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January 18, 2017

As Obama Administration Draws to a Close, PHMSA Releases Final Rule for Hazardous Liquid Pipelines

Pipeline Safety Alert On January 13, 2017, one week before the end of the Obama administration, the Pipeline and Hazardous Materials Safety Administration (PHMSA) released a final rule amending the federal safety standards for hazardous liquid pipelines in 49 C.F.R. Part 195 (Final Rule). The Final Rule is the latest step in a lengthy rulemaking process that began with the issuance of a wide-ranging request for public comment in October 2010, followed by the publication of a rulemaking proposal in October 2015 that contained a number of changes and additions to the Part 195 regulations. While still a significant regulatory action, PHMSA narrowed the Final Rule to address public comments, the recommendations of the Liquid Pipeline Advisory Committee (LPAC), and concerns raised by the Office of Management and Budget (OMB). PHMSA established a general effective date of six months from publication in the Federal Register, and various effective dates for specific changes to Part 195. If previous transfers of presidential power serve as a guide, PHMSA’s decision to release the Final Rule in the last days of the Obama administration may not mark the end of the rulemaking process. To avoid the possibility of being returned to PHMSA for further review by the Trump administration, the Final Rule must be published in the Federal Register by January 20, 2017. Even if that deadline is met, the Trump administration could extend the effective date of the Final Rule, reopen the public comment period, or take other actions. What’s Changing (For Now)? In the Final Rule, PHMSA adopts the following changes to Part 195: • Reporting Requirements for Gravity and Unregulated Gathering Lines. Operators of certain gravity lines and unregulated gathering lines must submit annual, accident, and safety-related condition reports to PHMSA. The accident and safety-related condition reporting requirements go into effect six months after…

January 12, 2017

Coming to a Stream Near You? Fourth Circuit Imposes Water Quality Standard Based on Conductivity

Administrative Watch On January 4, 2017, the U.S. Court of Appeals for the Fourth Circuit issued a significant decision addressing the scope of obligations owed by a permittee under the Clean Water Act’s National Pollutant Discharge Elimination System (NPDES) program.  Ohio Valley Environ. Coalition v. Fola Coal Company, LLC  (Appeal No. 16-1024).  The case involves discharges from a surface coal mine in West Virginia, governed by a NPDES permit issued by the West Virginia Department of Environmental Protection (WVDEP) pursuant to its authority under an EPA-approved state permitting program.  Although some aspects of the ruling are based upon a regulatory provision that was formerly a part of coal-specific NPDES regulations, the principles approved by the court could be applied to virtually any NPDES permit held by any industrial discharger. In upholding the district court’s January 27, 2015 decision, the Fourth Circuit panel agreed that a NPDES permittee may be required to meet limits on the conductivity of its effluent (i.e., the ability of water to transmit electricity, based on the number and types of ions) even when no specific conductivity limits are set forth in its permit.  It based this conclusion on general language in Fola’s permit, incorporating by reference a WVDEP regulation specifying that the discharges covered by a NPDES permit “are to be of such quality as not to cause a violation of applicable water quality standards.”  Included among West Virginia water quality standards is a narrative standard that prohibits any discharge of pollutants that “materially contributes” to “a significant adverse impact to the chemical, physical, hydrologic, or biologic components of aquatic ecosystems….” Though conductivity is a property rather than a pollutant, the court held that Fola’s high-conductivity discharges led to conditions that violate this narrative water quality standard and therefore violate its permit. The district court based its ruling…

January 10, 2017

Ohio Jury Awards $17.5M in Damages to Ohio Resident Who Alleged DuPont’s Disposal of C-8 Caused His Cancer

Administrative Watch A jury in federal court in the Southern District of Ohio recently issued a verdict in the class action litigation related to DuPont’s release of perfluorooctanoic acid and/or ammonium perfluorooctanoate (C-8). The jury awarded Kenneth Vignernon a total of $17.5 million in compensatory and punitive damages after finding that DuPont acted with actual malice in discharging C-8, and that such action caused Plaintiff’s testicular cancer.

The recent verdict is the third to be reached in the lawsuits that have been filed against DuPont due to water allegedly contaminated with C-8, chemicals used by DuPont at its Washington Works plant located in West Virginia. Following the initiation of a class action lawsuit in 2001, DuPont and potential plaintiffs entered into an agreement in which independent epidemiologists (the “Science Panel”) would analyze blood samples of individuals residing near the plant to determine whether C-8 was harmful to humans (the “Agreement”). Under the terms of the Agreement, if the studies established a causal link between exposure to C-8 and any particular disease, DuPont agreed not to contest causation in any subsequent litigation involving that disease.

Between 2004 and 2011, the Science Panel studied approximately 40,000 samples obtained pursuant to the Agreement. In December of 2011, the Science Panel released its results, which concluded there was a probable link between exposure to C-8 and various diseases, including kidney and testicular cancer.

Following the release of the Science Panel’s study results, approximately 3,500 individual lawsuits were brought against DuPont by plaintiffs diagnosed with a linked disorder. In an effort to streamline the litigation, the District Court moved forward with six test cases, two of which ultimately went to trial. In March of 2016, a jury awarded Carla Bartlett $1.6 million in damages. Approximately four months later, a jury…

December 19, 2016

Release of draft permits marks beginning of new era in air permitting

PIOGA Press On the eve of Thanksgiving, the Pennsylvania Department of Environmental Protection released two draft general permits that, if finalized, would result in significant changes to the air permitting regime for oil and gas industry sources. The first general permit is a revised version of the existing plan approval/operating permit known as GP-5 for compressor stations and processing facilities. Although the draft revised GP- 5 includes a number of conditions that would create more burdensome obligations for industry, midstream operators are already accustomed to dealing with a general permit. GP-5 (in some form) has been around for a decade. The second draft general permit, known as GP-5A, represents an even greater departure from the status quo, as it would require operators to obtain an air permit for production facilities for the first time. Production facilities are currently authorized pursuant to an air permitting exemption known as Exemption 38. DEP released the draft permits in anticipation of an Air Quality Technical Advisory Committee (AQTAC) meeting scheduled for Decem – ber 8. AQTAC advises DEP on the technical, economic and other social impacts of major program changes like this one, and typically reviews a DEP proposal before the formal public comment period begins. A lot can be said about how this program shift may impact day-to-day operations and possibly increase the cost of doing business in Pennsylvania. But keep things in perspective: these permits are still in draft form and therefore remain subject to change. Although major concepts such as whether to even have a general permit for well sites are unlikely to change, the finer details of the permits will be worked out through a future public comment process. Nevertheless, operators would be wise to obtain a copy of the permits (available at www.dep.pa.gov/Business/Air/BAQ/AdvisoryGroups/AirQuality-Technical-Advisory-Committee/Pages) and take a closer look at the proposed conditions….

December 15, 2016

PHMSA Issues Interim Final Rule on Underground Natural Gas Storage

Pipeline Safety Alert On December 14, the Pipeline and Hazardous Materials Safety Administration (PHMSA) released a pre-publication version of an interim final rule (IFR) establishing minimum federal safety standards for underground natural gas storage facilities. The IFR takes effect 30 days from publication in the Federal Register. Since this rule is styled as an IFR, PHMSA will not be providing a public comment period before the rule takes effect. Comments on the IFR are due 60 days from the date of publication. PHMSA may consider making changes to the rule based on the comments filed. Comments on the new PHMSA information collection request contained in the IFR (related to new reporting requirements for storage) are on a shorter timeframe and are due 30 days from publication. What’s Changing?Downhole Regulation:  PHMSA will regulate the downhole portions (wells and reservoirs) of underground gas storage facilities for the first time. Although PHMSA has had statutory authority to regulate storage since 1968, the agency declined to use that authority for policy reasons. The 2015 Aliso Canyon natural gas storage leak prompted changes to the Pipeline Safety Laws earlier this year, and those changes require PHMSA to regulate storage. • Incorporation of API Recommended Practices (API RP):  PHMSA will incorporate by reference the API recommended practices for underground natural gas storage (RP 1170 for salt caverns and RP 1171 for depleted reservoirs) covering reservoir and well design, integrity and monitoring, risk management, recordkeeping, integrity verification, site security and safety, emergencies, procedures, training and other subjects. Notably, the IFR mandates compliance with the “should” statements and other permissively worded provisions in the API RPs. • Reporting:  PHMSA will require storage operators to file annual, incident and safety-related condition reports, and file 60-day notices for certain construction activities (new storage facilities,…

December 12, 2016

EPA Issues Regulations for Substitutes to Ozone Depleting Substances under Clean Air Act Title VI

Administrative Watch The United States Environmental Protection Agency (EPA) has recently finalized rulemakings that extend standards promulgated under Title VI of the Clean Air Act (CAA) to substitutes for ozone depleting substances (ODS). The use of such substitutes will now potentially trigger new compliance obligations for many industries. A final rule published by EPA in November will subject certain substitute refrigerants to new requirements, such as leak rate thresholds, inspection, reporting and corrective action requirements associated with leaks, and sales restrictions of such substances. Under Section 608 of the CAA and 40 CFR 82, subpart F, EPA had previously imposed such requirements exclusively for substances listed as a class I or class II ODS under CAA Section 602. However, within this rulemaking, EPA interpreted its authority under CAA Section 608 to include regulation of many non-ODS, including hydrofluorocarbons (HFCs) and perfluorocarbons (PFCs), based in part on its estimation of such substances’ potential to contribute to global warming. Therefore, use of ODS substitute refrigerants that are not exempted from the “venting” prohibition in 40 CFR 82.154 may now trigger additional compliance requirements under Title VI of the CAA, even if such substances are not ODS. EPA has also finalized a rule pending publication that further restricts the use of many ODS alternatives under its Significant New Alternatives Policy (SNAP) program. Under Section 612 of the CAA, EPA’s latest SNAP rule will restrict the use of several HFCs, hydrofluoroolefins (HFOs), and other refrigerant types within many applications based upon their high global warming potential. These recent rulemakings indicate that companies should not assume CAA Title VI-related regulations to be limited to ODSs. Rather, even the exclusive use of non-ODS substances may nonetheless incur additional compliance obligations under Title VI. If you have questions related to these rulemakings or EPA’s regulations pertaining to refrigerants, please contact Michael…

December 1, 2016

Pennsylvania Mechanics’ Lien Law Amendments: DGS Online Construction Notices Directory in Effect January 1, 2017

On December 20, 2016 Babst Calland will present an informative and timely session on using the Pennsylvania Department of General Services (DGS) online “State Construction Notices Directory,” which lien claimants will be required to use on all construction projects greater than $1.5 million beginning January 1, 2017. Attendees will receive hands-on training from Babst Calland construction attorneys in navigating the new online directory, as well as learn about the Mechanics’ Lien Law Amendments and how these changes will significantly impact the rights of contractors, subcontractors and suppliers in filing mechanic’s lien claims. This seminar is endorsed and recommended by the following construction trade associations: Master Builders’ Association Of Western Pennsylvania, Inc., Constructors Association of Western Pennsylvania, Pennsylvania Builders Exchange, Associated Builders and Contractors, Inc., American Subcontractors Association of Western PA, and Keystone Contractors Association. For more information or to register click here.

November 28, 2016

Pipelines are safe

They already are the safest way to transport energy – and getting safer
Pittsburgh Post-Gazette By Keith J. Coyle
In a recent op-ed published in the Post-Gazette, “Gas Pipelines Represent Prosperity” (Sept. 5 Perspectives), David Spigelmyer and James Kunz described the many benefits that Pennsylvanians could see from the expansion of natural-gas pipelines and related energy infrastructure in the commonwealth. That op-ed prompted a response from Art Wegweiser (Oct. 3), who wrote that Mr. Spigelmyer and Mr. Kunz “seem to deftly dance around the issue of safety, with only a passing reference to this vitally important aspect” of natural-gas development. Mr. Wegweiser is right to draw attention to pipeline safety. There are thousands of miles of pipelines in Pennsylvania, and the people of the commonwealth expect these lines to operate safely. He also is right to remind the industry about the effect that significant pipeline accidents can have on people, property and the environment. These events, while extremely rare, demonstrate the importance of continuing to pursue the industry’s goal of zero incidents. The good news, according to a 2015 report from the American Gas Foundation, “Natural Gas Pipeline Safety and Reliability: An Assessment of Progress,” is that pipelines are safe — and getting safer. As the AGF observes: • Pipelines are the safest means of transporting energy products. Data compiled by the Bureau of Transportation Statistics show that pipelines have been the cause of fewer fatalities and injuries than the trucking and rail industries over the past decade. Data compiled by the Pipeline and Hazardous Materials Safety Administration show a significant reduction in the number of pipeline incidents involving fatalities or injuries over the past two decades. Reports from the U.S. Government Accountability Office and nongovernmental entities reach similar conclusions. • The natural-gas industry invests more than $19 billion annually in pipeline safety…

November 23, 2016

United States District Court Enjoins Enforcement of New Overtime Rule

As discussed in Babst Calland’s Employment Bulletin on May 20, 2016, the United States Department of Labor (DOL) published a Final Rule titled Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees (the “Final Rule”). Among other things, the Final Rule more than doubled the salary threshold required for employees to qualify for the executive, professional, or administrative exemptions allowed by the Fair Labor Standards Act (FLSA) and contained automatic updates to the salary thresholds. The Final Rule was set to go into effect on December 1, 2016. On November 22, 2016, however, the United States District Court for the Eastern District of Texas granted an emergency injunction to enjoin the application of the Final Rule. The injunction was filed against the DOL by twenty-two states and requested that the DOL be enjoined from enforcing the Final Rule. In granting the injunction request, the district court reasoned that the DOL was without statutory authority to issue and implement the Final Rule. Accordingly, the court enjoined application of the Final Rule, on a nationwide basis. Specifically, the court ruled that the DOL is enjoined from implementing and enforcing the Final Rule. Accordingly, until further notice, employers do not have to change overtime practices to comply with the DOL’s Final Rule. Babst Calland’s Employment and Labor Group will continue to keep employers apprised of further developments related to this and other employment and labor topics.If you have any questions or need assistance in addressing the above-mentioned area of concern, please contact John A. McCreary, Jr. at (412) 394-6695 or jmccreary@babstcalland.com, Stephen A. Antonelli at (412) 394-5668 or santonelli@babstcalland.com, or Christopher M. Helms at (412) 394-6477 or chelms@babstcalland.com. Click here for PDF.

November 22, 2016

PHMSA increases civil penalties and commits to providing detailed calculations in individual cases

The PIOGA Press The following first appeared as a Pipeline Safety Alert issued by law firm Babst Calland. On October 17, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published a General Policy Statement on Civil Penalties in the Federal Register. Representing the most recent step in the evolution of PHMSA’s enforcement process, the policy  statement is significant for several reasons. First, PHMSA is making a public commitment to release its proposed civil penalty calculation for individual enforcement cases. While standard practice for many other federal agencies, PHMSA has not historically provided the regulated community with its methodology for calculating proposed civil penalty amounts. Second, PHMSA is acknowledging the adoption of a Civil Penalty Framework as the agency’s policy for calculating proposed penalties, and will publish that Civil Penalty Framework on its website. Under PHMSA’s previous policy, operators received that document only upon request. Finally, and perhaps most significantly, the policy statement confirms that PHMSA will be assessing higher civil penalties (within the statutory maximums) in future enforcement cases, and that greater weight will be afforded to certain factors in determining penalty amounts. The statutory framework The pipeline safety laws require PHMSA to consider several factors in determining the amount of any civil penalty assessed for a particular violation. Three mandatory factors must be considered in all cases: (1) the nature, circumstances and gravity of the violation, including adverse impact on the environment; (2) the degree of the violator’s culpability, any history of prior violations and any effect on ability to continue doing business; and (3) the violator’s good faith in attempting to comply. Two other factors may be considered as a matter of discretion: (1) the economic benefit gained from the violation without any reduction because of subsequent damages, and (2) any other matters that justice requires. As recently adjusted for inflation under…

November 17, 2016

Supreme Court of Appeals of West Virginia Sides with Landowners in Eminent Domain/Pipeline Decision

Administrative Watch On November 15, 2016, the Supreme Court of Appeals of West Virginia in Mountain Valley Pipeline, LLC v. McCurdy (W. Va. No. 15-0919, Nov. 15, 2016), held that a private company may not enter private land for the purposes of surveying in preparation for an eminent domain action unless that company establishes that it is entitled to assert eminent domain over the private property. Mountain Valley Pipeline retained surveyors to survey certain private property in Monroe County, West Virginia, over which it intended to build a natural gas pipeline to transport natural gas from Wetzel County, West Virginia, to Pittsylvania County, Virginia.  Mountain Valley Pipeline intended to condemn the private property pursuant to West Virginia’s eminent domain statute, which allows condemnation by a private company if the land is going to be used for a “public use,” and claimed that the surveying work was necessary to prepare for the construction of the pipeline.  The McCurdys, who owned some of the property, sought an injunction to prevent the surveyors from entering their land, which the Circuit Court of Monroe County, West Virginia, granted. Writing for the West Virginia Supreme Court, Justice Robin Davis found that an individual may not enter onto private property to survey for the purpose of eminent domain unless the condemned property was going to be put to a “public use” as defined by West Virginia law.  As used in the eminent domain context, West Virginia law requires that the “public use” be “use” by residents and entities inside West Virginia’s boundaries.  As Mountain Valley Pipeline had not presented any evidence indicating that any residents or entities (other than itself and associated affiliates) would benefit from the construction of the pipeline to be constructed, representatives of Mountain Valley Pipeline were not permitted to enter the McCurdys’ land for…

November 9, 2016

NLRB Reinstitutes Employer’s Obligation to Bargain Before Disciplining Employees

The Legal Intelligencer Employers who are currently negotiating an initial collective bargaining agreement should be mindful that the National Labor Relations Board (NLRB) recently reaffirmed its analysis in Alan Ritchey, 359 NLRB 396 (2012), regarding an employer’s obligation to bargain before disciplining individual employees when a union has been certified, but has not yet entered into a collective bargaining agreement with the employer. On Aug. 26, in Total Security Management Illinois 1 & International Union Security Police Fire Professionals of America (SPFPA), 364 NLRB 106 (2016), the NLRB reiterated that an employer may not impose discretionary discipline when it is engaged in negotiations for an initial collective bargaining agreement with a recently certified union. Rather, the NLRB held, before imposing discipline on an employee within the bargaining unit, an employer must provide the union with notice and an opportunity to bargain unless the employee’s continued presence on the job presents a serious, imminent danger to the employer’s business or personnel. The NLRB’s ruling in Total Security essentially revived the legal principles asserted in Alan Ritchey, which the U.S. Supreme Court invalidated on procedural grounds in 2014. In Total Security, the employer, a provider of security planning and security services, discharged three of its security guards without providing their union any notice or opportunity to bargain. The union had been certified as the exclusive representative of a bargaining unit that included the three discharged guards. At the time of the discharges, the employer and the union had not reached an initial collective bargaining agreement. As a result of the discharges, the employer was charged with allegedly violating Section 8(a)(5) of National Labor Relations Act (NLRA), which makes it an unfair labor practice for an employer to refuse to bargain collectively. The NLRB administrative law judge, relying on Alan Ritchey, found the employer’s discharge of…

October 31, 2016

EPA Releases New Environmental Justice Action Agenda

Administrative Watch On October 27, 2016, the United States Environmental Protection Agency (EPA) released the Environmental Justice 2020 Action Agenda (EJ 2020), which outlines the EPA’s environmental justice strategic plan for 2016 to 2020. This most recent publication builds off the EPA’s previous environmental justice strategic plan for 2010 to 2014 (EJ 2014), which developed basic guidance and tools for integrating environmental justice into EPA’s programs and policies. EJ 2020 is the agency’s latest effort to focus on environmental and public health issues confronting the country’s minority, low-income, tribal, and indigenous populations. EPA defines “environmental justice” as “the fair and meaningful treatment of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.” The vision of EJ 2020 is to integrate environmental justice into the agency’s actions, cultivate partnerships to improve on-the-ground results, and create a path of achieving better environmental outcomes and reducing disparities in overburdened communities. EJ 2020 has three primary goals. The first goal of EJ 2020 is to deepen environmental justice practices within EPA programs to improve the health and environment of overburdened communities. This will involve further integrating environmental justice into EPA’s rulemaking, permitting, compliance and enforcement, and scientific efforts. EJ 2020’s second goal is to work with partners to expand its positive impact within overburdened communities. This includes working with state and local governments, collaborating with federal agencies, deploying community-based resources, and partnering with tribes and indigenous peoples. The third goal of EJ 2020 is to demonstrate progress on significant national environmental justice challenges. EPA has identified lead disparities, drinking water, air quality, and hazardous waste sites as the four major national environmental justice challenges to be addressed by EJ 2020. EPA intends EJ 2020 to be an action document, providing the basis…

October 24, 2016

Higher Penalties, Greater Transparency: PHMSA Increases Civil Penalties and Commits to Providing Detailed Calculations in Individual Cases

Pipeline Safety Alert On October 17, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published a General Policy Statement on Civil Penalties (Policy Statement) in the Federal Register. Representing the most recent step in the evolution of PHMSA’s enforcement process, the Policy Statement is significant for several reasons. First, PHMSA is making a public commitment to release its proposed civil penalty calculation for individual enforcement cases. While standard practice for many other federal agencies, PHMSA has not historically provided the regulated community with its methodology for calculating proposed civil penalty amounts. Second, PHMSA is acknowledging the adoption of a Civil Penalty Framework as the agency’s policy for calculating proposed penalties, and will publish that Civil Penalty Framework on its website. Under PHMSA’s previous policy, operators only received that document upon request. Finally, and perhaps most significantly, the Policy Statement confirms that PHMSA will be assessing higher civil penalties (within the statutory maximums) in future enforcement cases, and that greater weight will be afforded to certain factors in determining penalty amounts. The Statutory Framework The pipeline safety laws require PHMSA to consider several factors in determining the amount of any civil penalty assessed for a particular violation. Three mandatory factors must be considered in all cases, i.e., (1) the nature, circumstances, and gravity of the violation, including adverse impact on the environment; (2) the degree of the violator’s culpability, any history of prior violations, and any effect on ability to continue doing business; and (3) the violator’s good faith in attempting to comply. Two other factors may be considered as a matter of discretion, i.e., (1) the economic benefit gained from the violation without any reduction because of subsequent damages, and (2) any other matters that justice requires. As recently adjusted for inflation under the Federal Civil Penalties Inflation Adjustment Act of 2015, PHMSA’s administrative civil penalties are capped at $205,638 per violation per day, not to exceed $2,056,380 million for any related series of violations. PHMSA…

October 21, 2016

Commonwealth Court Reiterates Standards When Interpreting Zoning Ordinances

The Legal Intelligencer  In Pennsylvania, municipal governing bodies and zoning hearing boards are entitled to considerable deference when interpreting and applying their own zoning ordinances. This deference is based largely on the premise that municipal bodies and boards charged with drafting and administering zoning ordinances possess an unparalleled knowledge of and expertise in their own ordinances, as in In re Thompson, 896 A.2d 659, 669 (Pa. Commw. Ct. 2006). However, this deference is not without limit. The General Assembly and Pennsylvania courts have established the following statutory construction standards to guide municipal bodies and boards in their interpretations: • Governing bodies and boards must construe the words and phrases of a local zoning ordinance according to rules of grammar and according to their common and approved usage, Section 1903(a) of the Statutory Construction Act, 1 Pa.C.S. Section 1903(a). • Governing bodies and boards have an obligation to construe the words of an ordinance as broadly as possible to give the landowner the benefit of the least restrictive use, as in Albert v. Zoning Hearing Board of North Abington Township, 854 A.2d 401, 405 (Pa. 2004). • Any doubt as to undefined words or terms in a local zoning ordinance must be resolved in favor of the landowner and the least restrictive use of the land, as in Kissell v. Ferguson Township Zoning Hearing Board, 729 A.2d 194, 197 (Pa. Commw. Ct. 1999). • When attempting to define an undefined ordinance term, governing bodies and boards may look to statutes, regulation or dictionaries for assistance, as in Hartman v. Zoning Hearing Board of Cumru Township, 133 A.3d 806, 810 (Pa. Commw. Ct. 2016). • A ordinance’s plain language generally provides the best indication of legislative intent and thus statutory construction begins with an examination of the text itself, as in Malt Beverages Distribution v. Liquor Control…

October 17, 2016

The new Chapter 78a regulations have arrived

The PIOGA Press After years of rulemaking activity, the Pennsylvania Department of Environmental Protection’s new Chapter 78a regulations for surface activities associated with unconventional wells became effective on October 8. This article will review the status of the regulations and the next steps for implementing Chapter 78a across the Commonwealth.  Timing The Chapter 78 (conventional wells) and 78a (unconventional wells) Subchapter C rulemaking was adopted in February by the Environmental Quality Board (EQB). However, as discussed in the July issue of The PIOGA Press, the passage of Act 52 of 2016 abrogated the portion of rulemaking applicable to conventional oil and gas development. After review by the Attorney General’s Office and the Commonwealth Joint Committee on Documents, DEP withdrew all proposed amendments applicable to conventional oil and gas wells, making changes in Chapter 78 only to clarify its scope and remove all references to unconventional wells. Chapter 78a will be published in substantially the same form as approved by EQB in February and the Independent Regula – tory Review Commission in April. DEP published the final Chapter 78a rules, titled “Environmental Protection Performance Standards at Oil and Gas Well Sites,” in the Pennsylvania Bulletin on Saturday, October 8. The new rules became effective upon publication, with some provisions for future registration and modification of permitting facilities, such as fresh water and centralized impoundments. DEP was required to complete all the new forms and guidance referenced in Chapter 78a before publication. Training In August and September, DEP presented training webinars on topics associated with the final Chapter 78a rulemaking for operators, contractors and any other interested parties. Training topics included pipelines and horizontal directional drilling, waste management, emergency response, secondary containment, spills and releases, well permits and reporting, water management plans, area of review, erosion control, and site restoration. Audio recordings of the webinars, along with…

Old Quiet Title Making New Racket

Oil and Gas Committee Newsletter (ABA Section of Environment, Energy, and Resources) The growth of the U.S. economy in recent decades, along with contemporaneous expansion in industrialization and energy use abroad, has caused an explosion in demand for oil and natural gas. During that same time, oil and natural gas exploration and production companies have innovated new methods and techniques for extracting natural resources that were once considered inaccessible. New geologic reserves of hydrocarbons are being discovered at a rapid pace and the ability to develop new reserves has improved dramatically. Read more.  

October 14, 2016

PHMSA Releases Emergency Order Interim Final Rule

On October 14, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published its Interim Final Rule (IFR) entitled “Pipeline Safety: Enhanced Emergency Order Procedures” in the Federal Register.  The agency had previously issued a pre-publication version of this rule on October 4.  See Babst Calland’s Pipeline Safety Alert.  PHMSA will use these new regulations to implement its emergency order authority conferred by Congress in the “Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2016” (PIPES Act).  PHMSA may issue an emergency order to address an unsafe condition or practice, or a combination of unsafe conditions or practices that pose an imminent hazard to public health and safety or the environment.   The IFR contains administrative procedures that PHMSA must follow in determining if an imminent hazard exists, the factors that must be considered before PHMSA issues an emergency order, and the content of those orders, including a description of the persons subject to the restrictions, prohibitions, or safety measures and the standards and procedures for obtaining relief. The IFR also creates a process for administrative review of an emergency order that is largely patterned on the statutory text in 49 U.S.C. § 60117(o), including the referenced procedural rules for HazMat emergency orders in 49 C.F.R. § 109.19.

PHMSA may use this authority starting today, October 14.  Interested parties may file comments on this final rule until December 13, 2016.

October 13, 2016

State Courts Are Clarifying Legal Authority of Local Governments to Regulate Oil and Gas Activities

The Foster Report As opponents of oil and gas development increasingly look for ways to exert local control, key state court rulings over the last few years have attempted to clarify, in so-called preemptive challenge cases, what the role of local governments actually is in regard to regulating oil and natural gas activities, explained panelists at the recent Shale Insight Conference in Pittsburgh, Pennsylvania. Driven by citizen pressure or their own volition, local governments throughout the Appalachian Basin in West Virginia, Ohio, and Pennsylvania are increasingly attempting to limit or ban unconventional shale development through the adoption of ordinances or referenda. The question in West Virginia and Ohio appears to be a bit clearer, due to court rulings confirming that local governments do not have the authority to regulate oil and gas activities. However, in Pennsylvania, a state that may one day be the nation’s largest producer of gas, the legal authority remains murky, said conference presenter Krista-Ann Staley, an attorney at Babst Calland. Staley told the Foster Report October 5, that the Pennsylvania Supreme Court’s ruling on September 28 cases, allow local governments limited powers to regulate oil and gas development in MPC (i.e., zoning, subdivision and land development) and floodplain ordinances. The local ordinances still cannot supersede state regulation of oil and gas development. West Virginia. Two…

October 11, 2016

PADEP’s Chapter 78a Rulemaking Goes into Effect for Unconventional Operations in Pennsylvania

Administrative Watch

On Saturday October 8, 2016, the Pennsylvania Department of Environmental Protection’s new Chapter 78a regulations associated with unconventional wells went into effect when they were published in the Pennsylvania Bulletin. For unconventional well operators, there are substantial changes from prior law affecting operations over the entire life of the well, from permitting to site construction, waste handling, impoundments, pipelines, site restoration and spill remediation.

Critical New Provisions in Chapter 78a One major revision to the rules arises in sections 78a.15(f) and (g), which set out the pre-application requirements for a well permit at a location that “may impact a public resource.” This provision requires operators who propose to drill a well in such locations to notify the public resource agency, which now by definition includes schools, municipalities, and owners of playgrounds or water supplies, and provide additional information to DEP. The regulation applies if the limit of disturbance of the well site is located in any of eight specified areas, including “in a location that will impact other critical communities” and “within 200 feet of . . . a playground.” The public resource agency must be notified at least 30 days prior to the submission of the well permit application to DEP to allow the agency to provide written comments to DEP and the applicant. The applicant may provide a response to the comments. DEP will then consider various factors, including the comments submitted by both the public resource agency and the applicant, before setting conditions for the well permit based on impacts to public resources. Pipeline operators are for the first time within the scope of oil and gas regulations promulgated under Act 13. Under section 78a.68a, pipeline operators conducting horizontal directional drilling (HDD) beneath a body of water or a watercourse are subject to notification requirements. The rule requires such…

PHMSA Releases a Final Rule Expanding the Required Use of Excess Flow Valves

Pipeline Safety Alert On October 7, the Pipeline and Hazardous Materials Safety Administration (PHMSA) released a pre-publication version of its Final Rule entitled “Expanding the Use of Excess Flow Valves in Gas Distribution Systems to Applications Other Than Single-Family Residences” (EFV Final Rule).  In response to statutory changes and a National Transportation Safety Board recommendation, PHMSA is expanding the existing requirement that operators install an excess flow valve (EFV) on certain natural gas distribution pipelines to additional types of new or replaced service lines.  The agency is also requiring curb valves or other manual shut-off valves on new or replaced service lines with meter capacities above 1,000 standard cubic feet per hour (SCFH) and requiring operators to notify customers of their right to request the installation of an EFV on certain types of service lines.  The EFV Final Rule will become effective six months after the date of publication in the Federal Register, which is expected within 7—10 days. An EFV is a safety device installed inside a distribution service line between the main and the meter which can reduce the risk of an incident in the event of damage to the line by shutting off excessive gas flows.  Since 2010, PHMSA has required operators to install EFVs on new or replaced gas service lines servicing single-family residences (SFRs) unless the service line meets certain exceptions. EFVs must now be installed on the following service lines: 
  • Branched service lines to a SFR installed concurrently with the primary SFR service line (a single EFV may be installed to protect both lines);
  • Branched service lines to a SFR installed off a previously installed SFR service line that does not contain an EFV;
  • Multi-family installations, including duplexes, triplexes, fourplexes, and other small multifamily buildings (e.g., apartments, condominiums) with known customer loads at time of service installation,…

October 4, 2016

Robinson Township Revisited: The Pennsylvania Supreme Court Addresses Remaining Challenges to Act 13

Administrative Watch The Pennsylvania Supreme Court declared the last remaining challenged sections of Act 13 of 2012 to be invalid in an opinion issued September 28, 2016 in the Robinson Township v. Commonwealth line of cases (“Robinson IV”). The Supreme Court agreed with the Commonwealth Court that the portions of Act 13 giving the Public Utility Commission (“PUC”) and the Commonwealth Court jurisdiction to (1) review local zoning ordinances, (2) withhold impact fee payments and (3) award attorneys’ fees against municipalities were not “severable” from the sections of Act 13 imposing statewide zoning standards for oil and natural gas development previously invalidated by the Supreme Court in December 2013 (“Robinson II”). Regarding Chapter 32 of Act 13, the Supreme Court reversed the Commonwealth Court and held that Act 13’s provisions for the disclosure of hydraulic fracturing additives in a medical context and notice of spills to public drinking water suppliers but not to owners of private wells were unconstitutional “special laws.” Finally, the Supreme Court reversed the Commonwealth Court and held that the grant of eminent domain powers to companies for gas storage purposes violated the constitutional prohibitions against takings in the Fifth Amendment of the U.S. Constitution and Article I, Section 10 of the Pennsylvania Constitution. With respect to the plurality opinion in Robinson II, the PUC asked the Court to disavow its analysis of Article I, Section 27 of the Pennsylvania Constitution, commonly known as the Environmental Rights Amendment (“ERA”), as not precedential and “out of step” with the wisdom of prior existing law. Because the question had not been preserved, the Court declined to consider it. In its discussion of the questions presented by the PUC appeal, the Supreme Court also addressed the viability of Section 3215, which has been the subject of both controversy and litigation with the Department of Environmental Protection (“DEP”). Among other things, Section 3215(e) granted the Environmental Quality Board the authority to develop regulations for DEP to condition…

PHMSA Releases Emergency Order Interim Final Rule

Pipeline Safety Alert On October 4, the Pipeline & Hazardous Materials Safety Administration (PHMSA) issued a pre-publication Interim Final Rule (IFR) implementing the new emergency order authority that PHMSA received in the PIPES Act of 2016.  The IFR will become effective on the date of its publication in the Federal Register, which is expected within days.  PHMSA has provided a 60-day public comment period. Federal agencies may issue IFRs without providing prior notice and comment under the good cause exception in the Administrative Procedure Act. The courts have emphasized that the good cause exception is to be narrowly construed, and that the existence of a statutory deadline does not, in and of itself, constitute good cause unless a delay would threaten real harm.  PHMSA’s justification for issuing the IFR is that the PIPES Act contains a 60-day deadline for establishing temporary emergency order regulations, making compliance with the notice and comment requirements in the APA impracticable and not in the public interest. As required by the PIPES Act, the IFR contains administrative procedures that PHMSA must follow in determining if an imminent hazard exists, the factors that must be considered by PHMSA before issuing an emergency order, and the content of those orders, including a description of the persons subject to the restrictions, prohibitions, or safety measures and the standards and procedures for obtaining relief. The IFR also creates a process for administrative review of an emergency order that is largely patterned on the statutory text in 49 U.S.C. § 60117(o), including the referenced procedural rules for HazMat emergency orders in 49 C.F.R. § 109.19. The process allows for the filing of a petition for review seeking a formal hearing before an Administrative Law Judge (ALJ), or an informal hearing before the Associate Administrator. In either scenario, the…

September 16, 2016

Ohio Supreme Court Decides Cases Interpreting the Ohio Dormant Mineral Act

Administrative Watch On September 15, 2016, the Ohio Supreme Court issued three opinions and dispensed with 10 other related cases regarding the interpretation of the application of the Ohio Dormant Mineral Act (O.R.C. § 5301.56) (ODMA). The issues surrounding the ODMA resulted in all-or-nothing litigation regarding ownership of dormant mineral interests between surface owners and mineral owners, and oil and gas lessees claiming through both sides. The Ohio Supreme Court determined that the 1989 version of the ODMA (1989 Act) was not self-executing in that title to abandoned mineral interests did not vest in surface owners automatically by operation of law, but that surface owners claiming that mineral interests were abandoned were required to seek a judicial determination as to abandonment by filing a quiet title action. Therefore, any surface owner claiming title to abandoned minerals under the 1989 Act was required to obtain a court order confirming that the interests were abandoned and vested in the surface owner under the law. The Court also determined that the 2006 version of the ODMA (2006 Act) displaced the 1989 Act, and that any surface owner claiming title to abandoned minerals after the enactment of the 2006 Act must follow the notice and recording procedures set forth in the 2006 Act. Finally, the Court held that the payment of delay rentals under an oil and gas lease are insufficient savings events under the ODMA. The lead case of Corban v. Chesapeake Exploration, L.L.C., Slip Opinion No, 2016-Ohio-5796, was an appeal from the United States District Court for the Southern District of Ohio, Eastern Division, which certified two questions to the Supreme Court: (1) whether the 2006 Act or the 1989 Act applies to claims asserted after 2006 alleging that oil and gas rights vested in the surface owner, and (2) whether the payment of delay rentals under an oil and gas lease constitutes a “title transaction” and therefore a “savings event” under the…

September 12, 2016

FAA Issues Performance-Based Standards for Applicants Seeking a Waiver of the Small Unmanned Aircraft Rules

Pipeline Safety Alert The Federal Aviation Administration (FAA) recently issued its Performance-Based Standards highlighting information that an applicant must include in order to seek a waiver of Part 107, the rules that apply to the operation of a small unmanned aircraft system (small UAS or drones). (See previous Babst Calland pipeline safety alerts for more information on the Small UAS Final Rule and the waiver process.) Applicants may seek a waiver from many of the Part 107 regulations. However, the line-of-sight restriction (14 C.F.R. § 107.31) is of particular interest to the energy industry who may want to use a small UAS to conduct inspections of linear infrastructure. Applicants seeking a waiver of the line-of-sight requirement must demonstrate the method or means by which it will be able to: • continuously know and determine the position, altitude, attitude, and movement of the small UAS to ensure the aircraft remains in the area of intended operation; • avoid other aircraft, people on the ground, and ground-based structures and obstacles at all times; • increase the visibility of the small UAS in order to be seen at a distance of three statute miles unless a system is in place that can avoid all non-participating aircraft; • be alerted of any malfunction affecting the operation of the small UAS; and • ensure that all persons participating in the operation have relevant knowledge of all aspects of operating a small UAS that is not within the visual line of sight of the remote pilot. Since the effective date of the small UAS Final Rule, the FAA has granted 76 waivers of various sections of Part 107. The majority of these applications sought a waiver of the daytime operation limitation but at least two waivers were focused on line of sight. The FAA granted an application from a railroad company allowing a waiver of the line-of- sight requirements as long as the company does…