we are focusing on is Congress lifting
the export ban on crude oil," Mills said
in early September. "I feel it has a lot of
momentum and support in both houses.
But, there is only so much time left in
the session, and I worry we are going to
lose a lot of that momentum if the ban
isn't lifted this year."

Taxes And ESA
Mills and Stevens both say the Alliance's federal priorities are tax issues,
endangered species listings, and environmental regulations, especially the
EPA's methane reduction and "waters of
the United States (WOTUS)" regulations.
"Tax simplification has been a major
concern for the Alliance ever since President Barack Obama took office in January
2009," Mills notes. "He has proposed repealing percentage depletion and expensing intangible drilling costs in every
single budget he has submitted to Congress.
"So, the Alliance is working with industry partners in Washington, specifically
the Independent Petroleum Association
of America and the American Petroleum
Institute, to ensure federal policymakers
understand that these tax provisions are
vital to our industry," he continues.
Both Alliance representatives also discuss the association's ongoing battle with
ESA species listings and the USFWS.
Stevens says four species native to Texas
will be considered for listing within the
next few months:
* The monarch butterfly;
* The spot-tailed, earless lizard, which
is native to the Eagle Ford area in South
Texas;
* Sprague's pipit, a bird that migrates
to South Texas in the winter; and
* 12 varieties of freshwater mussels.
"We are working with Texas Parks &
Wildlife very closely on these possible
listings," Stevens confirms. "All these
species live or migrate through production-heavy areas of the state. If any are
listed, it will affect oil and gas operations
in Texas and other states."

Mills says the Alliance continues to
fight against the species listings on various
legal and political fronts, describing USFWS's "sue-and-settle" policy with environmental groups as a questionable
practice. "The Alliance is involved in a
lawsuit against the service because of
that policy, and the U.S. House has had
hearings on the matter," he says. "Environmental groups are bringing a massive
number of legal actions against the USFWS, forcing it to determine whether to
list these species as threatened or endangered.
"Because of that, we also are trying
to get the Endangered Species Act
changed," Mills adds. "USFWS can't
keep up with all these possible species
listings, and the law requires it to do that
within a certain period."

Growing EPA Regulations
Additionally, Mills remarks that EPA's
seemingly constant regulatory updates
and additions are of particular concern
to the Texas Alliance and its partners.
He mentions especially the White House's
Clean Power Plan, which President Obama
announced in August. Over the next 15
years, the plan seeks to reduce U.S.
carbon emissions from power generating
facilities by 32 percent below 2005 levels.
(AOGR, September 2015, pg. 158).
Mills also discusses EPA's latest regulations to reduce methane emissions
from oil and gas operations, which the
agency proposed in August. The program
seeks to lower greenhouse gas and volatile
organic compound releases from oil and
gas operations over the next 10 years by
as much as 45 percent below 2012 levels.
He says EPA's proposed regulations require operators to find and repair leaks,
capture gas from completed wells, and
limit emissions from equipment.
"Between the Clean Power Plan and
these methane emission regulations, the
oil and gas industry is going to keep
slowing in an already poor financial environment," Mills suggests. "Increased
natural gas use already is helping to cut
greenhouse gas emissions nationwide. If
the Obama administration wants to continue that trend, it should not be creating
additional burdens on both the energy
extraction and utility industries."
Stevens says EPA's expanded WOTUS
definition under the Clean Water Act
seems to be a jurisdictional "land grab,"
and this authoritative change still confuses
many industry leaders, he allows. "I do
not know how to advise our members on
this issue," he comments. "For instance,
if they want to drill in a 100-year flood
plain in the Texas Panhandle, we do not
have the information on whether EPA

132 THE AMERICAN OIL & GAS REPORTER

includes that area under WOTUS. This
piece of ground is barely a cow path, but
it could be included under the new definition."
Texas Alliance members and staff are
working subjectively to determine whether
any drilling, compressor, or pipeline location is under CWA jurisdiction, Stevens
elaborates. However, he clarifies that,
while the act is law in Texas, the Alliance
is waiting on the result of the state's
legal challenge to the rule, which was in
a U.S. district court as of mid-September.
Mills says the Alliance has various
other federal environmental and regulatory
issues it will continue to monitor, but he
did point to one "clear victory" for the
industry in regards to EPA's five-year
investigation into the impact of hydraulic
fracturing on drinking water.
"In its preliminary report, the agency
found state regulatory agencies had done
an excellent job, and suggested states
should continue to be the primary regulatory agencies for hydraulic fracturing,"
he states. "We agree with EPA's findings,
as state-based regulations allow for variation in geology, economy, and environment that federal-based regulations would
not accommodate as easily."
Seismicity Suits
Regarding state issues, Mills mentions
the Texas Railroad Commission's ongoing
investigation of and meetings on increased
seismic activity near Azle, Tx.
He says a report by Southern Methodist
University linked Azle's seismic events
to nearby wastewater injection wells. As
a result, he says, the Railroad Commission
ordered both XTO Energy and EnerVest
Operating LLC to "show cause" why
their disposal wells should not be shut
in.
Mills says at an RRC technical hearing,
EnerVest representatives testified that
the earthquakes were deeper than the
company's wells. In orders issued Aug.
31 and Sept 10, the RRC determined that
"a preponderance of the evidence" did
not support a "likely" link between the
injection wells and the Azle earthquakes
(see story page 25).
Stevens suggests the commission sided
with the oil companies because the SMU
researchers "did not have all the appropriate data."
Mills agrees that the study lacked the
in-depth data the companies were able to
supply from their wells. He says that
while SMU's study was flawed, the
overall investigation was a step in the
right direction and that Azle's increased
seismic activity does need to be studied
more. "The Azle community is very anx-



American Oil and Gas Reporter - October 2015

Table of Contents for the Digital Edition of American Oil and Gas Reporter - October 2015

Contents
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