Ensuring energy security and addressing climate change are not mutually exclusive goals, insists Senator Joe Manchin, D-W.V., and it is imperative for the United States to pursue both.
The chairman of the U.S. Senate Energy and Natural Resources Committee offered his perspective on the outlook for the country’s energy policy during a “Message to the Industry” video conversation included in The 2022 Babst Calland Report–Legal & Regulatory Perspectives for the U.S. Energy Industry, which the law firm released in late June. Joining Manchin in the report’s introductory webinar recording were Babst Calland energy attorneys Joe Reinhart, Moore Capito and Jim Curry.
The firm says its 12th annual energy analysis also contains perspectives from energy attorneys on critical issues facing the industry, including:
Regulatory developments and enduring concern about climate change;
Cybersecurity risks and the steps companies can take to minimize them;
The U.S. Securities and Exchange Commission’s environment, social and governance-oriented disclosure requirements, as well as federal and state efforts to promote environmental justice;
The role hydrogen and carbon capture and sequestration can play, as well as the factors influencing how quickly both technologies can expand;
Recent and pending regulations related to permitting and operating pipelines; and
The challenges renewable energy companies must overcome as they secure land and permits.
During the half-hour discussion with Manchin, the senator emphasized that laudable environmental ambitions must be rooted in reality. “You cannot just be aspirational and think ‘This is my wish; I wish it would work that way,’” Manchin advised. “It’s not the real world that we live in–and I have seen the real world. The world depends on the United States of America and West Virginia to provide what they need: life-saving energy that provides for them, their families and their economies.”
U.S. companies produce energy with environmental standards that are much higher than their counterparts in places such as the Middle East, Russia and Venezuela, but American producers must continue shrinking their environmental footprint, he said. Such improvement will come through the industry’s creativity, Manchin predicted, and not through artificial constraints intended to speed fossil fuels’ demise.
“Elimination is not the way to go,” the senator assessed. “Innovation is the way to go.”
Secure Energy Supplies
Reflecting on the United States’ top energy challenges and opportunities, Manchin said the United States must protect itself from the sort of supply chain limitations that have confronted many European countries since Vladimir Putin ordered Russian forces to invade Ukraine. The senator noted that when Germany’s Green Party gained power years ago, it not only embraced alternative energy sources, but also moved to shut down affordable and dependable traditional energy.
“They had nothing to replace it with and got themselves in one heck of a mess,” Manchin observed. “Now they are trying to scurry around and build portable liquefied natural gas terminals.”
Alternative energy sources face their own supply chain vulnerabilities that the United States and its allies will do well to avoid, the senator advised. Efforts in Washington to greatly expand the share of electric vehicles in U.S. fleets without securing and diversifying the components critical to building and powering them is short-sighted, he warned.
“China has captured 80% of processing of all rare earth minerals in the world, which is exactly what we need to have to build the batteries these vehicles run on,” Manchin observed. “I am old enough to remember standing in line trying to buy gasoline in 1974 when OPEC decided to shut us off . . . I sure as heck am not going to sign up to wait for that next battery in 2030 or 2035 when (China) won’t ship over the products we need to build that battery because we have not become self-reliant.”
To advance local supply chains, the senator said he was helping arrange a North American alliance on matters such as energy and critical minerals. After all, he suggested, Chinese Premier Xi Jinping is drawing lessons from the energy leverage Putin has used against Europe.
As for the leading opportunities Manchin mentioned, the senator pointed toward the United States’ ability to replace significant volumes of Russian oil and gas with production from plays such as the Marcellus and Utica shales. By contrast, he noted, Russian gas is “produced with much more emissions (that harm) the atmosphere.
“This is going to be truly historic,” he predicted. “We have to make sure we can give (European countries) all that support. The greatest support they need is dependable, reliable energy and that is what the United States can do.”
Ultimately, the senator urged, “We must demonstrate that the United States and our allies are going to lead the global decarbonization and produce fossil fuels with lower emissions than any other countries in the world. This includes continuing efforts to minimize methane emissions, growing the production and use of hydrogen, and deploying carbon capture utilization and storage.”
During the half-hour discussion with Manchin, the senator emphasized that laudable environmental ambitions must be rooted in reality. “You cannot just be aspirational and think ‘This is my wish; I wish it would work that way,’” Manchin advised. To hear Senator Manchin’s remarks, request access to the report at https://reports.babstcalland.com/energy2022-2/.
Transmission Infrastructure
Attorney Moore Capito posed a question that centered on opportunities that Manchin perceived to boost U.S. energy production and plausible policy paths to enable them. The senator acknowledged that U.S. political realities limit the scope of possibilities, in part because the Senate has 50 Republicans and 50 Democrats.
“We are in historic times,” he said. “The Senate has never been evenly split for this long in . . . 237 years. Never. Five-six months is as long as it was ever split before. So how do we navigate that?”
As the country works to mitigate energy supply risks, he suggested, policymakers should adopt a broader perspective that integrates big-picture considerations. The country should steer clear of skewed trade practices that make it easy to import from foreign countries with poor records on human rights and environmental protection, Manchin argued.
“Not that we are protectionist, we are just basically trying to level the playing field,” he characterized. “If you are just going to (ignore human rights and the environment) in your country–because it’s communistic or an autocracy–and . . . ship goods into our markets, that has got to stop.”
Although many of Manchin’s congressional colleagues assure him they understand the importance of U.S. energy supplies, he said they also cheer efforts to frustrate pipeline construction. “The Mountain Valley Pipeline is almost 90%-95% completed and the Third Circuit (Court of Appeals) keeps stopping us from moving forward to complete it. That would put 2 billion cubic feet a day into the market,” he lamented. “Until I see those people . . . making a deal in the real world, with its real challenges, I am sure not going down their path and saying, ‘Throw caution to the wind.’
“I want to develop the new technologies for the future,” he assured. “It’s going to have to coexist with realizing that we have to have a real robust fossil industry here.”
Manchin took issue with fossil fuel opponents’ contention that the United States should stop building pipelines to address climate change. “They have been shutting us down everywhere they can,” Manchin described. “They talk a good game, but then they put up so many obstacles. So I said, ‘Fine. Don’t count on me helping you on other areas until you are able to have a clear path of 10 years of how we are going to be able to drill (and) . . . produce.’”
To that end, the senator highlighted the senselessness of imposing strict methane regulations without supporting more transmission infrastructure. “You cannot fine me for methane escape when you will not let me build a pipeline to take the methane,” he mused. “You are either going to be on the team with us or sitting on the sideline watching us play the game.”
Babst Calland’s report also discusses the business outlook for the energy industry and contains sections on climate change; cybersecurity; ESG and environmental justice; hydrogen and carbon capture and sequestration; pipelines; and renewables. To request access, visit https://reports.babstcalland.com/energy2022-2/.
This article is an excerpt of The 2022 Babst Calland Report, which represents the legal perspective of Babst Calland’s energy attorneys addressing the most current business and regulatory issues facing the energy industry. To view the full report, go to reports.babstcalland.com/energy2022-2.
On June 30, the United States Supreme Court held, in West Virginia v. EPA, that the U.S. Environmental Protection Agency may not force existing coal-fired power plants to shift their electricity generation to cleaner sources under Section 111(d) of the Clean Air Act, thereby narrowing EPA’s authority to regulate greenhouse gas emissions from power plants.
West Virginia and a coalition of states, power companies and coal interests petitioned the Supreme Court to review the D.C. Circuit’s 2021 invalidation of the Trump administration’s 2019 Affordable Clean Energy rule, which had replaced the Obama administration’s 2015 Clean Power Plan. Under the Clean Power Plan, EPA calculated rate-based (amount of carbon dioxide emitted per megawatt hour generated) and mass-based (total amount of carbon dioxide emitted per year) targets for each state through application of three “building blocks” that were deemed to constitute the “best system of emission reduction…adequately demonstrated” (BSER) under Section 111(d) of the Clean Air Act: (1) improvements to heat rates (a measure of heat input to power output efficiency) achieved at individual power generation facilities; (2) shifting power generation to natural gas-fired or combined cycle facilities; and (3) increased power generation from renewable and zero-emitting sources. The latter two “building blocks” constituted the Clean Power Plan’s designed “generation shifting.” EPA projected that this BSER would drive down electricity derived from coal-fired sources from 38 percent of the nation’s overall generation in 2014 to 27 percent by 2030.
The Supreme Court held that EPA exceeded its authority under Section 111(d) of the Clean Air Act because Congress did not clearly authorize generation shifting regulations to constitute BSER under the statute. The court found EPA’s program presented a “major questions” issue, the resolution of which is to be determined by determining whether Congress so “specifically and clearly” empowered regulatory agencies through legislation to make sweeping, economy-wide changes. Here, the court found it “highly unlikely that Congress would leave” to “agency discretion” the decision of how much coal-based generation there should be over the coming decades. The court stated that the statutory term “best system of emission reduction” did not give the agency the authority to require widespread generation shifting as a means to reduce CO2 emissions because “the word [system] is an empty vessel” and “[s]uch a vague statutory grant is not close to the sort of clear authorization required by our precedents.” The court concluded that a “decision of such magnitude and consequence [i.e., the amount of coal-based generation] rests with Congress itself, or an agency acting pursuant to a clear delegation from that representative body.”
The decision has significant implications for the Biden administration’s focus on climate change specifically and for administrative law generally. For example, it is very unlikely that EPA may adopt a federal carbon cap-and-trade program administratively without Congressional authorization.
The court’s reasoning, while not necessarily binding, should also be persuasive in states that try to adopt wide-ranging climate change programs administratively based on state law, like the Pennsylvania Regional Greenhouse Gas Initiative, where state statutes do not provide such authority.
Babst Calland congratulates Attorney Tim Milleras the recipient of this year’s Energy & Mineral Law Foundation John L. McClaugherty Award, which recognizes outstanding contributions to the Foundation and the field of energy and mineral law. Each year, EMLF recognizes leaders who have shaped EMLF, and who are recognized as industry and community leaders.
If you are building new commercial construction, or making improvements to your existing facility, it is critical before starting to take steps to protect yourself from potential mechanics’ liens. Failing to do so could result in making double payments, or potentially forfeiting your property to foreclosure, says Marc Felezzola, a shareholder in Babst Calland’s Construction, Environmental and Litigation groups.
For example, if a prime contractor — someone who contracts directly with the owner — fails to pay a subcontractor — anyone who supplies labor or materials to the prime contractor or its direct subcontractor — the subcontractor can file a mechanics’ lien against the property on which the project was built. And if the subcontractor is not paid the lien amount, it can foreclose on the lien, force a sheriff sale of the property and take its payment from the proceeds of that sale.
This is true even if the owner has paid the contractor for the subcontractor’s work, meaning the owner could be subject to the double jeopardy of having to pay for subcontractor labor and materials twice.
“When you improve real property with construction, contractors and subcontractors confer a benefit that increases the property’s value,” Felezzola says. “The law allows for a lien against the property to secure payment for the benefit someone has contributed to increasing that value. As an owner, protecting yourself requires forethought before construction starts, to set the project up for transparency about potential lienholders and limit the scope of that potential to those with whom the owner directly contracts.”
Smart Business spoke with Felezzola about three ways to protect yourself before beginning a construction project.
How can a no lien agreement between the owner and the prime contractor offer protection?
A prime contractor may, but does not have to, purchase performance and payment bonds that provide a guaranty the contractor will perform and pay for the work required under the contract. If the contractor posts those bonds, Pennsylvania law allows the contractor to waive the right to mechanics’ file liens on behalf of subcontractors because they have the payment bond as alternative security for their right to payment.
And while the bond premium gets passed on to the owner, the owner gets the security of knowing there is no risk of having to double pay for work because its property won’t be subject to subcontractor liens.
How can a filing a notice of commencement reduce risk?
An owner can file a notice of commencement in the State Construction Notices Directory stating the project is commencing. If the owner does so, subcontractors must file a notice in the directory within 45 days informing the owner they are contributing to the project. Failure to do so forfeits any right to file a lien.
This ensures transparency and allows the owner to actively ensure against liens by contacting potential lienholders during the project and confirming they being paid as they perform their work.
How else can owners protect themselves?
An owner may also file a copy of the contract with the prime contractor with the court in the county where the project is located. Doing so limits the owner’s total liability for liens for work performed under that prime contract to the contract’s unpaid balance.
Thus, although filing the contract does not eliminate any subcontractor lien rights, it does eliminate the owner’s risk of the double jeopardy of having to pay subcontractors amounts the owner has already paid the contractor.
Before beginning any construction project — and before signing a contract — meet with an experienced attorney to ensure the terms of the contract are appropriate and create a game plan to both understand potential lienholders and take measures to manage the risk of mechanics’ liens.
None of these steps is expensive or time-consuming, and they will set your project up for success. However, once the project begins, these options are off the table, so reach out early to limit your risk of mechanics’ liens and the possibility of losing your property to foreclosure.
What does the West Virginia oil and gas industry have in common with freshwater mussels, how the federal government chooses to define the term “habitat,” and drilling activity on federal lands in the west? Quite a bit, actually. As explained below, recent developments on each of these topics intersect with the regulatory programs that govern oil and gas operations in West Virginia.
WVDNR Mussel Guidance
On June 23, 2022, the West Virginia Division of Natural Resources (WVDNR) published final guidance reflecting the agency’s recommendations for other state and federal government agencies to consider when issuing environmental permits authorizing activities that may impact freshwater mussels. Why does this matter to the West Virginia oil and gas industry? Because the guidance hopefully resolves a long running effort to address what some viewed as improper efforts by the WVDNR to directly regulate oil and gas operations.
In addition to various permits required by the West Virginia Department of Environmental Protection (WVDEP) and the United States Army Corps of Engineers (Corps) for activities that impact certain streams, operators are required to obtain a “right of entry” permit from the WVDNR before any disturbance may take place in or under certain size streams. This permit stems from the State of West Virginia’s claim to own the stream bed of certain waterways. Activities requiring a “right of entry” permit include installation of equipment to withdraw water for use in well completion or other activities.
Several years ago, WVDNR began attempting to impose conditions in “right of entry” permits that would regulate the design of certain stream crossings and impose restrictions on when and how much water could be withdrawn from a stream. These conditions were intended to minimize impacts on freshwater mussels, including those protected under the Endangered Species Act. After much discussion and negotiation between the agency and industry representatives concerning the propriety of such conditions, WVDNR agreed to publish either regulations or guidance on how to address freshwater mussels in the permitting process. Following a comment period on draft guidance published in the summer of 2021, WVNDR published the final guidance on June 23, 2022. In that document, WVDNR makes a number of recommendations for other agencies, such as WVDEP and the Corps, to consider during the consultation and coordination process associated with applications for environmental permits governing projects that may impact freshwater mussels. For example, WVDNR encourages the use of construction methods that minimize mussel impacts and recommends selection of project locations that avoid mussel populations. The guidance also speaks directly to horizontal directional drilling activities used to bore underneath streams rather than trenching through them. WVDNR also sets forth specific recommendations to restrict water withdrawals under certain stream conditions.
In addition to the guidance on the consultation process, WVDNR also revised its existing protocol to be followed by licensed divers when performing a stream bed survey to ascertain the presence and concentration of freshwater mussels. The survey protocol is a rather technical document that lays out the agency’s views on how and where mussel surveys should be conducted in large streams, such as the Ohio and Kanawha Rivers, as well as proposed restrictions on instream dredging or construction activities depending on the results of a mussel survey. Those working in or around streams that serve as habitat for freshwater mussel populations should consult the guidance, which can be downloaded from the WVDNR’s website: https://wvdnr.gov/plants-ani-mals/freshwater-mussels/.
Service Rescinds Definition of “Habitat”
Speaking of habitat, the United States Fish & Wildlife Service (Service) recently vacated the regulatory definition of the term “habitat” under the federal Endangered Species Act. Why is this relevant to oil and gas operators in West Virginia? This change could lead to areas in West Virginia being designated as “critical habitat” for a threatened or endangered species even if the species could not survive there, which would likely preclude development activities on or near those areas.
The Endangered Species Act precludes federal agencies from taking actions, including issuance of permits, that may adversely modify areas designated as “critical habitat” for species listed under the Act as “threatened” or “endangered.” The Act defines the term “critical habitat” to generally mean areas designated as essential to preserve or promote recovery of protected species regardless of whether the species is actually present in the area. The term “habitat,” however, was not itself defined in the Act or regulations until January, 2021 when a regulation published by the Service in December, 2020 became effective. (85 Fed. Reg. 81411). That regulation was in response to litigation challenging a “critical habitat” designation by the Service of an area where the relevant species could not survive under current conditions, which went all the way up to the United States Supreme Court. Weyerhaeuser Co. v. United States Fish and Wildlife Service, 139 S. Ct. 361 (2018). In making the designation, the Service reasoned that the area was once occupied by the species, and certain modifications could be made in the future that would allow the species to return to the area. The property owner challenged the designation arguing that an area could serve as “critical habitat” for a species if the area could not support the species as it exists – i.e. serve as “habitat” as that word is commonly understood. Both the district court and the court of appeals ruled that an area did not have to be “habitat” (as commonly understood) to meet the statutory definition of “critical habitat.” A unanimous Supreme Court disagreed and remanded the case with instructions to the lower court to make a determination of whether the subject area would qualify as “habitat” for the relevant species.
In response to the Weyerhauser decision, the Service undertook a rulemaking effort to specifically define “habitat” for purposes of making
“critical habitat” designations under the Endangered Species Act. After a lengthy comment period, the Service ultimately defined “habitat” as follows: “the abiotic and biotic setting that currently or periodically contains the resources and conditions necessary to support one or more life processes of a species.” Said another way, habitat means the conditions that presently or sometimes will support one facet of a listed species’ life processes (feeding, breeding, etc.). Under this definition, the Service could likely not designate an area as “critical habitat” unless the relevant species could survive in that area as it presently exists.
Immediately upon taking power, the Biden administration announced plans to evaluate a number of regulations promulgated during the prior administration, including those implementing the Endangered Species Act. In October, 2021, the Service proposed to rescind the regulation defining “habitat” and did so on June 24, 2022 (87 Fed. Reg. 37757). In the rulemaking, the Service readily acknowledged that “we are changing our position on some aspects of the rationale underpinning the definition’s adoption[.]” The current leadership of the Service determined that the regulatory definition of “habitat” adopted in early 2021 is “inconsistent with the conservation purposes of the Act” because it restricts the Service’s ability to designate certain areas as critical habitat – i.e. those areas where a species could not presently survive. According to the rulemaking announcement, rescinding the “habitat” definition will allow the Service “to designate unoccupied areas as critical habitat if those areas fit within any reasonable biological understanding of ‘habitat’ as established by the best available scientific data for a particular species, and if such areas are essential for the recovery of the species.” In other words, the Service should have more discretion in determining what qualifies as “habitat” when making critical habitat designations. This discretion is exactly what led to the critical habitat designation successfully challenged in the Weyerhauser case. The bottom line is that the Service has returned to the regulatory framework applied by the Service to designate an area where a protected species could not survive as critical habitat for that species. Couple this with ongoing efforts to list more and more species for protection under the Endangered Species Act, property owners and project developers should be concerned.
Cumulative impact of federal drilling permits on endangered species
In addition to potential impacts on critical habitat, the Endangered Species Act also requires federal agencies to consult with the Service to determine whether a proposed project may adversely affect listed species. Two anti-industry organizations have sued the United States Department of Interior and United States Bureau of Land Management challenging over 3,500 drilling permits issued for federal lands in New Mexico and Wyoming on the grounds that the agencies failed to consider the impacts of climate change and therefore impacts on certain endangered species. Center for Biological Diversity v. United States Department of Interior, No. 1:22-cv-01716 (D. D.C. June 15, 2022). Why should oil and gas industry in West Virginia care about this? Because the arguments advanced to challenge those permits also apply to environmental permits often needed for oil and gas operations in West Virginia.
The groups who filed the lawsuit allege that the federal agencies failed to consult with the Service prior to issuing the permits concerning the cumulative impacts of all the approvals on climate change and associated effects on “climate-imperiled” species listed for protection under the Endangered Species Act. According to the complaint, climate change is a primary driver for the decline of approximately 150 species. The complaint further alleges failure to consider the cumulative effects of the permits violates the National Environmental Policy Act (NEPA) and the Federal Land Policy and Management Act. The groups ask the court to vacate all the drilling permits and prohibit the agencies from approving any additional drilling permits until they have “fully complied” with the cited statutes.
Those in West Virginia should be concerned with this challenge for several reasons. First, while there is not much drilling on federal lands in the state, federal Clean Water Act section 404 “dredge and fill” permits are often required to build roads and pipelines associated with oil and gas development in the state. These permits, issued by the Corps, are subject to the consultation process under the Endangered Species Act. One of the same groups suing to vacate the federal drilling permits has a case pending since May, 2021 in Montana alleging that the Corps failed to adequately consult with the Service prior to issuing the section 404 nationwide permit used for pipelines (known as NWP 12). Center for Biological Diversity v. Spellmon, No. 4:21-cv-00047 (D. Mont.). A decision on the merits of that challenge could be issued soon.
Second, imposition of a “cumulative effects” analysis could displace a case-by-case evaluation of each individual project. Deeming a certain category of projects to be detrimental to climate change, and thus harmful to “climate-imperiled” species, could preclude approval of all permits for individual projects in that category.
Third, the incremental impact of one or more projects, or even a category of projects, on climate change, much less individual species, is difficult if not impossible to ascertain. Are bureaucrats at the Service qualified to make such decisions? Should they be making policy judgments about the net effect of a natural gas development project on climate change?
Fourth, the Service recently published a proposed rule to further expand its authority under the Endangered Species Act. On June 7, 2022, the Service published a proposal to revise its regulations to authorize the agency to create populations of threatened or endangered species in areas where those species have never been known to exist. (87 Fed. Reg. 34625). Historically, the agency has authority to re-introduce listed species into geographic areas within the species probable historical range, which are known as “experimental populations.” In other words, if the agency has evidence that a listed species once existed in an area, the Service can release the species to that area in an attempt to re-establish a population. The Service now seeks to expand the scope of eligible geographic areas to include locations outside of the species’ known historical range. The Service cites the impact of climate change on species and their habitats as justification for the proposed rule change. Under the proposed revised regulation, property owners and developers could face significant delays, or even outright cancellation, of projects in areas where the Service has chosen to attempt to establish a population of listed species that never before existed there. Comments on the proposed rule are due by August 8, 2022.
Conclusion
State and federal actions addressing wildlife management, especially under the Endangered Species Act, continue to pose challenges for the oil and gas industry. Operators would be wise to monitor regulatory and litigation developments, and to engage their consultants and attorneys early in the planning process to address anticipated issues arising under the Act.
Click here, to view the article online in the July issue of Go-WV News.
Melissa M. Rounds recently joined Babst Calland as senior counsel in the Energy and Natural Resources Group. Mrs. Rounds has represented clients in the oil and gas industry for more than 15 years and has assisted producers in a variety of transactional matters, including real estate closings, preparation of documents for leasing purposes and examining and certifying title. Her work includes resolving complex title defects, coordinating urgent title projects, working in-house with major energy producers to provide comprehensive lease analysis and assistance with mineral purchases, and providing legal analysis for changes in statutory and case law.
Mrs. Rounds’ work on behalf of the oil and gas community is primarily focused in Morgantown, West Virginia. Her representation in the Morgantown area includes working with operators to reach drilling commitments, and interactions with county officials in major producing counties in northcentral West Virginia.
Prior to joining Babst Calland, Mrs. Rounds was the owner and attorney for Melissa Rounds Law. She is a 2006 graduate of West Virginia University College of Law.
After a lengthy rulemaking process, the Pennsylvania Department of Environmental Protection’s (PADEP) CO2 Budget Trading Program rule was published in the Pennsylvania Bulletin. See 52 Pa. Bull. 2471 (Apr. 23, 2022). As previously reported in Vol. XXXVI, No. 4 (2019) of this Newsletter, on October 3, 2019, Governor Tom Wolf signed Executive Order No. 2019-07, “Commonwealth Leadership in Addressing Climate Change Through Electric Sector Emissions Reductions,” directing PADEP to initiate a rulemaking to join the Regional Greenhouse Gas Initiative (RGGI). RGGI is the country’s first regional, market-based cap-and-trade program designed to reduce carbon dioxide (CO2) emissions from fossil fuel-fired electric power generators with a capacity of 25 megawatts or greater that send more than 10% of their annual gross generation to the electric grid. The CO2 Budget Trading Program links Pennsylvania’s program to RGGI.
Following approval of the rule by the Environmental Quality Board (EQB) in July 2021 and approval by the Pennsylvania Independent Regulatory Review Commission in September 2021, the final form rulemaking was submitted to the Pennsylvania House and Senate Environmental Resources and Energy standing committees. Both houses of the legislature passed Senate Concurrent Regulatory Review Resolution 1 (S.C.R.R.R.1), which disapproved of the rulemaking, and Governor Wolf vetoed the resolution on January 10, 2022. See Vol. 39, No. 1 (2022) of this Newsletter. The Governor’s veto sent the resolution back to the legislature, where each chamber had 30 calendar days or 10 legislative days, whichever was longer, to attempt a veto override. The legislature needs a veto-proof two-thirds majority to override a veto and block a regulation. On April 4, 2022, the Pennsylvania Senate failed by one vote to reach the two-thirds majority vote needed to override Governor Wolf’s veto of S.C.R.R.R.1.
However, while S.C.R.R.R.1 was pending in the legislature, on November 29, 2021, the EQB submitted the CO2 Budget Trading Program rule to the Legislative Reference Bureau for publication in the Pennsylvania Bulletin. The Legislative Reference Bureau informed the EQB that it was not authorized to publish the rule because S.C.R.R.R.1 was still pending before the House of Representatives. On February 3, 2022, Patrick McDonnell, Secretary of PADEP and Chairperson of the EQB, filed suit in commonwealth court seeking to compel the Legislative Reference Bureau to publish the EQB’s final-form rulemaking for the CO2 Budget Trading Program. See McDonnell v. Pa. Legislative Reference Bureau, No. 41 MD 2022 (Pa. Commw. Ct. filed Feb. 3, 2022). On February 25, 2022, Senator Yaw’s office also announced that Pennsylvania Senate leaders petitioned to intervene in the lawsuit.
On April 5, 2022, the commonwealth court issued a stay preventing the Legislative Reference Bureau from publishing the EQB’s final-form rulemaking for the CO2 Budget Trading Program, pending further order of the court. Because no hearing was held on the stay, it was dissolved by operation of Pa. R. Civ. P. 1531(d) after five days.
The Legislative Reference Bureau subsequently published the rule on April 23, 2022. Two days later a group of stakeholders filed a petition for review of the rule and an application for preliminary injunction in the commonwealth court. See Bowfin KeyCon Holdings, LLC v. PADEP, No. 247 MD 2022 (Pa. Commw. Ct. filed Apr. 25, 2022). The court held a hearing on the preliminary injunction on May 10 and 11, 2022, and a ruling is expected early this summer.
If the commonwealth court does not grant the application for preliminary injunction, compliance obligations under the rule will begin July 1, 2022. Regulated sources must hold allowances equal to their CO2 emissions over a three-year compliance period. Each allowance is equal to one short ton of CO2. Regulated sources may purchase state-issued allowances at quarterly auctions or through secondary markets and can use allowances issued by any RGGI state to comply. Affected units would need to start monitoring emissions on July 1, 2022, to be able to purchase allowances for CO2 emitted on or after that date. RGGI operates on a three-year compliance schedule whereby only partial compliance is required within the first two years, and then full compliance is required after the end of the third year. The current RGGI three-year compliance period began in 2021, so 2021 and 2022 are interim compliance years and 2023 is a full compliance year. Regulated sources must acquire 50% of the necessary CO2 allowances by March 1, 2023, and acquire 100% of their allowances by March 1, 2024. The allowance price was $13.50 at the last RGGI auction on March 11, 2022. The partial year emissions cap for Pennsylvania would be 40.7 million tons of CO2 for the remainder of 2022. The total annual emissions cap will gradually decline to 58 million in 2030.
Further information regarding the rule can be found on PADEP’s RGGI webpage at https://www.dep.pa.gov/ Citizens/ climate/Pages/RGGI.aspx.
Pennsylvania Eligible for Over $26 Million in Federal Funding to Help Reclaim Abandoned Mine Lands
On March 4, 2022, Pennsylvania Governor Tom Wolf announced that the commonwealth is eligible for almost $26.5 million in Abandoned Mine Reclamation Fund program annual grants. See Press Release, Gov. Tom Wolf, “Gov. Wolf Announces $26.5 Million Federal Funding to Help Reclaim Abandoned Mine Lands” (Mar. 4, 2022). This is in addition to the almost $250 million authorized for annual distribution to Pennsylvania over 15 years from the federal Abandoned Mine Land (AML) Trust Fund. See Press Release, Gov. Tom Wolf, “Gov. Wolf Announces $244.9 Million Bipartisan Infrastructure Law Investment to Cleanup Pennsylvania’s Abandoned Mine Lands” (Feb. 7, 2022). The AML program was established pursuant to title IV of the Surface Mining Control and Reclamation Act of 1977, Pub. L. No. 95-87, 91 Stat. 445, and the $250 million annual distribution for Pennsylvania stems from President Joe Biden’s November 2021 bipartisan Infrastructure Investment and Jobs Act, Pub. L. No. 117-58, 135 Stat. 429 (2021).
In Governor Wolf’s March 4 announcement, he noted that AML funding supports jobs in coal communities and could lead to the reduction of methane emissions throughout the commonwealth. Pennsylvania expects to receive almost $4 billion over the next 15 years to address contamination and pollution caused by coal mining and the estimated 5,000 abandoned mines throughout the commonwealth. In 2019, the Pennsylvania Department of Environmental Protection (PADEP) reported that the commonwealth had over 287,000 acres of land in need of reclamation, with the estimated cost of reclamation expected to exceed $5 billion. See Fact Sheet, PADEP, “Pennsylvania’s Surface Mining Control and Reclamation Act Funded Abandoned Mine Lands Program: Past, Present, and Future” (Mar. 2019). A year-by-year summary of the AML grants awarded to Pennsylvania is available on PADEP’s website at https://www. dep.pa.gov/Business/Land/Mining/AbandonedMineReclamatio n/AMLProgramInformation/Pages/AMLFunding.aspx.
PADEP Announces Bond Rate Guidelines for Coal and Noncoal Mining Operations
On February 19, 2022, the Pennsylvania Department of Environmental Protection (PADEP) announced the bond rate guidelines for the calculation of land reclamation bonds for coal and noncoal mining operations in Pennsylvania. The coal bond rates were effective April 1, 2022, and the noncoal bond rates were effective February 19, 2022.
PADEP will use the coal bond rate guidelines to calculate land reclamation bonds for coal mining operations including surface mines, coal refuse disposal sites, coal refuse reprocessing sites, coal processing facilities, and the surface facilities of underground mining operations. These guidelines do not apply to bonds ensuring replacement of water supplies under section 3.1(c) of the Surface Mining Conservation and Reclamation Act, 52 Pa. Stat. § 1396.3a(c), or to bonds ensuring compliance with the requirements of the Bituminous Mine Subsidence and Land Conservation Act, id. §§ 1406.1—.21.
PADEP will use the noncoal bond rate guidelines to calculate land reclamation bonds for noncoal mining operations including surface mines and facilities and the surface facilities of underground mining operations. Activities including special revegetation plans, wetland mitigation, and stream channel restoration will be estimated on a case-by-case basis. Pursuant to 25 Pa. Code § 86.149 (coal) and 25 Pa. Code § 77.202 (non-coal), the bond schedule must reflect the requirement that the bond equal the estimated cost to PADEP “if it had to complete the reclamation, restoration and abatement work” required under the applicable acts, regulations, and permits. Both the coal and noncoal bond rate schedules and announcements are available on PADEP’s website at https://www.dep.pa.gov/Business/Land/Mining/BureauofMiningPrograms/Bonding/Pages/BondRates.aspx.
PADEP Publishes and Requests Comments on Draft Environmental Justice Policy
On March 12, 2022, the Pennsylvania Department of Environmental Protection (PADEP) published a revised draft of its Environmental Justice Policy (Draft EJ Policy) for public comment. See 52 Pa. Bull. 1537 (Mar. 12, 2022); PADEP, Draft EJ Policy (Mar. 12, 2022). Publication of the Draft EJ Policy comes approximately four years after PADEP published a revised version of its then-current EJ Policy focused on enhancing public participation during permit reviews in identified environmental justice (EJ) areas. PADEP withdrew that revision after public comments indicated that the proposed revisions were beyond the scope of PADEP’s stated focus. See 50 Pa. Bull. 5920 (Oct. 24, 2020). With the withdrawal, PADEP indicated that it intended to develop and integrate a broader EJ policy into its policies and practices. Id. The Draft EJ Policy incorporates, refines, and expands on the withdrawn 2018 revisions, relying on many of the developments that have occurred in the intervening years, and proposes to make significant changes to the current EJ Policy. See PADEP, Environmental Justice Public Participation Policy (Apr. 24, 2004). Below are some of the most significant changes.
Incorporation of Executive Order and Expansion of OEJ’s Role
The Draft EJ Policy incorporates Governor Tom Wolf’s October 28, 2021, executive order on EJ by citing it as an authority and addressing the requirements of the order. See Executive Order 2021-07, “Environmental Justice” (Oct. 28, 2021); Draft EJ Policy at i; see also Vol. XXXVIII, No. 4 (2021) of this Newsletter (Pennsylvania—Oil & Gas report). The executive order aligns the commonwealth with federal EJ initiatives and directs PADEP and executive agencies to address EJ across all programs. The executive order also formally established the Office of Environmental Justice (OEJ) and the Draft EJ Policy expands upon and clarifies the roles and responsibilities of the OEJ. Draft EJ Policy at 4–6. OEJ’s responsibilities include carrying out the Draft EJ Policy requirements and leading an interagency council on EJ for the commonwealth. Id. at 4.
Trigger and Opt-in Permits Are More Inclusive
The Draft EJ Policy expands the applicability of the policy to more permits, including “trigger permits,” defined as permits that “may lead to significant public concern due to potential impacts on human health and the environment.” Id. at 3. Trigger permits listed in the policy will automatically fall under the Draft EJ Policy if the project is in an “EJ Area.” Id. at 3, 6, 19–20. Trigger permits listed include surface and underground mining permits, coal refuse disposal, and large coal preparation facilities. Id. at 19. Unconventional oil and gas permits are also listed in the Draft EJ Policy as trigger permits and unconventional oil and gas permit holders must adhere to unique public participation requirements, including generating annual reports on active and anticipated drilling operations in EJ Areas. Id. at 15–16, 20.
Permits not listed as trigger permits or permits outside an EJ Area may still be considered “opt-in permits,” defined as “[a] permit that otherwise does not qualify as a public participation trigger permit, but [PADEP] believes warrants special consideration and enhanced public participation based on identified community concerns, present or anticipated environmental impacts, or reasonably anticipated significant adverse cumulative impacts.” Id. at 2. PADEP maintains broad discretion to apply the Draft EJ Policy to opt-in permits, which may include a permit for a listed opt-in facility type (appendix A of the Draft EJ Policy); a permit that “warrants special consideration,” a phrase undefined in the Draft EJ Policy; or any permit that warrants special consideration based on its “reasonably anticipated significant adverse cumulative impacts,” also undefined in the Draft EJ Policy. Id. at 2; see also id. at 20.
The Draft EJ Policy moves the definition of an “EJ Area” outside of the policy to a supplemental document, which has not yet been drafted or circulated. Id. at 1–2. According to PADEP, this supplemental document should allow for more frequent updates to data and methods used to determine “the geographic location where [PADEP’s] EJ Policy applies.” Id. at 1. Further, the Draft EJ Policy requires use of the new and frequently updated EJ Areas Viewer mapping tool, which includes environmental, demographic, and health data for use in all decisions regarding EJ in the commonwealth. Id. at 2, 5, 7. Because the EJ Areas Viewer will be frequently updated and the definition of an EJ Area will live in a supplemental document, it may prove difficult for permit applicants to predict when the Draft EJ Policy, if finalized, will apply to a project.
Enforcement and Grant Priority, Harmony with Climate Change Initiatives, and Future Updates
The Draft EJ Policy requires PADEP to prioritize inspections and compliance in EJ Areas or areas where environmental and public health conditions warrant increased attention. Id. at 16. PADEP must also develop grant guidance to prioritize EJ projects and create tracking/reporting systems for EJ projects. Id. at 17–18. The Draft EJ Policy also prompts PADEP to harmonize EJ initiatives with climate change initiatives. Id. at 17. If finalized as drafted, PADEP’s Secretary must review the EJ Policy at least every four years to determine whether revisions—via public comment and engagement processes—are necessary. Id. at 18.
PADEP accepted written comments on the Draft EJ Policy through May 11, 2022, and has suggested that the supplemental document defining “EJ Area” will be issued for public review sometime later this year. For more information on the Draft EJ Policy and how to submit comments, visit PADEP’s website at https://www.dep.pa.gov/PublicParticipation/ OfficeofEnvironmentalJustice/Pages/Policy-Revision.aspx.
On March 19, 2022, the Pennsylvania Department of Environmental Protection (PADEP) published a draft technical guidance document entitled “Trenchless Technology Guidance,” PADEP Doc. No. 310-2100-003 (Mar. 19, 2022). See 52 Pa. Bull. 1693 (Mar. 19, 2022). The purpose of this draft guidance document is to outline the steps and options to consider, and implement as appropriate, when proposing to use a trenchless technology installation method on any portion of a project. PADEP intends for this draft guidance to help “avoid, minimize, or eliminate environmental impacts” associated with trenchless technology installation. Trenchless Technology Guidance at 2. The public comment period on the draft guidance closed on May 18, 2022.
The draft guidance developed out of a stakeholder workgroup required as part of a settlement with the Clean Air Council, the Delaware Riverkeeper Network, and the Mountain Watershed Association regarding the PADEP-issued permits for the Mariner East II pipeline project. Two workgroups were formed out of that settlement to create guidance related to two topics: (1) alternatives analysis and (2) trenchless technology. The draft “Alternatives Analysis Technical Guidance Document” was published for public comment in October 2021. PADEP is currently working to revise the guidance in response to comments. The draft Trenchless Technology Guidance is the second draft guidance to come from these workgroups.
Trenchless technology is defined in the draft guidance as “[a] type of subsurface construction work that requires few trenches or no trenches which includes any trenchless construction methodology, including, without limitation: horizontal directional drilling, guided auger bore, cradle bore, conventional auger bore, jack bore, hammer bore, guided bores, and proprietary trenchless technology . . . .” Trenchless Technology Guidance at 6. This draft guidance outlines the steps that proponents of projects using trenchless technology should consider. Each project should evaluate the “suitability, feasibility, and environmental considerations” of using trenchless technology methods on a case-by-case basis, using this guidance, if published, as a step-by-step guide. Id. at 2.
Accordingly, the draft guidance is broken into three major sections—(1) suitability, feasibility, and environmental considerations; (2) design and permitting; and (3) construction and compliance. Each of these sections corresponds to a step in the process of evaluating the use of trenchless technology. Each step is then further broken down into sections that detail the regulatory requirements for each project stage. For example, step one recommends that parties interested in using trenchless technology installation methods utilize a “site suitability analysis” and a “feasibility analysis” to evaluate the potential effects of using trenchless technology. The feasibility analysis should include the assessment for the use of trenchless technology construction as the least environmentally impacting alternative. PADEP recommends that more complex projects consult local stakeholders during the site suitability analysis and the feasibility analysis.
The draft guidance also includes two appendices that PADEP emphasizes are important tools for project proponents to utilize. Appendix A provides a guide to assist project proponents in evaluating risk when using trenchless technologies. Appendix B includes checklists that correspond to each of the major sections of the draft guidance. Project proponents are highly encouraged to use these checklists to assist with due diligence. If a box is not checked, “the project proponent should be prepared to explain why the information was not examined.” Id. at 63. PADEP requests that project proponents submit the applicable checklists with any permit applications. Id. at 31.
On February 23, 2022, the Murrysville Watch Committee (MWC) petitioned the Supreme Court of Pennsylvania to allow an appeal of its unsuccessful challenge of the Municipality of Murrysville’s Oil and Gas Ordinance (Ordinance), which authorized oil and gas wells as a conditional use in Murrysville’s Oil and Gas Recovery Overlay District (Overlay District), including parts of the rural residential zoning district. As adopted, the Ordinance’s geographic and other limitations (e.g., required setbacks from well pads) restricted unconventional oil and gas development to only 5% of Murrysville’s land mass. MWC originally filed a validity challenge to the Ordinance in October 2018 before the Murrysville Zoning Hearing Board (Board), claiming, among other things, violations of due process, equal protection, and the Environmental Rights Amendment (ERA) to the Pennsylvania Constitution, Pa. Const. art. I, § 27. Broadly, MWC contended that unconventional oil and gas drilling is an industrial activity incompatible with residential zoning districts. The Board held multiple hearings, denied MWC’s challenge, and issued 167 findings of fact related to its decision. Without presenting any additional evidence, MWC appealed the Board’s decision to the Westmoreland County Court of Common Pleas, which affirmed the Board’s decision, noting that the record showed that MWC provided no evidence to differentiate the Ordinance from other, similar ordinances upheld on appeal, the precedential application of which foreclosed MWC’s challenges. MWC subsequently appealed that decision to the Commonwealth Court of Pennsylvania.
On January 24, 2022, the commonwealth court affirmed the trial court’s and Board’s decisions. Murrysville Watch Comm. v. Municipality of Murrysville Zoning Hearing Bd., No. 579 C.D. 2020 (Pa. Commw. Ct. Jan. 24, 2022). In doing so, the court relied on its prior decisions Frederick v. Allegheny Township Zoning Hearing Board, 196 A.3d 677 (Pa. Commw. Ct. 2018), and Protect PT v. Penn Township Zoning Hearing Board, 220 A.3d 1174 (Pa. Commw. Ct. 2019). In Frederick, the appellees claimed that an Allegheny Township, Westmoreland County, zoning ordinance that allowed oil and gas wells as a use by right in all zoning districts, subject to additional limitations, violated the ERA. The local zoning board and trial court both rejected these challenges and the commonwealth court affirmed, defining the appropriate standard for determining an ERA violation as whether (1) the values in the first clause of the ERA are implicated and (2) the governmental action unreasonably impairs those values. Murrysville, slip op. at 23–24; see Vol. XXXV, No. 4 (2018) of this Newsletter. Likewise, in Protect PT, the commonwealth court affirmed the validity of the Penn Township, Westmoreland County, zoning ordinance, which also faced claims of ERA violations. That ordinance created an overlay district authorizing natural gas operations by special exception, subject to certain limitations. The court rejected the challengers’ arguments of actual risk to the environment or health of township residents and found that the ordinance did not violate the ERA or due process. Murrysville, slip op. at 27–28.
Applying its analysis of these cases, the commonwealth court also found that the appellants failed to provide any evidence that unconventional oil and gas development, as contemplated under the Ordinance, was incompatible in the authorized residential zoning districts. On the contrary, the court concluded that the municipality had appropriately balanced protecting property owners in the Overlay District with economic development considerations and rejected the appellants’ claims that the Ordinance violated citizens’ due process rights. Id. at 21. For similar reasons, the court found that MWC had not shown that the Ordinance “unreasonably impaired” citizens’ rights under the ERA. Id. at 28. Finally, the court rejected the appellants’ claim that the Overlay District violated citizens’ equal protection rights under article III, section 32 of the Pennsylvania Constitution because it treated rural residential districts unequally. Id. at 35. The court reasoned that by their nature, overlay districts are subject to available land and population density, which municipalities can account for in their development. Id. The court also rejected MWC’s remaining claims, as further detailed in the opinion.
On February 23, 2022, MWC filed its petition to the Supreme Court of Pennsylvania to allow it to appeal the commonwealth court’s decision. At the time of this report, the respondents had filed their answers to MWC’s petition. See Murrysville Watch Comm. v. Municipality of Murrysville Zoning Hearing Bd., No. 56 WAL 2022 (Pa. filed Feb. 23, 2022).
Editor’s Note: The reporters’ law firm represents Olympus Energy LLC, an intervenor in the litigation with a pending unconventional gas well in Murrysville.
Pennsylvania Drafting Updates to Conventional Oil and Gas Regulations
The Pennsylvania Department of Environmental Protection (PADEP) is proceeding with two updates amending 25 Pa. Code ch. 78 (conventional oil and gas well regulations). See DEP Regulatory Update (Apr. 23, 2022). The final chapter 78 rulemaking approved by the Environmental Quality Board (EQB) and Independent Regulatory Review Commission (IRRC) in 2016 was used as the basis for the proposed updates. See Meeting Minutes, Oil & Gas Technical Advisory Board (TAB) (Sept. 17, 2020).
The first draft update, “Environmental Protection Performance Standards for Conventional Oil and Gas Operators” (#7-539), proposes updates to well reporting requirements and protection and replacement of public or private water supply regulations to reflect Act 13 of 2012, bonding requirements to reflect Act 57 of 1997, and updates to assessment and inactive status designation regulations to reflect current PADEP practice. Other surface and non-surface activity updates address permit issuance, underground injection well permitting, impoundments and borrow pits, erosion and sedimentation and site restoration requirements, and mechanical integrity testing and reporting. See TAB Meeting (Jan. 14, 2022); Proposed Chapter 78 Annex A Rulemaking (Aug. 19, 2021). This update was most recently presented to the Pennsylvania Grade Crude Development Advisory Council (CDAC) on December 16, 2021, and TAB on May 5, 2021.
The second update, “Waste Management and Related Issues at Conventional Oil and Gas Well Sites” (#7-540), addresses proper handling, storage, processing, and disposal of drill cuttings and waste water generated by conventional oil and gas operations. Area of review requirements pertaining to preparedness, prevention, and contingency plans, along with reporting and remediation of spills and releases at conventional oil and gas well sites, would be significantly updated by this proposed update. This update was last presented to CDAC on August 19, 2021, and to TAB on September 9, 2021. Of note, the practice of spreading brine for dust suppression and deicing roadways, on which PADEP’s Office of Oil and Gas Management imposed a moratorium in 2018 (but is authorized under PADEP’s Waste Management Program in certain situations), is not addressed in this update. See Proposed Chapter 78 Annex A Rulemaking (Aug. 19, 2021); Meeting Minutes, TAB (Sept. 9, 2021). PADEP, however, is currently reviewing a Penn State study on the environmental impact of spreading brine on roadways and advised TAB that the report will be released no later than August 2022, and indicated to TAB that the findings of the Penn State study will likely have a broad impact on the practice of brine spreading on roadways. TAB Meeting (Apr. 25, 2022). PADEP’s review of the study coincides with the Pennsylvania Office of the Attorney General’s apparent investigation of alleged illegal disposal, under the residual waste regulations, of brine produced from conventional oil and gas operations on roadways. See Meeting Comments, CDAC (Apr. 21, 2022).
PADEP advised TAB on April 25, 2022, that it will present the first draft update to the EQB for consideration and public comment during the second quarter of 2022. PADEP anticipates presenting the second update to EQB for consideration and public comment the following quarter. See 52 Pa. Bull. 1930 (Mar. 26, 2022).
Pennsylvania Allocated $104 Million for Orphaned and Abandoned Well Cleanup
On January 31, 2022, Pennsylvania Governor Tom Wolf announced Pennsylvania was allocated a total of $104 million in Phase I funding to support the cleanup of orphaned and abandoned oil and natural gas wells throughout the state. See Press Release, Gov. Tom Wolf, “Gov. Wolf Announces $104 Million from President Biden’s Bipartisan Infrastructure Law to Support Orphaned, Abandoned Well Cleanup in PA” (Jan. 31, 2022). The $104 million allocation is based on Pennsylvania’s notice of intent (NOI) to the U.S. Department of the Interior (DOI) indicating the commonwealth’s interest in applying for federal grant money for plugging orphaned wells and remediating orphaned well sites. See Press Release, DOI, “Biden Administration Announces $1.15 Billion for States to Create Jobs Cleaning Up Orphaned Oil and Gas Wells” (Jan. 31, 2022). The grants are part of $1.15 billion the federal government has allocated to states under the DOI with specific goals of reducing methane emissions and other pollution, and creating jobs. See Fact Sheet, White House, “Biden Administration Tackles Super-Polluting Methane Emissions” (Jan. 31, 2022); Infrastructure Investment and Jobs Act, Pub. L. No. 117-58, 135 Stat. 429 (2021). In the future, formula grants will allow the commonwealth to access more than $330 million in additional funding for the same purposes. See News Release, Senator Bob Casey, “Pennsylvania to Receive $104 Million to Clean Up Orphaned Oil and Gas Wells” (Jan. 31, 2022).
The Pennsylvania Oil and Gas Act defines an “abandoned well” as a well that (1) has not been used to produce, extract, or inject any gas, petroleum, or other liquid within the preceding 12 months; (2) for which the equipment necessary for production, extraction, or injection has been removed; or (3) is considered dry and not equipped for production within 60 days after drilling, re-drilling, or deepening. 58 Pa. Cons. Stat. Ann. § 3203. An “orphan well” is a well “abandoned prior to April 18, 1985, that has not been affected or operated by the present owner or operator and from which the present owner, operator or lessee has received no economic benefit other than as a landowner or recipient of a royalty interest from the well.” Id. The Pennsylvania Department of Environmental Protection (PADEP) estimates there are between 100,000 and 560,000 wells unaccounted for in state records, a significant number of which may still pose a threat to human health and the environment. See Fact Sheet, PADEP, “Abandoned and Orphan Oil and Gas Wells and the Well Plugging Program” (rev. Apr. 2021).
The funding is allocated in two parts. Phase I, with an initial grant of $25 million, will be used by PADEP to plug and remediate high-priority wells that pose a threat to health and the environment, and document how many orphaned and abandoned wells exist throughout the commonwealth that need to be plugged. See Meeting, Oil and Gas Technical Advisory Board (TAB) (Jan. 14, 2022). At the April 25, 2022, TAB meeting, PADEP stated that it is developing plugging projects for the most efficient expenditure of funds. For example, PADEP said that it intends to include lower priority orphaned wells in the vicinity of high-priority wells, targeting 8 to 10 wells per contract. Per PADEP, doing so will allow for remediating the largest number of orphaned wells possible in the fewest number of trips. Meeting, TAB (Apr. 25, 2022). The second allocation of Phase I funding to the commonwealth, totaling $79 million, was awarded in accordance with Phase I formula grant eligibility requirements based on job loss in the oil and gas industry during the COVID-19 pandemic, the number of documented orphaned wells, and the estimated cost to plug and remediate orphaned wells. See DOI Press Release, supra.
On April 12, 2022, DOI issued guidance to states outlining, among other things, the grant application process, uses for initial grant funding, and recommended best practices for establishing, conducting, and reporting plugging, remediating, and reclaiming activities. See Fact Sheet, DOI, “Bipartisan Infrastructure Law Sec. 40601 Orphaned Well Program—FY 2022 State Initial Grant Guidance” (Apr. 2022). At the January 14, 2022, and April 25, 2022, TAB meetings, PADEP explained that the commonwealth must submit an application for the previously awarded initial grant funding no later than May 13, 2022. The application must include certification that (1) there are orphaned wells in the commonwealth, (2) the commonwealth is a member of the Interstate Oil and Gas Compact Commission, and (3) 90% of the funds will be allotted to plugging contracts or grants within 90 days of receiving federal funding. See also id. at 9. DOI will disperse funds within 30 days of submission of certification. Any funds that remain “unobligated,” i.e., any funding that, on the date one year from the date of receipt, is not subject to a definite commitment for an immediate or future payment for goods or services ordered or received, must be returned to DOI. Id. at 5–6.
PADEP Withdraws Final Rulemaking for Control of VOC Emissions from Existing Oil and Natural Gas Resources
On March 15, 2022, the Environmental Quality Board approved final regulations establishing reasonably available control technology (RACT) requirements for volatile organic compounds (VOCs) and other pollutants from existing oil and natural gas production facilities, compressor stations, processing plants, and transmission stations. The regulation will be submitted to the U.S. Environmental Protection Agency (EPA) for approval as part of the commonwealth’s state implementation plan under the Clean Air Act. As reported in more detail in Vol. 39, No. 1 (2022) and Vol. XXXVII, No. 3 (2020) of this Newsletter, under the new regulation, oil and natural gas operators with facilities that exceed VOC emission thresholds would be required to do more frequent leak detection and repair monitoring on certain equipment at their facilities.
The rulemaking had advanced to the Pennsylvania House and Senate Environmental Resources and Energy Committees and the Independent Regulatory Review Commission (IRRC) for consideration. After the House Environmental Resources and Energy Committee issued a disapproval letter for the rulemaking on April 26, 2022, however, the Pennsylvania Department of Environmental Protection (PADEP) withdrew the rule from consideration by the IRRC to reevaluate the rulemaking. The Committee’s disapproval letter alleges that PADEP failed to comply with Act 52 of 2016, which requires that any rulemaking concerning conventional oil and gas wells be undertaken separately and independently from those concerning unconventional oil and gas wells or other subjects. PADEP has stated that it needs to finalize the rule by June 16, 2022, to avoid sanctions by the EPA under the Clean Air Act. Documents related to the rule can be found on PADEP’s website at https://www.dep.pa.gov/ Pub-licParticipation/EnvironmentalQuality/Pages/2022-Meetings. aspx.
Sparked by the newly released Allegheny Conference for Community Development’s long-term vision for achieving 70% reduction in carbon dioxide emission by 2050 and anticipating an upcoming Department of Energy funding opportunity announcement (FOA), local industry leaders gathered recently to discuss the benefits of a hydrogen economy.
Collaboration is key
These leaders all agreed that in order to build momentum toward a hydrogen economy in this region now, a collaboration of community resources, academia, energy and other industries, and public entities is key to producing a successful application proposal. More specifically, according to Krekanova, “if hydrogen and carbon capture utilization and storage (CCUS) could be well understood and thoughtfully negotiated, they can produce positive benefits for the environment, for the economy, and for the people.”
“One of the strengths … in the region here is, we have the industry base, we have the academic base, the research base,” Veser said.
Creating and strengthening opportunities for public and private partnerships and using those pooled resources and expertise will create additional opportunities in this region, he added.
“We can make hydrogen from natural gas, we can do carbon capture, we know how to do this. We know how to electrolyze water,” Veser said.
The challenge, he continued, is to develop more cost effective and energy efficient methods — processes that are more compact, use cheaper materials, and can eliminate the carbon footprint of external firing — that will bring down the cost curve.
And larger sums of money from both government and industry will further accelerate this research.
“We’re at a place where the federal government obviously is interested in this,” Curry said. “They have put money down for hydrogen hubs; we have the 45Q tax credit.”
In addition to federal tax incentives, Curry said there is an educational component of the policymaking phase of support. There is a need to educate the public about the complex issues associated with hydrogen or carbon capture will affect their energy costs, safety and convenience.
Permitting processes must improve
“If you can get people on board, get them comfortable [that] this is safe, this is going to help them, and it’s going to bring jobs to the region then you can really build the political support you need to do good policy,” Curry said.
In terms of regulatory and permitting issues, changes are required — at the federal and state levels — to streamline and speed up the permitting processes throughout the energy sector, noted Curry.
“I think for hydrogen in this region, it’s really the tie back to carbon capture and getting carbon sequestration wells permitted … the historical average for existing sequestration wells is about five years,” he said.
It’s a significant amount of time for project funders to wait on a project, he added.
Garber suggested that permitting processes could be streamlined. A few states — including West Virginia, North Dakota, and Wyoming — have taken the necessary steps to become the permitting authority for carb on sequestration wells.
“I’ve seen estimates that Pennsylvania has the capacity to sequester two and a half billion tons of CO2,” Garber said. “If we are delayed initial permits … then there certainly is the risk that hydrogen development and CCS [carbon capture and sequestration] transport will go to the Midwest and West as opposed to the Appalachia area.”
Clean energy for the region
In terms of regulatory, now is the time for the Pittsburgh region to add “clean energy for all,” to its “meds, eds and bots” identity, said Duquesne Light’s Guzek.
“The speed and flexibility (of how funds are allocated) are the two things from our perspective that really help us make our region competitive and one that can really prosper” he said.
And the Pittsburgh region is poised to supply a workforce that can support the new technologies and business issues associated with a hydrogen economy.
From an academia perspective, the University of Pittsburgh has played a significant role in research and development, and the educational side is now in the late planning stages of reviving its petroleum engineering undergraduate program with a strong focus on natural gas and renewable energy education for engineers, Veser said. The program — the first of its kind in the U.S. established in 1910 — is being reimagined for new technologies that will help graduates bridge the gap between fossil fuels and renewables.
“We really equip these engineers to lead that transition into whatever the future will bring because it is still unclear what ultimately the winning technologies will be and where the pathway will go,” he said. “There is a clear need in educating the next generation of engineers.”
Job opportunities and education will also be created for various trades, Guzek said.
Next gen of engineers and trade workers needed
“We need to continue to reach out into the communities and drive (home the point) that not everybody has to get a four-year degree,” he said.
Leveraging the partnerships throughout the region and its potentially on-demand industries, universities and hard-working communities will drive the region to a clean energy future for all, Guzek continued.
“I think there are some first movers here poised in the region to really jump into this … and I think there is a good chance that others will follow,” Garber said. “There are companies here that are willing to do this.”
“We’re not going to get there by just one technology,” Curry added.
To view the article and the video discussion, click here.
There is one in every town. The abandoned lot, corner or block. Maybe it once housed a building that was torn down long ago. Perhaps it served as the neighborhood sandlot for pick-up baseball games in the summer before the new all-season turf field was installed in the athletic complex. Might be one owner or several parcels with various owners. Likely it has delinquent taxes piling up. Possibly there was an approval in the past with much fanfare, but then the market collapsed, the groundbreaking was canceled and permits expired. People drive past all the time and wonder, “What are they ever going to build there?”
Although land is valuable because they are not making any more of it, a variety of factors can prevent otherwise viable property from being developed. In situations where there are local government hurdles to development, a would-be developer can have several options. A rezoning to change the zoning map and the type of permitted uses on the property is one option. But rezoning comes with risks both to the developer including a spot zoning challenge by neighbors and to the local government due to the possibility that the developer does a project that is now permitted in the new zoning district even though it was not what was proposed during the legislative rezoning process.
Another option for a more targeted development where the local government will have assurances that it will get what was promised is a use variance. Although not as common as the ubiquitous dimensional variance that seek to alter building setbacks or heights beyond what is allowed in the zoning ordinance, a use variance in the right circumstances can be a viable path for both the local government and the developer. Far too often a developer might be scared away from this option due to the heavy burden of establishing that the property is constrained by an unnecessary hardship to warrant the relief of a use variance.
In the Pennsylvania Commonwealth Court’s reported opinion, In re Appeal of Frank Garcia, No. 134 C.D. 2020 (May 10, 2022), the much-maligned use variance concept received a bit of a revival. This city of Philadelphia case involved a rectangular lot over 45,000 square feet in size that had been abandoned and vacant for decades as the Olde Richmond neighborhood around it grew and changed. The property is located at 2600-40 Hagert Street and is bounded by three public streets. Zoning only permitted attached and semi-detached single-family residences on the property.
The developer initially devised a plan to divide the property into three parcels for a multi-family apartment building and eleven single-family dwellings. This plan was not well received by the neighbors and the community association. After meeting with community members, the developer revised its plan to reduce the building size and number of units, create a pedestrian walkway, increase the open areas, and increase the landscaping and preservation of several existing trees. Essentially, the apartment building was turned into a smaller number of duplexes and the eleven single-family dwellings remained. In addition, the developer agreed to provide off-street parking for use by the community and to create a pocket park and community garden for the neighborhood.
The duplexes required a use variance from the Zoning Board of Adjustment. The developer addressed the neighbors’ concerns with traffic and parking problems by comparing its proposal to what could be constructed without the variance. Using the entire property for single-family residences would add to the parking and traffic concerns, and there would be no requirement for the developer to provide for the additional off-street parking spaces and other design features that were offered in the revised plan. In addition, the objecting neighbors claimed that the developer failed to establish an unnecessary hardship or that the requested variance represented the minimum variance that would allow the property to be developed. In response, the developer established that it was not economically viable to do an exclusively single-family development and the surrounding commercial and industrial would impact the ability to market single-family residences to potential buyers.
The Zoning Board of Adjustment granted the use variance for the duplexes over the neighbors’ objections, and the Common Pleas Court affirmed. Judge Patricia McCullough, writing for the unanimous Commonwealth Court, used the opportunity presented by this case to review the standards for a use variance, but more importantly, to explain the common errors that arise when a use variance is viewed in terms of extremes rather than the nuance the law requires. McCullough began by addressing the need to find an “unnecessary hardship” peculiar to the property that is the first step in a use variance case. Based on Supreme Court decisions, the three ways an applicant for a use variance can establish an unnecessary hardship are by establishing either that: the property cannot be used for a permitted purpose due to the physical features of the property, or a permitted use can only be developed at a prohibitive expense or the property is valueless for any use permitted by the zoning ordinance. This is a disjunctive test that has multiple factors, and yet there has been a trend of decisions that only focus on one of these three criteria and ignores other factors. The belief that a use variance was only appropriate for a valueless property or in situations where it was impossible to comply with the zoning ordinance played a large role developers’ fear for seeking one and zoning hearing boards’ reluctance to grant one.
This extreme position is an error. A developer does not need to have a completely valueless property before an unnecessary hardship will be established. McCullough explained the variety of factors that must be considered by a zoning hearing board conclude whether an unnecessary hardship exists. In this case, the developer detailed for the Zoning Board of Adjustment what a single-family development permitted by right would look like. It would be 16 lots in two rows of eight houses back-to-back with front yards that were 20 feet wide and side yards that were 70 feet long. This would look like a suburban subdivision and not like anything in the immediate area. This, coupled with the large size of the lot, the fact that it was bounded by three public streets, and that the surrounding land was not in keeping with a single-family development was sufficient for the Zoning Board of Adjustment to conclude that there was an unnecessary hardship that warranted variance relief.
McCullough next analyzed the objectors’ argument that the developer failed to establish that a use variance for duplexes was the minimum necessary variance. The court noted that this criterion is decidedly more difficult to assess in a use variance than in a dimensional variance case where an applicant can clearly quantify the restriction and show how the building will work if the restriction is changed. However, this difficulty in a use variance case can be overcome by considering the economics of the proposed variance. Too often, developers are not willing to discuss their profit margins or how changes will impact the bottom line. Here, the developer was able to bring forward facts that supported its reasonable profit expectations and how that interacted with the minimum number of dwelling units that would be necessary for the plan to be economically viable. By doing so, the developer gave the Zoning Board of Adjustment substantial evidence to support the determination that the number of duplexes requested in the variance was the minimum variance to make the project economically feasible and justified relief from the hardships posed by the property, the surrounding area, and the zoning ordinance.
The developer in this case was well served to meet with the community and make a revision to the plan to address concerns. The court mentioned these revisions throughout the opinion and a willingness to work with the community played a key role in establishing the economics that led to a decision that the duplexes were the minimum necessary variance. There was a final issue relating to a unique provision in the Philadelphia zoning code that bars a variance if there are delinquent property taxes unless the Zoning Board of Adjustment included a condition that the taxes be satisfied, which was not addressed by the lower court and the Commonwealth Court remanded the case for resolution of that issue.
The city of Philadelphia is not subject to the Pennsylvania Municipalities Planning Code like other municipalities, but Pennsylvania courts recognize the universal considerations that go into any variance application before a local zoning hearing board. Practitioners facing a use variance as either counsel for a developer, attorney for the objectors, or solicitor for the zoning hearing board will all be well served to review In re Appeal of Frank Garcia as they prepare for a public hearing. A use variance is not necessarily something to be feared and it can be an effective solution to put that vacant lot present in every town to productive use.
Robert Max Junkeris a shareholder in the public sector, energy and natural resources and employment and labor groups of Babst, Calland, Clements & Zomnir. Conctact him at rjunker@babstcalland.com.
Babst Calland today published its 12th annual energy industry report: The 2022 Babst Calland Report – Legal & Regulatory Perspectives for the U.S. Energy Industry.Each of our nation’s energy sectors is impacted by local, state and federal policies, many of which are addressed in this inclusive report on legal and regulatory developments for the energy industry in the United States.
The Babst Calland Reportrepresents the timely and insightful perspectives of the firm’s energy attorneys on some of the most critical issues facing the industry, including climate change, cybersecurity, ESG and environmental justice, hydrogen and carbon capture sequestration, pipelines, and renewables.
Joseph K. Reinhart, shareholder and co-chair of Babst Calland’s Energy and Natural Resources Group, said, “The U.S. energy industry, and the U.S. economy as a whole, is reacting to shifting market forces and potential significant new changes in laws and regulations. Importantly, Russia’s invasion of Ukraine earlier this year and the resulting worldwide shortage of oil and gas has spotlighted the world’s continued reliance on fossil fuels and reinforced the value of America’s relative energy independence even as the nation and the world continue to seek alternative energy sources.”
Report Features Video Commentary from U.S. Senator Joe Manchin
This edition of The Babst Calland Report also features commentary from Senator Joe Manchin (D-WV), Chairman of the U.S. Senate Energy and Natural Resources Committee, who spoke with Babst Calland energy clients at a special briefing on May 26, 2022 called “A Perspective on U.S. Energy Policy with Senator Joe Manchin.”
To request a copy of The 2022 Babst Calland Report, click here.
The Babst Calland Report is provided for informational purposes for our clients and friends and is not intended to constitute legal advice.
Commonwealth v. International Development Corporation, 2022 WL 628284 (Commw. Ct. Pa. 2022). This is a deed interpretation case with some Title Wash sprinkles mixed. In 1894, two individuals (Proctor and Hill) conveyed approximately 2,000 acres in Bradford County to Union Tanning Company, excepting and reserving all the coal, oil and gas. This was unseated lands, and the minerals remained assessed with the surface. After several intervening conveyances, the surface estate became vested in Central Pennsylvania Lumber Company (CPLC). CPLC’s surface assessment went delinquent and was sold to Calvin McCauley in 1908. The deed to McCauley effectively “washed” the title to the reserved minerals, which also effectively became vested in McCauley. McCauley subsequently transferred the newly-reunified estates under the 2000 acres back to CPLC in 1910. In 1920, CPLC conveyed the land to the Commonwealth, utilizing the following language:
[t]his conveyance is made subject to all the minerals, coal, oil, gas or petroleum found now or hereafter on, or under the surface on any or all of the lands described in each of the above mentioned parts or divisions [of the 1920 deed]; together with the right and privilege of ingress, egress and regress upon said lands for the purpose of prospecting for, or developing, working or removing the same, as fully as said minerals and mineral rights were excepted and reserved in deed dated October 27, 1894, from … Proctor [and Hill] to … Union …
International Development Corporation became the current successor to CPLC as to the minerals following the above 1920 deed, and the Commonwealth of Pennsylvania continues to own the surface estate to this deed. The case hinges on the interpretation of the above language – is it a reservation benefiting CPLC, or just a limitation on the warranty? The Commonwealth Court determined that, reading the 1920 deed as a whole and in context, the intent of CPLC was clearly to retain for itself the same mineral rights that had originally been reserved by Proctor and Hill in 1894. The Court pointed out that, normally, making a conveyance “subject to” a prior reservation or right does not create a new right. However, in the 1920 deed, CPLC utilized additional language modifying the “subject to” clause that created new rights for itself. As such, the Court effectively vested title to the oil and gas at issue with International Development Corporation, and not the Commonwealth.
WEST VIRGINIA
Antero Resources Corporation v. Irby, 2022 WL 1055446 (S. Ct. W. Va. April 8, 2022). Antero contested the methodology employed by the West Virginia State Tax Commissioner’s valuation of three wells located in Doddridge and Ritchie Counties, on appeal from the West Virginia Business Court. A larger valuation dispute had previously been adjudicated and remanded to that court, to which the parties were able to reach agreement, but the current dispute revolves around wells specifically producing both oil and gas. Essentially, West Virginia regulations allow certain deductions from the assessed value of wells.
Oil wells receive a deduction of $5,750.00, while gas wells receive deductions of $150,000.00 or more per year, with the deductible value increasing year over year. The Tax Commission applied the deductions to the Antero oil and gas wells based on the proportion of revenue generated by each individual resource on a per-well basis. For example, for a well that generated 75% of its revenue on gas and 25% of its revenue on oil, the Commission calculated the deduction as follows: 75% of $150,000.00 plus 25% of $5,750, for a total well deduction of$113,937.50. Antero argued that the assessments were not “singular” as required under existing caselaw regarding these producer’s well assessments because a monetary average effectively creates a sliding scale for valuation (an idea that had been previously rejected by the Supreme Court). The real value of the additional oil well deductions equates to millions of dollars in Doddridge and Ritchie Counties. The Supreme Court concluded that the valuation of the “mixed” oil and gas wells was reasonable and not in violation of fairness, upholding the Tax Commissioner’s valuations.
Alyssa Golfieri is a shareholder in the firm’s public sector and energy and natural resources groups. Her practice focuses primarily on municipal and land use law, with an emphasis on zoning, subdivision, land development and municipal ordinance enforcement.
Practice Profile:
Golfieri is a shareholder in the firm’s public sector and energy and natural resources groups. Her practice focuses primarily on municipal and land use law, with an emphasis on zoning, subdivision, land development and municipal ordinance enforcement.
She represents the firm’s municipal clients on a wide array of local government issues, including the preparation of zoning and land development ordinances pursuant to the Pennsylvania Municipalities Planning Code, the processing of land development applications, responses to record requests submitted under the Pennsylvania Right-to-Know Law, navigation of public bidding matters, abatement of property maintenance issues, defense of notices of violations before zoning hearing boards and magisterial district judges, and compliance with both the Pennsylvania Sunshine Act and the Pennsylvania Public Official and Employee Ethics Act.
Leadership Activity:
Golfieri is an active leader within the firm, having served on the associates, summer associates, recruiting, technology and carpetmaster’s committees. She also serves as a mentor to future generations of attorneys outside the firm.
Pro Bono and Civic Work:
She frequently volunteers as an alumni judge for Duquesne University School of Law 1L appellate oral arguments, a juror for Allegheny County High School Mock Trial Competition, a panelist for Allegheny County Bar Association’s young lawyer’s division roundtable discussion titled “Preparing for the Bar Examination,” and a coordinator for Allegheny County Bar Association’s young lawyer division holiday toy drive.
Experience:
Current employer, May 2011-present, summer associate, 2011, associate, September 2012-December 2020, shareholder, Jan. 1, 2021-present.
Education:
The Pennsylvania State University, B.S. in crime, law and justice, 2009; Duquesne University School of Law, J.D., 2012.
The Pennsylvania Department of Environmental Protection on March 12 shared an updated draft of its Environmental Justice (EJ) Policy for public comment. Among the many changes, the draft EJ Policy expands the role of the Office of Environmental Justice (OEJ), creates new requirements for unconventional oil and gas, and creates new enforcement priorities for the department. Comments were accepted through May 11.
Pennsylvania’s Environmental Justice Policy
The OEJ oversees environmental justice initiatives and policies in the state. The primary goal of the OEJ is to increase communities’ environmental awareness and involvement in DEP’s permitting process. In 2004, the department created the Environmental Justice Public Participation Policy to provide citizens in environmental justice communities enhanced public participation opportunities during certain permit application processes. The EJ Policy is a critical part of DEP’s environmental justice initiatives, providing guidelines for the agency’s approach to public engagement for permit application reviews in environmental justice areas as defined under the current EJ Policy.
In 2018, DEP circulated a draft revision to the current EJ Policy for public comment. Ultimately, the department withdrew the proposed draft revisions after public comments were received, and the current 2004 version of the EJ Policy remained in effect. DEP continued to evaluate revisions to the EJ Policy and in 2021 proposed to update the policy by incorporating, refining and expanding upon the withdrawn 2018 revisions. On March 12, DEP released the draft EJ Policy for a 60-day public comment period with several public meetings and informational webinars.
Significant revisions and additions to the draft EJ Policy
The draft EJ Policy proposes to make significant changes to the current policy. Below are some of the most significant changes recommended by DEP:
Incorporation of executive order on EJ
The draft EJ Policy cites and incorporates the requirements Governor Tom Wolf ’s Executive Order on Environ mental Justice (Executive Order 2021-07), which was issued in October 2021 and formally established the OEJ. This contextualizes the draft EJ Policy into the broader effort to address environmental justice across the state executive agencies and federal EJ initiatives. The draft EJ Policy has been altered throughout to ensure OEJ will meet the requirements of the order.
OEJ expanded roles and responsibilities
The draft EJ Policy describes the purpose and responsibilities of the OEJ. The draft policy gives DEP new roles and responsibilities and dictates how OEJ will engage with stakeholders and communities going forward. This marks a large expansion of the responsibilities of the OEJ, including coordinating an interagency council on environmental justice for the Commonwealth. By way of example, OEJ will provide training to DEP staff, maintain and reassess every two years the EJ Area Viewer, issue an annual report, develop strategic plans every five years, and help create and implement a Language Access Plan for the department.
DEP maintains broad discretion on opt-in permits
While listed trigger permits automatically trigger the application of the current policy, DEP maintains the adverse cumulative environmental or public health stressors” shall be denied a permit. The New Jersey EJ law does not define “cumulative environmental or public health stressors.”
Without a definition of “cumulative impacts” in the draft EJ Policy, or under Executive Order 2021-07, it is unclear whether DEP will interpret that phrase similar to the New Jersey law. However, the department’s broad discretion under a subjective standard (“warrant special consideration”) and an undefined cumulative impacts standard make the applicability of the opt-in permit process hard to predict.
Updated definitions of “EJ Area” and “Area of Concern”
Under the current EJ Policy, an EJ Area was defined as census tract with 30 percent or greater minority population or 20 percent or greater population below the poverty line. The draft policy defines an EJ Area as “the geographic location where Department’s EJ Policy applies.” Further, it states that the methods for identifying EJ Areas will be specific outside the policy for easier amendment. Because the definition of an EJ Area will live outside the policy, it will be more frequently amended to reflect recent data and definitions used in other agencies and community groups. Thus, the draft EJ Policy’s application and scope are not clearly defined or entirely predictable.
The draft EJ Policy simplifies the current definition of Area of Concern, which now is defined as the area within a half-mile of the proposed permit activity. The draft directs applicants to use the new EJ Area Viewer mapping tool to determine if a project is in an EJ Area and the project’s Area of Concern.
Unconventional oil and gas now included
Oil and gas unconventional well permits (and change in use) are now considered trigger permits and the draft EJ Policy includes new, specific provisions for unconventional oil and gas public engagement. Under the draft policy these permits will automatically trigger the policy requirements. Unconventional well permits are included in the draft EJ Policy’s list of trigger permits, at Appendix A. While permits listed in Appendix A trigger Sections II (“Permit Review Process”) and III (“Community Input”) of the draft EJ Policy, unconventional well permits will only trigger the application of Section IV (“Oil and Gas Public Engagement”). The draft policy’s Section IV proposes unique public participation requirements for unconventional oil and gas operations. The requirements of Section IV will apply retroactively to unconventional well permits already issued by DEP and create continuing obligations such as annual reports on active and anticipated drilling operations—even though such operations are not subject to an actual permit application submitted to the department.
EJ Areas Viewer mapping tool
The draft policy requires the use of the new EJ Areas Viewer, which is available at pa.gov/EJViewer. The EJ Areas Viewer is an interactive mapping tool that contains environmental and demographic indicators, which can be updated and modified by DEP at any time based on new environmental justice related data. Along with other mapping tools, the department should use the EJ Areas Viewer to assist in decisions regarding all aspects of environmental justice, including determining if a potential opt-in permit should fall under the draft EJ Policy. Overall, the use of this and other mapping tools will allow DEP and OEJ to consider much more data—environmental, demographic, health, etc.—than under the existing policy.
Climate initiatives
New requirements will push OEJ and DEP to harmonize the environmental justice initiatives with climate change initiatives. This focus will cut across the department―programs, rulemaking, policies and enforcement. DEP commits in the draft policy to ensure climate-related initiatives will consider and prioritize communities disproportionately impacted by climate change. The department also will ensure the Climate Action Plan addresses environmental justice and the impact of climate change on EJ Areas. Further, DEP will implement strategies for outreach and engagement with environmental justice and climate change vulnerable communities.
Babst Calland will be tracking the draft EJ Policy as the department responds to comments and moves to finalize the policy this year. If you have questions about the environmental justice developments described above, please contact Sean McGovern at 412-394-5439 or smcgovern@babstcalland.com.
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