On December 14, 2013, the Pennsylvania Environmental Quality Board (EQB) amended the Title V annual emission fee assessed by the Department of Environmental Protection (DEP)’s Bureau of Air Quality, increasing the fee to $85 per ton of “regulated pollutant,” for up to 4,000 tons of emissions. This represents an increase of $27.50 per ton of emissions, moving from the existing rate of $57.50 per ton. Citing DEP budget deficit problems, the EQB described this $27.50 increase as “a bridge to allow additional time for the development of a comprehensive fee structure for the air quality program.” The annual Title V emission fee requirement affects owners and operators of facilities that are classified as major sources of air pollution under Section 501 of the Federal Clean Air Act and subject to the Title V permitting program. The increased rate will affect Title V fees payable by September 1, 2014, for emissions occurring in calendar year 2013.
New York State Department of Health Commissioner Nirav Shah announced earlier this week that his public health review of hydraulic fracturing will continue in private until it is complete. Despite facing harsh criticism for a lack of transparency in the review process, Shah told reporters that the scientific work surrounding hydraulic fracturing must be conducted in a “sacred space” to maintain objectivity. “The process needs to be transparent at the end, not during,” Shah said. Governor Andrew Cuomo said that there is no timetable for completion of the health review, although he reportedly anticipates it will be finished in 2014. “But my timeline is whatever Commissioner Shah needs to do it right and feel comfortable,” Cuomo said. “It’s a major decision.” Governor Cuomo previously said in June 2013 that he would make a decision on the State’s hydraulic fracturing moratorium before the 2014 election.
Ohio legislation enacted earlier this year imposes new requirements on facilities that store, recycle, treat, process or dispose of brine or other waste substances associated with the exploration, development and operations of oil and gas wells. Under the new requirements, the Chief of the Division of Oil and Gas Resources Management must adopt rules establishing the procedures and requirements for applications to obtain permits for the installation and operation of these waste facilities. The Division has established a two-step process for waste facility operators to comply with the new requirements:
- Beginning on January 1, 2014, operators of these facilities must apply for a temporary authorization, known as a Chief’s Order, to install new facilities or continue to operate existing facilities.
- After the Chief promulgates the new rules, all facilities operating under a Chief’s Order and new facilities will be required to obtain a permit in conformance with the new rules.
The Division of Oil and Gas Resource Management intends to propose the new rules in early 2014. Guidelines for applying for Chief’s Orders for interim authority to install or operate facilities have been posted on ODNR’s website and are available here.
The PA Environmental Digest reported that the Pennsylvania Department of Environmental Protection introduced a new online Oil and Gas Mapping Tool. The new mapping tool displays the location of wells across Pennsylvania. It allows users to search for wells by type (conventional, unconventional and coal bed methane) and status (active, plugged or abandoned). Users will be able to view the wells through a satellite photo view, topographic map view and animated map view. Once a well is selected, the mapping tool will display well information such as the operator name, well permit number, location information and name of the well.
The Pittsburgh Business Times reports that CONSOL Energy Inc. will use electric engines when it drills at the Pittsburgh International Airport. On Tuesday December 17, the Findlay Township Planning Commission gave an affirmative recommendation to approve four well pad sites and two impoundments. The public hearing before the Township Board of Supervisors may occur in January 2014, and drilling may commence by the end of 2014.
The Pennsylvania Supreme Court has ruled that several critical provisions of Act 13, the General Assembly’s 2012 comprehensive update to the former Oil and Gas Act, are unconstitutional. In addition to invalidating a key section of Act 13 placing limits on the regulatory authority of local governments, the Court’s ruling also struck down a number of the legislation’s well location restrictions administered by the Department of Environmental Protection (DEP).
The Commonwealth Court, in a 4-3 decision, had declared the limits on the authority of local governments in Section 3304 unconstitutional on the grounds that they violated substantive due process, holding that it allowed incompatible uses in zoning districts, was inconsistent with municipal comprehensive plans, did not protect the interests of neighboring property owners, altered the character of the neighborhood, and made irrational classifications. The Supreme Court affirmed, albeit on different grounds. The majority opinion held that the limits on local governments violated Article 1, Section 27 of the Pennsylvania Constitution, commonly known as the “Environmental Rights Amendment.” The Supreme Court also invalidated Section 3303 of Act 13, which provided that “environmental acts” are of statewide concern and preempt local regulation of oil and gas operations regulated by such acts. Sections 3305 through 3309 were enjoined to the extent that they enforced any section of Act 13 found to be invalid.
Additionally, the Commonwealth Court held Section 3215(b)(4) to be null and void because it gave the DEP insufficient guidance to waive setback requirements and allowed the DEP to make legislative policy judgment. Upon review, the Supreme Court affirmed. However, the Supreme Court held that all of Section 3215(b), including the setbacks from waters of the Commonwealth, is invalid because the waiver provision was not severable from the remainder of that section. The implications of this are unclear, as the DEP and well permit applicants now have no defined setbacks from surface waters or wetlands under Act 13 or any other statute. The Supreme Court also found that Section 3215(d), which allowed the DEP to consider comments from municipalities in its permitting decisions, were invalid and that Sections 3215(c) and (d) are invalid to the extent that they enforce Sections 3215(b) and (d).
For a more in-depth analysis, see Babst Calland’s recent Administrative Watch.
Kinder Morgan Energy Partners, L.P. (KMP) announced that its subsidiary, Kinder Morgan Cochin LLC, signed a letter of intent with NOVA Chemicals Corporation to develop a new $300 million products pipeline for the Utica Shale, coined Kinder Morgan Utica To Ontario Pipeline Access (UTOPIA).
The 210-mile pipeline is expected to be operational by mid-2017, with an initial capacity of 50,000 barrels per day. The pipeline will enable KMP to move product from multiple facilities in Harrison County, Ohio to Kinder Morgan’s Cochin Pipeline near Riga, Michigan, and ultimately, to Windsor, Ontario, Canada.
The State of Ohio issued nearly than double the amount of Utica shale drilling permits than first expected for 2013. The Ohio Department of Natural Resources initially predicted that it would issue 525 permits for 2013. According to ODNR’s most recent report, the State has issued 1015 permits. An industry spokesman says that the higher than expected increase reflects the interest in exploring the Utica shale’s oil and gas reserves. The permits were issued to 30 different companies operating in Eastern Ohio.
On December 12, 2013, several Pennsylvania state representatives announced their plan to introduce a bill creating a severance tax on unconventional natural gas extraction. The proposed tax, which would replace Act 13’s existing impact fee, would be 4.9% of the value of natural gas sold from an unconventional well. Of the proceeds, 40% would be distributed to the impacted municipalities, and the remaining 60% would fund various statewide programs such as basic education (40%), the Growing Greener environmental stewardship fund (10%), investment in public lands (10%), programs for adults with special needs (8%), drug and alcohol programs (8%), the human services development fund (5%), behavioral health programs (5%), solar energy-Pennsylvania Sunshine Program (4%), the Homeowner’s Emergency Mortgage Assistance Program (3%), rape and domestic violence programs (2%), industry partnerships (3%), and veterans’ homes (2%). The sponsors of the proposal include Representatives DiGirolamo, Murt, DeLissio, and Readshaw.
On December 10, 2013, President Obama issued a memo entitled, “Federal Leadership on Energy Management,” that directs federal facilities to achieve new goals for renewable energy and implement new energy management practices. The principal goals are as follows: (1) by 2020, 20% of the total electric energy consumed by each agency during any fiscal year should come from renewable energy, with interim goals of 10% renewable energy usage by 2015, 15% in 2016 and 2017, and 17.5% in 2018 and 2019; (2) each agency must install building energy meters and sub-meters as required by the National Energy Conservation Policy Act and install additional ones where cost-effective and appropriate; and (3) the General Services Administration, in coordination with the Department of Energy, must initiate a strategy to pilot “Green Button” at federal facilities where feasible. “Green Button” is a data access system developed by the North American Energy Standards Board for providing web-based secure access to energy bill account data, usage data, and consumption data to customers and utilities for purposes of demand-side management. For purposes of the President’s memo, “renewable energy” is defined as “energy produced by solar, wind, biomass, landfill gas, ocean, geothermal, municipal solid waste, or new hydroelectric generation capacity.”
Today, the Pennsylvania Department of Environmental Protection (DEP) issued a press release to announce the opening of the public comment period for its long-awaited proposal to revise the oil and gas regulations at 25 Pa. Code Chapter 78 (environmental protection standards). The comment period will open this Saturday when the official notice is published in the Pennsylvania Bulletin. Comments will be accepted through February 12, 2014.
During the public comment period, the Pennsylvania Environmental Quality Board (EQB) will host seven public hearings across the Commonwealth. Persons wishing to present testimony at a hearing must contact the EQB at least one week in advance. In addition to the EQB hearings, DEP will host two informational webinars on Thursday, December 19th from 2:30 – 3:30pm and Friday, January 3rd from 9:30 – 10:30am. DEP will answer questions about the rulemaking during the webinars.
Earlier this week, the Senate of Pennsylvania unanimously confirmed Ellen Ferretti as Secretary of the Department of Conservation and Natural Resources (DCNR), and in a 42-8 vote, also confirmed Chris Abruzzo as Secretary of the Department of Environmental Protection (DEP). Abruzzo’s background is mainly in prosecution but he also worked as Deputy Chief of Staff to Governor Corbett and in the drug enforcement section of the Pennsylvania Attorney General’s office. Ellen Ferretti previously served as DCNR’s Deputy Secretary for Parks & Forestry and has worked on environmental issues both in and out of government. Both nominees have already been serving in their respective positions; Abruzzo since April, and Ferretti since June.
Environmental groups and industry organizations are at an impasse over regulations proposed by the New York State Department of Environmental Conservation (DEC) that would lift the state’s 40-year ban on the construction and operation of liquefied natural gas (LNG) facilities. New York enacted a moratorium on the construction of LNG storage facilities after the explosion of an LNG tank in Staten Island killed 40 workers in 1973. Several environmental groups that oppose the proposed regulations commented that lifting the LNG ban will open the door for shale gas development through hydraulic fracturing in New York. Industry groups and the DEC, however, said that the regulations would facilitate the use of LNG in long-haul trucks, a cheaper and cleaner option to diesel fuel. “These regulations have nothing whatsoever to do with fracking and everything to do with putting cleaner trucks on our highways,” said a spokeswoman for the DEC. The DEC is expected to finalize the proposed regulations in early 2014.
The Marcellus Shale Coalition has announced the newly elected officers of its 2014 Executive Board. K. Scott Roy, Range Resources Corporation’s Vice President of Government and Regulatory Affairs, was elected as the chairman. Heather Lamparter (Vice President, Legal, Exco Resources (PA), LLC), Mark Hager (Senior Government Affairs Representative, Williams) and Gary Smith (Vice President and General Manager, EOG Resources) were elected as vice chair, treasurer and secretary, respectively.
The Pittsburgh Business Times reported yesterday that Rice Energy Inc. is planning for an initial public offering sometime during the first quarter of 2014. Rice confirmed that it filed a Form S-1 with the Securities and Exchange Commission. Pipeline reports that Rice’s registration statement will be made public in a few weeks. The Business Times further reports that Alpha Natural Resources will be selling its 50 percent stake in a joint venture, Alpha shale Resources, to Rice for $300 million. A portion of the payment for that transaction will include stock from the upcoming IPO.