Articles, Alerts & Perspectives

American Oil & Gas Reporter

WASHINGTON–A pipeline safety regulation published in April by the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration goes beyond traditional natural gas transmission to have serious implications for onshore gas gathering.

PHMSA published its long-awaited notice of proposed rule making for natural gas transmission and gathering pipelines on April 8. Under development for more than four years, the NOPR proposes significant changes to the regulations for gas pipeline facilities in 49 CFR Part 192, including regulations for onshore gas gathering lines.

Adopted a decade ago, the current regulations rely, in large part, on American Petroleum Institute Recommended Practice 80, Guidelines for the Definition of Onshore Gas Gathering Lines, which is a voluntary consensus standard for classifying onshore production operations and gas gathering lines. Current regulations contain an exemption for gas gathering lines in rural, Class 1 locations–i.e., areas where 10 or fewer buildings intended for human occupancy are located in the vicinity of a gathering line.

The NOPR proposes to change these regulations by:
• Modifying the requirements for determining whether a pipeline qualifies as an onshore gas gathering line;
• Applying portions of the Part 192 regulations to certain previously unregulated Class 1 gas gathering lines; and
• Applying federal reporting requirements to all gas gathering lines (whether regulated or not).

The PIOGA Press

Three years after the Pennsylvania Supreme Court rendered its controversial decision in Robinson Township v. Commonwealth, the plurality opinion is still front-and-center in battles over local regulation of oil and gas activities. The 2013 Robinson Township case, in which a three-justice plurality of the Supreme Court relied on a new and much more extensive interpretation of the Pennsylvania Environmental Rights Amendment (ERA) to invalidate certain provisions of Act 13, made its way back to the Supreme Court for consideration of new issues in 2016. In the intervening time, the Commonwealth Court, county courts of common pleas and local zoning hearing boards grappled with the meaning of the 2013 decision and its impact on local zoning authority. These cases continue to work their way through the appeals process.

Robinson Township Returns to the Pennsylvania Supreme Court

In March 2016 the Supreme Court heard argument in the Robinson Township challenge to Act 13, the General Assembly’s 2012 comprehensive update to the former Oil and Gas Act. When it first decided the case in 2013, a three-justice plurality of the Supreme Court relied on a novel and broad interpretation of the ERA (i.e. that the ERA imposes on the Commonwealth and its municipalities a fiduciary duty to “conserve and maintain” natural resources) to invalidate several sections of Act 13, including two key sections of Chapter 33 which placed limits on local government authority to regulate the oil and gas industry.

The Court remanded several undecided issues to the Commonwealth Court, including whether the remaining local government provisions of Act 13 could stand alone as “severable” from the invalidated ones, or whether they must fail alongside them. The remanded sections address the conferral upon the Pennsylvania Public Utility Commission (PAPUC) and Commonwealth Court of original jurisdiction to review local ordinances regulating the industry (as opposed to having such challenges filed with local zoning hearing boards or governing bodies), the imposition of attorney’s fees to prevailing parties in ordinance challenges in certain instances, and a municipality’s loss of its Act 13 impact fees if its ordinance was invalidated. …

Employment Bulletin

On May 18, 2016, the United States Department of Labor (DOL) published a longexpected final rule that more than doubles the salary threshold required for employees to qualify for the executive, professional, or administrative exemptions allowed by the Fair Labor Standards Act (FLSA).

Under the current law, for an employee to be exempt from the FLSA’s overtime provisions, he or she must earn at least $23,660 per year ($455 per week) on a “salary basis” and perform the job duties described in the Executive, Administrative, Professional and other exemption categories recognized by DOL. Effective December 1, 2016, however, that salary threshold will rise to $47,476 ($913 per week). The job duties tests will not change. This salary increase will mark the first increase in the salary threshold since 2004. The updated final rule is expected to enable approximately 4.2 million additional employees to earn overtime pay.

In addition to doubling the overtime salary threshold, the final rule also:

• increases the total annual compensation requirement for highly compensated employees (HCE) from $100,000 to $134,004;

• establishes a mechanism for automatically updating the salary and compensation levels every three years, beginning on January 1, 2020; and

• amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.

The full text of the final rule can be accessed beginning May 23, 2016 at http://federalregister. gov/a/2016-11754.

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 John A. …

Law360

Babst Calland Clements & Zomnir PC announced on Thursday that it’s building out its new Washington, D.C., office with the addition of a third shareholder in its pipeline and hazmat safety practice who used to be an attorney for the Pipeline and Hazardous Materials Safety Administration.

After three years as a regulatory counsel to the Interstate Natural Gas Association of America, Brianne Kurdock told Law360 on Friday she’s happy to once again be working with James Curry and Keith Coyle, two attorneys she worked with as a senior attorney at the PHMSA.

“To have three of us together with that kind of agency expertise was really compelling,” she told Law360 on Friday. “I enjoyed my days at INGA but this is an opportunity I just had to take.”

Kurdock plans to help clients with strategic and compliance counseling, audit preparation, incident response, enforcement proceedings, regulatory comment preparation and litigation.

Read more. (subscription required)

Brianne K. Kurdock has joined law firm Babst Calland as a shareholder in its Energy and Natural Resources Group and newest member of its Pipeline and Hazardous Materials Safety practice in Washington, D.C.

Ms. Kurdock joins Babst Calland from the Interstate Natural Gas Association of America (INGAA), the national trade organization for interstate gas pipelines, where she served as the primary regulatory attorney. Kurdock is reuniting with her former colleagues, energy attorneys James Curry and Keith Coyle, all of whom previously worked together at the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA), the federal agency that oversees the safety of the country’s vast network of gas and hazardous liquids pipelines. Attorneys Curry and Coyle joined Babst Calland in January of this year when the firm opened its new Washington, D.C. office.

At PHMSA, Ms. Kurdock handled regulatory, enforcement, and litigation matters involving the federal regulation of oil and gas pipelines and liquefied natural gas facilities. She also served as regional counsel in administrative enforcement cases and incident investigations. While at PHMSAMs. Kurdock served as lead attorney for special permit applications and rulemaking initiatives and represented PHMSA in inter-agency meetings with the Department of Justice, the Federal Energy Regulatory Commission, the Environmental Protection Agency and the Department of the Interior.

Ms. Kurdock previously represented clients in connection with land use and environmental issues as an associate in a private law firm in New Jersey. She also served as a law clerk in the Superior Court of New Jersey. Ms. Kurdock is admitted to practice in New Jersey and New York. She received her J.D. from Seton Hall University School of Law, and a B.A. in Government from the University of Virginia. …

The Legal Intelligencer

On Jan. 13, the Commonwealth Court rendered a decision in Honey Brook Estates v. Board of Supervisors of Honey Brook Township, 2016 Pa. Commw. LEXIS 52 (Pa. Commw. Ct. 2016), that reaffirmed a municipality’s obligation to act in good faith when processing subdivision and land development plans. The Commonwealth Court originally articulated the elements of this obligation in Raum v. Board of Supervisors, 370 A.2d 777 (Pa. Commw. Ct. 1977).

In Raum, a landowner submitted a subdivision plan for review and approval approximately 80 days before the township was scheduled to act on a proposed rezoning of the landowner’s property. Upon receipt of the landowner’s plan, the township did nothing but attempt to derail the landowner’s approval. Specifically, the township waited until the last possible moment (i.e., two days before enacting the proposed rezoning) to raise objections to the plans, then claimed there was insufficient time to consider modifications made in response to the township’s objections. Finding the township had a “deliberate, pervasive plan and intent to thwart” the landowner’s development and thus acted in bad faith, the Commonwealth Court ruled that the landowner was entitled to plan approval. In reaching this conclusion, the court stated: “A municipality has a legal obligation to proceed in good faith in reviewing and processing development plans. The duty of good faith includes discussing matters involving technical requirements or ordinance interpretation with an applicant, and providing an applicant a reasonable opportunity to respond to objections or to modify plans where there has been a misunderstanding or difference.”

Nearly 40 years later, in Honey Brook Estates, the court revisited the parameters of a municipality’s obligation to review development plans in good faith. There, a landowner purchased property in Honey Brook Township with the intent of constructing a 78-unit residential development. …

Midstream Business

Stunned by a judge’s advisory ruling in early March that could put many contracts with upstream partners up for renegotiation, midstream operators warily await a more definitive ruling in the Sabine Oil & Gas bankruptcy case as the realization sets in that a key advantage in putting deals together could be lost. The ruling by U.S. Bankruptcy Judge Shelley Chapman authorized Sabine to reject gathering and processing contracts with two midstream companies, Nordheim Eagle Ford Gathering LLC and HPIP Gonzales Holdings LLC because the E&P could not meet minimum production requirements and faced substantial financial penalties of up to $35 million.

The ruling by U.S. Bankruptcy Judge Shelley Chapman authorized Sabine to reject gathering and processing contracts with two midstream companies, Nordheim Eagle Ford Gathering LLC and HPIP Gonzales Holdings LLC because the E&P could not meet minimum production requirements and faced substantial financial penalties of up to $35 million.

The argument by the midstream companies that the “covenant running with the land” language in the contracts would preclude rejection by the debtor was put aside for another day, but the judge made it clear in a non-binding ruling that the agreements in question do not “run with the land” in her interpretation of Texas law.

“From a practical standpoint, what it says is, all these contracts that rely on acreage dedications are in play,” bankruptcy attorney David Ross of Babst Calland told Hart Energy. The hard line that midstream companies had assumed they could take, that the “covenant” language assured them of payment because the agreement was tied to the land and not to the owner, is now open to be challenged.

The PIOGA Press

On March 17, the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) released a pre-publication version of its long-awaited notice of proposed rulemaking (NPRM) for gas transmission and gathering pipelines. Under development for more than four years, the NPRM proposes significant changes to the regulations for gas pipeline facilities in 49 C.F.R. Part 192.

Read more.

Marcellus Business Central

On March 17, the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) proposed new regulations to update critical safety requirements for natural gas pipelines. The prior legislation, the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, expired at the end of FY 2015 but called for PHMSA to evaluate the need for additional damage prevention and inspection regulations.

The 549-page, pre-publication edition of the proposed regulations for gas transmission and gathering lines took over four years to make and includes four congressional mandates, one recommendation from GAO, and six recommendations from the National Transportation Safety Board (NTSB).

PHMSA’s new proposals include a climate action plan to reduce methane emissions and inspections for previously exempt gas pipelines built before 1970, such as the PG&E pipeline that exploded and started fires in San Bruno, CA in 2010, killing eight people and leveling 35 houses, and the pipeline explosion in 2011 in Allentown, Pa., which killed five people including a 4-month-old child. Both explosions were caused by leaks from old cast-iron natural gas distribution pipelines. NTSB’s investigation of the PG&E natural gas pipeline failure concluded that hydrostatic testing of grandfathered pipelines would have likely have prevented the explosion.

The proposed regulations would also broaden the scope of safety coverage by adding new assessment and repair criteria for gas transmission pipelines, including pipelines that pass through areas of medium population density where a failure could pose a serious risk to residents.

The significant growth in the nation’s production, usage and commercialization of natural gas is placing unprecedented demands on the nation’s pipeline system,” said U.S. Transportation Secretary Anthony Foxx.

“This proposal includes a number of commonsense measures that will better ensure the safety of communities living alongside pipeline infrastructure and protect our environment.”

The U.S. …

Pittsburgh Business Times

On March 17, 2016, the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) released a long-awaited rulemaking proposal that could have a dramatic impact on the gas pipeline industry. More than four years in the making, the proposed rules would make significant changes to PHMSA’s pipeline safety standards by imposing new requirements for gas transmission and gathering lines. This ambitious proposal, issued in the waning days of the Obama Administration, seeks to address a number of issues raised by the Congress, other federal agencies, and the rapid development of energy infrastructure in the nation’s shale plays, particularly in the Marcellus and Utica regions.

Read more.