Articles, Alerts & Perspectives

OOGA Bulletin

On October 14, 2015, the United States District Court for the Western District of Pennsylvania invalidated several sections of a Grant Township, Indiana County, Pennsylvania local ordinance that was enacted to prevent an oil and gas operator from operating an underground injection well that had been permitted by the United States Environmental Protection Agency. In Pennsylvania General Energy Company, L.L.C. v. Grant Township, Civil Action No. 14-209, 2015 U.S. Dist. LEXIS 139921 (W.D. Pa. Oct. 14, 2015), Pennsylvania General Energy Company, L.L.C. filed a complaint in federal court against Grant Township to challenge the constitutionality, validity and enforceability of a Grant Township ordinance that sought to establish a self-described Community Bill of Rights Ordinance (the Ordinance).

PGE drills for and produces natural gas in Grant Township and other municipalities in Pennsylvania. PGE took steps to reclassify an existing vertical gas well located in Grant Township as an underground injection well.  As background, in Pennsylvania, most produced fluid from natural gas operations, particularly unconventional operations, is recycled by using it down-hole to complete other wells.  Produced fluid that is not recycled is commonly treated at centralized wastewater treatment facilities or injected into permitted disposal wells.  Most of the injected material is brine and other produced fluid that returns to the surface after drilling and during operation of a well.  However, there are many fewer commercial and captive injection wells in Pennsylvania than there are in Ohio at this time.

In Pennsylvania, EPA is responsible for implementing the Underground Injection Control Program under the federal Safe Drinking Water Act, and for regulating the construction, operation, permitting, and closure of injection wells.  When reviewing a UIC permit application, EPA evaluates whether the proposed injection will protect underground sources of drinking water from the subsurface injection of fluids.  …

West Virginia Record

WASHINGTON, D.C. — The House Judiciary Committee’s Subcommittee on Constitution and Civil Justice will be holding a hearing today on the ACCESS (ADA Compliance for Customer Entry to Stores and Services) Act, which aims to protect small businesses from the widespread abuse of the Americans with Disabilities Act (ADA).

Congressman Ken Calvert (R-CA), who is sponsoring the bill, will testify before the committee in support of the bill he says will help prevent plaintiffs’ lawyers from “trying to enrich themselves on the backs of the disabled.”

The ACCESS Act, also known as H.R 241, would require an aggrieved person to notify a business of an ADA violation in writing, and give the business owner 60 days to provide the aggrieved individual a detailed description of improvements to remedy the violation. Then, the owner would have 120 days to remove the infraction. Failure to meet these conditions would be grounds to further the lawsuit.

Calvert told the West Virginia Record that as a property owner himself, he has had to deal with complaints from people who find minor discrepancy in a building or in following the regulations, and instead of being given time to correct the infraction, owners get slapped with lawsuits and “lawyers get rich.”

“We all want to have access (for) the disabled, we just don’t want to make this an excuse for lawyers to sue small business owners,” he said. “Nobody is objecting to making sure that we have access for the disabled.”

Calvert said some of the infractions are very minor, like not having a sign in the right location or neglecting to paint a line in the right way.

Instead of rushing to file lawsuits, Calvert said business owners should be given an opportunity to fix infractions and comply with the law. …

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.