Scattered and Dissonant: The Clean Air Act, Greenhouse Gases, and Implications for the Oil and Gas Industry

In the midst of a domestic oil and gas production revolution, the Environmental Protection Agency (EPA) has constructed a web of findings and regulations to control greenhouse gas (GHG) emissions from stationary sources under the auspices of the Clean Air Act. This Article explores the theoretical and practical implications for the oil and gas industry of EPA’s Clean Air Act GHG regulatory regime that, in light of congressional paralysis, will continue to expand beyond major new and modified oil and gas facilities such as refineries and natural gas processing plants. Future rulemakings directly aimed at the oil and gas industry will likely include lower regulatory thresholds for permitting and control technology requirements, performance based GHG emissions standards for refineries, and amendments to recently-adopted air emissions performance standards for oil and gas production to address GHG. Indirectly, contemplated rules for new and existing power plants may effectively eliminate coal as a substitute for natural gas in the generation of electricity, causing the domestic price of natural gas and electricity to increase amid inevitable liquefied natural gas exports to foreign nations. If a federal market-based program is ever adopted, GHG reporting requirements indicate that oil and gas companies could be assessed and forced to pass on to consumers the cost of GHG automobile emissions. All of these regulatory programs will eventually sweep in smaller independent oil and gas producers and increase the cost to produce, process, and refine oil and gas

Intermediate Sanctions: Controlling the Tax-Exempt Organization Manager

On August 4, 1988, the Department of the Treasury issued proposed intermediate sanctions regulations that allow the Internal Revenue Service to impose significant excise taxes on executives of tax-exempt organizations who receive compensation in excess of reasonable compensation or in excess of amounts that would ordinarily be paid for like services by like enterprises. Exempt organization theory holds that government provides a tax exemption to further social goals, but those goals are frustrated when management has conflicting incentives. In a for-profit entity, management and firm owners have conflicting goals when control is separated from ownership, but in a tax-exempt entity, owners are replaced by beneficiaries interested in the charitable goals of the organization. This note argues that, in contrast to the corporate for-profit goal of maximizing profits, the tax-exempt organization should seek to maximize public goods by maximizing expenditures on programs, which incentives the manager to increase revenues and decrease administrative costs. The new intermediate sanction regulations may tend to frustrate the goal of program expenditure maximization by promoting compensation comparisons with other organizations, ex ante evaluations of compensation reasonableness, and the occurrence of transaction costs to support reasonableness determinations

Creatures of Circumstance: Conflicts Over Local Government Regulation of Oil and Gas

Scholars periodically note the impending upsurge in local oil and gas regulation, offering various reasons for increased local action. Papers written only a few years ago attribute greater local action in the West to population growth, increased urbanization, and increased demand for energy. Consider, however, more recent phenomena. First, population migration from more liberal states to more traditionally conservative producing states likely plays a role, as new residents [11-4] bring perspectives opposing drilling activity. Second, while the suburbs continue to expand into the oil patch, the oil patch has expanded into the suburbs and urban areas as well. Hydraulic fracturing may be an “old” technology, but it was little more than a decade ago that Devon Energy (shortly after its acquisition of Mitchell Energy) began large-scale commercial production in the Barnett Shale that kicked off the “shale boom.” As evinced by the Barnett Shale, operators may produce this prolific new source of production from underneath cities and towns. Third, “fracking” is now commonly accused of dangers ranging from groundwater contamination to promiscuity and drug addiction. Negative media reports8 and well-organized public awareness campaigns trumpeting these dangers have strongly influenced local residents and local politics

On Local Fracking Bans: Policy and Preemption in New Mexico

In the midst of the hydraulic fracturing revolution, elected officials in Mora County, New Mexico recently banned all oil and gas production within the county. But the officials went even further, stripping corporations of constitutional rights and declaring the constitutions of the United States and the state of New Mexico illegal if interpreted as inconsistent with the ordinance. Why would a small rural county like Mora with no oil and gas operations to speak of adopt such an extreme ordinance? This article applies economics, political choice, and localism theories to argue that Mora County’s decision may be at least partly explained by special interest group influence. The severance of land into separate surface and mineral estates exacerbates the influence disparity by concentrating votes in residents with little to no participation in the proceeds of production. Reasonable, traditional land use restrictions certainly have a place to protect truly local interests. This article maintains, however, that outright bans and extreme restrictions improperly infringe upon state interests

How Contract Boilerplate Can Bite

Lawyers and academics often use the term “boilerplate” to refer to standardized non-negotiable contracts that prey upon consumers. But for more sophisticated contracts drafted and negotiated by transactional lawyers, the term refers to those common, usually short, and seemingly innocuous provisions at the end of the contract, often under a heading entitled “general” or “miscellaneous.” While these provisions seem harmless enough, for those transactional lawyers unfortunate enough to see 50 or 100 page contracts the subject of litigation, experience shows that crafty litigators with ample time and will to research and argue the meaning of each word in the contract will claim that notices are defective, implied waivers have been granted, and anti-assignment clauses are invalid. Worse yet they may materialize a previously unknown claimant that sues on a theory of third party beneficiary rights. This article examines the legal ramifications of these beastly boilerplate provisions, how they might inflict a stinging and painful bite, and the means to tame the monsters

Fracking in Louisiana: The Missing Process/Land Use Distinction in State Preemption and Opportunities for Local Participation

Oil and gas development is testing and defining the boundaries of local government authority and autonomy as concerned municipal entities and citizens seek to limit oil and gas operations. Advances in high-volume hydraulic fracturing have increased domestic oil and gas production to historic levels.) At the same time, national and international concerns about irreversible man-made global warming have focused on fossil fuel combustion. National groups opposed to continued reliance on oil and gas as an energy source have found willing partners in many local governments and their citizens, who are anxious about the local implications of drilling and fracking. Many citizens and environmental organizations coalesce around local environmental risks such as the potential degradation of ground and surface waters and air quality, seismic activity, and social and economic costs on the local area-including increased truck traffic, road damage, noise, housing shortages, and boom and bust cycles. Particularly in urban or suburban areas, voters may also perceive drilling and fracking as a threat to property values, aesthetics, and lifestyles