This column has previously addressed the increasing likelihood of 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 or collect."
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 eastern Utah.
Challenges from Federal Wildlife Protection Statutes
The federal wildlife protection statutes pose several challenges for oil and gas compliance efforts:
- 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 regulators.
- 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.
Discussion With FERC Chairman Jon Wellinghoff
