Administrative Watch
In an opinion strictly interpreting the statutory text of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), the U.S. Supreme Court limited the scope of a CERCLA provision that is designed to extend state law claims for personal injury or property damage resulting from hazardous substance contamination. Although the case may have limited practical application because of the relatively unique nature of the North Carolina law involved, the Supreme Court’s decision in CTS Corp. v. Waldburger has the effect of cutting off the plaintiffs’ claims for injuries allegedly caused by decades-old contamination.
As background, Congress enacted Section 9658 of CERCLA in 1986 to protect plaintiffs from having their personal injury or property damage claims prematurely extinguished by operation of state statutes of limitation. Under the “discovery rule” established by Section 9658, state statutes of limitation will not begin to run until a plaintiff discovers (or reasonably should have discovered) that the claimed harm was caused by contamination. Any state statute that holds otherwise is preempted by CERCLA.
In CTS, the Supreme Court was asked whether Section 9658, which by its express terms preempts conflicting state statutes of limitations, also preempts state statutes of repose. Although statutes of limitations and statutes of repose both may operate to prohibit a plaintiff from bringing a claim based on the passage of time, the two policies have distinct purposes. A statute of limitations requires a plaintiff to file a lawsuit within a certain timeframe after the claim arises in order to limit stale claims where evidence and witnesses may have been lost. On the other hand, a statute of repose represents a legislative policy decision that a defendant should be free from liability after a certain time (i.e., a “hard stop” to tort liability).
The plaintiffs in the case filed a state-law tort claim in federal court against CTS, which operated an electronics plant in Asheville, North Carolina from 1959 to 1985. CTS eventually sold the plant in 1987. The plaintiffs included a group of landowners who claimed that their drinking water wells were contaminated by hazardous substances released by CTS when it operated the electronics plant. CTS moved to dismiss the claim as untimely under North Carolina’s statute of repose, which bars tort actions commenced more than 10 years after the last tortious act committed by the defendant. Because the last act by CTS occurred in 1987 – 24 years before the lawsuit – the trial court dismissed the claim.
The Court of Appeals for the Fourth Circuit reversed the decision of the trial court and reinstated the plaintiffs’ claims, holding that Section 9658 does preempt statutes of repose. The Court of Appeals found that the interpretation in favor of preemption was consistent with the purposes of CERCLA, pointing to the premise that remedial statutes such as CERCLA should be interpreted in a liberal manner.
Signaling a continued intention to engage in strict construction of CERCLA’s sometimes ambiguous and contradictory language, the Supreme Court admonished the Court of Appeals for substituting its liberal construction proposition in the place of an interpretation based upon CERCLA’s text and structure, writing that “no legislation pursues its purposes at all costs.” “Congressional intent is discerned primarily from the statutory text,” the Court wrote. The Court proceeded to examine the statutory text and legislative history of Section 9658. As one factor among many, the Court noted that the term “statute of limitations” appears four times in Section 9658 while the term “statute of repose” does not appear at all. After a painstakingly close evaluation of the relevant statutory text and related definitions, the Court concluded that Section 9658 does not preempt state statutes of repose. Thus, the North Carolina statute of repose applied, thereby cutting off the plaintiffs’ claims.
As noted above, the Court’s holding in CTS has limited application. First, it only applies to state-based personal injury and property damage claims, and has no impact on CERCLA cost recovery actions under Section 107, contribution claims under Section 113 or enforcement and response authority under federal and state environmental laws. Moreover, only a handful of states have statutes of repose like the one on the books in North Carolina. It will be interesting to see whether state lawmakers take steps to enact similar statutes of repose to cut off state-based personal injury and property damage claims related to contamination. It is noteworthy that in the aftermath of the CTS decision, North Carolina lawmakers have quickly moved to “clarify” that their state’s statute of repose was not intended to cut off tort claims related to groundwater contamination, thereby potentially breathing life into the claims the Supreme Court just extinguished.
For additional information regarding the impact of the Court’s ruling, please contact Lindsay P. Howard at (412) 394-5444 or lhoward@babstcalland.com, or Michael C. Murphy at (412) 394-6428 or mmurphy@babstcalland.com.
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Administrative Watch
Proposed regulatory amendments published on April 19, 2014 are likely to affect hundreds of facilities in Pennsylvania. The Pennsylvania Department of Environmental Protection (PADEP) has estimated that 141 sources will need to install additional pollution control equipment under the proposal. In addition, environmental advocacy groups began criticizing the rule as being too lenient even before it was published.
The Pennsylvania Environmental Quality Board published proposed amendments to PADEP regulations in 25 Pa. Code Chapters 121 and 129 (relating to general provisions; standards for sources). The proposed rule would require all major stationary sources of nitrogen oxides (NOx) or volatile organic compound (VOC) emissions, or both, to apply “reasonably available control technology” (RACT). NOx and VOC controls are required because the Commonwealth is located in the Northeast Ozone Transport Region.
The proposed rule would establish presumptive RACT for nine source categories: combustion units; boilers; process heaters; turbines; engines; municipal solid waste landfills; municipal waste combustors; cement kilns; and other sources that are not regulated elsewhere under Chapter 129. Facility owners and operators would be required to either meet the presumptive RACT emission limitations and requirements or negotiate alternative requirements with PADEP.
The Pennsylvania Environmental Quality Board will hold three public hearings on the RACT proposal in May 2014. Public comments will be accepted until June 30, 2014. If you own or operate a major stationary source of NOx or VOC emissions, or both, your facility is likely to be affected by this rulemaking. For additional information regarding compliance options, please contact Michael H. Winek at (412) 394-6538 or mwinek@babstcalland.com, or Meredith Odato Graham at (412) 773-8712 or mgraham@babstcalland.com.
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Administrative Watch
On January 13, 2014, the United States Environmental Protection Agency (EPA) released a final rule that will allow entities to complete manifest forms required under the Resource Conservation and Recovery Act (RCRA) through a computer-based e-Manifest system hosted by EPA. The rule will offer hazardous waste handlers an efficient alternative to the current time-consuming paper manifest forms. However, generators who want to use the system will be charged user fees and must ensure that all downstream waste handlers also agree to use the system. Entities will still be allowed to use paper manifest forms on an interim basis, which must be sent to EPA for manual entry into the e-Manifest system once it is developed.
The e-Manifest Alternative
The new e-Manifest forms will carry the same legal force as the paper forms, and individual states cannot require paper forms to be completed if the e-Manifest system is used. There are several issues that handlers should be aware of when using the e-Manifest system:
• to use the e-Manifest system, the rule requires all entities in the chain of custody to agree upfront to use the system instead of using paper forms. Generators should ensure that transporters and receiving facilities are willing to participate in the e-Manifest system;
• the e-Manifest system is XML-based. Entities who want to use the system should ensure their computing system supports XML architecture; and
• the rule states that manifest data are not confidential business information. Aggregate data requests from the e-Manifest system may possibly reveal customer lists for receiving facilities, or process information for generators.
While not yet finalized, e-Manifests will likely be executed by using a PIN/password and ID system under the following steps:
• the generator enters waste descriptions, certifies in the system that the waste shipment is properly packaged, and presents a government-issued photo ID to the transporter during pickup. The transporter in turn logs on to their system account and enters the pickup date and the last five digits of the ID into the system, certifying witness of the generator’s signature;
• the transporter acknowledges receipt of the waste in the system, and a printed copy of the e-Manifest is carried by the transporter until delivery to comply with DOT regulations; and
• when the transporter arrives to drop off the waste at the receiving facility, the facility has thirty days to log on to the system and enter the date of receipt and any issues with the waste shipment.
Although the rule has been enacted by EPA, the e-Manifest system is not required to be implemented until October 5, 2015. A schedule of user fees and a specific implementation date will be revealed in a future rule by EPA. The system will automatically take effect within all states on the date of implementation.
For more information on the e-Manifest system, please contact Dean A. Calland at (412) 394-5408 or dcalland@babstcalland.com, or Varun Shekhar at (412) 394-5679 or vshekhar@babstcalland.com.
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Administrative Watch
The Ohio Department of Natural Resources, on February 21, 2014, published draft rules concerning horizontal well site construction. The public comment period for the draft rules ends on March 10, 2014. A subsequent 30-day comment period will be announced after the draft rules are formally proposed. The draft rules are available on the Division of Oil and Gas Resources Management’s website,oilandgas.ohiodnr.gov.
The rules require approval of a well site by the Chief of the Division of Oil and Gas prior to construction of the site. “Well site” is defined as including the well pad, all associated production activities, and access roadways. The rules require submission of an application containing extensive and detailed information, including detailed drawings, a sediment and erosion control plan, a dust control plan, a geotechnical report, and a storm water hydraulic plan.
The rules create an approval process that is not linked to the issuance of well drilling permits, and is therefore a new, independent approval requirement. The rules as drafted present numerous and significant issues regarding establishing the boundaries of a well site and the nature and extent of information needed to obtain approval of the site.
For additional information on the draft rules, and to obtain assistance on submitting comments, please contact David Northrop at 412-394-6590 or dnorthrop@babstcalland.com.
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Administrative Watch
On October 31, 2013, Ohio Governor Kasich signed Substitute House Bill 72 (HB 72) into law. HB 72 amends various Sections of the Ohio Revised Code (the Code), in part, to modernize the county recorder requirements. Regarding Sections of the Code which set forth procedural requirements for the forfeiture of oil and gas leases (Section 5301.332) and the abandonment of severed mineral interests (Section 5301.56 (2006), also known as the Dormant Mineral Act), HB 72 adds the requirement that a Notice of Failure to File be recorded in order to effectuate the forfeiture of an oil and gas lease or the abandonment of a mineral interest under the Dormant Mineral Act. This replaces the current procedural requirement that the recorder place a marginal notation on the lease or on the record of which the severed mineral interest is based to complete a claim under these Sections of the Code. HB 72 becomes effective on January 30, 2014.
Lease Forfeiture
Section 5301.332 of the Code provides a lessor with the right to pursue the forfeiture of a lease so long as there are no producing or drilling oil or gas wells, and: (i) the lease term expired, or (ii) the lessee failed to comply with the covenants of the lease. Currently, the lessor is required to serve notice of the lessor’s intent to declare the lease forfeited, and subsequently file an affidavit of forfeiture. If the lessee, or the lessee’s successors or assigns fail to provide notice to the lessor that the lease is still effective within 60 days of the lessor’s notice, then the lessor may cause the county recorder to note upon the margin of the lease that “This lease cancelled pursuant to affidavit of forfeiture recorded in Lease Vol. …, Page …”. Upon such notation, the forfeiture is complete.
Beginning January 30, 2014, pursuant to the revised procedure under HB 72, instead of causing the recorder to make a marginal notation on the lease, the lessor must file a notice of failure to file. The notice must contain the following:
1. A statement that the person filing the notice is the lessor or the lessor’s successors or assigns;
2. The document number or volume and page of the lease record where the oil or gas lease is recorded;
3. A general description of the land; and
4. The statement: “This lease cancelled pursuant to affidavit of forfeiture recorded as Document Number …, or Official Record/Lease Vol. …, Page …”.
Once the notice is recorded, the record of the lease shall not be notice to the public of the existence of the lease or of any interest therein or rights thereunder, and the record shall not be received in evidence in any court of Ohio on behalf of the lessee, or the lessee’s successors or assigns, or against the lessor, or the lessor’s successors or assigns.
Dormant Mineral Act
Section 5301.56 of the Code, the Dormant Mineral Act, provides a surface owner with a procedure by which they can pursue ownership of previously reserved mineral interests. Currently, under the Dormant Mineral Act, the surface owner is required to serve notice to the mineral interest holder of the surface owner’s intent to declare the mineral interest abandoned and subsequently, file an affidavit of abandonment. If the mineral interest holder fails to assert a claim that the interest has not been abandoned within 60 days of the surface owner’s notice, then the surface owner may cause the recorder to note upon the margin of the record of which the mineral interest is based that “This mineral interest abandoned pursuant to affidavit of abandonment recorded in volume …., page ….”. Upon such notation, the mineral interest vests with the surface owner.
Beginning January 30, 2014, pursuant to the revised procedure under HB 72, instead of causing the recorder to make a marginal notation on the record of which the severed mineral interest is based, the surface owner must file a notice of failure to file. The notice must contain the following:
a. A statement that the person filing the notice is the owner of the surface of the lands subject to the mineral interest;
b. A description of the surface of the land that is subject to the mineral interest; and
c. The statement: “This mineral interest abandoned pursuant to affidavit of abandonment in volume .…, page….”.
Immediately after the notice of failure to file a mineral interest is recorded, the mineral interest shall vest in the owner of the surface of the lands formerly subject to the interest, and the record of the mineral interest shall cease to be notice to the public of the existence of the mineral interest or any rights thereto. In addition, the record shall not be received as evidence in any Ohio court on behalf of the former holder or the former holder’s successor or assignees against the owner of the surface of the lands formerly subject to the interest. However, the abandonment and vesting of a mineral interest pursuant to Sections 5301.56(E) to (I) shall only be effective as to the property of the owner that filed the affidavit of abandonment under Section 5301.56(E).
In addition to the procedural changes outlined above with regard to Sections 5301.332 and 5301.56, HB 72 amends the terminology in these sections to gender neutralize the law.
If you have any questions regarding the pursuit of forfeiture of an oil and gas lease or a claim of abandonment of a mineral interest under the Dormant Mineral Act, please contact Bruce F. Rudoy at 412-253-8815 or brudoy@babstcalland.com, Christopher J. Hall at 412-253-8820 or chall@babstcalland.com, or Matthew L. Lambach at 412-253-8825 or mlambach@babstcalland.com.
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Administrative Watch
On August 15, 2013, the United States Environmental Protection Agency (EPA) published a proposed and “direct final” rule that expands the options available to parties seeking to qualify for certain defenses to liability under Superfund and other laws. This change will provide prospective purchasers with additional choices when conducting environmental due diligence. Although it will take some time for the market to catch up with this change, it is likely that conducting due diligence using this newest approach will add additional cost and time to a proposed real estate transaction.
Background
When acquiring commercial or industrial real estate, it is critical to conduct due diligence into the environmental conditions and prior uses of the target property. Understanding these conditions not only allows the purchaser to evaluate the potential limitations and risks associated with the property, but this due diligence can also be used to establish defenses to environmental liability. For example, under the federal Superfund law (CERCLA), bona fide prospective purchasers and other “innocent” landowners can be protected from certain environmental liability if they undertake “all appropriate inquiry” (AAI) into the prior ownership and uses of a property before acquiring it.
EPA has established specific standards and practices for conducting AAI (the AAI Rule), and in doing so, specifically recognized ASTM’s 2005 Standard for conducting Phase I Environmental Site Assessments (ASTM E1527-05) as being compliant with the AAI Rule. ASTM is currently revising its 2005 Standard, which will be published as ASTM E1527-13 (the 2013 Standard) when finalized. EPA’s proposed rule would provide parties with the option of using either the 2005 Standard or the new 2013 Standard when conducting AAI.
The 2013 Standard
EPA noted in the proposed rule’s preamble that the agency reviewed the 2013 Standard and determined that there are only “slight differences” between the AAI Rule, the 2005 Standard and the 2013 Standard. ASTM has not yet finalized the 2013 Standard, therefore EPA developed and placed a document in the proposed rule docket that provides a comparison of the two ASTM standards. Among the significant revisions in the 2013 Standard noted by EPA are the following:
• Vapor Intrusion: ASTM’s revisions to the 2013 Standard clarify that vapor migration of contaminants may constitute a Recognized Environmental Condition. An environmental professional performing a Phase I under the 2013 Standard, therefore, must assess potential impacts to a subject property from vapor migration in much the same way that potential groundwater contamination concerns are addressed.
• Regulatory Record Review: ASTM added guidance in the 2013 Standard that an environmental professional should review regulatory agency files and records when the subject property or an adjacent facility is identified in a government database search.
• Definitions: ASTM revised several definitions which, in effect, require an environmental professional to review past corrective actions at a subject property as well as some neighboring sites, and provide available information on contamination left in place and related use limitations and restrictions.
From EPA’s perspective, the use of the 2013 Standard would be completely voluntary. In the proposed rule’s preamble, EPA expressly states that the action “does not require any party to use” the 2013 Standard, and parties may continue to follow the requirements of the AAI Rule or use the 2005 Standard when performing AAI. The decision of which standard to use will be up to the party seeking protection and will be based on several factors, including costs, timing, property type and business risk tolerance. Of course, if a lender is involved in the transaction, it is possible that it will require that the more stringent 2013 Standard be followed – whether EPA considers the newly revised Standard voluntary or not. With the additional procedures of looking deeper into completed cleanups at a property, addressing vapor migration and expanded review of regulatory agency files, there is little doubt that Phase I assessments performed under ASTM E1527-13 will involve additional costs and require more time to complete.
EPA is accepting written comments on the proposed rule until September 16, 2013, and the rule will become effective on November 13, 2013 if the agency does not receive adverse comments. If timely negative comments are received, EPA will withdraw the “direct final” rule and will respond to the comments in deciding whether to move forward as currently proposed.
If you have any questions regarding the use of ASTM’s 2013 Standard for conducting AAI or any other issue regarding environmental due diligence, please contact Lindsay P. Howard at (412) 394-5444 or lhoward@babstcalland.com, Michael C. Murphy at (412) 394-6428 or mmurphy@babstcalland.com, or any of the other attorneys in our Environmental Services Group.
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Administrative Watch
On August 8, 2013, the Pennsylvania Department of Environmental Protection (DEP) announced that unconventional gas well sites will no longer be unconditionally exempt from the requirement to obtain an air quality plan approval. The Air Pollution Control Act authorizes DEP to exempt certain sources from the requirement to obtain a plan approval, i.e., the state air quality “permit” which authorizes the construction and temporary operation of air emissions sources. DEP had previously provided a blanket exemption for both conventional and unconventional well sites, such that operators did not need to obtain a plan approval from DEP prior to constructing wells, wellheads and associated equipment. DEP’s new policy retains the existing broad exemption for conventional well sites, but makes significant changes with respect to unconventional well sites.
DEP released a revised final technical guidance document entitled, “Air Quality Permit Exemptions,” which lists plan approval exemptions by category of emission sources. The newly revised list reflects changes to Exemption No. 33, pertaining to compressed natural gas fueling, and Exemption No. 38, pertaining to conventional and unconventional oil and gas exploration, development, production facilities and associated equipment and operation. Although revised Exemption No. 38 still exempts both conventional and unconventional “wells, wellheads, and associated equipment,” DEP will now require unconventional well operators to meet several criteria in order to qualify for the exemption. These new criteria involve controls and practices that are more stringent than federal air regulations. The new conditions on Exemption No. 38 include:
• Owners and operators must conduct an annual leak detection and repair (LDAR) program for valves, flanges, connectors, storage vessels, and compressor seals that are in natural gas or hydrocarbon liquids service—essentially, LDAR must be implemented across the entire well pad;
• Storage vessels/storage tanks must meet 95% or greater emissions reductions for VOCs;
• Facility-wide VOC emissions must remain below 2.7 tpy (excluding emissions that are permitted or otherwise covered by Exemption No. 38 (e.g., storage tanks meeting 95% or greater VOC control));
• If the VOCs include HAPs, facility-wide HAP emissions must remain below 1,000 lbs/yr of a single HAP or one tpy of a combination of HAPs (excluding emissions that are permitted or otherwise covered by Exemption No. 38);
• Flaring emissions must satisfy certain restrictions (e.g., permanent flares must be enclosed); and
• Facility-wide NOx emissions must remain below 6.6 tpy and other limits specified for shorter duration (e.g., 100 lbs/hr)(excluding emissions from permitted sources).
Unconventional well operators have a choice: either maintain records to demonstrate compliance with the new conditions in Exemption No. 38 or obtain a plan approval for the well, wellhead and associated equipment.
For more information about DEP’s revised air permitting policy for oil and gas operations and other air programs, please contact Michael H. Winek at (412) 394-6538 or mwinek@babstcalland.com, David E. Northrop at (412) 394-6590 or dnorthrop@babstcalland.com, or Meredith A. Odato at (412) 394-6540 or modato@babstcalland.com.
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Administrative Watch
After months of negotiation, the state of Ohio’s biennial budget was signed into law on June 30, 2013 by Governor John Kasich. The new budget covers a wide range of topics, but it is notable for what it does not include – an increase in the oil and gas severance tax. The budget also makes several changes to oil and gas industry regulations. The changes include:
• Horizontal well owners must report production on a quarterly basis rather than an annual basis;
• Beginning on March 31, 2015, well owners must disclose the country of origin of all steel pipes used in the drilling process;
• Only synthetically lined pits or impoundments may be used for temporary storage of brine and other fluids;
• After January 1, 2014, the storage, recycling, treatment, processing or disposal of brine or other waste substances must be in accordance with a permit issued by the chief of the Ohio Department of Natural Resource’s Division of Oil and Gas Resources Management, and the chief is required to adopt rules addressing the issuance of the permits;
• The owner of a horizontal well must test drill cuttings for the concentration of radium-226 and radium-228 if the material is technologically enhanced naturally occurring radioactive material (TENORM) and is not reused in connection with the well, disposed of by injection or transported out of Ohio;
• The owner or operator of a solid waste facility may accept material containing TENORM if the material contains less than five picocuries per gram above natural background of radium-226 or radium-228; and
• Material that is not TENORM, but has come in contact with refined oil-based substances, may only be disposed at an authorized solid waste facility or used in accordance with rules adopted by the director of environmental production. The material may also be reused at the location of the horizontal well in a manner approved by the chief.
Several other changes in oil and gas industry regulations were signed into law in addition to those summarized above. For more information please contact David E. Northrop at 412-394-6590 or dnorthrop@babstcalland.com.
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Administrative Watch
The Ohio Department of Natural Resources, Division of Oil & Gas Resources Management, recently published new guidelines for applications for a unitization order under Revised Code Section 1509.28. That Section provides the method preferred by the industry for creating units for horizontal drilling where parcels within the proposed unit are unleased. The guidelines are intended to formalize the unitization application process and provide consistency and efficiency in the review process. The guidelines provide notice to applicants that applications lacking information listed in the guidelines will be considered to be incomplete, and will not be processed by the division.
Fifteen unitization application requirements are listed, and can be found at http://www.oilandgas.ohiodnr.gov/industry/unitization. Several requirements of particular importance are:
• Applicants must provide an affidavit setting forth a detailed account of the attempts to lease the unleased properties that includes the date of each attempt, identification of both the person contacted and the person who made the contact, and identification of how the contact was made;
• Applicants must provide a list of all uncommitted working interest owners in the unit which includes the name, address, parcel numbers and the respective acreage of each owner;
• Applicants must submit a statement of why unitization is necessary, a description of the plan for development of the unit, identification of the formation to be produced, estimated value of the recovery of oil and gas for each proposed well, an estimated cost of drilling and operating a well and a designated contact person for the applicant; and
• Applicants must bring large exhibits or slides of maps, cross-sections, gamma ray-density logs identifying the proposed formations to be produced and reserve calculations to the hearing.
The published guidelines also provide additional information concerning revisions and updates to applications, the hearing procedures, requests for continuances of the hearing and the division chief’s action on applications. For more information, please contact David E. Northrop at (412) 394-6590 or dnorthrop@babstcalland.com.
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Administrative Watch
Numerous sources, from elementary schools to chemical manufacturers will be affected by recently finalized rules governing boilers, process heaters and incineration units. In late December 2012, the U.S. Environmental Protection Agency (EPA) signed the long-awaited final revisions to its combustion air rules affecting boilers, process heaters, incinerators and kilns at a wide variety of facilities and institutions. This rulemaking package includes a revised: (1) Major Source Boiler Rule; (2) Area Source Boiler Rule; (3) Commercial and Industrial Solid Waste Incineration (CISWI) Units Rule; and (4) Non-Hazardous Secondary Materials (NHSM) Rule. After nearly two years of deliberation and legal challenges, the EPA published the final revisions in the Federal Register in late January and early February. The changes to the regulations are effective on different dates.
EPA issued the four rules together because they are interrelated. The two Boiler Rules control emissions of hazardous air pollutants from boilers and process heaters located at industrial, commercial and institutional facilities, while the CISWI Rule controls air pollutants from devices at commercial and industrial facilities (regardless of Major or Area Source designation) that combust “solid waste.” The NHSM Rule defines “solid waste” for purposes of determining which air pollution control rule applies, whether it be the CISWI Rule or one of the Boiler Rules. If, for example, a boiler located at a Major Source facility combusts “solid waste,” which the NHSM Rule defines broadly to include liquids, semisolids and contained gases, then the boiler is subject to the CISWI Rule—not the Major Source Boiler Rule. Generally, the regulated community has preferred to avoid the CISWI Rule, because it imposes tougher requirements than the Boiler Rules’ regime.
The recent revisions should prompt owners and operators of boilers and other combustion devices to evaluate whether their devices are subject to one of these rules. Potentially affected facilities should consider conducting and documenting an applicability analysis for any type of combustion device. This applicability analysis is complicated because it requires the gathering of facts and consideration of the various applicability and exemption provisions in the rules. Several factors are significant, such as a device’s fuel type (including whether any “solid waste” is combusted), date of construction or reconstruction and heating capacity. Designation of the facility as a Major Source or Area Source is also significant.
Depending upon the outcome of an applicability analysis, the relevant rule may impose emission limitations for mercury and other pollutants, operating limits and/or work practice standards such as a regular boiler tune-up. Demonstrating compliance with an emission limit could involve performance stack testing, fuel analyses or continuous monitoring systems (CMS). Some units may trigger the obligation to have a qualified energy assessor perform an assessment to identify energy saving opportunities. There are also requirements relating to monitoring, recordkeeping and reporting. A proper applicability analysis will enable facility owners and operators to determine precisely which of these and other substantive requirements must be satisfied and by what deadline.
For more information about these and other air regulations, please contact Michael H. Winek at 412-394-6538 or mwinek@babstcalland.com, David E. Northrop at 412-394-6590 or dnorthrop@babstcalland.com, or Meredith A. Odato at 412-773-8712 or modato@babstcalland.com.
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Administrative Watch
On January 30, 2013, the Ohio Supreme Court ruled that the issuance of a permit to drill a new well, deepen a well, reopen, convert or plug a well is not considered to be an “order of the chief” of the Ohio Department of Natural Resources’ Division of Oil and Gas Resources Management (DOGRM), Chesapeake Exploration, LLC, v. Oil & Gas Comm., 2013-Ohio-224 (January 30, 2013). As such, the Court held that the Ohio Oil and Gas Commission has no jurisdiction to hear an appeal of such permit under Ohio’s oil and gas law.
The case was brought before the Court by a drilling company seeking a writ of prohibition to prevent the Oil and Gas Commission from exercising jurisdiction in a landowner’s appeal of a permit to drill issued by DOGRM. In determining the Commission’s jurisdiction, the Court was asked to reconcile one provision of Ohio’s oil and gas law authorizing the Commission to hear appeals of any “order of the chief” of DOGRM (R.C. § 1509.36) with another, recently amended, provision of the statute stating that the issuance of a permit to drill “shall not be considered an order of the chief” (R.C. § 1509.06(F)). The Court concluded that R.C. 1509.06(F) manifestly divests the commission of appellate jurisdiction over the chief’s decisions to issue permits for oil and gas wells. An issue not addressed by the Court is whether a permit to drill may be appealed to state court under Ohio’s administrative procedure law.
If you would like to discuss this decision or other issues related to natural gas exploration and production in Ohio, please contact David E. Northrop at 412-394-6590 or dnorthrop@babstcalland.com, Robert W. Thomson at 412-394-5656 or rthomson@ babstcalland.com, Michael H. Winek at 412-394-6538 or mwinek@babstcalland.com, or Ryan D. Elliott at 412-394-5432 or relliott@babstcalland.com.
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Administrative Watch
On March 27, 2012, EPA Administrator Lisa Jackson signed a Proposed Rule to establish New Source Performance Standards for emissions of Carbon Dioxide (CO2) from new affected fossil fuel-fired electric generating units (EGUs). The Proposed Rule is due, in part, to the U.S. Supreme Court’s 2007 opinion in Massachusetts et al. v. Environmental Protection Agency and the EPA’s subsequent 2009 “endangerment” finding.
The Proposed Rule would apply to EGUs that commence construction after publication of the Proposed Rule in the Federal Register. More specifically, the Proposed Rule would require “new fossil fuel-fired EGUs greater than 25 megawatt electric (MWe) to meet an output-based standard of 1,000 pounds of CO2 per megawatt-hour (lb CO2/MWh) . . . .” EPA reports that this standard is “based on the performance of widely used natural gas combined cycle (NGCC) technology.” EPA opines that, even without the Proposed Rule, no new coal-fired EGUs will be constructed through 2030 without “Carbon Capture and Storage” (CCS) technology.
EPA states that new coal-fired or pet coke-fired units could meet the standard by either employing CCS to approximately 50 percent of the CO2 in the emissions at startup, or through later application of CCS to meet the standard over a 30-year period. The Proposed Rule would not apply to existing EGUs whose CO2 emissions increase as a result of installation of pollution controls for conventional pollutants, or to proposed EGUs that have acquired a complete preconstruction permit by the publication date of the Proposed Rule and commence construction within 12 months of the publication.
Comments on the Proposed Rule will be due 60 days after publication in the Federal Register. The pre-publication copy of the Proposed Rule is available online at http://epa.gov/carbonpollutionstandard/pdfs/20120327proposal.pdf.
If you have any questions regarding the Proposed Rule, please contact Donald C. Bluedorn II at 412-394-5450 or dbluedorn@babstcalland.com or Matthew S. Casto at 681 205-8950 or mcasto@babstcalland.com.
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