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November 2, 2017

Deduction of Post-Production Expenses from Royalty Payments in Ohio

Legal Perspective A federal court recently addressed two contentious issues affecting calculation of royalty payments from production of shale gas in Ohio: (1) whether operators may deduct post-production expenses (costs for gathering, compression, treatment, processing, transportation, and dehydration) when calculating royalty payments; and (2) whether operators are required to pay royalties on all gas extracted at the wellhead – including gas that is lost between the wellhead and the point of sale (i.e. “line loss” gas).  Lutz v. Chesapeake Appalachia, L.L.C., No. 4:09-cv-2256, Dkt. 142 (N.D. Ohio, Oct. 25, 2017) (Judge Sara Lioi). In 2009, a group of five lessors commenced a putative class action suit in the federal District Court for the Northern District of Ohio against Chesapeake Appalachia, L.L.C., Columbia Energy Group, and NiSource, Inc.  The lessors claimed that, since 1993 the producers had been “deliberately and fraudulently” underpaying the gas production royalties owed to the lessors by (1) deducting post-production expenses from the royalty payments, (2) calculating royalty payments on volumes less than the amount of gas produced at the wellhead, and (3) using a sale price that was less than the market price for gas.  In response to a motion by the producers, the court dismissed the entire complaint as time-barred by the statute of limitations.  On appeal of that order, the Sixth Circuit determined that the breach of contract claim was not entirely time-barred because each alleged monthly underpayment would constitute a separate breach of contract that triggered a new accrual period under the statute of limitations. Lutz v. Chesapeake Appalachia, L.L.C., 717 F.3d 459, 470 (6th Cir. 2013).  As a result, the lessors may assert a breach of contract claim for alleged underpayments that occurred during the four years prior to commencement of the action.  The Sixth Circuit also noted that the lessors “may be…

October 23, 2017

EPA Administrator Pruitt Issues “Sue and Settle” Directive and Institutes New Public Participation Requirements for EPA Settlements of Defensive Lawsuits

Legal Perspective – Environmental  On October 16, 2017, EPA Administrator Scott Pruitt issued a directive formally ending the so-called “sue and settle” practices by the Agency. The directive, per an accompanying memorandum, was prompted by the EPA’s practice of resolving defensive lawsuits through consent decrees and settlement agreements “that appeared to be the result of collusion with outside groups.” Previous administrations were criticized when settlement of these lawsuits drove the policies and priorities of the Agency without input from states and regulated parties. The Administrator declared that the days of regulation through litigation are over, and the “EPA will not resolve litigation through backroom deals with any type of special interest groups.” Sue and settle practices have arisen in a variety of circumstances. For example, the Clean Air Act requires the EPA to review and revise regulations on fixed schedules that were imposed by Congress. Historically, the EPA has struggled to meet many of these statutory deadlines. Other  lawsuits include challenges to regulations issued by the Agency or lawsuits seeking to compel the Agency to perform a non-discretionary duty. The plaintiffs bringing lawsuits against the EPA include environmental groups, individuals, states, industry stakeholders and trade associations. The Administrator’s directive broadly addresses lawsuits filed against the EPA but does not encompass the settlement of enforcement actions initiated by the EPA or administrative appeals of permits issued by the EPA. The directive is aimed at increasing transparency and public participation in accordance with the principles of administrative law. To enhance public participation, the directive requires the EPA to make certain documents publicly available within specified timeframes: -Website publication:  Within 15 days of receipt or service, the EPA’s Office of General Counsel must publish online notices of intent to sue the Agency and complaints or petitions for review regarding an environmental law, rule, or regulation. -Notice to…

June 23, 2017

The Pennsylvania Supreme Court Reexamines the Environmental Rights Amendment

Administrative Watch  The Pennsylvania Supreme Court has rejected the long-standing test for analyzing claims brought under Article I, Section 27 of the Pennsylvania Constitution, commonly known as the Environmental Rights Amendment (ERA). In its June 20, 2017 decision in Pennsylvania Environmental Defense Foundation (PEDF) v. Commonwealth, the Supreme Court set aside the test from Payne v. Kassab that has been used since 1973, and held that the Commonwealth’s oil and gas rights are “public natural resources” under the ERA and that any revenues derived from the sale of those resources must be held in trust and only expended to conserve and maintain public natural resources. The Supreme Court’s opinion in PEDF is an important step in the ongoing judicial re-examination of the ERA. However, the impact of the Court’s decision on environmental and land use issues beyond the relatively narrow facts of this case remains unclear. Factual Background A statutory special fund in Pennsylvania, known as the Oil and Gas Lease Fund (Lease Fund), holds all rents and royalties from oil and gas leases of Commonwealth land. The Lease Fund was originally required, by statute, to be used “exclusively used for conservation, recreation, dams, or flood control.” In 1995, the Pennsylvania Department of Natural Resources (DCNR) became the entity responsible for making appropriations from the Lease Fund for projects. Between 2009 and 2015, the Pennsylvania General Assembly made a number of budgetary decisions related to the Lease Fund, including the enactment of Sections 1602-E and 1603-E of the Fiscal Code, which transferred control over the royalties from oil and gas leases from the DCNR to the General Assembly and required that there could be no expenditures of money in the Lease Fund from royalties unless that money was transferred to the General Fund by the General Assembly. PEDF brought claims challenging Sections 1602-E, 1603-E,…

May 16, 2017

Clean Water Act Squeeze Play: EPA Asks the Fourth Circuit Not to Force Work on New Water Quality Standards Pending Appeal in “Constructive Submission” TMDL Case

Administrative Watch  On May 2, 2017, the U.S. District Court for the Southern District of West Virginia (Chief Judge Robert C. Chambers) issued a Memorandum Opinion and Order denying a request by the Environmental Protection Agency (EPA) for a Stay of that court’s earlier decision on liability, in an important pending Clean Water Act case. Ohio Valley Environ. Coalition, et al. v. Pruitt (Civil Action No. 3:15-0271; S.D.W.Va.). At issue is a February 14, 2017 decision issued by Judge Chambers, granting summary judgment to the plaintiff groups (collectively, “OVEC”) against EPA. In that ruling, the court directed EPA to either approve or disapprove the “constructive submission” of “no TMDLs ” for all biologically impaired bodies of water within West Virginia, within 30 days. OVEC filed the underlying action based upon the listing by the West Virginia Department of Environmental Protection (WVDEP) of 573 streams as “biologically impaired” under the WVDEP’s narrative water quality standards, one of which prohibits “materials in concentrations which are harmful…to man, animal, or aquatic life.” This list (known as a Clean Water Act “303(d) List”) was started in the late 1990s and includes streams that were added as recently as 2010, using a tool known as the “West Virginia Stream Condition Index.” Ordinarily, when a stream is listed on a 303(d) List as impaired, the relevant state agency develops a TMDL for that stream (which is a formula or method for limiting the concentration of pollutants flowing into the stream and thereby returning it to compliance). In 2012, the West Virginia Legislature amended the West Virginia Water Pollution Control Act by directing the WVDEP to develop a new tool to assess the health of biological communities for purposes of determining compliance with the WVDEP’s biological water quality standard. Once that new methodology is finalized, an…

April 4, 2017

Trump Executive Order Withdraws Obama Administration Actions on Climate Change and Requires Review of Regulations Affecting Energy Sector

Administrative Watch  This is the second in a series of Administrative Watch alerts to assist in understanding the significant regulatory actions arising out of the Trump administration, and the effect of legal challenges to those actions by environmental groups.

On March 28, 2017, President Donald Trump signed an Executive Order entitled “Promoting Energy Independence and Economic Growth,” with the stated policy of “promot clean and safe development” of domestic energy resources and ensuring an affordable and reliable supply of electricity, while “avoiding regulatory burdens that unnecessarily encumber energy production, constrain economic growth, and prevent job creation.” Although the Executive Order does not itself withdraw any rules issued by the U.S. Environmental Protection Agency (EPA) or other agencies, it clearly reflects President Trump’s intent to drastically change course from the Obama administration’s stance on climate change and to seek reducing environmental regulation of, among other sources of greenhouse gases, coal-fired power plants and oil and natural gas operations.

This Executive Order revokes existing Executive Order 13653, signed by President Barack Obama on November 1, 2013, which expressly recognized the existence of and potential impacts from climate change and directed interagency efforts to prepare for such impacts. The Executive Order signed by President Trump also revokes and rescinds several presidential memoranda and executive reports, including but not limited to:

  • The President’s Climate Action Plan (June 2013), which, among other things, identified Obama administration priorities and laid the groundwork for measures to reduce carbon dioxide emissions from power plants, reduce methane emissions from oil and gas operations and other industries, and increase investment in renewable energy sources; and
  • Presidential Memorandum on Power Sector Carbon Pollution Standards (June 2013), which directed EPA to develop and publish proposed rules to establish carbon dioxide emissions standards for existing, new, modified and reconstructed power plants.

March 8, 2017

Early Moves in Trump Administration Reduce Regulation, Rouse Environmental Groups

Administrative Watch 

This is the first in a series of Administrative Watch alerts to assist in understanding the significant regulatory actions arising out of the Trump administration, and the effect of legal challenges to those actions by environmental groups.

The first 60 days of the Trump administration have seen a host of executive and congressional actions impacting environmental regulations and the energy sector. Industry has largely applauded these moves, but environmental groups have signaled that they intend to aggressively challenge these actions in court: Executive ActionsRegulatory Freeze Memo. On January 20, 2017, White House Chief of Staff, Reince Priebus, issued a memo to the heads of all departments and federal agencies imposing a temporary moratorium on most regulatory actions. The memo indicated that no new regulations should be sent to the Office of Federal Register (OFR) without the review and approval of the new administration; that any regulations awaiting publication by the OFR should be withdrawn; and that consideration should be given to postponing the effective date of any recently-published regulations for at least 60 days. On January 24, 2017, the Acting Director of the Office of Management and Budget (OMB) issued guidance to agencies implementing the Regulatory Freeze memo. OMB directed executive agencies to promptly identify effective dates that need to be extended. OMB also discussed the types of rules that would likely meet the exceptions laid out in the Regulatory Freeze memo. Examples include those rules that would frustrate statutory or judicial deadlines such as the civil penalty adjustments required to be filed as a result of the Federal Civil Penalties Inflation Adjustment Act of 1990. • Presidential Pipeline Memoranda. On January 24, 2017, President Donald J. Trump issued memoranda calling for the expedited review and approval of two pipeline projects that had been blocked or stalled…

March 3, 2017

Executive Order Aims to Roll Back Clean Water Rule

Administrative Watch

On February 28, 2017, President Donald Trump signed an executive order, Restoring the Rule of Law, Federalism, and Economic Growth by Reviewing the “Waters of the United States Rule” (the Order), directing his administration to withdraw and reconsider the Clean Water Rule (the Rule), 80 Fed. Reg. 37054 (June 29, 2015). The Order is the first step in following through with President Trump’s campaign pledge to eliminate the Rule, which he characterized as a “massive power grab,” and begins the lengthy process of rescinding or revising the Rule.

The Clean Water Rule sought to clarify the definition of “waters of the United States” (WOTUS) and the extent of federal authority to regulate these waters under the Clean Water Act (CWA) after years of differing interpretations. The Rule was widely regarded by industry as having expanded the extent of waters to be regulated under the CWA. As a result, the Rule was generally considered to broaden the jurisdictional reach of the United States Army Corps of Engineers (the Corps) and United States Environmental Protection Agency (the USEPA) with regard to issues such as permitting for wastewater discharges and dredge and fill activities in navigable waters. The Rule was challenged by numerous industry groups, as well as 31 state attorney generals, including Scott Pruitt, the newly-appointed Secretary of the USEPA. Amid questions as to whether the court of appeals or the federal district court is the appropriate forum to hear challenges to the Rule, the United States Supreme Court granted review of this jurisdictional issue in January 2017. The Rule has been stayed in light of these ongoing challenges.

The recent Order lays out the following policy: “It is in the national interest to ensure that the Nation’s navigable waters are kept free from pollution, while…

February 3, 2017

Pennsylvania DEP Invites Public Comment on Controversial Air General Permits for Oil and Gas Industry

Administrative Watch The Pennsylvania Department of Environmental Protection (DEP) has announced the beginning of a public comment period regarding two draft general permits that, if finalized, would result in significant changes to the air permitting regime for oil and gas industry sources. According to a notice published in the Pennsylvania Bulletin on February 4, 2017, DEP also proposes to revise the Air Quality Permit Exemptions document (DEP Doc. No. 275-2101-003) as it relates to oil and gas exploration, development, and production activities. The draft permits and proposed revisions to the exemption document present a number of timing, cost, and other implementation considerations for oil and gas operators. The first draft permit is a revised version of the existing general plan approval/operating permit known as “GP-5” for compressor stations and processing facilities. The draft revised GP-5 would be available for natural gas compressor stations, processing plants, and, for the first time, transmission stations. It includes a number of conditions that would expand on existing obligations for midstream operators who are accustomed to dealing with GP-5. For example, the revised GP-5 includes specific requirements for the control of methane emissions from storage vessels and other sources. The second draft 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 “unconventional natural gas well site operations” and “remote pigging stations” for the first time. Production facilities are currently authorized pursuant to the air permitting exemption known as “Exemption 38” in DEP Doc. No. 275-2101-003. DEP treats oil and gas exploration, development, and production activities which fall under Exemption 38 as exempt from the obligation to obtain an air permit. The Pennsylvania Bulletin notice indicates that DEP intends to divide Exemption 38 into two separate categories, Exemption 38a and Exemption 38b. Exemption 38a…

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 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…

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…

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 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…

June 23, 2016

EPA Issues Technical Guidance For Assessing Environmental Justice In Regulatory Analysis

Administrative Watch The United States Environmental Protection Agency’s (“EPA’s”) latest publication demonstrates that issues relating to environmental justice will have a significant impact on regulatory actions in the near future and will be an important topic during the public comment period for proposed rules. On June 7, 2016, EPA issued the publication Technical Guidance for Assessing Environmental Justice in Regulatory Analysis (“Guidance”), which recommends technical approaches that EPA analysts can use to incorporate environmental justice concerns during the rulemaking process. 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.” When evaluating proposed regulatory actions, EPA recommends analysts conduct an initial screening of environmental justice concerns to determine the appropriate level of analysis through the rulemaking process. Specific consideration should be given to “proximity of sources to low-income populations, minority populations, and/or indigenous peoples, unique exposure pathways, and a history of environmental justice concerns associated with the pollutant being regulated.” With respect to evaluating the environmental justice issues in Human Health Risk Assessments that are conducted to support a regulatory action, EPA’s new Guidance provides factors to consider when designing various assessments during the planning, scoping, and problem formulation portions of the rulemaking process. These assessments stress the importance of considering disproportionate impacts on certain population groups or demographics due to a potential for increased vulnerability and susceptibility to environmental stressors. This Guidance complements EPA’s existing Environmental Justice Action Development Process Guide and is a significant component of “EJ 2020,” which is a broader strategy to advance and address issues of environmental justice by the year 2020. EPA is currently seeking comments until July 7, 2016 on its draft EJ 2020 Action Agenda, which proposes integrating environmental justice concerns to all EPA actions, including the rulemaking considerations found in the Guidance, as well as permitting and enforcement actions. Babst Calland attorneys…

June 9, 2016

Your Company’s “TO DO” List for Chemical Substances Regulation and Compliance

Administrative Watch Now that the House of Representatives has passed Toxic Substances Control Act (TSCA) reform legislation, which is the Frank R. Lautenberg Chemical Safety for the 21st Century Act (H.R. 2576), on May 24, 2016 followed by Senate passage on June 7, 2016, the reconciled legislation is finally on its way for President Barack Obama’s signature. The president is expected to quickly sign it. So what does this mean for your company? Although this is by no means complete, here is a “to do” list to frame your company’s TSCA reform efforts. 1. PROMOTE SOUND SCIENCE: Take advantage of public comment opportunities for your company and its scientific and legal advisors to weigh in on the USEPA’s Year 1 mandate to establish a risk-based chemical screening process and criteria for designating chemicals as low or high priority substances, as well as guidance for submitting risk assessments through the new chemical review PMN process. In preparing comments, look to USEPA’s 2014 TSCA Work Plan as an indicator of what USEPA’s work product is likely to look like and consider weaving in real world examples of sound and proven risk assessment methodologies. The TSCA Work Plan program is the USEPA’s current blueprint for conducting safety assessments, prioritizations, and risk management evaluations. So the USEPA is likely to build upon what it has already developed. Many non-rulemaking policies, procedures, and guidance must also be reviewed, revised as warranted or newly developed by the end of Year 2 so do not miss comment opportunities as they arise. 2. LOOK FOR DATA GAPS: Because all new and existing chemical substances actively being made, sold and/or distributed will ultimately be evaluated/re-evaluated by the USEPA under the risk evaluation standards that are developed, now is a good time for your company to look at the existing/available exposure data and develop new data for any information gaps. 3. FILE ROBUST PMNs AND SNUNs: With the lifting of the “least burdensome” requirement, the USEPA faces…

June 1, 2016

U.S. Supreme Court Finds Clean Water Act Jurisdictional Determinations Reviewable

Administrative Watch On May 31, 2016, the Supreme Court of the United States unanimously ruled in U.S. Army Corps of Engineers v. Hawkes Co. that approved jurisdictional determinations (JDs) issued by the U.S. Army Corps of Engineers (USACE) under the federal Clean Water Act are final agency actions subject to judicial review. Like the Court’s 2012 landmark opinion in Sackett v. EPA (finding that an Administrative Order to Comply is immediately appealable), the Hawkes decision effects a fundamental change in the framework for addressing jurisdictional disputes under the statute. The Clean Water Act regulates the discharge of pollutants into “waters of the United States,” imposing substantial criminal and civil penalties for unpermitted discharges. Because it is often difficult for an owner to determine whether a specific parcel contains jurisdictional waters, the USACE issues two types of JDs on a case-by-case basis. “Preliminary” JDs are expressly non-binding, merely advising a property owner that jurisdictional waters may be present on a parcel. “Approved” JDs, on the other hand, convey the Corps’ definitive position as to the presence or absence of jurisdictional waters. Moreover, the USACE and the U.S. Environmental Protection Agency (USEPA) are parties to a Memorandum of Agreement (MOA) that makes Approved JDs binding on both agencies for five years. In Hawkes, the plaintiffs received an Approved JD that found a peat wetland (that plaintiffs sought to mine) constituted jurisdictional waters because of its “significant…

May 17, 2016

EPA Issues Final Rules to Reduce Oil and Natural Gas Sector Emissions and Clarify Air Permitting Standards

Administrative Watch On May 12, 2016, the U.S. Environmental Protection Agency (EPA) unveiled final rules intended to reduce greenhouse gas emissions from the oil and natural gas sector and to clarify when pollutant-emitting activities are considered “adjacent” for air permitting purposes. The rules finalized on May 12 will impact primarily new, modified, and reconstructed sources, including but not limited to sources at well sites, processing plants, and compressor stations. In conjunction with these final rulemakings, EPA also took the first step in the process of developing a proposed rule to reduce methane emissions from existing sources. Read more.

May 13, 2016

Environmental Groups File Suit Over Absence of Regulation of Oil & Gas Waste

On May 4, 2016, seven environmental groups followed through on a prior threat to sue the United States Environmental Protection Agency (EPA) by filing a lawsuit against the EPA in a bid to force the agency to develop tailored rules for the disposal, storage, transportation, and handling of oil and gas waste under the Resource Conservation and Recovery Act (RCRA) Subtitle D solid waste program. In an effort to trigger movement on the issue, the environmentalists had previously sent the EPA a 60-day Notice of Intent to Sue in August 2015; however, according to the environmentalists, the agency did not formally respond to the Notice. The Complaint, filed with the U.S. District Court for the District of Columbia, alleges that the agency has not within the statutorily required three-year timeframe (1) reviewed and, where necessary, revised RCRA’s Subtitle D solid waste regulations for oil and gas waste, and (2) reviewed and/or revised its guidelines for state solid waste management plans for oil and gas waste. Read more.

April 26, 2016

Major Sources of NOx and/or VOCs in Pennsylvania Must Meet New Requirements by January 1, 2017

Administrative Watch On April 23, 2016, the Pennsylvania Environmental Quality Board (EQB) published a final-form rule that requires major sources of nitrogen oxides (NOx) and/or volatile organic compounds (VOCs) to meet reasonably available control technology (RACT) by January 1, 2017. See 46 Pa.B. 2036. The final rulemaking adopts presumptive RACT requirements and emission limitations. Major sources that are not subject to any presumptive RACT requirements or emission limitations will need to develop their own RACT requirements. The final-form rulemaking will affect a wide array of combustion sources in several industrial sectors and may require the installation of costly control technologies or implementation of new work practices. Read more.

January 20, 2016

Pennsylvania Methane Reduction Strategy Expected to Transform Air Program for Oil and Natural Gas Sector

Administrative Watch On January 19, 2016, Pennsylvania Governor Tom Wolf and the Department of Environmental Protection (DEP) announced a sweeping new regulatory strategy for reducing methane emissions from oil and natural gas operations in the Commonwealth. Methane, the primary constituent of natural gas, is considered by federal and state agencies to be a potent greenhouse gas which contributes to climate change. Governor Wolf stated that Pennsylvania, as the nation’s second largest producer of natural gas, is “uniquely positioned to be a national leader in addressing climate change.” Read more.

November 1, 2015

Court Upholds Zoning Ordinance Permitting Oil and Gas Well Development in Agricultural/Residential Zoning District

Administrative Watch On October 21, 2015, Judge Richard McCormick, President Judge of the Westmoreland County Court of Common Pleas, issued a decision and order upholding the validity of Allegheny Township’s zoning ordinance, which permits oil and gas well development in the Township’s R2 Agricultural/Residential Zoning District. The decision in Frederick v. Allegheny Township Zoning Hearing Board, No. 1898 of 2015 (Com. Pl. Westmoreland Co. Oct. 21, 2015), affirms a previous decision of the Township’s Zoning Hearing Board. Babst Calland represented CNX Gas Company LLC (CNX), an intervenor in the case, before both the Common Pleas Court and the Zoning Hearing Board. Read more.

October 1, 2015

Pennsylvania Supreme Court Addresses the Impact of Environmental Contamination and Remediation on Real Estate Tax Valuation

Administrative Watch The Pennsylvania Supreme Court recently handed down its opinion in Harley- Davidson Motor Co. v. Springettsbury Twp., — A.3d — (2015), in which the Court discusses the impact of environmental contamination on a property’s value for real estate taxation purposes, when the current owner is a party to an agreement with the government to remediate the contamination. The site’s current owner, Harley-Davidson Motor Company (HD), is a party to an agreement with the United States government (including the Department of Defense and Navy) to share in cleanup costs of a former weapons manufacturing plant and is and participating in the EPA’s “One Cleanup” program, under which HD’s cleanup of the property is governed by Pennsylvania’s brownfields remediation statute (Act 2). The cleanup has not been completed. Read more.

EPA Releases Final Rule Amending Steam Electric Power Generating ELGs

Administrative Watch On September 30, 2015, the U.S. Environmental Protection Agency (EPA) released a pre-publication version of the final rule to amend the Steam Electric Power Generating Effluent Limitation Guidelines and Standards (ELGs) at 40 C.F.R. Part 423. The final rule imposes more stringent effluent limitations for many types of wastewater discharges from both existing and new coal-fired steam electric power plants, and contains significant changes from the proposed rule. Read more.

Environmental Groups Plan Suit Over Absence of Regulation of Oil & Gas Waste

Administrative Watch On August 26, 2015, seven environmental groups sent the U.S. Environmental Protection Agency (EPA) a Notice of Intent to Sue the agency in an attempt to force the agency to develop tailored rules for oil and gas wastes under the Resource Conservation and Recovery Act (RCRA) Subtitle D solid waste program. The groups argued that the agency has not within the statutorily required three-year timeframe (1) reviewed and, where necessary, revised RCRA’s Subtitle D solid waste regulations for oil and gas wastes, and (2) reviewed and/or revised its guidelines for state solid waste management plans for oil and gas wastes. Read more.