Baker McKenzie’s North America Energy response team recently surveyed a number of key oil and gas producing jurisdictions across the United States — representing approximately 90% of domestic oil production — to assess how these jurisdictions are responding to the recent collapse in the oil price from a regulatory perspective.
No two jurisdictions are identical in their response, and our analysis reveals a range of approaches. Texas, Oklahoma, and North Dakota are responding pro-actively, pursuing top-down solutions to address the crisis (e.g., considering mandatory production cuts, allowing operators to shut-in production, etc.) while New Mexico, Pennsylvania, and the Bureau of Land Management (BLM) are offering more limited, selective relief and typically doing so on a case-by-case basis (e.g., offering environmental compliance derogations upon request, issuing guidance to address specific issues, etc.). In a third group, California, Colorado, West Virginia, Wyoming, Ohio, and the Bureau of Ocean Energy Management (BOEM) are taking a non-interventionist, “business as usual” approach, abstaining from any substantial action for now.
In the course of our review, we detailed the actions taken by each of the jurisdictions surveyed with respect to production cuts, relief for state-owned lands, environmental enforcement, and contractual relief. We then grouped the jurisdictions by their level of engagement and responsiveness in facing the crisis — seeking to identify common themes and takeaways — and will discuss each group in turn.