This column has previously addressed the increasing likelihood
federal regulation of upstream oil and gas activities,
principally by the EPA. EPA regulatory efforts could substantially
increase compliance costs for oil and gas operators. However, a
greater impediment to oil and gas development may come from
statutes enforced by the U.S. Fish and Wildlife Service and by
NOAA. NGOs who oppose oil and gas development are increasingly
looking to the Endangered Species Act (ESA), the Marine Mammals
Protection Act (MMPA) and the Migratory Bird Treaty Act (MBTA) to
oppose oil and gas development.
The Endangered Species Act was enacted in 1973 to provide for
the conservation of species that are determined to be endangered or
threatened. Under the act, the U.S. Fish and Wildlife Services or
NOAA's National Marine Fisheries Service may list a species as
"threatened" or "endangered." A listing of a
species can occur after a status review by one of the agencies or
as a result of a petition by any U.S. citizen or organization.
If a species is listed as "endangered," then Section 9
of the ESA prohibits the "taking" of that species. If a
species is listed as "threatened," then both FWS and NMFS
take the position that they may, by regulation, restrict the taking
of the species. "Taking" is defined as "to harass,
harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect,
or to attempt to engage in any such conduct." Similar
protection is afforded to marine mammals under the MMPA.
"Taking" is defined under the MMPA as "harass, hunt,
capture, kill or collect, or attempt to harass, hunt, capture, kill
Oil and gas operators and service companies whose operations
could result in the "taking" of an endangered species may
be required to apply for an "incidental take" permit to
protect the company if its operations result in the unintentional
taking of an endangered or threatened species. As you might
imagine, the process for obtaining such a permit is both time
consuming and expensive.
On January 1 of this year, BOEM and BSEE issued two Notice to
Lessees (NTLs), Joint NTL No. 2012-G01 and Joint NTL No. 2012-G02,
setting forth requirements for vessels working in support of Gulf
of Mexico oil and gas operations and offshore seismic to take
measures to reduce the likelihood of vessel strikes and the impact
of air gun blasts on marine mammals. The NTLS specify that 21
species of whales and dolphins, 5 species of sea turtles and 1
species of manatee could be encountered in the Gulf of Mexico,
including the smallest species of sea turtle, the
Kemp's ridley sea turtle.
On land, NGOs are pointing to a variety of plant and wildlife
that may be endangered by oil and gas operations, including the
spectacled eider, greater sage grouse, Graham's penstemon,
Wyoming pocket gopher, Kentucky arrow darter, tan riffleshell,
whooping crane, polar bear and, of particular interest to oil and
gas operators in the Permian Basin, the
dunes sagebrush lizard. It is not coincidental that the
habitats of the species listed above are located in developed and
developing oil and gas plays such as Alaska, the Bering Sea, shale
formations in the West and Midwest, the Permian Basin and the Gulf
of Mexico. For example, the Graham's penstemon is a flower
that, according to one organization, is found only on oil shale in
Challenges from Federal Wildlife Protection
First, is the possibility that, in addition to the traditional
permitting requirements imposed by state laws, operators may be
required to seek incidental take permits from federal
Second are the increased costs and operational restrictions
that may be imposed by those permits, such as the training and
staffing requirements imposed under the NTLs recently issued by
BSEE and the possibility that operations may have to be suspended
if an endangered or threatened species is encountered.
Finally is the risk that criminal enforcement could arise from
normal, otherwise lawful operations. U.S. Fish and Wildlife
Services takes the position that the Endangered Species Act imposes
strict criminal liability for the taking of an endangered species,
even if that taking was unintentional and incidental to otherwise
lawful activities. Recently, two federal district courts have
dismissed prosecutions under the Endangered Species Act after
concluding that Congress did not intend to criminalize incidental
takings of that nature, but there is also case law supporting a
"strict liability" interpretation of the criminal
provisions of the act.
You may not know what Kemp's ridley sea turtles and dunes
sagebrush lizards are, but they could be significant to your
company and your compliance program.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
The Mintz Levin Energy & Clean Technology practice group worked on over 45 transactions in 2013 and helped energy and clean technology clients on a wide range of matters, including financing transactions, joint ventures and other arrangements with investors and global corporations from the United States, China, Russia, Europe, India and Japan.