FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(By Joseph K. Reinhart, Sean M. McGovern, Matthew C. Wood and Gina N. Falaschi)
On November 29, 2021, the Pennsylvania Supreme Court overturned a decision by the Pennsylvania Commonwealth Court, ruling that UGI Storage Company (UGI) could be held liable for taking oil and gas drilling rights in a proposed protective buffer zone around the Meeker natural gas storage field in Tioga County, Pennsylvania. In 2009, UGI, a quasi-public entity with the power of eminent domain, sought from the Federal Energy Regulatory Commission (FERC) a certificate of public convenience and necessity to acquire and operate certain facilities related to the interstate transportation and sale of natural gas owned by UGI Central Penn Gas, Inc. (CPG), including a 1,216- acre underground storage field in Tioga County and an additional 2,980-acre protective buffer zone around the storage field.
FERC granted UGI’s application for the storage field but denied its request for the full buffer zone (citing issues with notification and property rights requirements in accordance with applicable federal regulations). The decision resulted in only parts of the buffer zone being certificated. In 2015, certain property owners sought the appointment of a board of viewers to assess damages for de facto condemnation of their properties under section 502(c) of the Eminent Domain Code, 26 Pa. Cons. Stat. § 502. The property owners claimed that although only certain segments of the buffer zone had been certificated, UGI was treating the properties within the uncertificated segments in the same manner as those within the certificated are- as as protection for the integrity and security of the storage field. As such, the property owners alleged that UGI had deprived them of the financial benefits of utilizing natural gas underlying their properties by effectively prohibiting hydraulic fracturing activities, thus resulting in a de facto condemnation. The case moved between the trial and appellate courts over the next few years.
On appeal to the Commonwealth Court of Pennsylvania in 2020, the court applied the three-prong test for determining whether a de facto condemnation had occurred (but disagreed as to whether the owners needed to prove that UGI had proper- ty-specific powers of eminent domain in order to prove same). See generally Hughes v. UGI Storage Co., 243 A.3d 278 (Pa. Commw. Ct. 2020), vacated and remanded, 263 A.3d 1144 (Pa. 2021). Under the test, the property owners had to show that (1) the condemnor had the power to condemn the land under eminent domain procedures; (2) the property owner was substantially deprived of the use and enjoyment of the property through exceptional circumstances; and (3) the damages sustained were an immediate, necessary, and unavoidable consequence of the condemnor’s exercise of its eminent domain power. Id. at 284. A majority of the members of the court concluded that failing to obtain FERC’s certification for segments of the buffer zone precluded UGI exercising its eminent domain power. As such, the court found that the property owners could not establish that “that any purported deprivation of the beneficial use and enjoyment of their properties ‘is the immediate, necessary and unavoidable consequence of the exercise of the power to condemn,’ the third prong necessary to find a de facto taking.” Id. at 289 (quoting In re Condemnation by Commonwealth, 805 A.2d 59, 68 (Pa. Commw. Ct. 2002)). The property owners appealed to the Pennsylvania Supreme Court.
In Hughes v. UGI Storage Co., 263 A.3d 1144 (Pa. 2021), the court looked to the text of the Eminent Domain Code, concluding that nothing therein indicated a requirement of a relation- ship between the eminent domain power and a specific property. Id. at 1156. Instead, the court reasoned that an actionable taking only required that the condemnor proceeded by authority of law for a public purpose. Id. Relying on its interpretation of the Eminent Domain Code and a string of U.S. Supreme Court decisions that found no requirement of a relationship between the eminent domain power and a specific property, the court held that “a public or quasi-public entity need not possess a property-specific power of eminent domain in order to implicate inverse condemnation principles.” Id. at 1158. The court vacated the commonwealth court’s order and remanded to that court for further proceedings consistent with its opinion and to address a waiver issue previously raised at the trial court level.
Copyright © 2022, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(By Joseph K. Reinhart, Sean M. McGovern, Matthew C. Wood and Gina N. Falaschi)
On January 15, 2022, the Pennsylvania Department of Environmental Protection (PADEP) released in the Pennsylvania Bulletin, and requested public comment on, its draft 2022 Integrated Water Quality Monitoring and Assessment Report (2022 Integrated Report). See 52 Pa. Bull. 418 (Jan. 15, 2022). The draft 2022 Integrated Report, which PADEP is required to produce biennially pursuant to sections 303(d) and 305(b) of the Clean Water Act (CWA), 33 U.S.C. §§ 1313(d), 1315(b), and 40 C.F.R. pt. 130, identifies state waters that do not meet applicable water quality standards. Waters fall into three general statuses—attaining, impaired, or unassessed—and are further categorized according to uses, data, and whether a total maximum daily load (TMDL) is necessary (e.g., Category 1 waters are attaining for all uses, while Category 5 waters are impaired for one or more uses by a pollutant that requires a TMDL).
Pursuant to applicable regulations, PADEP assessed waters throughout the commonwealth for four uses: drinking water, fish consumption, aquatic life, and recreational use. 25 Pa. Code § 93.3. Similar to the 2020 Integrated Report, see Vol. XXXVII, No. 3 (2020) of this Newsletter (Pennsylvania—Mining report), PADEP identified acid mine drainage, agriculture, and stormwater runoff as the top known sources for waters impairment. PADEP conducted initial assessments on 5,844 stream miles and 25,742 public lake acres in addition to reassessing an additional 5,334 stream miles and 14,262 public lake acres. Waters were reassessed for a variety of reasons, including removal of potential discharge sources, identification of new discharge sources, or verification that source and cause of impairment are unchanged. The draft 2022 Integrated Report identified 27,886 impaired stream miles, 2,418 more than documented in the 2020 Integrated Report. The draft 2022 Integrated Report reflects the cumulative assessment of 99% (84,977 miles) of stream miles and 97% (109,819 acres) of lake acres statewide and is the fifteenth in a series of reports prepared and submitted to the U.S. Environmental Protection Agency (EPA) pursuant to the CWA.
Items of note in the draft 2022 Integrated Report include:
- Since 2004, approximately 920 stream miles and 28,000 public lake acres have been restored.
- Approximately 28,000 stream miles and 69,000 public lake acres are listed as impaired.
- After PADEP completed the new assessments and reassessments, the percentage of impaired waters in Pennsylvania increased to 33%, up from 30% as documented in the 2020 Integrated Report.
- The draft 2022 Integrated Report identified Lancaster (1,286 stream miles), Elk (1,126 stream miles), Chester (1,020 stream miles), Franklin (928 stream miles), and Allegheny (915 stream miles) as counties having the most miles of impaired streams.
- PADEP delisted a total of 380 stream miles and 178 public lake acres. A total of 120 stream miles were fully restored, 78 stream miles had causes for impairment removed, and the remaining stream miles were delisted because of data refinement. Of the 178 public lake acres delisted, 95 acres were fully restored, 26 acres had causes for impairment removed, and the remaining acres were delisted because of data refinement.
PADEP is seeking general comments on the draft 2022 Integrated Report, and specific comments on waters listed as high priorities for TMDL development and on those selected for restoration through alternatives to TMDLs. PADEP is accepting comments on the draft 2022 Integrated Report through March 1, 2022. The final 2022 Integrated Report, including a list of Category 5 waters (requiring development of a TMDL), will be submitted to the EPA pursuant to sections 303(d) and 305(b) of the CWA.
Copyright © 2022, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(By Joseph K. Reinhart, Sean M. McGovern, Matthew C. Wood and Gina N. Falaschi)
On January 15, 2022, the Pennsylvania Department of Environmental Protection (PADEP) published draft General Permit WMGR163 (Draft Permit) in the Pennsylvania Bulletin for public comment. See 52 Pa. Bull. 419 (Jan. 15, 2022). PADEP created the Draft Permit as a result of the July 9, 2021, passage of Act 70, which amended the Administrative Code of 1929. As pro- posed, the Draft Permit would authorize the short-term processing, transfer, and beneficial use of oil and gas liquid waste to hydraulically fracture or otherwise develop an oil or gas well under the authority of the Solid Waste Management Act, 35 Pa. Stat. §§ 6018.101–.1003, and the Municipal Waste Planning, Recycling and Waste Reduction Act, 53 Pa. Stat. §§ 4000.101–.1904. The Draft Permit covers facilities that process and beneficially reuse oil and gas liquid waste for no longer than 180 consecutive days.
If finalized as proposed, any company interested in using the Draft Permit will have to register its authorized activities with PADEP pursuant to 25 Pa. Code § 287.643. PADEP will be prohibited from requiring an applicant to obtain a determination of applicability from the agency (25 Pa. Code § 287.641(c)) prior to the issuance of the final permit as authorized under 25 Pa. Code § 287.641(d) for the land application of material. Key provisions in the Draft Permit include:
- Facilities are authorized to process and transfer oil and gas liquid waste for no more than 180 consecutive days during the permit’s one-year coverage
- The permittee may not store more than 1,000,000 gallons of oil and gas liquid waste on-site at any one
- Oil and gas liquid waste is not subject to concentration limits or chemical testing in order to be stored in an impoundment (unlike General Permit WMGR123).
- The applicable facility must meet the siting requirements set forth in the permit (e.g., it must not be located within a 100-year floodplain or within certain distances of an exceptional value wetland, dwelling, or property line, subject to certain exceptions).
- The permittee must develop and make available at the facility a Preparedness, Prevention and Contingency Plan that is consistent with applicable PADEP guidance.
The Draft Permit is available for review and comment through March 15, 2022, and Act 70 requires PADEP to submit the general permit to the Pennsylvania Legislative Reference Bureau by July 1, 2022, for publication in the Pennsylvania Bulletin. 71 Pa. Stat. § 510-39.
Copyright © 2022, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(By Joseph K. Reinhart, Sean M. McGovern, Matthew C. Wood and Gina N. Falaschi)
The Pennsylvania Department of Environmental Protection (PADEP) is preparing to finalize a rulemaking that adopts reasonably available control technology (RACT) requirements and RACT emission limitations for existing oil and natural gas sources of volatile organic compound (VOC) emissions. This proposal is based on the U.S. Environmental Protection Agency’s (EPA) October 2016 Control Techniques Guidelines (CTG) for the Oil and Gas Industry, 81 Fed. Reg. 74,798 (Oct. 27, 2016), which provide RACT requirements for VOC emissions from existing oil and gas sources. The rule would apply to owners and operators of any of the following oil and natural gas sources of VOC emissions that were in existence on or before the effective date of this rulemaking: storage vessels (in all segments except natural gas distribution), natural gas-driven continuous bleed pneumatic controllers, natural gas-driven diaphragm pumps, centrifugal and reciprocating compressors, and fugitive emission components.
Pennsylvania’s Environmental Quality Board (EQB) first published a proposed rulemaking on May 23, 2020. 50 Pa. Bull. 2633 (May 23, 2020); see Vol. XXXVII, No. 3 (2020) of this Newsletter. The proposed rulemaking was published for public comment, three virtual hearings were held, and the comment period ended on July 27, 2020. PADEP received roughly 4,500 comments from approximately 36,000 commenters. PADEP is preparing, but has not yet released, a comment and response document for the rulemaking.
The draft final-form rule was presented to the Air Quality Technical Advisory Committee in December 2021 and was presented to PADEP’s other advisory committees in January 2022. The final-form rule incorporated public comment by making changes to improve clarity and minor edits on applicability and inspection requirements. The rulemaking will impact approximately 199 conventional wells and 4,913 unconventional wells, which will be required to implement leak detection and repair (LDAR) programs or increase the current LDAR frequency under the proposed rulemaking. Approximately 278 midstream com- pressor stations and 5 natural gas processing plants will be required to implement LDAR programs or meet new requirements.
On December 16, 2021, EPA found that Pennsylvania failed to submit state implementation plan (SIP) revisions required by the Clean Air Act (CAA) in a timely manner to address RACT requirements associated with the 2016 Oil and Natural Gas Industry CTG mentioned above. See 86 Fed. Reg. 71,385 (Dec. 16, 2021). Failure to submit SIP revisions within the next 18 months will trigger sanctions and the creation of a federal implementation plan.
PADEP anticipates advancing the draft final rule to the EQB for approval in the first quarter of 2022. The agency will finalize the rule and submit it to EPA as a SIP revision in the second quarter of 2022—within EPA’s new 18-month deadline. Compliance requirements would likely begin in January 2023.
Copyright © 2022, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Water Law Newsletter
(By Lisa M. Bruderly, Mackenzie Moyer and Evan M. Baylor)
On October 16, 2021, the Pennsylvania Department of Environmental Protection (PADEP) published a revised draft technical guidance document entitled “Guidance on Notification Requirements for Spills, Discharges, and Other Incidents of a Substance Causing or Threatening Pollution to Waters of the Commonwealth Under Pennsylvania’s Clean Streams Law,” PADEP Doc. No. 383-4200-003 (Oct. 16, 2021) (Spill Guidance). See 51 Pa. Bull. 6559 (Oct. 16, 2021). This guidance replaces the first draft published on August 8, 2020, in response to comments on that draft. The intended purpose of the Spill Guidance is to address what spills, discharges, or other incidents need to be immediately reported to PADEP.
Background of Immediate Notification Procedures
Pennsylvania’s Clean Streams Law, 35 Pa. Stat. §§ 691.1–.1001, requires PADEP to protect the waters of the commonwealth from activities that pollute or have the potential to pollute these waters. Chapters 91 and 92a of Pennsylvania’s regulations, specifically, 25 Pa. Code §§ 91.33 and 92a.41, require immediate notification to PADEP when a spill, discharge, or other incident results in an unpermitted discharge of a sub- stance that causes, or threatens to cause, pollution of the waters of the commonwealth, endangerment to downstream users, or damage to property.
Specifically, section 91.33(a) requires the responsible person to immediately notify PADEP
[i]f, because of an accident or other activity or incident, a . . . substance which would endanger downstream users of the waters of this Commonwealth, would otherwise result in pollution or create a danger of pollution of the waters, or would damage property, is discharged into these waters . . . or is placed so that it might discharge, flow, be washed or fall into them . . . .
The Spill Guidance states that accidents, activities, or incidents that may need to be reported under section 91.33 include, among other things, “spills, leaks, overflows, line breaks, [and] existing pollution that is newly discovered.” Spill Guidance at 3. In an emergency, public health and safety come first; notification to PADEP “should occur as soon as possible after immediate risks to public health and safety subside.” Id. at 4.
Section 92a.41(b) requires National Pollutant Discharge Elimination System (NPDES)-permitted facilities to comply with the oral notification requirements of section 91.33 no later than four hours after becoming aware of an incident causing or threatening pollution. The incident could occur as a result of an accident or incident at the facility “or during an activity authorized by an NPDES permit.” Id. at 3. NPDES-permitted facilities are required to submit a written notification to PADEP within five days of the permittee becoming aware of any incident.
What Spills, Discharges, or Other Incidents Need to Be Reported
PADEP does not identify threshold amounts of substances that trigger notification requirements (i.e., reportable quantities) because the impact of spills is fact-intensive and cannot be predicted ahead of time. Factors to evaluate when determining whether a spill should be reported include (1) the nature of the substance spilled (e.g., concentration, quantity, toxicity); (2) the location of the spill (e.g., characteristics of nearest waters of the commonwealth, geology, and proximity to surface water and downstream users); (3) the weather conditions before, during, and after the incident; and (4) the presence and implementation of a spill response plan. Id. at 6–7.
The Spill Guidance presents a risk characterization framework to assist in evaluating whether a spill may endanger downstream users, pollute waters, or damage property. Id. at 7–9. To illustrate this fact-intensive evaluation, PADEP uses examples ranging from spilling a drop of milk on a driveway, in which notification is not expected, to a tanker truck dumping thousands of gallons of milk into a stream, where notification is required. Id. at 9. PADEP’s position is that “it is not tenable to define pre-established, quantitative criteria by which it can be determined if a particular spill or discharge constitutes or threatens pollution,” but notification is “strongly encourage[d]” when the risks of pollution, endangerment to downstream users, or property damage are unknown or uncertain. Id.
PADEP must also be notified of a spill that does not directly discharge to a surface water of the commonwealth, if that spill could possibly enter a water of the commonwealth and endanger downstream users, result in pollution, or cause property damage. Id. at 6. In instances of evaluating whether an indirect discharge could result in a violation of water quality standards, additional factors must be considered including the length of time for the spilled substance to reach surface water and the extent the spilled substance is diluted or transformed before reaching the surface water. Id.
The Spill Guidance also addresses pollution risks to groundwater. Id. Waters of the commonwealth include “underground water,” and “spills or other unauthorized discharges that do not occur directly to surface waters may also constitute pollution as defined in The Clean Streams Law.” Id. As an example, the Spill Guidance states that “if a spill or unauthorized discharge results in harmful contamination of groundwater used by a municipal drinking water treatment plant, that spill or unauthorized discharge would constitute pollution as defined by The Clean Streams Law.” Id.
The Spill Guidance presents examples of incidents that would require immediate notification and incidents that would not be expected to require notification. Incidents that require immediate notification include sanitary sewer overflows; vehicular or other transportation accidents in which pollutants are spilled on or into the ground, storm drains, drainage swales, or surface water; and historical/existing pollution that is newly discovered. Incidents where PADEP does not expect notification include spills/overflows collected by appropriate secondary containment and minor spills onto the ground where the contaminated soil is immediately removed and there is no reasonable possibility of the substance reaching groundwater or surface water. Id. at 9–10.
PADEP recognizes that some spills or unauthorized discharges pose negligible risk of pollution, and notification of these spills is neither required nor expected. However, PADEP “strongly encourages” notification regarding any spill or unauthorized discharge where the risks of pollution to waters of the commonwealth, property damage, or endangering downstream users are “unknown or uncertain.” Id. at 9. Overall, PADEP emphasizes that it is best to err on the side of caution and notify if there is “a reasonable possibility that pollution occurred or will occur.” Id. at 11. Comments were due on the draft guidance document on December 15, 2021, and can be viewed at https://www.ahs.dep.pa.gov/eComment/.
Copyright © 2022, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
FNREL Water Law Newsletter
(By Lisa M. Bruderly, Mackenzie Moyer and Evan M. Baylor)
On January 25, 2022, the Pennsylvania Department of Environmental Protection (PADEP) published a long-awaited technical guidance document, entitled “Pennsylvania Function- Based Aquatic Resource Compensation Protocol,” PADEP Doc. No. 310-2137-001 (effective Mar. 1, 2022) (Mitigation Guidance), for evaluating and valuing aquatic resource compensatory mitigation.
As background, a draft version of the Mitigation Guidance was published in March 2014. PADEP revised that draft to in- corporate feedback from other federal and Pennsylvania agencies, PADEP’s Water Resources Advisory Committee, and public comments.
The Pennsylvania Dam Safety and Encroachments Act, 32 Pa. Stat. §§ 693.1–.27, and its implementing regulations, 25 Pa. Code ch. 105, require a person to obtain a permit from PADEP to construct, operate, maintain, modify, enlarge, or abandon a dam, water obstruction, or encroachment that alters the course, current, or cross section of a body of water. Mitigation Guidance at 1. A mitigation plan is typically required with the permit application, including, as applicable, a plan to compensate for the impact to regulated waters as a result of the project. Id. at 2.
The stated purposes of the Mitigation Guidance are to:
- provide an acceptable methodology to evaluate functional compensation offsets associated with proposed aquatic resource impacts and determine compensatory mitigation requirements;
- assist in identifying measures that minimize proposed project impacts on aquatic resource functions to reduce subsequent compensation requirements; and
- provide a means for evaluating compensation proposals performed on-site, at a mitigation bank, or through an in-lieu fee
Id.
The Mitigation Guidance is intended to ensure consistency in determining compensation requirements and valuing compensation projects. Id. It is intended to be compatible, and used concurrently, with the federal compensatory mitigation requirements of the U.S. Environment Protection Agency and U.S. Army Corps of Engineers. Id. at 3.
This Mitigation Guidance applies to all intermittent and perennial watercourses, floodways and floodplains, wetlands, and other bodies of water, such as lakes and reservoirs, that are wholly or partly within Pennsylvania. Id. at 1. The Mitigation Guidance separates the regulated waters of the commonwealth into three aquatic resource groups based on the predominant functions of each aquatic resource type: (1) riverine (intermittent and perennial wadeable watercourses and their flood- ways/floodplains); (2) lacustrine (lakes, reservoirs, and non-wadeable rivers); and (3) palustrine (wetland environments, including unvegetated wetlands). Id. at 3–10. Function groups have been established for each resource type and are intended to represent the “predominant functions present within the applicable aquatic resource types.” Id. at 4.
Evaluation of whether a project may require compensation starts with establishing the project’s potential effect on the function group for the applicable resource type. The evaluation examines the area and type of impact (i.e., direct, indirect, or temporal). Id. at 4–5. The project effect is then scored (i.e., minimal to severe) and adjusted, as appropriate. Id. at 5–8. A re- source condition assessment is also conducted. Id. at 8–9. Other scores are assessed for (1) the aquatic resource value, taking into account the resource’s uniqueness, protected or public uses, and other special characteristics; and (2) the wetland coefficient of conservatism, a criterion relied on to categorize the wetland resource value for an impact area. Id. at 10–15.
In instances of after-the-fact permitting or enforcement, resource conditions are assigned to an already impacted resource area by either assuming the impacted resource was in the best attainable condition or by conducting a Condition Level
1 Rapid Assessment. Id. at 9. Compensation requirements are calculated after determining the areas of direct, indirect, and temporal impacts, the project effect category and value for each applicable function group, the appropriate resource condition scores for each resource area, and the appropriate resource value category and value for each resource. Id. at 15.
The Mitigation Guidance also describes the methodology to evaluate whether a mitigation project provides adequate compensation to offset the function compensation requirements. Id. at 23. This methodology includes scoring and adjustment (if appropriate) of the compensation value factor and determining the condition differential between the condition of the resource before and after the project. Id. at 18. After evaluation of other factors, the functional credit gain is calculated for each resource function group and adjusted, if appropriate. Id. at 22.
The Mitigation Guidance will be effective March 1, 2022. PADEP will provide updated application forms, instructions, and training prior to the effective date. The Mitigation Guidance and the accompanying Aquatic Resource Condition Level 2 Rapid Assessment Protocols are available on PADEP’s eLibrary website.
Copyright © 2022, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
Law360
(By Robert Stonestreet, Christopher (Kip) Power and Ben Clapp)
State and federal lawmakers are creating economic opportunities for the coal industry and landowners to support production of critical materials in high demand for technology products.
The term “critical materials” refers to a group of 50 minerals, elements, substances and materials, including substances known as rare earth elements, that the U.S. Department of Energy has identified as key components of products that are essential to the economic or national security of the U.S., and that are susceptible to supply chain disruption.
According to the U.S. Geological Survey, approximately 97% of rare earth elements are produced in China. The federal legislation known as the Infrastructure Investment and Jobs Act, or IIJA, seeks to reduce the risk of supply chain disruption by diversifying and domesticating production of these materials.
To that end, the act allocates over $1.3 billion to support a number of new and existing DOE initiatives directed toward research, development and production of critical materials generally — and in some cases, rare earth elements specifically.
Rare earth elements are essential for many high-tech products, such as smartphones and other sophisticated electronic devices. They are key components of important defense applications, such as guidance systems, sonar and radar. These elements also serve as important raw materials used in the manufacture of renewable energy equipment, such as solar panels and wind turbines.
Rather than being rare, these elements exist in many places throughout the U.S. and the rest of the world, although generally in very low concentrations that make them difficult to economically recover and process.
But relatively greater concentrations of rare earth elements, along with other critical materials, can be found in coal seams and adjacent geologic formations. Even higher concentrations often exist in polluted water flowing from surface and underground coal mines — commonly referred to as acid mine drainage, or AMD.
The heightened concentration of rare earth elements and other critical materials in AMD, AMD sludge (a byproduct of AMD treatment) and legacy coal refuse disposal areas (also known as gob piles) presents potential opportunities for the mining industry to leverage grants and other funding sources provided by the IIJA to subsidize AMD treatment costs, and promote reclamation of legacy abandoned mine lands.
Companies operating in the mining industry — not just academic institutions or research foundations — are eligible to apply for large amounts of funding created by the IIJA related to the extraction of critical materials generally and rare earth elements specifically. These programs include:
- $400 million appropriated to fund pilot projects for the processing, recycling and development of critical materials, at least 30% of which must be granted to projects relating to secondary recovery, which includes recovery of critical materials from mine waste piles, AMD sludge or byproducts produced through legacy mining activities. Each grant for chosen pilot projects can be up to $10 million, and the DOE will prioritize projects that are shown to be economically viable in the long term.
- An allocation of $127 million in grants focused on research to improve the security of rare earth elements, including through the development and assessment of advanced separation technologies for the extraction and recovery of rare earth elements and other critical materials from coal and coal byproducts, such as AMD, and evaluation of environmental or health impacts associated with the recovery of rare earth elements from coal-based resources and methods of mitigating those impacts.
- Grant funding totaling $140 million dedicated toward establishing a rare earth demonstration facility, that would demonstrate the feasibility of a comprehensive, full-scale operation to extract, separate and refine rare earth elements from AMD, mine waste and other “deleterious material” at a single site. The cost share for an award recipient is expected to be approximately 50%. The DOE seeks to “catalyze development of an economic, competitive, sustainable domestic REE supply from unconventional and secondary sources capable of supporting [approximately] 10% of current U.S. demand.” With specific reference to this funding opportunity, the DOE recently issued a request for information, seeking input on a number of different topics from industry, academia, government agencies, investors and other key stakeholders with interest in developing such a facility. Interested parties are asked to comment upon all aspects of the development, design and construction of a demonstration facility, including potential impacts to environmental justice and energy transition communities, and the types of information that will be needed to determine whether a project is successful. The request for information is not a formal funding opportunity, which is expected to be issued in the fourth quarter of 2022.
- $600 million in grant funding available for projects to establish a sustainable long-term supply of critical materials, including innovations in technologies to diversify commercially viable sources of these materials, and development of advanced critical material extraction, production, separation, alloying or processing technologies.
- $75 million to fund contracts supporting construction of a research facility to be used for pilot projects focused on developing a reliable supply chain for rare earth elements and other critical materials.
Opportunities to apply for these grants and contracts through the DOE are expected to open beginning in the fourth quarter of 2022, subject to the development of appropriate policies or regulations to guide the process.
State lawmakers in West Virginia are also taking important steps to promote rare earth element recovery associated with coal mining operations. Legislators have recently introduced multiple bills in the 2022 legislative session intended to clarify that those who successfully extract rare earth elements from mine drainage may derive a commercial benefit from doing so.
These efforts seek to resolve the issue of who owns the substances present in AMD, which historically has been considered a liability rather than an asset, due to the costs and permitting liability associated with treating it. Under current proposals, ownership of rare earth elements and the right to assign, sell or otherwise financially benefit from their production, may also be vested in the state where AMD is being treated at abandoned or bond-forfeited reclamation sites.
Other states where AMD could serve as a potential source of rare earth elements may pursue similar legislation. But West Virginia appears to be the only state currently doing so.
West Virginia’s proposed legislation is important, because attributing specific volumes of mine drainage water to specific properties can present difficult challenges. Key considerations include whether the water flowing from a site is properly considered to be surface water or groundwater, and whether the analytical framework is one focused on the right to consumptive use or liability for treatment prior to discharge.
At least from a regulatory perspective, in a growing number of cases, the distinction between surface water and groundwater is a determination that is not easily made. For example, in the past, it may have been reasonable to assume that any point source discharge of water subject to a permit issued under the Clean Water Act’s National Pollutant Discharge Elimination System program is a purely surface water.
But in light of the U.S. Supreme Court‘s 2020 decision in County of Maui v. Hawaii Wildlife Fund, introducing the functional equivalency test for pollutants conveyed through groundwater, that line of demarcation may not be so clear. Things can be even murkier in the underground mine context.
A single mine may span multiple tracts with many different mineral owners. Since water moves through the subsurface in both mined-out voids and unmined geologic formations, mine drainage in underground areas can be an amalgamation of water flowing from and/or through a number of different underground mines forming one or more underground mine pools.
While volumes of water flowing from or through certain mine voids can be reasonably calculated, estimating what quantity of rare earth elements came from a particular mine void or source would be challenging, to say the least. Technical approaches that have been accepted in similar legal contexts — e.g., in the context of the Underground Injection Control permitting program under the federal Safe Drinking Water Act — may prove helpful in addressing this question, and enabling interested parties to reach agreements to facilitate rare earth element extraction.
In short, these and other legislative actions present substantial opportunities for members of the coal industry to participate in grant programs, and otherwise derive revenue from recovery and sale of rare earth elements and other critical materials associated with mining operations.
In the best case scenario, those treating AMD may find that they can turn a liability into an opportunity for financial gain. Regardless of the specific application, participating in these programs will take careful planning, and an early focus on the key issues in the development of a framework for project success.
For the full article, click here.
The article was first published on Law360, February 28, 2022.
The Legal Intelligencer
(by Lisa Bruderly)
The controversy continues over the hotly contested definition of “waters of the United States” (WOTUS), a phrase that determines the scope of federal jurisdiction over streams, wetlands and other waterbodies under the Clean Water Act (CWA). The U.S. Environmental Protection Agency (USEPA) and the U.S. Army Corps of Engineers (Corps) published a proposed revision to the WOTUS definition on December 7, 2021 (Rule 1), with the public comment period closing on February 7, 2022. Nearly 90,000 comments were received.
This proposed definition is similar to the pre-2015 definition of WOTUS, which is currently in effect, but it also includes updates to reflect relevant Supreme Court decisions (e.g., Rapanos v. United States) that occurred in the early 2000s. Much of the controversy surrounding the WOTUS definition relates to the two tests identified in the Rapanos decision. Justice Antonin Scalia issued the plurality opinion in Rapanos, holding that WOTUS would include only “relatively permanent, standing or continuously flowing bodies of water” connected to traditional navigable waters, and to “wetlands with a continuous surface connection to such relatively permanent waters.” Justice Anthony Kennedy, however, advanced a broader interpretation of WOTUS in his concurring opinion, which relied on the concept of a “significant nexus.” In his opinion, Justice Kennedy stated that wetlands should be considered as WOTUS “if the wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity of other covered water.”
If promulgated, the December 2021 proposed WOTUS definition would incorporate Justice Kennedy’s significant nexus test into the regulations, by designating waters such as wetlands, lakes and streams as WOTUS if they “alone or in combination with similarly situated waters in the region, significantly affect the chemical, physical, or biological integrity” of traditionally navigable waters. The proposed rule defines “significantly affect” to mean “more than speculative or insubstantial effects” on the integrity of the traditionally navigable waters based on the distance from a water of the United States or traditionally navigable water; hydrologic factors, including shallow subsurface flow; the size, density, and/or number of waters that have been determined to be similarly situated; and climatological variables such as temperature, rainfall, and snowpack.
If the December 2021 proposed WOTUS definition is promulgated, the impact is not expected to be extremely significant because, under the current definition of WOTUS, the Corps has largely been relying on its 2008 guidance, which already considers Kennedy’s significant nexus test.
New Proposed WOTUS Definition Expected This Year
However, the Biden administration intends additional (potentially more expansive) revisions to the WOTUS definition in a second rulemaking (Rule 2), planned for later this year. Broadly, the more expansive the definition of WOTUS, the more waters that are federally regulated, and the more likely that surface water impacts from a project will require Section 404 permitting. The increased amount of impacts to federally-regulated waters may cause a project to exceed nationwide permit (NWP) or state programmatic permit (e.g., PASPGP-6) thresholds and require an individual Section 404 permit. Typically, obtaining an individual permit is a more expensive and lengthy process than obtaining coverage under a general permit (i.e., NWP or PASPGP-6).
While the extent of Rule 2 is unknown, as stated in the Fall 2021 Unified Agenda, “[t]his second rule proposes to include revisions reflecting on additional stakeholder engagement and implementation considerations, scientific developments, and environmental justice values. This effort will also be informed by the experience of implementing the pre-2015 rule, the 2015 Clean Water Rule, and the 2020 Navigable Waters Protection Rule.”
U.S. Supreme Court Agrees to Hear WOTUS Case
In addition to planned changes to the definition by the Biden administration, the U. S. Supreme Court, in January 2022, signaled that it would weigh in on the WOTUS debate, when it agreed to hear the case of Sackett v. USEPA. In Sackett, landowners in Idaho have had a long-standing challenge to an administrative order issued against them for alleged unpermitted fill of wetlands. The Sacketts’ arguments largely pertain to whether Justice Kennedy’s significant nexus test in Rapanos is the appropriate test to delineate the wetlands as WOTUS.
In 2021, the Ninth Circuit ruled against the Sacketts’ position and held that the “significant nexus” test in the Kennedy concurrence was the controlling opinion from Rapanos. The Sacketts petitioned the U.S. Supreme Court to consider whether Rapanos should be revisited to adopt the plurality’s test for wetland jurisdiction under the CWA. However, the Court agreed, instead, to consider the narrow issue of whether the 9th Circuit “set forth the proper test for determining whether wetlands are ‘waters of the United States.’” The Supreme Court’s decision as to whether Justice Kennedy’s concurring opinion is controlling will be very significant in future interpretations of WOTUS.
Recent Changes to the NWP Program
The changes to the definition of WOTUS coincide with the U.S. EPA and the Corps recently issuing updates regarding certain NWPs under Section 404 of the CWA and Section 10 of the Rivers and Harbors Act of 1899. Additional revisions are planned in 2022. Broadly, NWPs authorize certain work in streams, wetlands, and other WOTUS when those activities will result in no more than minimal individual and cumulative adverse environmental effects.
The reissuance of 40 existing NWPs and issuance of one new NWP (Water Reclamation and Reuse Facilities), on December 27, 2021, rounded out NWP rulemaking activities that began in September 2020, when the Corps, under the Trump administration, proposed to reissue the 52 existing NWPs and issue five new NWPs. In January 2021, the Corps modified and reissued 12 existing NWPs that largely related to the energy industry and issued four of the five proposed NWPs. The January 2021 final rule also revised and reissued the NWP general conditions and definitions.
While the December 2021 reissuance includes relatively minor changes to several NWPs, it also adds consistency to the NWPs as a whole, by (1) making the newly reissued NWPs subject to the general conditions and definitions included in the January 2021 rule; and (2) identifying the expiration date for the newly reissued permits as March 14, 2026, consistent with the expiration date of the NWPs that were reissued in January 2021. These NWPs go into effect on February 25, 2022.
Looking ahead, the Biden administration intends to reevaluate the NWPs later this year. According to the Fall 2021 Unified Agenda of Regulatory Actions, the Corps is planning a comprehensive rulemaking in 2022 to re-examine all NWPs issued in 2021 “to identify NWPs for reissuance, modification, or issuance, in addition to identifying potential revisions to general conditions and definitions in order to be consistent with Administration policies and priorities.” Changes to the NWP program are expected to address, among other things, climate change and environmental justice.
With expected WOTUS and NWP developments from the U.S. EPA, the Corps and the U. S. Supreme Court, 2022 is shaping up to be a critical year for federal water law. Babst Calland will continue to track developments and changes to the definition of WOTUS and the NWP program. If you have any questions about these developments, please contact Lisa Bruderly at 412.394.6495 or lbruderly@babstcalland.com.
For the full article, click here.
Reprinted with permission from the February 24, 2022 edition of The Legal Intelligencer© 2022 ALM Media Properties, LLC. All rights reserved.
Employment and Labor Alert
(by Steve Antonelli and Jessica Altobelli)
In a recent show of bipartisanship, both the House of Representatives and the Senate recently passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (H.R. 4445). President Biden has supported the Bill, urging Congress to pass it, and is expected to sign the Bill into law any day. Like the 2017 prohibition on tax deductions for amounts paid for sexual harassment settlements that are subject to a nondisclosure agreement, this Bill is a product of the “#MeToo” movement that will serve to bring greater transparency to alleged sexual misconduct in the workplace.
If enacted into law, the Bill will amend the Federal Arbitration Act to prevent companies from enforcing mandatory arbitration clauses against parties who bring claims of sexual assault or harassment. Instead, prospective plaintiffs will be given the choice of whether to proceed with arbitration or litigate their claims in the public forum of a federal court. This decision will be available even to plaintiffs who have already signed contracts agreeing to mandatory arbitration, so long as the alleged dispute itself arises after enactment of the law, as the law will apply retroactively to make mandatory arbitration provisions voidable. The law will not, however, allow cases that have already been decided in an agreed upon arbitration to be re-opened or re-litigated.
The Bill will also enable individuals to bring collective actions and it will allow disputes over its application to be made by the federal courts, rather than by an arbitrator. It will also apply to cases filed under federal, state, or local law. Employers that utilize forced arbitration provisions in employment agreements should review their agreements for necessary revisions and be mindful of the fact that, in a few days, the forced arbitration provisions of their existing agreements may be voided by employees alleging sexual assault or harassment.
Babst Calland’s Employment and Labor Group will continue to keep employers apprised of further developments related to this and other employment and labor topics. If you have any questions or need assistance in addressing the above-mentioned area of concern, please contact Stephen A. Antonelli at (412) 394-5668 or santonelli@babstcalland.com or Jessica L. Altobelli at (412) 394-6557 or jaltobelli@babstcalland.com.
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Environmental Alert
(by Robert Stonestreet)
The federal Fourth Circuit Court of Appeals has struck down an evaluation by the U.S. Fish and Wildlife Service of the potential impacts on two endangered fish species presented by stream crossings for the Mountain Valley Pipeline. In its February 3, 2022 opinion, the Court concluded that the Service failed to sufficiently establish the “environmental baseline” conditions for each species, and failed to adequately evaluate how the stream crossings, along with other anticipated activities impacting the streams, will affect the species on a cumulative basis. The Court also faulted the Service for not assuming future negative effects of climate change in its analysis.
In September 2020, the Service published a “Biological Opinion” addressing how the proposed pipeline would likely affect five species listed for protection under the federal Endangered Species Act (ESA) (one plant; two fish; and two bats). The Service concluded that the pipeline would likely affect each species, but would not jeopardize those species, which is the key determination under the ESA for whether other federal agencies may issue permits for a project. The Service also issued an “Incidental Take Statement” that authorized certain levels of “take” of each species associated with construction of the stream crossings, which would otherwise be prohibited by the ESA. For purposes of the ESA, “take” of a species means actions “to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such conduct.”
A group of organizations opposed to the pipeline, including the Sierra Club, challenged both the Biological Opinion and the Incidental Take Statement with regard to the two fish species (Roanoke Logperch and Candy Darter) and one bat species (Indiana Bat). The Court only squarely addressed the Service’s evaluation of the two fish species, but included a detailed footnote that strongly recommended a second look by the Service at its evaluation of the Indiana Bat.
The opinion explaining the Court’s ruling primarily focuses on how the Service ascertained the environmental baseline for the two fish species and assessed the cumulative impacts of the proposed pipeline along with other anticipated activities. The Court faulted the Service for not gathering site specific data for each stream crossing proposed in areas of the species’ habitat. The opinion states that the Service did not sufficiently identify the existing “stressors” that were negatively impacting the species in the pipeline path. Although the Service observed that a primary driver decreasing the Candy Darter population is “hybridization” – i.e. interbreeding by the Candy Darter with another similar species of darter – the Court concluded that the Service did not adequately consider other factors negatively affecting the Candy Darter, such as increased stream sedimentation.
The Court rejected the Service’s argument that statistical modeling used to prepare both the environmental baseline determination and cumulative effects evaluation sufficiently accounted for conditions within the pipeline path. The Court did so because (1) the Biological Opinion does not indicate a reliance on statistical modeling to establish the environmental baseline or cumulative effects determinations; and (2) the models were not designed to assess environmental conditions on a small-enough scale to evaluate the specific areas to be impacted by the project.
With respect to climate change, the Court acknowledged that the statistical modeling used by the Service takes into account “environmental stochasticity,” which is defined as “unpredictable fluctuations in environmental conditions.” The Court still found that the Service did not adequately consider climate change because the models assumed a constant amount of environmental stochasticity in the future. According to the Court, “the model failed to account for the one thing we know about climate change: that it will get worse over time.” The opinion identifies anticipated increased water temperatures, frequency and intensity of flooding, and increased sedimentation as negative impacts of climate change that were not considered in the statistical models. The court does not cite to any of the materials in the administrative record to support this observation. Other than referencing a description of climate change by the Service as presenting an “increasing threat,” the Court does not offer any guidance on why the Service should assume conditions for the species will necessarily get “worse” over time due to climate change, or how the Service should go about factoring these considerations into its evaluations.
In light of the Service’s shortcomings described in the opinion, the Court concluded that the Service could not have reasonably concluded that the proposed project is unlikely to jeopardize the two fish species. The Court recognized that the ESA does not prohibit approval of projects “solely because baseline conditions or cumulative effects already imperil a species.” However, the ESA does prohibit approval of a project that will likely accelerate the decline of a species. “Put differently, if a species is already speeding toward the extinction cliff, an agency may not press on the gas.”
The Court rejected several additional arguments advanced by the challengers as grounds to set aside the Biological Opinion and Incidental Take Statement. These included claims that the Service (1) arbitrarily limited the scope of the “action area” (i.e. the impact area); (2) erroneously excluded the Blackwater River from its evaluation of the Roanoke Logperch; and (3) the Incidental Take Statement established “unlawfully vague” take limits.
This opinion highlights the importance of Endangered Species Act considerations for energy projects. The Candy Darter was listed as endangered on November 20, 2018, which was over a year after the Federal Energy Regulatory Commission (FERC) authorized the pipeline project. As noted in the “2021 Babst Calland Report,” the Service has drastically accelerated the pace of proposing and adopting species for protection under the ESA. As more species are designated for protection under the ESA, there is an increased likelihood that areas slated for development will trigger a rigorous review by the Service before any federal permit may be issued for a proposed project.
The opinion makes clear that the Service must methodically analyze the specific areas expected to be affected by a proposed project to determine whether the project may jeopardize a listed species. This effectively means that project proponents, through their counsel and consultants, must ensure that the Service adequately evaluates potential impacts on listed species, and more importantly, documents that evaluation correctly. A failure by the Service to do so, or a finding that the project will jeopardize a listed species, can stop a project in its tracks. Even one that is “an already mostly finished Pipeline” as the court observed in this case. As of December 2021, 94 percent of the pipeline had been constructed with approximately 20 linear miles remaining.
If you have any questions about the court’s opinion or the Endangered Species Act in general, please contact Robert M. Stonestreet at rstonestreet@babstcalland.com or 681-265-1364.
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Babst Calland announced the addition of two professionals to its Washington, D.C. office – former PHMSA Official Christopher Hoidal as Senior Director of Safety and former API Policy Advisor, Christopher Kuhman as an Associate.
Chris Hoidal recently joined Babst Calland as Senior Director of Safety in the Energy and Natural Resources, Environmental and Pipeline and HazMat Safety groups. Mr. Hoidal advises clients throughout the United States on the regulation of transportation pipelines, LNG facilities and other regulated energy facilities. He has over 30 years of experience in various leadership roles with the U.S. Department of Transportation, Pipeline and Hazardous Materials Safety Administration (PHMSA).
Mr. Hoidal has extensive knowledge of the pipeline safety regulations, industry codes and standards, and agency policy. He guides industry stakeholders seeking to improve regulatory compliance and safety performance, conducting transactional due diligence, and building remedial programs to address accidents and near-miss events. Mr. Hoidal also advises clients on special permits, inspection preparation, enforcement, rulemaking and policy development.
Mr. Hoidal worked for the United States Department of Transportation from 1990 to 2021, and the Pipeline and Hazardous Materials Safety Administration’s Office of Pipeline Safety since 1993. Prior to joining the Firm, Mr. Hoidal served as a Senior Technical Advisor in PHMSA’s Office of Pipeline Safety between 2018 and 2021. In this role, he supported PHMSA in the development of recent rules and guidance, including the 2019 Gas “Mega Rule.” Before this role, Chris served for 20 years as PHMSA’s Western Region Director for the Office of Pipeline Safety.
Mr. Hoidal has his Bachelor of Science in Geotechnical Engineering from the University of Nevada (1980), and Master of Business Administration from the University of Colorado (1983).
Chris Kuhman recently joined Babst Calland as an associate in the Energy and Natural Resources and Pipeline and HazMat Safety groups. Mr. Kuhman advises energy clients on a variety of pipeline safety-related matters.
Prior to joining the Firm, he worked as a Policy Advisor for the American Petroleum Institute (API) where he helped to develop API’s legislative and regulatory positions on pipeline safety matters. Before his work at API, Chris served as an engineer for a gas distribution company and an upstream energy services company where he gained practical technical knowledge. Firm clients benefit from Chris’ unique mix of policy and engineering experience. He is a 2021 graduate of American University Washington College of Law.
Commenting on their move to the Firm, Jim Curry, Managing Shareholder of Babst Calland’s Washington, D.C. office said, “We are very pleased to welcome Chris Hoidal and Chris Kuhman to our Firm. They have great backgrounds in the energy sector and a commitment to client service, and both are a natural fit for our pipeline practice. They join our growing Washington, D.C. office and will support our energy clients nationwide.”
PIOGA Press
(By Lisa Bruderly and Evan Baylor)
The U.S. Environmental Protection Authors: Agency (EPA) and the U.S. Army Corps of Engineers have recently issued updates regarding Nationwide Permits (NWPs) under Section 404 of the Clean Water Act (CWA) and Section 10 of the Rivers and Harbors Act of 1899, as well as a new proposed definition of waters of the United States (WOTUS). More developments on both subjects are anticipated in 2022 from these agencies, as well as from the U.S. Supreme Court.
On December 27, 2021, the Corps published a final rule reissuing 40 existing NWPs and issuing one new NWP (Water Reclamation and Reuse Facilities) (86 Fed. Reg. 73522). Broadly, NWPs authorize certain work in streams, wetlands and other WOTUS when those activities will result in no more than minimal individual and cumulative adverse environmental effects. This final rule rounds out NWP rulemaking activities that began in September 2020, when the Corps, under the Trump administration, proposed to reissue the 52 existing NWPs and issue five new NWPs.
As background, in January 2021, the Corps modified and reissued 12 of the existing NWPs and issued four of the five proposed NWPs. The January 2021 final rule also revised and reissued the NWP general conditions and definitions. The focus of that rule was largely to revise and reissue NWPs that relate to the energy industry, including the division of existing NWP 12 (Utility Line Activities) into three NWPs, depending on the type of utility line: oil and natural gas pipeline activities (NWP 12), electric utilities and telecommunications (NWP 57), and utility lines for water and other substances (NWP 58). The December 2021 rule does not address these 16 NWPs that were finalized in January 2021.
This December 2021 reissuance makes relatively minor changes to several NWPs, including NWP 13 (Bank Stabilization) and NWP 27 (Aquatic Habitat Restoration, Enhancement and Establishment Activities). It also states that the NWPs will be subject to the general conditions and definitions included in the January 2021 rule, making the general conditions and definitions for all NWPs consistent. Previously, these NWPs had been subject to the general conditions and definitions in effect in 2017.
The NWPs in this rule replace the 2017 versions of those permits and complete the rulemaking process to reissue all of the NWPs. These NWPs go into effect on February 25 and will expire on March 14, 2026, consistent with the expiration date of the NWPs that were reissued in January 2021.
More NWP changes expected in 2022
The Biden administration intends to reevaluate the NWPs later this year. According to the Fall 2021 Unified Agenda of Regulatory Actions, the Corps is planning a comprehensive rulemaking in 2022 to reexamine all NWPs issued in 2021 “to identify NWPs for reissuance, modification, or issuance, in addition to identifying potential revisions to general conditions and definitions in order to be consistent with Administration policies and priorities.” Changes to the NWP program are expected to undo Trump administration revisions, which, arguably expanded the permits’ applicability, and also address climate change and environmental justice concerns.
The Corps stated that it is considering whether additional steps should be taken to ensure the NWP program aligns with the Biden administration’s policies and priorities, including Executive Order 13990, “Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis.” This order directs agencies to review and address regulations from the previous administration that conflict with national objections to improve public health and the environment. Further, this order directs agencies to prioritize environmental justice. According to Assistant Secretary of the Army for Civil Works Michael L. Connor, “The [Corps] will also be reviewing the overall NWP program to ensure consistency with the administration’s policies, including the need to engage affected communities.”
Changes to WOTUS
The Corps and EPA published a proposed revision to the WOTUS definition on December 7 (Rule 1), with the public comment period closing on February 7. This proposed definition is similar to the pre-2015 definition of WOTUS, with updates to reflect relevant Supreme Court decisions (e.g., Rapanos v. United States) that occurred in the early 2000s. In Rapanos, Justice Scalia issued the plurality opinion, holding that WOTUS would include only “relatively permanent, standing or continuously flowing bodies of water” connected to traditional navigable waters, and to “wetlands with a continuous surface connection to such relatively permanent waters.” Justice Kennedy, however, advanced a broader interpretation of WOTUS in his concurring opinion, which relied on the concept of a “significant nexus,” and stated that wetlands should be considered as WOTUS “if the wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity of other covered water.” The December 2021 proposed WOTUS definition would incorporate Justice Kennedy’s significant nexus test into the regulations.
The impact of the December 2021 proposed WOTUS definition is generally not expected to be significant because, under the current definition of WOTUS, the Corps, in most jurisdictions, has been relying on 2008 guidance which also considers Kennedy’s significant nexus test. However, the Biden administration intends additional (potentially more expansive) revisions to the WOTUS definition in a second rulemaking (Rule 2). Broadly, the more expansive the definition of WOTUS, the more waters that are federally regulated, and the more likely that surface water impacts from a project will require Section 404 permitting. The increased amount of impacts to federally-regulated waters may result in a project exceeding NWP or state programmatic permit (e.g., PASPGP-6) thresholds and requiring an individual Section 404 permit.
As stated in the Fall 2021 Unified Agenda, “[t]his second rule proposes to include revisions reflecting on additional stakeholder engagement and implementation considerations, scientific developments, and environmental justice values. This effort will also be informed by the experience of implementing the pre-2015 rule, the 2015 Clean Water Rule, and the 2020 Navigable Waters Protection Rule.”
U.S. Supreme Court agrees to hear WOTUS case
In addition to planned WOTUS changes by the Biden administration, the U. S. Supreme Court, in January 2022, signaled that it would weigh in on the WOTUS debate, when it agreed to hear the case of Sackett v. USEPA. In Sackett, landowners in Idaho have a long-standing challenge to an administrative order issued against them for allegedly conducting fill activities without a Section 404 permit. Much of the Sacketts’ arguments pertain to whether the wetlands in question were appropriately delineated as WOTUS by applying Justice Kennedy’s significant nexus test in Rapanos.
In 2021, despite the Sacketts’ arguments, the Ninth Circuit held that the “significant nexus” test in the Kennedy concurrence was the controlling opinion from Rapanos. The Sacketts petitioned the U.S. Supreme Court to consider whether Rapanos should be revisited to adopt the plurality’s test for wetland jurisdiction under the CWA. However, the court agreed instead to consider the narrow issue of whether the Ninth Circuit “set forth the proper test for determining whether wetlands are ‘waters of the United States.’” The Supreme Court’s decision as to whether Justice Kennedy’s concurring opinion is controlling will be very significant in future interpretations of WOTUS.
With expected WOTUS developments from the U.S. EPA, the Corps and the U. S. Supreme Court, 2022 is shaping up to be a critical year for federal water law.
Babst Calland will continue to track developments and changes to the NWP program and WOTUS. If you have any questions about these developments, contact Lisa Bruderly at 412-394-6495 or lbruderly@babstcalland.com or Evan Baylor at 202-853-3461 or ebaylor@babstcalland.com.
For the full article, click here.
For the PDF, click here.
Reprinted with permission from the February 2022 issue of The PIOGA Press. All rights reserved.
The Legal Intelligencer
(by Anna Jewart and Blaine Lucas)
In recent years, public support for renewable energy generation has increased across the United States. According to a recent article published by the National Agricultural Law Center, 89% of Americans support expanding solar power generation and 83% support wind power expansion. See, Peggy Kirk Hall, Whitney Morgan and Jesse Richardson, “Land Use Conflicts Between Wind and Solar Renewable Energy and Agricultural Uses,” Nat’l Ag. Law Center (Jan. 10, 2022). National approval, however, often fails to translate into local support. Those seeking to site wind or solar projects are frequently met with opposition from neighbors, many of whom may be generally supportive of renewable energy, but when it comes time to decide where generation will occur, they repeat the well-known adage, “Not in my back yard.” In fact, local objection to renewable projects frequently mirrors that which has been levied for decades against traditional energy development. Concerns over aesthetics, noise, storm water, or traffic can be expected whether an applicant proposes an oil and gas well or a wind farm. In either instance, broad concerns over impacts on the community often devolve into highly technical debates over compliance with not only the local ordinances, but the validity or reliability of different scientific methods or standards. As a result, zoning hearings on any energy project may become full-blown battles of the experts. In Atlantic Wind v. Zoning Hearing Board of Penn Forest Township, No. 585 C.D. 2020, No. 591 C.D. 2020, No. 20 C.D. 2021, No. 242 C.D. 2021, (Pa. Cmwlth. Jan. 12, 2022), the Pennsylvania Commonwealth Court considered whether a zoning hearing board properly handled competing expert testimony over what metrics to use in calculating maximum noise levels.
In 2013, Atlantic Wind, LLC (Atlantic Wind) entered into a lease with the Bethlehem Authority (authority), for property located in Penn Forest Township (the township). The lease granted Atlantic Wind the right to use approximately 5,000 acres of the authority’s property (the project area) for wind energy purposes. In 2015, Atlantic Wind filed an application for a special exception under the Township Zoning Ordinance (ordinance) to erect 28 wind turbines with access roads, appurtenant structures, and infrastructure, including a permanent meteorological tower.
On Jan. 30, 2019, the Township Zoning Hearing Board (board), following 10 public hearings, denied the application and concluded in part that Atlantic Wind failed to present evidence or sustain its burden of showing the project would comply with the ordinance’s noise level requirements. Both Atlantic Wind and the authority appealed to the trial court. The trial court consolidated the appeals and granted petitions to intervene to the township and 42 individual objectors (objectors.) Without taking additional evidence, the trial court affirmed the board’s denial. Atlantic Wind and the authority appealed to the Commonwealth Court.
On appeal, Atlantic Wind asserted that the board had disregarded unrefuted record evidence that it would maintain sound levels in compliance with the ordinance, and that it erred in finding the ordinance mandated the use of a sound metric known as “Lmax.” Under the ordinance, Atlantic Wind was required to prove in relevant part that:
The design of the wind energy facility shall conform to applicable industry standards, including those of [ANSI] …
and …
The audible sound from the wind turbine(s) shall not exceed 45 A weighted decibels [(dBAs)], as measured at the exterior of an occupied dwelling on another lot …
At the hearings, Atlantic Wind presented an acoustical engineer as an expert witness, who testified that he conducted predictive modeling and issued a report which concluded the project would comply with the 45dBA limit. He testified that because the ordinance did not specify the use of a particular metric, he employed a metric known as “Leq,” because it was most common, and the industry standard. His testimony detailed his methods, his reasons for reliance on the Leq metric, and its acceptance by the scientific community as well as why another available metric, Lmax, was not appropriate. In contrast to the Leq metric, which measures average sound levels, Lmax measures the highest noise level.
The objectors presented their own expert in wind turbine acoustics and noise measurements who argued the Leq metric was not a proper metric to evaluate a “shall not exceed” noise ordinance, but that Lmax should be used instead. Following testimony on why Leq was improper, he testified he could ascertain the Lmax by adding 11dBAs to the Leq results, thereby concluding the project would in fact exceed the ordinance maximum of 45 dBAs.
On rebuttal, Atlantic Wind presented a second witness, this time a certified noise control engineer, who supported and affirmed Atlantic Wind’s original expert testimony and report, and explained that when an ordinance does not specify what the metric is, his professional experience would suggest using Leq. He further disagreed with the objectors’ expert’s method of obtaining an Lmax metric by adjusting the Leq by 11dBAs. In sum, he concluded with a reasonable degree of professional certainty that the Leq modeling accurately demonstrated the project would meet the ordinance standard. Ultimately, the board determined that the Lmax metric was the appropriate one to use under the ordinance, and Atlantic Wind had failed to produce evidence to meet its burden that the sound level would not exceed the requirements of the ordinance.
As acknowledged by the Commonwealth Court, the board was free to reject even uncontradicted expert testimony it found to be lacking in credibility, and it would not be an abuse of discretion to choose to believe the opinion of one expert over another. However, the board was required to provide an adequate explanation of its resolution of the factual questions involved at the hearing, and to show, through its written findings and conclusions, that its decision was well reasoned and not arbitrary. The court found several defects in the board’s findings and conclusions, noting, for example, that while it appeared the objectors’ expert testimony formed the basis of the board’s decision, it never made a written finding that he had ever appeared or testified at the hearings, let alone reconciled his testimony with that of the other experts. In addition, there were no findings relative to the rebuttal testimony at all. Consequently, the court found the board had failed to provide any “explanation of its resolution of the factual questions involved,” as required by law.
Furthermore, the court observed that if the ordinance intended to apply the Lmax metric it could have stated so. As a result, the court concluded that the board’s application of the Lmax metric was not supported by law or record evidence and could not form the basis for denial of the application. The court relied largely on MarkWest Liberty Midstream & Resources v. Cecil Township Zoning Hearing Board, 102 A.3d 549 (Pa. Cmwlth. 2014), a case in which the court found that a zoning board, in considering a special exception application for a natural gas compressor station, had acted arbitrarily and abused its discretion by mandating requirements not set forth in the ordinance. As a result, the court vacated the board’s decision, and remanded it for the board to make the necessary credibility determinations and to explain its resolution of the factual questions regarding the noise metric.
Finally, the court also reversed the board’s decision on two ordinance interpretation issues. First, the court found that the board had erred in finding that the wind farm use would be an unlawful second principal use under the ordinance. Objectors had argued the project area was already used as a “government facility” in part because it was covered by a conservation easement intended to preserve the property to benefit the authority’s adjacent potable water reservoirs. Because “government facilities” were only permitted by special exception under the ordinance, and no such application had been granted by the board, the court found that the record did not support the finding that any other zoning use, let alone a principal use, existed in the project area. Second, the court found that the board erred in finding that the meteorological tower was also an unlawful second principal use, rather than an accessory use to the project. The court noted that not only had Atlantic Wind presented sufficient evidence that the tower was customary and incidental to the project, the board failed to recognize its own zoning officer’s opinion that the tower was an integral part of the overall project. The township and the objectors have filed an application for reargument. As of this writing, the court has not acted on that application.
Atlantic Wind, although an unreported case, holds educational value for all land use applicants, objector and decisionmakers. The case demonstrates the technical level with which the parties must be prepared to present their cases, and reminds zoning hearing boards and governing bodies that their decisions must be thoroughly discussed and supported in their written findings and conclusions. Atlantic Wind also may be a harbinger of the intense scrutiny and opposition renewable energy projects, much like traditional energy developments before them, will encounter as the nation broadens its energy portfolio.
For the full article, click here.
Reprinted with permission from the February 10, 2022 edition of The Legal Intelligencer© 2022 ALM Media Properties, LLC. All rights reserved.
Pennsylvania Business Central
Tim Schoonover is a shareholder in the Energy and Natural Resources, Litigation and Public Sector groups of law firm Babst Calland. Tim has practiced law in the Centre County region since 1997. He currently serves as Solicitor for Haines Township, and is the former Solicitor to Benner Township and counsel to AccuWeather, Inc. Tim has significant experience with Marcellus Shale related issues, including contract matters and land use litigation issues. His practice also focuses on the areas of real estate, corporate/business law, municipal law, litigation, and estate planning and administration.
Tim received his J.D. from the Ohio Northern University Pettit College of Law in 1995. He is an active volunteer in Centre County having held board positions for the Centre County Bar Association, State College Jaycees, Infant Evaluation Program, Habitat for Humanity of Greater Centre County, Centre County Housing and Land Trust, and YMCA of Centre County.
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Alert
(by Peter Schnore and Ed Phillips)
At the beginning of 2022, the Pittsburgh Post-Gazette reported that the overall vacancy rate in the Pittsburgh commercial real estate market was 20.8% at the end of 2021, which was an increase from the 19.3% vacancy rate at the end of 2020. [1] But statistics like this tell only part of the story, as they reflect past events, rather than what market participants anticipate will occur in the future. The same article noted that some property owners are offering incentives, such as free rent and higher improvement allowances to retain and attract tenants. The COVID pandemic is having, and will have, a material impact on the value of various commercial property types for quite some time.
Given the trends in increasing vacancy rates and incentives—along with concerns for what long-term effects the pandemic will have on tenants’ future needs—commercial property owners should consider whether the time is right to appeal their commercial real estate assessments. For many commercial property owners, the best approach is to work with an attorney familiar with the appeals process and property valuation through the lens of Pennsylvania assessment law, to best appreciate whether an appeal is likely to be a worthwhile endeavor. In Allegheny County, property owners have until March 31, 2022 to initiate an appeal for Tax Year 2022. For property owners in the remainder of Pennsylvania, annual appeal deadlines fall between August 1 and the first Monday in October, depending on the county.
Each year, Pennsylvania publishes an equalization ratio for each county based on a comparison of the county’s most recent years’ sales data vs. the sold properties’ assessments. In a properly filed appeal, this ratio is applied to the property’s current fair market value to set the assessment. The ratio applicable to Allegheny County for Tax Year 2022 is significantly more favorable to property owners than last year’s ratio. This more favorable ratio makes it a particularly good year to initiate an appeal by the March 31, 2022 deadline. Because counties are not required to regularly reassess, the financial benefits of a decreased assessment may be enjoyed for many years.
Property taxes are often the most significant operating expense for an income-producing property, making it important to evaluate this expense to protect your real estate asset’s bottom line.
If you have any questions about these developments, contact Peter Schnore at 412-394-5692 or pschnore@babstcalland.com or Edward Phillips at 412-394-6553 or ephillips@babstcalland.com.
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[1] Mark Belko, Lingering effects: Pittsburgh office market struggles to overcome the pandemic, Pittsburgh Post-Gazette (January 4, 2022, 6:07 AM).
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