Renewables Law Blog
(By Christopher Hall)
Following the passage of West Virginia Senate Bill 583 in early 2020, West Virginia has seen an uptick in the number of new proposed renewable energy projects. SB 583 established a new incentive program supporting the development of renewable energy facilities on former industrial sites. Berkeley County, in the eastern panhandle, recently announced a proposed 100 MW solar facility to be built on a 750 acre brownfield site previously used as a manufacturing facility. Read more.
Tags: energy, renewable, SB 583, solar, tax credits, West Virginia Senate Bill 583
Pipeline Safety Alert
(by Keith Coyle and Ashleigh Krick)
On January 11, 2021, the Pipeline and Hazardous Materials Safety Administration (PHMSA or the Agency) published a Final Rule amending the gas pipeline safety regulations at 49 C.F.R. Parts 191 and 192. Adopted as part of the Trump administration’s efforts to reduce or eliminate unnecessary regulatory burdens, PHMSA estimates that the Final Rule will result in approximately $130 million in annualized cost savings for pipeline operators. Although the effective date of the Final Rule is March 12, 2021, the Agency provided a deferred compliance date of October 1, 2021, for the new amendments.
Additional information about the Final Rule is provided below.
Distribution Integrity Management Program Exemptions and Farm Taps
- Consistent with the policy announced in PHMSA’s March 2019 Exercise of Enforcement Discretion, the Final Rule provides operators with the option to maintain pressure regulating devices on farm taps under either the distribution integrity management program (DIMP) requirements or 49 C.F.R. § 192.740. The Final Rule exempts farm taps originating from unregulated production and gathering pipelines from the DIMP requirements, the overpressure protection inspection requirements in § 192.740, and the annual reporting requirements in Part 191.
- The Final Rule does not amend PHMSA’s regulations to provide additional clarity in determining what qualifies as a farm tap or where production, gathering, or transmission piping ends and distribution service line piping begins in farm tap configurations. The Agency stated that these definitional issues will be addressed in a guidance document that remains under development or in a future rulemaking proceeding. In the preamble to the Final Rule, PHMSA emphasized that any portion of a farm tap originating from an unregulated pipeline that meets the definition of service line must still comply with all applicable Part 191 and 192 requirements.
- The Final Rule also exempts master meter operators from the DIMP requirements. PHMSA noted that it would evaluate separately whether to extend the exception to small LPG operators or all distribution operators with fewer than 100 customers.
Corrosion Control
- The Final Rule allows operators to remotely monitor cathodic protection rectifier stations, codifying the position the Agency had already taken in a 2019 interpretation. If operators remotely monitor rectifiers, operators are required to conduct a physical inspection of the rectifier annually. PHMSA also confirmed that the regulations and related interpretations do not specify a particular technology.
- The Final Rule extends the atmospheric corrosion control inspection interval for distribution service lines from 3 years to 5 years, not to exceed 63 months. If atmospheric corrosion is identified, the inspection interval reverts to the 3-year period. Going forward, if no atmospheric corrosion is identified in a subsequent inspection, then the operator could then return to the 5-year inspection interval.
- The Final Rule did not adopt proposals by commenters and the Gas Pipeline Advisory Committee to use remediation as an alternative to the 3-year inspection interval if atmospheric corrosion has been observed. PHMSA explained that the current regulations already require remediation of atmospheric corrosion and operators can use the 5-year inspection interval if no atmospheric corrosion is identified in subsequent inspections. PHMSA also clarified that operators must retain the records of the two most recent atmospheric corrosion inspections to use the 5-year inspection interval in order to support that atmospheric corrosion was not identified on the service line. Finally, PHMSA clarified that consideration of corrosion risks in a DIMP plan includes atmospheric corrosion.
Reporting and Information Collection
- The Final Rule adjusts the monetary property damage threshold in the definition of an “incident” from $50,000 to $122,000 to account for inflation. This threshold had not been updated since 1984 and includes losses to the operator and third parties, but not the cost of lost gas. PHMSA committed to updating the monetary damage threshold annually based on the formula provided in newly established Appendix A to Part 191. The Agency will post the updated monetary damage threshold to its website, with the new threshold becoming effective on July 1st each year.
- The Final Rule eliminates §§ 191.12 and 192.1009 (the requirement to submit mechanical fitting failure (MFF) reports). Operators are still required to file incident reports for MFFs that involve a failure of a mechanical joint. Operators also need to include a count of hazardous leaks involving a mechanical joint failure in its gas distribution annual reports.
Standards Incorporated by Reference for Plastic Pipe
- The Final Rule incorporates by reference the 2018a edition of ASTM D2513-18a, “Standard Specification for Polyethylene (PE) Gas Pressure Pipe, Tubing, and Fittings” and adopts corresponding amendments to the plastic pipe design standards to allow a design factor of 0.40 for pipe with a diameter of 24 inches or less.
- The Final Rule also incorporates by reference the 2019 edition of ASTM F2620, “Standard Practice for Heat Fusion Joining of Polyethylene Pipe and Fittings” and corresponding amendments to the requirements for joining procedures in §§ 192.281 and 192.283 to clarify that procedures that provide an equivalent or superior level of safety to ASTM F2620 are acceptable. PHMSA agreed with commenters that 0.099 is an acceptable minimum wall thickness for 1-inch CTS Pipe.
Test Factor for Pressure Vessels
- In response to a 2015 petition for reconsideration, PHMSA amended § 192.153(e) to allow pressure vessels that were tested in accordance with the 1.3 times MAOP test factor after July 14, 2004, to continue operating without retesting.
- Pre-fabricated units and pressure vessels meeting the 1.3 test factor installed after July 14, 2004, are not subject to the strength testing requirements of § 192.505(b) as long as the components were installed before October 1, 2021 (the compliance deadline for the Final Rule). Likewise, these same components are not subject to the duration requirements of § 192.505(c) and (d) as long as they have been tested for duration consistent with § 192.153(a) and (b).
- Pre-fabricated units and pressure vessels installed on or after October 1, 2021, must be tested for the duration specified in §§ 192.505(c), 192.505(d), 192.507(c), or 192.509, as applicable.
- PHMSA also adopted its proposal to accept pre-installation manufacturer pressure tests, with certain conditions, for newly manufactured pressure vessels installed after October 1, 2021. If the manufacturer pressure test is used, the operator must inspect the pressure vessel after it has been placed into service in accordance with the new requirements in § 192.153(e). In response to comments regarding pressure vessels temporarily used on a pipeline facility, PHMSA is also accepting pre-installation manufacturer pressure tests or a prior test so long as the component is promptly removed after the task is complete. The Agency also adopted requirements pertaining to the pressure vessels that are temporarily removed from a pipeline facility and reinstalled at that location or a different location.
Other Amendments
- The Final Rule adopted a change to § 192.229(b), which provides that welders may not weld with a welding process they have not engaged in within the last 6 months, by extending the time frame to 7 ½ months.
- The Final Rule extends the allowance for testing fabricated units and short segments of pipe prior to installation if a post-installation test is not practicable, which is currently permitted for steel pipelines that operate at a stress level greater than 30% SMYS, to steel pipelines that operate at a stress level less than 30% SMYS and at or above 100 psi. The Final Rule does not extend the pre-testing provisions to pipelines operating below 100 psi, service lines, or plastic pipelines. The Final Rule removes “hydrostatic” from the new § 192.507(d) to allow for the use of test mediums other than water.
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Renewables Law Blog
(By Christopher Hall)
The recently approved federal spending bill for 2021 appropriations (December 27, 2020) included extensions to the federal solar investment tax credit (ITC) and wind production tax credit (PTC). The ITC and PTC provide significant financial incentives to the growing renewable energy industry. The ITC is a tax credit that can be claimed on federal corporate income taxes for a percent of the cost of a solar photovoltaic (PV) system that is placed in service. The ITC, which was scheduled to step down from 26% to 22% in 2021, has been extended at its current 26% rate for an additional two years through 2023. The PTC is a per-kilowatt-hour (kWh) tax credit for electricity generated using qualified energy resources including wind, and was scheduled to phase down from 60% of the original credit to 40% in 2021. The new spending bill included an extension of the 60% rate for an additional year through 2021. Projects must be commenced prior to the expiration of the new extension deadlines in order to qualify for the current tax credit rate. Please click here for more information.
Tags: energy, federal solar investment tax credit, federal spending bill, ITC, PTC, renewable, solar, tax credits, wind, wind production tax credit
Smart Business
(by Sue Ostrowski featuring Donald Bluedorn)
A business continuity plan helps protect your business both today and into the future in a way consistent with your goals and culture. But it’s not just about planning for contingencies this time. The pandemic has changed the way businesses need to approach their plans, says Attorney Donald C. Bluedorn II, managing shareholder at Babst Calland.
“Things are much different than a year ago, and along with business and operational contingencies, companies should review their legal and regulatory risks and opportunities as well,” he says.
Smart Business spoke with Bluedorn about how to ensure your business continuity plan moves your business seamlessly forward.
What changes during the pandemic are now either beneficial or detrimental to Business operations?
Businesses need to reimagine how they operate and create a proactive mindset around challenges the business or industry is facing. Are there any advantages or savings in how you operated last year that are sustainable or should be adopted?
Concerns with significant legal and contractual commitments are likely to emerge. And as people re-enter the physical workplace, or not, there may be employment issues. In addition, new leadership at the federal level could pose legal challenges and create evolving tax issues. In the Western Pennsylvania region, this could result in changes to energy regulations, a risk for some but an opportunity for others. Environmental compliance and regulatory obligations are also likely changing, and trusted advisers can help you navigate these challenges and incorporate them in your plan.
It’s an opportune time to review your plan from a business risk or legal and regulatory perspective. Are vendors fulfilling their commitments and are you fulfilling your own contractual obligations? Look at your real estate needs going forward. Will you need as much space? Will it be configured the same way? If you need to change your footprint, begin reviewing your leases now.
Audit your environmental and regulatory obligations to see if you can reduce spending while maintaining the same level of compliance. It goes without saying that your inside or outside legal counsel is integral to this entire process. In addition, litigation has changed dramatically. With court closures, re-evaluate litigation to determine whether there is an opportunity to change your strategy with a more cost-effective, faster way to achieve your goals.
What should you be thinking about with your business continuity plan?
Think about the impacts on the business, as well as your employees, that were prompted by the challenges of the pandemic. Revisit and reanalyze your plans in light of the pandemic and its impact on achieving your business goals. Consider your challenges and opportunities, keeping one eye on protecting people and the other on positioning and maintaining and growing the business.
How should a business continuity plan address technology issues?
It should address whether you have enough licenses and sufficient infrastructure to have everyone work at the same time and whether you have protocols to address issues, making sure you have the capability to seamlessly transfer work and recover data.
The second concern is data and cybersecurity. The pandemic has created new risks for companies — and new opportunities for cyberhackers. Rethink and aggressively address security. Keep an eye on potential risks and continue assessing the need to make changes relevant to legal, regulatory and insurance matters that may have greater costs and risk to the business if they aren’t promptly addressed.
How should a plan incorporate the importance of people?
Be aware of your employees’ concerns and be sensitive to ways to protect them. Then think creatively about how to safely re-enter the workplace while achieving your business goals, incorporate what you will do if people get sick and be flexible on schedules.
Remember that, as uncertain, fearful and anxious as you may be about the future of your business, your people are just as fearful. If you can help them through it, you will emerge with a much better culture.
For the full article, click here.
For the PDF, click here.
Pipeline Safety Alert
(by Keith Coyle and Brianne Kurdock)
On December 27, 2020, President Donald J. Trump signed the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2020 (2020 PIPES Act) into law. Adopted as part of a broader federal spending and COVID-19 relief package, the signing of the 2020 PIPES Act represents the culmination of a multi-year effort to reauthorize the nation’s federal pipeline safety program. The prior reauthorization of the federal pipeline safety program, enacted in the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2016 (2016 PIPES Act), expired on September 30, 2019.
The 2020 PIPES Act authorizes general funding for the Pipeline and Hazardous Materials Safety Administration’s (PHMSA) gas and hazardous liquid pipeline safety programs of $156.4 million for fiscal year (FY) 2021, $158.5 million for FY 2022, and $162.7 million for FY 2023, with additional amounts authorized in each of these FYs from the Oil Spill Liability Trust Fund for hazardous liquid pipeline safety and the user fee program for underground gas storage facilities. The 2020 PIPES Act also prescribes specific funding amounts that PHMSA must use for certain activities, including for recruitment and retention of federal pipeline safety personnel, operational expenses, and federal grant programs.
In addition to authorizing funding levels through FY 2023, the 2020 PIPES Act contains several amendments to the Federal Pipeline Safety Laws. Some of the key changes are highlighted below.
Title I of the 2020 PIPES Act:
- Establishes a new 3-year program for advancing pipeline safety technologies, testing, and operational practices.
- Adds an operator’s self-disclosure to the list of factors that PHMSA must consider in assessing administrative civil penalties.
- Recognizes additional due process protections for PHMSA enforcement proceedings, including that:
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- An operator be allowed to request that matters of fact and law be resolved in a consent agreement and consent order.
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- An operator and PHMSA be permitted to convene meetings for purposes of reaching a settlement or simplification or other disposition of issues.
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- The case file in an enforcement action include all pertinent agency records.
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- An operator be allowed to reply to PHMSA’s post-hearing submissions and request that a hearing be held on an expedited basis.
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- PHMSA carry the burden of proof, presentation, and persuasion in an enforcement proceeding.
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- PHMSA issue a post-hearing recommendation not later than 30 days after the deadline for any post-hearing submission of a respondent.
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- PHMSA issue an order within 120 days of the filing of a petition for reconsideration.
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- An operator be allowed to ask PHMSA to issue a declaratory order to resolve issues of controversy or uncertainty.
- Requires PHMSA to notify the public of an enforcement hearing and provides that the agency will make formal hearings, as defined in 49 C.F.R. § 190.3, open to the public. Currently, PHMSA’s enforcement cases with the exception of a hearing on an emergency order, are conducted informally and do not qualify as formal hearings.
- Directs PHMSA to post the charging and responsive documents related to an enforcement action along with the decision or order on its website. For the most part, PHMSA has already been posting these materials on its website.
- Requires PHMSA to issue a final rule within 2 years that clarifies the applicability of the pipeline safety regulations to idle pipelines, which are defined as pipelines that have ceased normal operations and will not resume service for at least 180 days, have been isolated and purged, or contain small, non-hazardous volumes of gas.
- Directs PHMSA to issue a final rule within 3 years updating the federal safety standards for the operation and maintenance of large-scale liquefied natural gas facilities, other than peak shaving facilities.
- Following the submission of a report to Congress and subject to the appropriation of necessary funding, authorizes PHMSA to create the National Center of Excellence for Liquefied Natural Gas Safety.
- Requires PHMSA to issue a final rule within 90 days establishing new minimum federal safety standards for onshore gas gathering lines.
- Orders PHMSA to issue new leak detection and repair program rules within 1 year for operators of regulated gas gathering lines, gas transmission lines, and gas distribution lines.
- Requires each operator to amend its operation and maintenance plan within 1 year to meet the leak detection and repair program requirements of 49 U.S.C. § 60102(q).
- Directs PHMSA to review each operator’s operation and maintenance plan within 2 years of the Act and not less than five years thereafter. This review may be included as a part of a regularly scheduled inspection.
- Requires PHMSA to make a determination on whether to advance the rulemaking proceeding for updating the class location requirements.
- Directs PHMSA to enter into an agreement with the National Academy of Sciences to complete a study within 2 years relating to the installation of automatic or remote-controlled shut-off valves on existing gas transmission lines in high consequence areas and existing hazardous liquids pipelines in commercially navigable waterways or unusually sensitive areas.
- Defines the terms “certain coastal waters” and “coastal beach” and requires PHMSA to complete an outstanding rulemaking mandate for these areas from the 2016 PIPES Act within 90 days.
- Requires each hazardous liquid pipeline operator to implement procedures that assess potential impacts by maritime equipment or other vessels, including anchors, anchor chains, or any other attached equipment.
- Amends the reporting obligation for safety-related condition reports to require an operator to submit the report to the Secretary, the appropriate state authority, and the tribe where the subject of the report occurred. If there is no state authority, the operator must submit the report to the Governor of the relevant state.
Title II of the 2020 PIPES Act, also known as the Leonel Rondon Pipeline Safety Act, contains several amendments to the Federal Pipeline Safety Laws in response to a September 2018 gas distribution incident that occurred in the Merrimack Valley, Massachusetts. In particular, Title II of the 2020 PIPES Act:
- Requires PHMSA to issue regulations within 2 years amending the integrity management program, emergency response plan, operation and maintenance manual, and pressure control recordkeeping requirements for gas distribution operators.
- Directs PHMSA to submit a report to Congress within 3 years on the implementation of pipeline safety management systems within the gas distribution industry.
- Orders PHMSA to issue regulations within 180 days requiring that at least 1 qualified agent of a gas distribution operator be present at a district regulator station or other site to monitor and prevent overpressurization during certain construction projects, unless the district regulator station has a monitoring system and the capability for remote or automatic shutoff.
- Mandates that PHMSA issue regulations within 1 year that require gas distribution operators to assess and upgrade district regulator stations.
The product of an agreement reached in the waning days of the current session of Congress, the 2020 PIPES Act does not contain several amendments proposed during earlier phases of the legislative process. The 2020 PIPES Act does not eliminate PHMSA’s obligation to consider the costs and benefits of changes to the pipeline safety regulations or prohibit the use of direct assessments as part of a pipeline operator’s integrity management program. The Act does not change the mens rea (or mental state) requirement in the criminal statute or expand the list of prohibited activities covered under the criminal provision. Nor does the Act authorize the use of administrative law judges in PHMSA enforcement actions, increase the amount of civil penalties that can be imposed for violations of the pipeline safety laws or regulations, or authorize the filing of mandamus actions challenging PHMSA’s failure to perform non-discretionary duties.
The task of implementing the provisions in the 2020 PIPES Act will fall on the incoming administration of President-elect Joseph R. Biden. Having emphasized environmental issues during the 2020 campaign, including efforts to address climate change through reductions in greenhouse gas emissions, the Biden administration will have the opportunity to advance these commitments in addressing the rulemaking mandates in the 2020 PIPES Act, particularly the new leak detection and repair program requirements. The Biden administration’s policy preferences and appointees for key positions will influence the implementation of the 2020 PIPES Act as well. President-elect Biden has already announced that Pete Buttigieg, the former mayor of South Bend, Indiana, will be his nominee to serve as the next Secretary of the U.S. Department of Transportation, although a potential nominee for PHMSA Administrator may not be announced until later this year.
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RMMLF Water Law Newsletter
(By Lisa M. Bruderly)
On September 15, 2020, the U.S. Army Corps of Engineers (Corps) published proposed revisions to certain nationwide permits (NWPs) under section 404 of the Clean Water Act (CWA), 33 U.S.C. § 1344, for discharges of dredged and fill material into waters of the United States. See Proposal to Reissue and Modify NWPs, 85 Fed. Reg. 57,298 (proposed Sept. 15, 2020). At that time, the Corps proposed to reissue all NWPs, rather than only reissuing those with proposed changes. However, on January 13, 2021, the Corps published the final NWP rule, reissuing only 12 existing NWPs, issuing four new NWPs, and reissuing the NWP general conditions and definitions with limited modifications. See Reissuance and Modification of NWPs, 86 Fed. Reg. 2744 (Jan. 13, 2021). The 16 reissued/issued NWPs are effective on March 15, 2021, and will expire on March 14, 2026.
Of particular interest to the oil and natural gas industry is the Corps’ decision to divide the 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).
State/Regional NWP Conditions
On September 30, 2020, the Corps’ Baltimore, Philadelphia, and Pittsburgh Districts proposed, in SPN-20-62, draft state/regional conditions for the proposed NWPs, as well as a list of “Final 2020 Nationwide Permit Suspensions” for Pennsylvania, among other states/geographic locations. The proposed regional conditions for Pennsylvania pertained to 22 NWPs and six general conditions, including the requirements for completing a pre-construction notification (PCN). The Corps’ Districts asked for comments on the proposed regional conditions and on the need for additional regional conditions to help ensure that the adverse environmental effects of authorized activities would be no more than minimal. The public comment period closed on November 16, 2020. When finalized, the final regional conditions will likely not include the proposed regional conditions pertaining to NWPs that were not reissued in January 2021.
Changes to Regional Conditions for NWP 12. The proposed regional conditions for the reissued NWP 12 differ in notable ways from the regional conditions for the 2017 NWP 12. Many of the 2017 regional conditions have been removed. For example, the proposed regional conditions would eliminate the prohibition from using NWP 12 in Pennsylvania for projects involving the permanent loss of more than 300 linear feet of stream bed for a single and complete project. Among other changes, the proposed regional conditions would also introduce the requirement for pipeline projects completed by horizontal directional drilling or other boring methods to include in their PCN a plan to address the prevention, containment, and cleanup of sediment or other materials caused by inadvertent returns of drilling fluids to waters of the United States.
Change in Scope of NWP Suspensions. Typically, the Pennsylvania State Programmatic General Permit (currently, PASPGP-5) is the mechanism that the Pennsylvania Department of Environmental Protection (PADEP) and the Corps rely upon to permit projects in Pennsylvania with impacts to regulated waters, which do not trigger the need for individual section 404 permitting. With the availability of the state programmatic permit, 34 NWPs (including NWP 12) have typically been suspended in Pennsylvania, except in certain section 10 waters and, for certain NWPs, when the regulated activity or indirect impacts extend across state boundaries. (“Section 10 waters” are waters that are considered as navigable under section 10 of the River and Harbor Act of 1899, 33 U.S.C. § 403.)
The “Final 2020 Nationwide Permit Suspensions” for Pennsylvania, issued with SPN-20-62, however, could significantly expand the use of these 34 NWPs by adding a provision that the suspensions do not apply for “Areas within Pittsburgh District’s area of responsibility in the Commonwealth of Pennsylvania.” This exception to the NWP suspensions could significantly increase the use of NWPs in the western part of Pennsylvania. However, reliance on the NWPs is not certain because the Pittsburgh District will still have discretion to utilize the most efficient and effective permitting tool in its evaluation of a specific action.
Conditional State Water Quality Certification for NWPs
On October 15, 2020, the Corps’ Baltimore District, on behalf of the Corps’ Baltimore, Philadelphia, and Pittsburgh Districts, requested that PADEP provide State Water Quality Certification (SWQC) under section 401 of the CWA, 33 U.S.C. § 1341, for discharges of dredged and fill material into waters of the commonwealth that are authorized by the proposed NWPs. PADEP published its proposed conditional SWQC on October 31, 2020. See 50 Pa. Bull. 6062 (Oct. 31, 2020). The public comment period for the proposed SWQC closed on November 30, 2020. One comment letter was received.
Pennsylvania’s conditional SWQC became effective on December 15, 2020. See 51 Pa. Bull. 238 (Jan. 9, 2021). The three conditions of the SWQC are summarized below:
- All necessary environmental permits or approvals must be obtained and all necessary environmental assessments must be submitted to PADEP before beginning any activity authorized by the Corps under a NWP.
- Fill material may not contain any waste as defined in the Solid Waste Management Act, 35 Pa. Stat. §§ 6018.101–.1003.
- Applicants and projects eligible for these NWPs must obtain all necessary state permits and/or approvals to ensure that the project meets the state’s applicable water quality standards, including any project-specific SWQC.
PADEP’s SWQC is conditional because it is based on the Corps’ September 15, 2020, proposed NWPs. PADEP has reserved the right to amend or withdraw this conditional SWQC if the language set forth in the final NWPs, Pennsylvania suspensions, or regional conditions published by the Corps “differs so substantially from the language in the proposed NWPs, Pennsylvania suspensions or regional conditions that the conditions contained herein can no longer insure compliance with Pennsylvania’s State Water Quality Standards Program.” 51 Pa. Bull. at 239. PADEP has not indicated whether it will revise the conditional SWQC based on the changes in the scope of the final NWPs.
Proposed Rulemaking—Revisions to Dam Safety and Water Management Regulations
On December 5, 2020, the Pennsylvania Department of Environmental Protection’s (PADEP) proposed amendments to 25 Pa. Code ch. 105 were published in the Pennsylvania Bulletin. See 50 Pa. Bull. 6863 (Dec. 5, 2021). Among other purposes, chapter 105 regulates obstructions and encroachments along or within waters of the commonwealth, similar to the U.S. Army Corps of Engineers’ section 404 permitting program under the Clean Water Act. The public comment period for the proposed rulemaking closed on February 3, 2021. The amendments will become effective upon final publication in the Pennsylvania Bulletin.
In addition to adding and/or amending at least 20 definitions, the proposed rulemaking would make several other changes to chapter 105. Among other revisions, the proposed rulemaking would (1) clarify existing waivers and add permit waivers for certain low impact structures and activities; (2) add antidegradation and cumulative impacts subsections to the applicant information requirements; (3) amend the environmental assessment provisions to add application information requirements specific to environmentally beneficial projects; (4) update provisions relating to compensatory mitigation obligations for proposed aquatic resource impacts that cannot be avoided, including the addition of siting criteria for mitigation projects, compensation factors, and monitoring and performance standards; (5) add new structures and activities that may be exempt from submerged lands licensing charges; and (6) provide further specificity regarding application requirements, such as the cumulative impact analysis, a water dependency demonstration, a stormwater management demonstration, alternatives analysis, antidegradation analysis, impacts analysis, and mitigation plan for projects seeking to discharge dredged or fill material into aquatic resources.
More detailed analysis of the proposed changes was reported in Vol. LIII, No. 2 (2020) of this Newsletter.
Copyright © 2021, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
Babst Calland recently named Ben Clapp, Alyssa E. Golfieri, and Gary E. Steinbauer as shareholders in the Firm.
Ben Clapp is a member of the Environmental, Energy and Natural Resources, and Emerging Technologies groups. Mr. Clapp advises clients on the environmental components of complex transactions, including identifying and analyzing significant environmental liability and compliance issues arising in connection with mergers and acquisitions, asset sales, securities offerings, project financings, and corporate restructurings, and works to resolve, manage, allocate or mitigate these environmental risks in the client’s best interest. Mr. Clapp assists buyers, sellers, financing sources, and underwriters in transactions taking place across a wide range of industries, including the upstream, midstream, and downstream oil and gas sectors, renewable energy, real estate, utilities, chemicals, manufacturing, mining, pharmaceuticals, pulp and paper, and food and beverage.
Mr. Clapp is a 2008 graduate, cum laude, of the American University Washington College of Law.
Alyssa E. Golfieri is a member of the Public Sector and Energy and Natural Resources groups. Ms. Golfieri’s practice focuses primarily on municipal and land use law, with an emphasis on zoning, subdivision, land development, and municipal ordinance enforcement. Ms. Golfieri 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. Ms. Golfieri has also served as assistant solicitor for several years, and is currently the solicitor for the Borough of Ford City.
Ms. Golfieri is a 2012 graduate, cum laude, of Duquesne University School of Law.
Gary E. Steinbauer is a member of the Environmental group. Mr. Steinbauer leverages his experience as a former lawyer for the U.S. EPA to help clients on a wide variety of matters arising under major federal and state environmental and regulatory programs. He provides strategic advice on permitting matters, day-to-day compliance needs, government investigations, and enforcement actions. Mr. Steinbauer regularly works with companies in the power generation and distribution, mining, metals, chemical, oil and gas, healthcare and other industrial sectors. He also represents municipalities, governmental, and non-governmental organizations. Mr. Steinbauer devotes a significant portion of his practice to water resources and wastewater management and permitting. He regularly advises clients on issues arising under the Clean Water Act and related state programs regulating wastewater and storm water discharges, and he handles NPDES permitting matters and appeals. He also assists clients as they navigate matters involving the Clean Air Act, Emergency Planning and Community Right-to-Know Act, Endangered Species Act, Resource Conservation and Recovery Act, Safe Drinking Water Act, and similar state laws.
Mr. Steinbauer is a 2006 graduate, magna cum laude, of the University of Toledo Law School.
Mr. Steinbauer is a 2006 graduate, magna cum laude, of the University of Toledo Law School.
Mr. Steinbauer is a 2006 graduate, magna cum laude, of the University of Toledo Law School.
Pipeline Safety Alert
(by Keith Coyle and Ashleigh Krick)
On December 21, 2020, the U.S. Congress passed the Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2020 (the Act) as part of a larger year-end spending and COVID-19 relief package. The Act reauthorizes the federal pipeline safety program through September 30, 2023, and establishes annual funding levels for the 2021, 2022, and 2023 fiscal years. The Act also makes other important changes to the federal pipeline safety laws administered by the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA or the Agency).
The Act requires PHMSA to issue new rules for gas pipeline leak detection and repair programs and idle pipelines, update the operations and maintenance standards for certain large-scale liquefied natural gas facilities, and finalize outstanding rulemakings for gas gathering lines, class location changes, and the definition of unusually sensitive areas. The Act establishes additional due process protections for PHMSA enforcement actions, authorizes a new declaratory order proceeding, and obligates PHMSA to consider an operator’s self-report in assessing a civil penalty. Other noteworthy provisions in the Act include authorizing the implementation of a new pipeline safety testing program, the performance of various research and development studies, and the creation of a National Center of Excellence for Liquefied Natural Gas Safety. Lastly, the Act contains various new requirements for distribution lines in response to the 2018 incident in Merrimack Valley, Massachusetts.
The Act does not include several provisions that Congress proposed in earlier versions of the legislation. For example, the Act does not eliminate PHMSA’s obligation to consider the costs and benefits of changes to the pipeline safety regulations or prohibit the use of direct assessments as part of a pipeline operator’s integrity management program. The Act does not change the mens rea (or mental state) requirement in the criminal statute or expand the list of prohibited activities covered under the criminal provision. Nor does the Act authorize the use of administrative law judges in PHMSA enforcement actions, increase the amount of civil penalties that can be imposed for violations of the pipeline safety laws or regulations, or authorize the filing of mandamus actions challenging PHMSA’s failure to perform non-discretionary duties. The elimination of these provisions likely reflects the compromises that became necessary to achieve the Act’s passage before of the end of the current Congress.
The passage of the Act represents the culmination of a multi-year effort to reauthorize the federal pipeline safety program, which expired on September 30, 2019, under the terms of the Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2016. While significant progress has been made in recent years, PHMSA is still working to satisfy certain outstanding rulemaking mandates from the 2016 legislation and the prior reauthorization of the federal pipeline safety laws, the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011.
Babst Calland intends to release another client alert in early January 2021 that provides additional insights on the Act and the upcoming transition to a new presidential administration.
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The Legal Intelligencer
(by Krista-Ann Staley and Anna Jewart)
This year marks the 20th anniversary of the Religious Land Use and Institutionalized persons Act of 2000 (RLUIPA), 42 U.S.C. Sections 2000cc et seq, a federal statute that protects the rights of individuals and institutions to use land for religious purposes, in addition to protecting the rights of persons confined to institutions to exercise their faiths. Coincidentally, the anniversary comes at a time when the COVID-19 pandemic and related restrictions have severely limited our ability to gather safely, causing many churches, synagogues, temples, mosques and other places of worship to close or limit attendance. This context provides a unique opportunity to review two decades of RLUIPA’s application.
One key component of RLUIPA is the protection of the ability to gather and congregate without government intrusion. While earlier legislation, such as the Church Arson Prevention Act, 18 U.S.C.A. Section 247, protected places of worship against arson, vandalism, or other violent interference, RLUIPA protects the ability to establish or build those places of worship. To do so, it specifically addresses local land use regulations, including the application of zoning regulations and permitting practices.
Congress enacted RLUIPA in the late 1990s, following nine hearings over three years. Those hearings examined religious discrimination in land use decisions. They revealed what Congress described as “massive evidence” of widespread discrimination by state and local officials in cases involving individuals and institutions seeking to use land for religious purposes. This discrimination most often impacted minority faiths and newer, smaller or unfamiliar denominations, and could be coupled with racial and ethnic discrimination. RLUIPA, drafted with bipartisan support, unanimously passed both houses of Congress and was signed into law by President Bill Clinton in 2000. The Civil Rights Division of the Department of Justice, tasked with enforcing RLUIPA, reports the statute has had a “dramatic impact on protecting individuals and institutions seeking to exercise their religions through construction, expansion, and use of property” since its enactment. See “Twentieth Anniversary of the Religious Land Use and Institutionalized Persons Act” (Sept. 22, 2020).
In general, RLUIPA provides that a land use regulation cannot substantially burden religious exercise, unless the government can show the regulation furthers a compelling government interest and is the least restrictive means of furthering that interest, 42 U.S.C.A. Section 2000cc(a). Subsection (b) then provides for four specific protections as follows:
No government shall impose or implement a land use regulation in a manner that treats a religious assembly or institution on less than equal terms with a nonreligious assembly or institution.
No government shall impose or implement a land use regulation that discriminates against an assembly or institution on the basis of religion or religious denomination
No government shall impose or implement a land use regulation that:
- Totally excludes religious assemblies from a jurisdiction; or
- Unreasonably limits religious assemblies, institutions, or structures within a jurisdiction.
RLUIPA’s land use provisions specifically address discrimination in state and municipal land use decisions. It enables aggrieved persons to bring suit under both the land use and institutionalized person provisions. In addition, the attorney general is authorized to bring suit to enforce RLUIPA, and the Department of Justice may bring suit for declaratory or injunctive relief, but not monetary damages. See 42 U.S.C.A. Section 2000cc-2. This leads to the typically rare occurrence of cases in which the U.S. government sues local municipalities over what is traditionally a local prerogative, zoning.
As is well-detailed in the 20th anniversary report, extensive litigation under the land use provisions of RLUIPA has not resulted in any U.S. Supreme Court decisions. However, the federal courts of appeal and district courts have ruled on numerous RLUIPA issues. The majority of RLUIPA litigation has focused on the substantial burden and equal terms provisions found in subsections (a) and (b)(1), above. The courts are of general agreement that the question of what constitutes a “substantial burden” should be determined by a totality-of-the-circumstances test, examining whether the government’s actions substantially inhibit religious exercise, rather than merely inconveniencing it. This assessment considers factors such as the actual need of the congregation for the proposed site, whether the government action imposed delay, uncertainty or expense and whether the government acted arbitrarily. See 20th Anniversary Report at 8, citing Brief of the United States as Amicus Curiae, Thai Meditation Association of Alabama v. City of Mobile, No. 19-12418 (11th Cir. Filed Oct. 23, 2019) at 17.
Although there is no national consensus regarding the interpretation of the “equal terms” provision contained in subsection (b)(1), a plaintiff asserting a claim under this provision in the U.S. Court of Appeals for the Third Circuit must show “it is a religious assembly or institution, subject to a land use regulation, which regulation treats the religious assembly on less than equal terms with a nonreligious assembly or institution that causes no lesser harm to the interests the regulation seeks to advance.” See United States v. Bensalem Township, 220 F.Supp. 3d 615, 621 (E.D. Pa. 2016).
The nondiscrimination and exclusion provisions have not been the targets of frequent litigation, however federal courts in Pennsylvania have addressed them. In Bensalem Township, cited above, the court noted that the nondiscrimination provision is rooted in First Amendment establishment clause jurisprudence, and intended to prevent governmental bodies from treating groups differently on the basis of their religious denomination. This includes disparate treatment in the implementation of zoning regulations. For example, a RLUIPA nondiscrimination claim can be based on allegations that a plaintiff religious group faced a more rigorous approval process to obtain a conditional use than a secular group.
Pennsylvania jurisprudence suggests that the “total exclusion” provision is difficult to prove. In Adhi Parasakthi Charitable, Medical, Educational, and Cultural Society of North America v. Township of West Pikeland, 721 F.Supp.2d 361 (E.D. Pa. 2010), the court held a zoning ordinance requiring conditional use approval for a Hindu temple did not rise to the level of a total exclusion as “religious use was not entirely zoned out” of the township.
Furthermore, in Lighthouse Institute for Evangelism v. City of Long Branch, 510 F.3d 253 (3d Cir. 2007), the Third Circuit held that, unlike the substantial burden section contained in 42 U.S.C.A. 2000cc(a), the equal terms, nondiscrimination, and exclusion provisions contained in 2000cc(b) do not provide for strict scrutiny analysis of offending land use regulations. Rather, they operate under a strict liability standard, making any discriminatory regulations automatically invalid. As analyzed in Adhi, under this section, if the discrimination occurred, the government does not have the opportunity to justify the conduct by showing a compelling interest.
It is critical to note that RLUIPA’s land use provisions do not prohibit local governments from regulating religious uses. RLUIPA requires local governments to draft and apply local regulations so that they do not place substantial burdens on religious uses, absent a compelling government interest, and do not exclude, unreasonably limit, discriminate against, or treat on less than equal terms any religious use, regardless of government interest. Municipalities would be well-advised to enact and apply local regulations based on neutral terms, such as the number of seats available at a place of assembly or anticipated parking demands. In addition, municipal governments must be cognizant of what constitutes a religious use. It should also be noted that Pennsylvania’s Religious Freedom Protection Act, (RFPA) requires that a law or regulation in the commonwealth, that has an effect on the exercise of religion has to establish that the agency did not substantially burden a persons’ free exercise of religion. See 71 P.S. Sections 2401-2407; Ridley Park United Methodist Church v. Zoning Hearing Board of Ridley Park Borough, 920 A.2d 953 (Pa. Cmwlth. 2007).
Krista-Ann M. Staley is a shareholder in the public sector services and energy and natural resources groups of the Pittsburgh law firm of Babst Calland Clements & Zomnir. In these capacities, Staley focuses her practice on representation of diverse private and public sector clients on land use and other local regulatory matters. Contact her at kstaley@babstcalland.com.
Anna S. Jewart is an associate in the firm’s public sector services group and focuses her practice on zoning, subdivision, land development, and general municipal matters. Contact her at ajewart@babstcalland.com.
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Reprinted with permission from the December 17, 2020 edition of The Legal Intelligencer© 2020 ALM Media Properties, LLC. All rights reserved.
Environmental Alert
(by Robert Stonestreet)
On December 16, 2020, the United States Fish and Wildlife Service (Service) adopted a final regulation to define the term “habitat” for use when designating “critical habitat” areas under the Endangered Species Act (ESA). 85 Fed Reg 81411. The ESA already defines the term “critical habitat,” which in general means areas designated as essential to preserve or promote recovery of threatened or endangered species regardless of whether those species are actually present in the area. The term “habitat,” however, is not itself defined in the ESA or pre-existing regulations. As detailed in the Environmental Alert published on August 10, 2020 (available here), the Service proposed two potential “habitat” definitions on August 5, 2020 for public comment. 85 Fed Reg 47333. In the final rulemaking, the Service chose to adopt a “habitat” definition that is markedly different than the two definitions proposed for public comment back in August. The adopted definition reads as follows:
For the purposes of designating critical habitat only, habitat is the abiotic and biotic
setting that currently or periodically contains the resources and conditions necessary to support one or more life processes of a species.
According to the Service, “[a]biotic means derived from non-living sources such as soil, water, temperature, or physical processes” and the term “biotic” means “derived from living sources such as a plant community type or prey species.” The preamble portion of the Federal Register entry notes that the phrase “resources and conditions” is intended to clarify that habitat “is inclusive of all qualities of an area that can make that area important to the species.”
Compare that definition to the two definitions proposed for public comment on August 5, 2020, which appear below:
Primary Proposed Definition: The physical places that individuals of a species depend upon to carry out one or more life processes. Habitat includes areas with existing attributes that have the capacity to support individuals of the species.
Alternate Proposed Definition: The physical places that individuals of a species use to carry out one or more life processes. Habitat includes areas where individuals of the species do not presently exist but have the capacity to support such individuals, only where the necessary attributes to support the species presently exist.
The Service noted that the revised version of the adopted definition takes into account the approximately 48,000 public comments submitted to the agency.
This rulemaking was a response to litigation over what areas the Service could designate as critical habitat that is not occupied by a listed species. Weyerhaeuser Co. v. United States Fish and Wildlife Service, 139 S. Ct. 361 (2018). In Weyerhaeuser, the Service designated an area as critical habitat for a species even though that species could not survive in the area under current conditions. The Service reasoned that the area was once occupied by the species, and certain modifications could be made in the future that would allow the species to return to the area. The United States Supreme Court ruled that the Service could not designate an area as critical habitat for a listed species that was not “habitat” for that species in the first place – i.e. an area where the species could survive.
The Service seems to acknowledge that the adopted “habitat” definition would preclude the type of designation at issue in Weyerhaeuser. In response to comments that the proposed definition would improperly preclude areas that require restoration from being designated as critical habitat, the Service noted that “habitat, whether occupied or unoccupied, must still have (currently or periodically) the resources and conditions necessary to support one of the life processes for the species.” According to the Service, “the definition respects the statutory text by distinguishing between habitat and areas that are not habitat (but can become habitat in the future, whether by virtue of restoration activities or because of other changes).”
The regulation becomes effective on January 15, 2021 and will apply only to proposed critical habitat rulemakings that are published in the Federal Register after that date.
If you have any questions about the regulation, or the Endangered Species Act in general, please contact Robert M. Stonestreet at rstonestreet@babstcalland.com or 681.265.1364.
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Environmental Alert
(by Lisa Bruderly and Tim Bytner)
On December 10, 2020, U.S. EPA issued for public comment its draft guidance (Draft Guidance) regarding the U.S. Supreme Court’s County of Maui “functional equivalent” analysis within the Clean Water Act (CWA) National Pollutant Discharge Elimination System (NPDES) program (85 Fed. Reg. 79489). The comment period closes on January 11, 2021.
In County of Maui v. Hawaii Wildlife Fund, 140 S. Ct. 1462 (2020), the Supreme Court held that a NPDES permit is required in instances when a point source discharge of a pollutant through groundwater to a navigable water is the “functional equivalent” of a direct pollutant discharge from a point source into a navigable water. Babst Calland discussed the Supreme Court’s April 23, 2020 decision, and its far-reaching implications, in its May 11, 2020, PIOGA Press article titled “Potential Clean Water Act Liability Extends to Discharges to Groundwater That Reach Surface Water.”
The Supreme Court offered a non-exclusive list of seven factors to consider on a case-by-case basis:
- Transit time;
- Distance traveled;
- Nature of the material through which the pollutant travels;
- Extent to which the pollutant is diluted or chemically changed as it travels;
- Amount of pollutant entering the navigable waters relative to the amount of the pollutant that leaves the point source;
- Manner by or area in which the pollutant enters the navigable waters; and
- Degree to which the pollution (at that point) has maintained its specific identity.
Emphasis on Threshold Requirements for NPDES Permits
The Draft Guidance stresses that the County of Maui decision did not change the structure of the NPDES permit program, and, at most, only adds another step in determining whether a NPDES permit is required under a limited number of scenarios. In fact, U.S. EPA devotes much of the eight-page Draft Guidance to discussing the following two threshold conditions that trigger NPDES permitting:
- An actual discharge of a pollutant to a water of the United States must occur; and
- The discharge of a pollutant must be from a point source.
The Draft Guidance emphasizes that, unless both of these thresholds are met, the “functional equivalent” analysis is not necessary, concluding that, “[o]nly after it is established that an actual discharge of pollutants from a point source to waters of the United States via groundwater occurs (or will occur) would there be a need to consider the Supreme Court’s ‘functional equivalent’ analysis.”
Consideration of Identified Factors
Although the seven factors in the County of Maui decision were not extensively discussed, the Draft Guidance does briefly address how transit time and distance traveled may affect the “functional equivalent” evaluation. For example, U.S. EPA reaffirmed that permitting authorities cannot assume that all releases “near a water of the United States” are the functional equivalent of a direct discharge to that water. Instead, the Draft Guidance suggests that, where there are indications that a discharge of pollutants through groundwater has reached navigable waters, the permitting authority should consider conducting a technical analysis (e.g., an evaluation of hydraulic conductivity and/or hydraulic gradient) to understand whether there is either an actual discharge of a pollutant to a navigable water or the functional equivalent of such a discharge.
The Draft Guidance recognizes that what happens to the discharged pollutant over time and distance is also “critical” to the “functional equivalent” analysis. For example, the pollutant composition and/or concentration that reaches the navigable water may differ from the composition/concentration of the discharge “through chemical or biological interaction with soils, microbes, plants and their root zone, groundwater, or other pollutants, or simply through physical attenuation or dilution,” such that the discharge through groundwater may not be the functional equivalent of a direct discharge.
Introduction of an Eighth Factor
U.S. EPA introduces an eighth factor to consider in performing a “functional equivalent” analysis: the design and performance of the system or facility from which the pollutant is released. U.S. EPA includes this factor because a facility or system may be designed or operated in a way that significantly changes the composition and/or concentration of pollutants that reach navigable water, thereby affecting whether the pollutant released by the point source is the “functional equivalent” of the pollutant that enters the surface water. For example, a system may be designed to “promote dilution, adsorption or dispersion of the pollutant, thereby affecting the extent to which the pollutant is chemically changed, the amount of pollutant entering the water of the United States relative to the amount of the pollutant that leaves the point source, and the degree to which the pollutant has maintained its specific identity at the point it reaches a water of the United States.” Facilities with a storage or treatment system (e.g., a septic system or settling pond) may be less likely to require a NPDES permit because the function of the system could prevent the functional equivalent of a discharge of pollutants to waters of the United States.
“Functional Equivalent” Test Still Evolving
The “functional equivalent” analysis is factually-dependent and can only be determined on a case-by-case basis. The Draft Guidance does not provide any “hard and fast” rules that the regulated community can rely on to assess whether a point source discharge that enters a navigable water through groundwater would require a NPDES permit. Continued uncertainty and differences in the application of the analysis among the regulatory agencies and/or jurisdictions are nearly certain, especially with the possibility that the incoming Biden administration may revise or rescind the Draft Guidance.
Should you have questions regarding the Draft Guidance or would like the Firm’s assistance in preparing any comments to the Draft Guidance, please contact Lisa Bruderly at (724) 910-1117 or lbruderly@babstcalland.com or Tim Bytner at (412) 394-6404 or tbytner@babstcalland.com.
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The PIOGA Press
(by Kevin Garber and Jean Mosites)
As of the date of this article, Joe Biden is likely to become the 46th president of the United States. Assuming that stands, the Biden-Harris administration will try to implement dramatically different environmental and energy policies than the Trump administration. Whether Congress enacts many or all those policies depends heavily on the outcome of the two January U.S Senate special elections in Georgia. The Biden administration can impart significant changes through executive orders and agency actions despite the outcome of those elections, while states and regional governmental bodies will continue to play a significant role in shaping policy. This article reviews some of the implications of the 2020 election for the energy industry.
2020 election summary
National elections. Republicans cut into the Democrat’s majority in the House but Democrats still hold a 222-205 margin as of the date of this article. Republicans hold 50 Senate seats to 46 for the Democrats and two for independents pending the outcome of the Georgia special elections for Senate in January. If Democrats pick up both seats, Vice President-Elect Kamala Harris would cast the deciding vote on matters which divide the Senate 50-50. Shelley Moore Capito (R-WV) is likely to succeed John Barrasso (R-WY) as the top Republican on (and possibly become the chair of) the Senate Environmental and Public Works Committee when Senator Barrasso moves on to head the Energy and Natural Resources Committee. Both are positive developments for the energy industry.
Mr. Biden has chosen individuals from non-governmental environmental organizations and academia to lead his transition teams to staff the Environmental Protection Agency, Council on Environmental Quality, the Department of Interior and the Department of Energy. The teams themselves are largely comprised of those of similar background. Notably absent are representatives from the energy industry, which portends the nominations of more environmental-activist agency heads than served in the Trump administration. For example, the Wall Street Journal has criticized Mr. Biden’s choice of John Kerry as a cabinet-level special envoy for climate (i.e., a “climate czar”) as reflecting that climate will be a special negotiating priority rather than one issue among many in foreign policy. Mr. Biden has already committed to rejoining the Paris Climate Agreement on his first day in office or within his first 100 days, depending on which report you read.
State elections. At the state level, Republicans retained their majority in the state houses in seven of the 10 states critical to energy extraction and production, including Pennsylvania. There are Republican governors in six of those states. The following table summarizes the makeup of the state houses and executive offices
The Biden Energy Plan
The president-elect’s environmental and energy teams say climate change is an “existential threat” to the environment. The Biden Energy Plan commits the U.S. to an irreversible path to net-zero carbon emissions economy-wide by 2050. Although the plan does not propose to tax carbon emissions, impose a carbon cap and trade program or ban hydraulic fracturing on private land, and therefore is not as far-reaching as the Green New Deal, it is an unsettling departure from the Trump administration’s policy of reducing regulatory overreach in favor of less burdensome regulations on the fossil fuel industry. The Biden Energy Plan essentially is a $2 trillion infrastructure plan. It emphasizes an interconnectivity between clean energy and the economy. Highlights include the goal of zero net emissions from power plants by 2035 and economy-wide by 2050. The federal government would use its procurement power to build 500,000 e-vehicle charging stations, convert all 500,000 school buses to electric and provide all Americans in municipalities of more than 100,000 population with “quality public transportation” (in the plan’s words) by 2030. The Biden plan promises to upgrade four million commercial buildings to become more energy efficient and weatherize two million (mostly low income) homes within four years. It intends to induce the construction of 1.5 million homes and public housing units to address a stated affordable energy crisis and increase energy efficiency. Environmental justice principles feature prominently in the plan.
The road to the Biden Energy Plan
How green we go and how fast we get there depends on congressional and executive branch action.
The January special elections in Georgia will dictate the extent to which Congress passes legislation to implement the Biden Energy Plan. Republicans in Congress see themselves largely in a defensive posture for the upcoming 117th Congress, acting to temper or block far-reaching energy bills the more environmentally active House might contrive.
In the short term and apart from legislation, if both Senate seats go to Democrats, Congress could use the Congressional Review Act (CRA) to invalidate late-term Trump administration regulations. Adopted in 1996, the CRA allows Congress to invalidate, by a simple majority vote, final agency regulations adopted by the previous administration in the 60 legislative days before the previous Congress adjourned. It is a simple, expedite procedure―a joint resolution to invalidate a regulation is presented to committee, then, if approved, is presented to the legislative bodies for majority vote. Trump administration pro-energy regulations at risk to CRA invalidation, depending on the date of adjournment, include the September 14 and 15 EPA final oil and gas Review Rule and the ReconsiderationRule (i.e., the Quad O and Quad Oa rules that exclude transmission and storage from the O&G Production Source category and do not regulate methane emissions); the final October 15 Coal Combustion Residuals rule (extending the deadline to close landfills and surface impoundments and allowing owners of surface impoundments (of which approximately 520 currently are in operation) to demonstrate that an unlined impoundment is as safe as a lined one); and the final July 13 Clean Water Act Section 401 water certification rule (limiting the review of section 401 certifications to water quality impacts rather than far-reaching potential climate change effects).
If the Senate remains in Republican hands, the Biden administration and its agencies can take several steps to undo Trump administration regulations they believe would impede the Biden Energy Plan. Litigation abeyance is one such tactic. For pending litigation involving Trump-era regulations, a new EPA and Department of Justice can ask courts to place cases in abeyance to postpone briefing and arguments until the new administration reviews and potentially revises or withdraws the regulations.
For example, litigation concerning the oil and gas Review Rule and the Reconsideration Rule is pending in the D.C. Circuit Court. The new administration could ask the court to suspend further proceedings until it reevaluates those two rules. Litigation involving a major regulatory revision to the National Environmental Protection Act (which is intended to streamline the Environmental Impact Statement process) is pending in federal courts in Virginia, California and New York for which the Biden administration could employ the same tactic. The same is true of the CCR and 401 Certification rules mentioned above as well as many others.
For Trump-era rules that have not been finalized yet, such as the proposed definition of “habitat” under the Endangered Species Act and the proposed reevaluation and reissuance of the Army Corps’ Nationwide Permit 12, the Biden administration could simply direct EPA to stop work on these rules and withdraw others that are sitting with the Office of Management and Budget for review. And of course, the Biden administration could revoke the presidential permit granted to the Keystone XL Pipeline and take similar actions. Thus, despite how the Georgia special election plays out, many avenues are available to the Biden administration to remove perceived obstacles to the implementation of the Biden Energy Plan.
In the states
State environmental law can significantly affect the energy industry. Discussing the many state programs and how the 2020 elections will influence them is beyond the scope of this article. However, to highlight a few key points, 23 states have specific executive or legislative (or both) programs with specific greenhouse gas reduction targets. Twenty-nine states have renewable portfolio standards including Pennsylvania’s Alternative Energy Portfolio Standard. California, New York, Nevada, Washington, Maine and Virginia each has enacted state laws to eliminate carbon emission from electric power plants.
Several regional initiatives relate to carbon pricing and carbon cap and trade. These include the Transportation Climate Initiative, for which 12 northeastern states signed a memorandum of understanding in 2019 to reduce carbon emissions from transportation; the Western Climate Initiative, a California economy-wide cap and trade program; and the Regional Greenhouse Gas Initiative (RGGI), for which the Pennsylvania Environmental Quality Board’s proposed regulations are open for comment until January 14.
Political makeup in the states will play an important role in the Biden administration’s implementation of the Biden Energy Plan. For example, the Wolf administration is committed to adopting final RGGI regulations to reduce CO2 emissions which the General Assembly is trying to thwart, the most recent example being bipartisan House Resolution 1088, which urges the Independent Regulatory Review Commission to disapprove the proposed RGGI regulations. In Louisiana, Governor John Bel Edwards established a new Climate Initiatives Task Force through executive action to develop a blueprint to meet aggressive CO2 emission reductions despite Republicans controlling the legislature.
Conclusion
It remains to be seen how the 2020 elections will play out for the energy industry. Courts undoubtedly will be asked to resolve the tension between the executive (President-Elect Joe Biden and some governors) and the legislature (possibly a Republican-controlled U.S. Senate and Republican state general assemblies) regarding legal authority for critical policies affecting the energy industry. Overarching these legal issues are the economic fallout from the COVID pandemic and a growing social sentiment to reduce the use of fossil fuels to respond to climate change. They may be as much or more important to the long-term composition of the energy industry.
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Environmental Alert
(by Lisa Bruderly)
On December 5, 2020, the Pennsylvania Environmental Quality Board (EQB) published in the Pennsylvania Bulletin proposed revisions to more than 30 provisions of the dam safety and waterway management regulations under 25 Pa. Code Chapter 105. The public comment period will remain open until February 3, 2021.
The revisions will significantly amend the Pennsylvania Department of Environmental Protection (PADEP) regulations regarding the permitting of obstructions and encroachments of waters of the Commonwealth under Chapter 105. The proposed revisions are expected to create expansive new requirements, almost certainly increasing the time and effort required to complete individual/joint Chapter 105 permit applications. These new requirements, if promulgated, will also likely increase PADEP application review times, particularly at the outset when the agency and the regulated community are becoming familiar with the new requirements. Additionally, revised compensatory mitigation criteria could expand the extent of mitigation required for a project. On the other hand, the addition of six new permit waivers means that certain projects may no longer be required to obtain a Chapter 105 permit.
According to the public comment notice, other revisions include adding or changing 18 definitions, adding antidegradation and cumulative impact subsections to the applicant information requirements, providing a new option for dam owners to satisfy proof of financial responsibility obligations, amending the wetland replacement criteria regarding compensatory mitigation for unavoidable impacts to aquatic resources, and adding new structures and activities that may be exempt from submerged lands licensing charges.
The proposed revisions to Chapter 105 have been anticipated for more than one year. In anticipation, PADEP solicited input from multiple Commonwealth agencies and commissions. It also consulted its Agricultural Advisory Board, Water Resources Advisory Committee and Citizens Advisory Council. The EQB adopted the proposed revisions on July 21, 2020. The last comprehensive revisions to the wetland permitting provisions of Chapter 105 were promulgated in October 1991.
For additional information, please refer to the two articles published by Babst Calland earlier this year: PADEP Proposes Significant Changes to Permitting Process for Stream and Wetland Impacts (Rocky Mountain Mineral Law Foundation Water Law Newsletter, July 14, 2020) and PA Proposes Changes for Permitting Projects with Stream, Wetland Impacts (The Legal Intelligencer, June 11, 2020).
Babst Calland continues to analyze the practical effects of these proposed regulatory revisions and other water law-related developments. Please contact Lisa M. Bruderly at (724) 910-1117 or lbruderly@babstcalland.com if you have questions regarding how these Chapter 105 revisions may affect your operations and/or plans for development.
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Environmental Alert
(by Matt Wood and Colleen Grace Donofrio)
On November 25, 2020, Governor Tom Wolf signed ACT 127 of 2020 (House Bill 1808), which, when effective on January 24, 2021, will amend Pennsylvania’s Solid Waste Management Act (SWMA) to support advanced plastics recycling operations in the Commonwealth by exempting qualifying operations from the waste management requirements. ACT 127 accomplishes this by amending the SWMA to exempt the conversion of plastics at facilities with advanced recycling processes from the waste “processing” and “treatment” requirements under the SWMA and its implementing regulations. These facilities turn hard-to-recycle plastics (e.g., plastic bags, wrappers, PVC 3, LDPE 4, PP 5, PS 6, Other 7) into useable raw materials and products.
Specifically, ACT 127 amends the SWMA to define:
- “Post-use polymers” – post-use plastics from residential, municipal, or commercial sources that would not otherwise be recycled and, when converted using advanced recycling, are not considered waste.
- “Advanced recycling” – a manufacturing process whereby post-use polymers are converted into basic hydrocarbon raw materials, feedstocks, chemicals, liquid fuels, waxes, lubricants, and other related products. Conversion processes include, but are not limited to, pyrolysis, gasification, depolymerization, catalytic cracking, reforming, and hydrogenation.
- “Advanced recycling facility” – receives, separates, stores, and converts post-use polymers into raw materials and products.
Facilities coming under the exclusion are not regulated as waste “processing” or “treatment” facilities but still need to comply with all other applicable environmental requirements (e.g., air, water). Facilities that only perform a portion of these services (e.g., segregation facilities) do not qualify for the exemption from the waste requirements.
ACT 127 is likely to attract new advanced recycling businesses to Pennsylvania and thereby foster job creation, drive investment and innovation, and create regulatory certainty, with the added benefit of recycling more plastics. Conversely, many of the products developed from the conversion process are fossil fuels that may contribute to climate change.
Babst Calland is tracking the SWMA amendments and can assist you in evaluating how these changes may affect your operations and/or plans for development. If you have questions about ACT 127 or any other waste-related matters, please contact Matthew C. Wood in the Pittsburgh office at 412.394.6583 or mwood@babstcalland.com or Colleen Grace Donofrio in the New Jersey office at 856.256.2495 or cdonofrio@babstcalland.com.
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Energy Alert
(by Tim Miller and Katrina Bowers)
The United States Court of Appeals for the Fourth Circuit (Fourth Circuit) has vacated a judgment of the United States District Court for the Northern District of West Virginia that held an oil and gas lease failed to sufficiently indicate the method for calculating post-production costs to be deducted from royalty payments pursuant to West Virginia law. The lease provided that the lessor would bear some part of the post-production costs and contained a detailed list of post-production expenses that were deductible from royalties, but the District Court held the accounting methodology was not sufficiently disclosed. In Young v. Equinor USA Onshore Properties, Inc., No. 19-1334 (4th Cir. Dec. 1, 2020), the Fourth Circuit held that West Virginia law does not require that an oil and gas lease set out an “Einsteinian proof” for calculating post-production costs and, in fact, could be satisfied by a simple formula. In holding that the lease sufficiently indicated the method for calculation in compliance with West Virginia law, the Fourth Circuit explained that the method was to add all the identified, reasonable, and actually incurred post-production costs, deduct them from the lessee’s gross proceeds, and then adjust for the lessor’s share of the total pooled acreage and royalty rate. This opinion also questions the continued viability of the West Virginia Supreme Court’s holding in the Estate of Tawney v. Columbia Nat. Res., LLC, 219 W. Va. 266, 633 S.E.2d 22 (2006) in light of critical comments in a subsequent royalty case decided by the West Virginia Supreme Court in 2017, Leggett v. EQT Prod. Co., 238 W. Va. 264, 800 S.E.2d 850 (2017).
If you have any questions about the Young decision or its impact on the oil and gas industry, please contact Timothy Miller at (681) 265-1361 or tmiller@babstcalland.com, or Katrina Bowers at (681) 205-8955 or kbowers@babstcalland.com.
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