Oil companies may now freely export all kinds of crude oil without involvement from BIS.
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About a year-and-a-half ago, when Anna Sewell, a new lawyer for EarthJustice, moved across the country to Seattle from the heart of the Marcellus shale natural gas drilling hub in Pennsylvania, she expected to leave behind the local furor created by the huge numbers of new unconventional gas wells drilled in the area. Instead, as she drove westward, she saw first-hand that the Marcellus was only the tip of the iceberg. From mile-long crude oil trains to oil field workers sharing her 4:00 AM oatmeal at a hotel in Dickinson, North Dakota, to an astounding number of dramatic flares flanking the highways at night, there were signs everywhere along the route that the fracking revolution extended well beyond the Northeast’s natural gas supply.

How fracking helped push the crude oil export ban over the edge

Anna’s travels illustrated the new reality of the modern American energy industry and its widespread deployment of new drilling techniques like hydraulic fracturing (“fracking”). In fact, Americans in many regions of the country have witnessed an enormous surge in the production of both oil and natural gas. Shale-dominated regions like the Marcellus, the Eagle Ford in Texas, and the Bakken formation in North Dakota and Montana, have become household names as companies vie for drilling rights on public and private lands.

As domestic oil production surged, so did US oil companies’ efforts to lobby Congress for a repeal of the export ban in the hopes of finding overseas markets for the glut of crude they had created. For forty years, the ban generally prohibited the export of crude oil. By the end of 2015, however, the industry’s long campaign against the ban finally proved successful when Congress repealed it, opening the floodgates to all kinds of crude oil exports.

No one knows for sure what the full effect of lifting the ban will be. Regardless of whether crude oil exports increase meaningfully in the coming months and years, it is clear that they had already skyrocketed in the last few years. In 2014 alone, weekly crude exports increased by more than 700 percent not because of Congressional action, but because the Obama administration had been quietly eroding the law.

What you need to know about the crude oil export ban lift.

No public input on the rule change

In deliberate response to increasing domestic oil production, a little-known federal agency called the Bureau of Industry and Security (BIS) had begun considering ways to loosen the crude export ban. The ban prohibited the export of crude oil and condensate, a very light form of crude oil, unless it had been processed through a crude “distillation tower,” but it did allow firms to export refined petroleum products such as gasoline and diesel. In the summer of 2014, BIS issued unusual new commodity classifications to oil companies, labeling their condensate as a refined petroleum product that was eligible for export even under the ban. The change meant that oil companies could freely export their condensate to other countries without a license, which was important to the industry because the Eagle Ford Shale region in Texas was producing vast quantities of condensate.

After BIS issued its new classifications, the agency decided it needed to take formal action to clarify its new position on crude oil exports. BIS considered its legal options and ultimately opted not to provide the public with the customary opportunity to comment on its policy via either a public rulemaking or a public environmental review process. Instead, BIS decided to publish confusing FAQ-style documents on its website. It was a remarkably high-handed response for an agency that had just effectively changed the definition of crude oil, thus allowing the export of fuel that had been only minimally distilled. The FAQs identified several new factors the agency would use to unilaterally determine if condensate or crude had been sufficiently processed in order to be classified as a refined petroleum product that was not subject to the ban. BIS refused to publicly admit this was a policy change and kept the commodity classifications and related documents secret.

The Sightline and Earthjustice lawsuit

On February 10, 2015, Sightline Institute retained Earthjustice to file a formal Freedom of Information Act request, seeking the release of documents related to BIS’s new FAQs, as well as the commodity classifications BIS had issued to oil companies in summer 2014. When BIS failed to release any documents whatsoever, Earthjustice filed a lawsuit on Sightline’s behalf seeking the requested documents. BIS then released documents that indicated it had considered pursuing a rulemaking or environmental review process, but decided instead to issue the FAQs. Yet BIS still refused to release the condensate commodity classification documents, claiming they were privileged records that could be withheld from the public.

  • In December 2015, while the lawsuit was ongoing, Congress repealed the crude export ban altogether. The repeal happened quickly, and somewhat unexpectedly, via a rider on the omnibus spending bill. The rider completely lifted the ban, although it preserves the authority of the President to reinstate the ban for one-year periods in certain limited circumstances. The documents BIS had withheld were therefore rendered historical footnotes. As a result, Sightline dismissed its Freedom of Information Act lawsuit.

    Consequences for Cascadia

    Oil companies may now freely export all kinds of crude oil without involvement from BIS. This new regulatory landscape, coupled with the surge in crude exports created by BIS’s secretive weakening of the ban in 2014, may have potentially serious environmental and public health consequences for many years to come. Rising numbers of crude oil trains and tankers moving through our towns and ports will increase the risk of spills and explosions along rail routes and in sensitive waterways like Puget Sound. The change also marks a step backward in efforts to reduce carbon pollution. With the now-unfettered ability to export crude, it is especially important that we prevent the fossil fuel industry from turning the Northwest into a pipeline for US crude exports to Asia.

    These developments raise the stakes in a standoff that’s already underway: oil companies striving to develop major crude shipment depots squaring off with local and regional anti-fossil fuel movements like the Thin Green Line in the Northwest.

    Read more: Sightline sues Obama administration over crude oil exports.

    Anna Sewell is an associate attorney in Earthjustice’s Northwest office.