American Oil and Gas Reporter - December 2015 - 107

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refinery workers. Meanwhile, he noted,
Democrats more closely aligned with environmentalists tend to think legislation
that contains crude exports also should
contain credits for alternative energy or
other green group priorities, all of which
could repel conservative Republicans.
"We have to have at least six Democrats
in the Senate-without losing any Republicans-to get 60 votes," Fuller observed.
Other Issues
The Liaison Committee also heard
from Rick Ingram, health and safety adviser for BP America's U.S. Onshore
Division and co-founder and chairman
of the Service, Transmission, Exploration
& Production Safety (STEPS) Network.
Ingram said the National Institute for
Occupational Safety & Health and the
National Occupational Research Agenda
had been looking into questions of silica
hazards for workers at hydraulic fracturing
operations. "NIOSH/NORA did some
good, objective research," he assessed.
Ingram said Assistant Secretary of
Labor for the Occupational Safety and
Health Administration David Michaels
had inquired about industry efforts and,
thanks to STEPS, Ingram was able to
quickly set up a conference call with
more than 100 participants. "We were
able to get in front of that issue so OSHA
did not overreact," he described. "It was

under pressure from the White House
and the press, but we were able to show
them we were working on it."
Nevertheless, he predicted that OSHA
was likely to unveil a rule on silica dust
soon. "That is one of its highest priorities,"
Ingram reported. "Hydraulic fracturing
is going to require some pretty good engineering controls."
Ultimately, he advised, the upstream industry would be wise not to ignore the
issue. "How many of you have seen a television commercial with attorneys trying to
get people to join a mesothelioma lawsuit?"
he posed. "From what I see at 25,000 feet,
respirable crystalline silica in hydraulic fracturing is the mesothelioma of the future."
Meanwhile, Elyea reported that the
Internal Revenue Service was on the
verge of undermining family limited partnerships, which he described as a very
effective estate planning tool for small
family businesses. "It allows you to gift
or sell interests in your business to your
family members and still, in many cases,
maintain control," he detailed. "In many
cases, the descendant's estate can qualify
for a discount and save a substantial
amount of tax.
"The IRS has hated that provision for
years," he continued. "It is going to issue
new regulations. We do not know what
they will say, but they either are going to
eliminate or substantially limit those dis-

counts."
When OIPA's Terry expressed incredulity that the IRS would go after tax
treatment that originated in statute, Elyea
promised the matter would be litigated.
"They are trying to legislate through regulation," he mused.
Near the Liaison Committee meeting's
end, IPAA Vice President of Crude Oil
and Natural Gas Regulatory Affairs Susan
Ginsberg raised the subject of a notice of
proposed rule making from the Pipeline
and Hazardous Material Safety Administration for natural gas transmission lines.
"Most troubling to our industry is that the
proposed rule will regulate gathering, over
which PHMSA has jurisdiction but historically has left alone," she related. "Production lines are not in PHMSA's jurisdiction, but there will be concerns about
the definition of where gathering starts."
Attorney Jonathan Airey, a partner
in Vorys, Sater, Seymour and Pease
LLP in Columbus, Oh., and chairman
of the IPAA Law Committee, reflected,
"With the liquid issues we encounter in
the midstream at this stage, there may
be more interest in this for IPAA producers than there has been historically.
On the hazardous liquids lines, (PHMSA)
is going to extend notices and annual
reports to unregulated gathering. The
real focus is redefining unregulated gathering."
❒

LAWYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FROM PAGE 99

geologists, marketing experts, people who
have knowledge about gas exploration,
company owners to talk about the hardships they are going to face.
"If you could win through me, you
would benefit all of western New York.
I really am stunned that the politicians
are not fighting to protect all of you, and
most importantly, protect the citizens of
New York."
DEC Update
With the high-volume fracturing ban in
place, DEC is focused more on compliance
than permitting, reported Theodore Loukides,
chief of the compliance and enforcement
section of DEC's Division of Minerals.
The agency attempted to rewrite a
host of high-volume fracturing regulations
in 2008, when New York producers first
expressed interest in the Marcellus Shale,
he said, but those efforts failed to advance.
New York changed its policies regarding
shut-in wells, and adopted a scoring grid
offered by the Interstate Oil & Gas Compact
Commission, he reported. The grid evaluates a well's physical location as well as

the condition of the site and equipment,
and develops a numerical score reflecting
its relative environmental threat. Loukides
warned wells that scored low would not
be approved for shut-in status.
The DEC's interest in old oil fields
has caused some consternation among
producers, Loukides admitted. He added
the interest, arising in the wake of the
supplemental generic environmental impact
statement, came from what he called "a
very activist group in the agency." Those
staff members have focused on bulk
storage and brine disposal. DEC requirements for petroleum bulk storage tanks at
a fueling or port facility are far different
than those for oil production, but some in
DEC don't see that distinction, he said.
"The bulk storage people are not really
interested in consent orders; they are much
more interested in compliance," he advised.
'You are most likely to see notices of violation for brine and storage tank issues,
but you need to address them. If you get
one of these notices, please don't put it
aside. Take care of it, and you could make
r
a significant issue go away."

The New York Department of Environmental Conservation now focuses on
compliance rather than permitting, the
result of the state's imposition of a ban
on high-volume hydraulic fracturing,
Theodore Loukides, chief of the compliance and enforcement section of DEC's
Division of Minerals, tells the Independent
Oil & Gas Association of New York's annual convention, held Oct. 21-22.

DECEMBER 2015 107

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