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.
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 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.
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.
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).
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.
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.
Two recent developments depict the frustration with regulatory roadblocks and concern with future costs that project developers often cite in working through Endangered Species Act (ESA) issues with the U.S. Fish & Wildlife Service (FWS). One illustrates the extraordinary delays that ESA permitting can create. The other is indicative of the ever-broadening scope of FWS authority.
On June 1, 2022, West Virginia-based Allegheny Wood Products, Inc. (AWP) filed a federal lawsuit against FWS and its Director, as well as the Secretary of the Interior, seeking a court order directing FWS to take action in an ESA permitting process that began 16 years ago and still remains pending. Allegheny Wood Products, Inc. v. U.S. Fish and Wildlife Service, Civil Action No. 2:22-cv-007 (N.D. W.Va.) (assigned to Judge Thomas Kleeh). According to the Complaint, AWP (one of the largest producers of Eastern U.S. hardwoods) began the process to obtain an Incidental Take Permit from the FWS in 2006 for a proposed project in Tucker County, West Virginia. Consistent with guidelines published by FWS, AWP started the process by submitting a draft Habitat Conservation Plan (“HCP”; a prerequisite to submission of a permit application) to FWS for review. Largely in response to comments from the agency, AWP had to revise the HCP many times, including at least 10 revisions in just the last three years. AWP contends that most of those revisions were in response to FWS comments that sought changes “to sections [of the HCP] that were previously agreed upon” or “foundational changes that should have been raised earlier.” Complaint, ¶28. As an example of the kinds of delays it has experienced, AWP notes that the FWS offered no response to its March 2013 draft HCP until March 2016.
Concerned that the FWS was intentionally refusing to advance the review process to the next stage, in December 2017 AWP unilaterally decided it was time to submit an Incidental Take Permit application, including the most recent version of its HCP. AWP also paid the required application fee and supplied an administrative “Environmental Assessment,” as required by the National Environmental Policy Act (NEPA). Four years later, AWP’s application remains pending with no end in sight. FWS has reportedly failed to comply with the deadlines set forth in its own timeline provided to AWP on August 4, 2020 to govern the completion of its review. Alleging violations of the federal Administrative Procedures Act, the Council on Environmental Quality’s NEPA regulations, and the FWS Planning and Incidental Take Permit Processing Handbook, AWP has asked the court to issue an order requiring that FWS complete its review of the AWP application by a date certain, retain jurisdiction over the case to oversee compliance with that order, and award AWP its costs and attorney’s fees in bringing the action.
AWP is not alone in its frustration over lack of action by FWS. On May 18, 2022, West Virginia Senator Shelley Moore Capito questioned FWS Director Martha Williams during a Senate hearing on the agency’s proposed 2023 budget (click here to access). Senator Capito inquired about significant delays in ESA permitting actions associated with highway development in West Virginia that have been pending before FWS since 2014. Rather than expand the agency’s budget to hire additional staff, FWS proposed that the State of West Virginia should pay FWS nearly $800,000 per year to fund additional staff to handle the State’s projects. Private businesses have also entered into similar agreements with FWS to pay the agency money in exchange for the assignment of staff dedicated to certain projects. In essence, both the states and private industry have to fund FWS to do its job in a timely fashion or else be stuck in perpetual regulatory limbo.
While FWS apparently lacks sufficient funding to handle its current workload, the agency recently proposed to expand its regulatory reach ever further. On June 7, 2022, FWS 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. Historically, FWS 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, FWS can release the species to that area in an attempt to re-establish a population. FWS now seeks to expand the scope of eligible geographic areas to include locations outside of the species’ known historical range. FWS 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 FWS has chosen to attempt to establish a population of listed species. Comments on the proposed rule are due by August 8, 2022.
For questions about the Endangered Species Act and other environmental compliance issues, please contact Christopher B. (Kip) Power at (681) 265-1362 or cpower@babstcalland.com, or Robert M. Stonestreet at (681) 265-1364 or rstonestreet@babstcalland.com.
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.
On May 18, 2022, the U.S. Environmental Protection Agency (EPA) added five per- and polyfluoroalkyl substances (PFAS) to its Regional Screening Level (RSL) and Regional Removal Management Level (RML) lists, increasing the total number of PFAS chemicals from one to six. The five added PFAS chemicals EPA are:
Hexafluoropropylene oxide dimer acid and its ammonium salt (HFPO-DA, a/k/a GenX);
Perfluorooctanesulfonic acid (PFOS);
Perfluorooctanoic acid (PFOA);
Perfluorononanoic acid (PFNA); and
Perfluorohexanesulfonic acid (PFHxS).
These join perfluorobutanesulfonic acid (PFBS), which EPA added to the RSL and RML lists in 2014 (and revised in 2021 with an updated toxicity assessment). The RSLs and RMLs are not cleanup standards; they are risk-based values used to identify contamination and inform whether additional actions may be necessary at a given site to protect human health and the environment. Specifically, EPA utilizes RSLs to identify whether contaminated media at a given site should be further investigated (e.g., if a constituent’s concentration exceeds the RSL, it likely requires additional investigation; concentrations below the RSL generally do not). RMLs are one of many factors EPA uses to support a decision whether to conduct a removal action at a site. The updated RSL tables are available here and the RML tables are available here.
More broadly, these updates are among many PFAS-related steps EPA has taken or intends to take in the coming months and years. They follow three actions, described below, that EPA took in April 2022 to address PFAS in water.
To better investigate and analyze PFAS in water, EPA published its Draft Method 1621, a screening method capable of measuring aggregated concentrations of chemicals with carbon-fluorine bonds at the parts per billion level, i.e., it measures concentrations of PFAS, as well as non-PFAS fluorinated compounds, such as pesticides and pharmaceuticals. EPA intends this method to be used to broadly screen for the presence of fluorinated compounds, with more sensitive methods, e.g., Draft Method 1633, utilized to identify specific PFAS compounds. Both of these methods are progressing through the validation processes.
To address some discharges of PFAS, EPA issued a memorandum titled, “Addressing PFAS Discharges in EPA-Issued NPDES Permits and Expectations Where EPA is the Pretreatment Control Authority.” The memorandum includes monitoring provisions, analytical methods, pollution prevention, and best management practices to reduce PFAS discharges by applicable industrial direct dischargers (including, but not limited to, organic chemicals, plastics and synthetic fibers; metal finishing; electroplating; electric and electronic components; landfills; pulp, paper, and paperboard; leather tanning and finishing; plastics molding and forming; textile mills; paint formulating; and airports). Although the memorandum specifically focuses on EPA-issued permits and authority, EPA intends to publish similar guidance to state permitting authorities in 2022.
To protect aquatic life from PFAS contamination, EPA proposed Clean Water Act freshwater aquatic life ambient water quality criteria for PFOA and PFOS. If finalized, states and authorized tribes can consider the criteria in developing their own water quality standards. The proposals are open to public comment through July 2, 2022 and a fact sheet summarizing the criteria is available here.
In addition to these examples, EPA continues to move toward accomplishing other PFAS-related goals, many of which are summarized in the agency’s “PFAS Strategic Roadmap: EPA’s Commitments to Action 2021–2024,” available here. Among its targets for 2022, EPA intends to propose national primary drinking water regulations for PFOA and PFOS (fall 2022), which would require monitoring of public water supplies (and further action if PFOA and/or PFOS are found to be present in concentrations above their respective maximum contaminant levels (MCLs)). EPA also intends to propose a rule to designate PFOA and PFOS as CERCLA hazardous substances (spring 2022), which would require facilities to report PFOA and PFOS releases above applicable reportable quantities and authorize EPA to use additional enforcement and cost recovery authority, including potentially “reopening” previously remediated Superfund sites. Final rules for each of these proposals are expected in 2023.
Between now and 2024, EPA also plans to collect data and develop PFAS Effluent Limitations Guidelines (ELGs) to be incorporated into direct discharger NPDES permits to limit pollutants from entering the nation’s waters. ELGs establish national technology-based regulatory limits for specific pollutants in wastewater discharges into surface water and into municipal sewage treatment facilities. EPA aims to publish proposed rulemakings for ELGs for the organic chemicals, plastics and synthetic fibers industries (summer 2023) and the metal finishing and electroplating industries (summer 2024). EPA intends to complete studies of electrical and electronic component facilities, textile mills, and landfills and data reviews of other industries, including leather tanning and finishing, plastics molding and forming, and paint formulating, to inform whether to initiate future related rulemakings. EPA released its Preliminary Effluent Guidelines Program Plan 15 in September 2021, availablehere, the final version of which is targeted for publication in fall 2022 and will address whether future regulatory actions are needed for other industries.
While the federal government focuses on it goals, some of which may implicate state requirements, many states continue to implement their own actions with respect to PFAS. Pennsylvania, for example, is progressing toward finalizing MCLs for PFOA and PFOS, the first time the commonwealth has set such regulations for any contaminant. In February 2022, the Environmental Quality Board (EQB) published a proposed rule to establish MCLs for PFOA and PFOS of 14 parts per trillion (ppt) and 18 ppt, respectively, which are similar to standards set in other states. EQB held five virtual public hearings on the proposed rule and accepted public comments through April 27, 2022 (comments are available here). If the rule is finalized as proposed, it will set initial compliance monitoring requirements beginning January 1, 2024, for community and nontransient noncommunity water systems serving a population greater than 350 persons and all bottled, vended, retail and bulk systems, and January 1, 2025, for systems serving fewer than 350 persons.
As the federal government and state governments move to address PFAS at their respective paces, in some cases working on the same issues (e.g., drinking water regulations), it remains to be seen how these efforts will or will not mesh. Regardless, Babst Calland attorneys will continue to track PFAS developments at the federal and state level and are available to assist you with PFAS-related matters. For more information on these developments and other remediation matters, please contact Matthew C. Wood at (412) 394-6583 or mwood@babstcalland.com, Mackenzie Moyer at (412) 394-6578 or mmoyer@babstcalland.com, or any of our otherenvironmental attorneys.
On April 6, the U.S. Environmental Protection Agency (EPA) published in the Federal Register a proposed rule that, if finalized, would establish a federal implementation plan (FIP) to address regional ozone transport under the Clean Air Act (CAA). The proposed rule is noteworthy based on the numerous adjustments it makes to existing nitrogen oxides (NOx) emissions budgets for a number of states, including Pennsylvania, as well as marking the first time that the EPA has used the regional ozone transport provision under the CAA to regulate sources other than electricity generating units (EGUs).
Background
Section 109 of the CAA directs the EPA to establish federal National Ambient Air Quality Standards (NAAQS) for certain pollutants deemed appropriate by the EPA. One of these pollutants is ozone, which is formed in part by photochemical reactions involving NOx and volatile organic compounds (VOCs). The most recent NAAQS for ozone was promulgated by the EPA in 2015, which establishes an eight-hour 70 parts per billion ambient standard. Section 110 of the CAA also directs states to submit to the EPA “state implementation plans” (SIPs), to detail how emissions from facilities in each state will attain the NAAQS. SIPs are also required to demonstrate that emissions from facilities in the state will not “contribute significantly” to nonattainment or interfere with continued attainment of the NAAQS by other states (often referred as the CAA’s “Good Neighbor” provision). If a state fails to submit a satisfactory SIP to achieve these requirements, the EPA is required under the CAA to develop and implement a FIP for that state.
The EPA’s approach to implementing the CAA’s Good Neighbor provision began in 2011 with enactment of the Cross-State Air Pollution Rule (CSAPR) (76 Fed. Reg. 48208), designed to address the 1997 ozone NAAQS among other things. Under this rulemaking, the EPA established a NOx emission budget and trading system for EGUs. The emission budgets, developed on a state-by-state basis, were based on a four-step process involving: identification of receptors in downwind states with demonstrated issues achieving the ozone NAAQS; determining those upwind states contributing to downwind nonattainment through ambient air quality modeling; identifying and quantifying the amount of emissions that significantly contribute to downwind nonattainment and the amount of emissions reductions needed to prevent such downwind nonattainment; and development and implementation of an emission budget. Based on each state’s budget, affected EGUs in each state would be allocated one allowance per ton of NOx emissions, which would be debited from their account at the end of each ozone season. Those sources with a shortfall of NOx allowances would need to purchase additional allowances.
CSAPR and its periodic updates—including the “CSAPR II” rulemaking in 2016 (81 Fed. Reg. 74504) which was developed in response to the promulgation of the 2008 ozone NAAQS—have been subject to litigation over the years. In particular, in Wisconsin v. EPA, 938 F.3d 303 (D.C. Cir. 2019), the U.S. Court of Appeals for the D.C. Circuit found that the emission budgets established by the EPA were not sufficient to fully eliminate upwind states’ significant contributions to downwind nonattainment, in violation of the CAA’s Good Neighbor provision. As a result, the EPA promulgated a subsequent revision to CSAPR and CSAPR II in April 2021 (86 Fed. Reg. 23054) to further reduce the emission budgets allocated to each state. The proposed rule implements further reductions to emission budgets, based on implementation of the 2015 ozone NAAQS which is more stringent than the 2008 ozone NAAQS.
Notable Features of the Proposed Rule
In the proposed rule, the EPA would continue to find that interstate transport of NOx emissions from EGUs in several states, including Pennsylvania, significantly contribute to downwind nonattainment of the 2015 ozone NAAQS. However, the proposed rule would expand the number of states subject to this finding and would also find that NOx emissions from certain non-EGU sources also are significant contributors to downwind nonattainment. Finally, the proposed rule would issue a FIP for these states, imposing a revised NOx emissions trading program among these states.
While the proposed FIP would not appreciably change the types of EGUs subject to the existing NOx trading program, it would, among other things, expand the trading program under the current iteration of CSAPR to include EGUs from eight other states. It would also reduce the amount of NOx emissions budgets for states by varying amounts between 2023-2025, and by roughly 25% beginning in 2026, reflecting an emissions level based on installation of post-combustion selective catalytic reduction (SCR) or noncatalytic reduction (SNCR) controls at 30% of coal-fired power plants. The proposed FIP’s NOx emissions trading program would also include a “recalibration” provision, such that a surplus of banked allowances among all sources in a state beyond a 10.5% target bank amount would be subject to downward adjustment.
Moreover, the proposed rule would establish additional emissions limits beyond a strict trading program for certain affected EGUs. Coal-fired EGUs with greater than 100 MW nameplate capacity would be subject to a daily emissions limit of 0.14 lbs NOx/MMBTU. If a facility exceeds this limit, it would be charged allowances at a penalty rate of three times the normal rate (i.e., three allowances surrendered per excess ton NOx emitted). In addition, the proposed rule establishes a 50-ton limit for NOx over the emissions level at 0.1 lbs NOx/MMBTU, for EGUs that are found to be responsible for contributing to a state’s exceedance of its “assurance level,” i.e., 121% of the state’s emissions budget. These limits have potentially significant implications for facilities with a seasonal operating pattern.
Finally, the proposed rule would establish NOx emissions limits for several types of industrial sources other than EGUs (including reciprocating internal combustion engines in pipeline transportation of natural gas, cement kilns, boilers and furnaces in iron and steel mills, glass furnaces, paper mills and other equipment for chemical, petroleum and coal product manufacturing). These limits would be established on a source category basis. However, sources in these categories would not be required to participate in the trading program established for EGUs. If finalized, this would mark the first iteration of CSAPR in which EPA would use the Good Neighbor provision of the CAA to establish emission limits for specific source categories.
Key Takeaways
The proposed rule not only represents increased stringency in the existing NOx emissions trading program among EGUs under the CSAPR, it also reflects a substantial expansion in the scope of industries regulated under the CAA’s Good Neighbor provision. Sources may want to consider whether the proposed rule will establish limitations that are more stringent than those arising under other provisions of the CAA (for example, the “new source performance standards” under Section 111, or “reasonably available control technology” standards developed by states under Section 182). It also remains to be seen whether future iterations of CSAPR rulemaking will further expand the types of sources covered by the rule.
The proposed rule will remain open for public comment under docket number EPA-HQ-OAR-2021-0668 until June 21, (which includes a 15-day extension granted by the EPA). Given the wide array of industries that may be affected by the proposed rule, it is expected that it will elicit a substantial number of comments from industry, nonprofit organizations, and state and local agencies.
Varun Shekhar is a senior associate in Babst, Calland, Clements and Zomnir’s environmental and transportation safety groups. His environmental practice focuses on compliance matters arising under the Clean Air Act and implementing regulations. Contact him at vshekhar@babstcalland.com.
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This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy
11 months
The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.