On April 4, 2022, the Pennsylvania Senate failed by one vote to reach the two-thirds majority vote needed to override Governor Tom Wolf’s January 10th veto of Senate Concurrent Regulatory Review Resolution 1, which was intended to block the Pennsylvania Department of Environmental Protection’s regulation to join the Regional Greenhouse Gas Initiative (RGGI). However, the following evening, April 5, the Commonwealth Court issued a stay preventing the Legislative Reference Bureau from publishing the regulation as a final, immediately-effective rule in the Pennsylvania Bulletin and scheduling a hearing for May 4, 2022 on litigation that DEP initiated in February to force publication of the final regulation.
RGGI is the country’s first regional, market-based cap-and-trade program, designed to reduce carbon dioxide emissions from fossil-fuel-fired electric power generators with a capacity of 25 megawatts or greater that send more than 10 percent of their annual gross generation to the electric grid. Regulated sources must hold allowances equal to their CO2 emissions over a three-year compliance period. Each allowance is equal to one short ton of CO2. Regulated sources may purchase state-issued allowances at quarterly auctions or through secondary markets and can use allowances issued by any RGGI state to comply. Regulated sources may also use offsets awarded for certain environmental projects to meet a maximum of 3.3 percent of their allowances.
To read the full Alert, click here.
Methane emissions are a chief concern across the oil and gas value chain. Gary Steinbauer and Sean McGovern, both shareholders with Babst Calland, discuss methane mitigation and how players in the energy space can best handle it in this video, divided into three segments.
In the first segment, Steinbauer discusses the Biden administration’s approach to methane emissions in the energy sector, including proposed regulatory changes in the EPA’s Methane Rule.
In the second segment McGovern discusses abandoned and orphaned wells, how they are being plugged, and the help that operators can receive from the Bipartisan Infrastructure Law that passed in 2021.
In the final segment, both attorneys offer step-by-step advice to operators in Appalachia trying to navigate a slew of updated regulations.
View the three-part video, here.
During its 2022 60-day Session, the West Virginia Legislature took action to promote development of “rare earth element” recovery in the state, although it failed to deliver on all of the proposed legislative action on the last day of the Session.
On March 10, 2022, the Senate unanimously approved House Bill 4003, which is intended to clarify the ownership of rare earth elements present in mine drainage. The bill creates a new section of the West Virginia Abandoned Mine Lands Act, addressing valuable materials (not limited to rare earth elements) that may be produced through treatment of mine drainage. The new statute declares that these materials are part of the “waters of the state” and that they “can only be separated from the water with expensive and continuing investments of resources which may last for decades.” The new statute provides that any materials extracted through treatment of mine drainage “which have economic value” may be used, sold, or transferred for commercial gain by whoever successfully removes the materials from the mine drainage. To the extent the West Virginia Department of Environmental Protection is engaged in such activity through its mine drainage treatment activities, any proceeds the agency derives from the use, sale, or transfer of extracted materials must be deposited in the Special Reclamation Water Trust Fund or the Acid Mine Drainage Set-Aside Fund. Governor Jim Justice is expected to sign the bill into law.
To read the full Alert, click here.
On June 7, 2018, Pennsylvania Governor Tom Wolf and Department of Environmental Protection (DEP) Secretary Patrick McDonnell announced the final issuance of air permitting documents affecting oil and gas operations in the Commonwealth. DEP shortly thereafter released a suite of new materials to mark the latest step forward in implementing Governor Wolf’s Methane Reduction Strategy. The new permitting documents are controversial in so far as they represent a significant departure from the status quo, requiring operators to take a fresh look at when and where an air permit may be needed. Please read more about these program changes in this alert.
On April 12, 2018, the Fourth Circuit Court of Appeals became the second federal appellate court to recognize the so-called groundwater “conduit theory” of liability under the Clean Water Act. The decision in Upstate Forever v. Kinder Morgan Energy Partners, L.P., No. 17-1640, has broad implications for many industries. Please read more about the decision in this alert.
Since its enactment in 1972, the federal agencies who administer the Clean Water Act (the Act), the Environmental Protection Agency (EPA) and the United States Army Corps of Engineers (the Corps), have taken the position that the definition of “waters of the United States” governed by the Act (also known as “jurisdictional waters”) does not include groundwater. Regulation of groundwater therefore falls outside the scope of the Act. To read more: click here.
On January 22, 2018, the U.S. Supreme Court unanimously held that lawsuits challenging the Obama administration’s 2015 Clean Water Rule (Rule) – a landmark revision to the definition of “waters of the United States” (WOTUS) that arguably expanded the scope of the federal government’s authority under several regulatory programs, including those associated with wastewater discharges and dredge/fill activities under the Clean Water Act (CWA) – must be filed in federal district courts instead of the federal courts of appeal. Nat’l Assoc. of Mfrs. v. Dept. of Def., No. 16-299 (Jan. 22, 2018) (NAM). While the Supreme Court’s decision in NAM did not address the merits of the lawsuits challenging the Rule, it did determine the appropriate forum for those legal challenges. To read more: click here.
On November 30, 2017, the Pennsylvania Department of Environmental Protection announced the details of highly-anticipated changes to its air permitting program for the oil and gas industry. The Department released in final draft form two air program general permits, “GP-5” and “GP-5A,” as well as a permit exemption known as “Exemption 38.” Plans to revise the air permitting framework were first announced in January 2016 as part of Governor Tom Wolf’s Methane Reduction Strategy for Pennsylvania. The recently updated permits and exemption are not yet in effect or legally binding, which means there may still be an opportunity to influence these critical air permitting documents. To read more: click here.
On November 13, 2017, the Pennsylvania Environmental Hearing Board issued its second opinion analyzing Article I, Section 27 of the Pennsylvania Constitution, commonly known as the Environmental Rights Amendment, in light of the Pennsylvania Supreme Court’s June 20, 2017 decision in Pennsylvania Environmental Defense Foundation v. Commonwealth (PEDF). In Friends of Lackawanna v. DEP and Keystone Sanitary Landfill, EHB Dkt. No. 2015-063-L (November 10, 2017) the EHB applied the principles set out in PEDF and upheld a landfill permit renewal.
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On October 14, 2017, the DEP published notices of availability for a trio of draft Technical Guidance Documents (TGD) in the Pennsylvania Bulletin. Each of these TGDs proposes policy departures from current practices in both the form and substance of the respective TGD. Two of them, Policy for the Development and Publication of Technical Guidance and Policy for the Development and Review of Regulations, are significantly less detailed than their predecessor TGDs. For instance, the draft TGDs omit internal procedural steps and checkpoints involved in the DEP’s promulgation of new technical guidance documents and regulations. The revisions, if finalized, will affect those regulated and public entities who routinely participate in the DEP’s TGD and regulatory development process.
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In Summit Petroleum Corp. v. US EPA, 690 F.3d 733 (6th Cir. 2012), the U.S. Court of Appeals for the Sixth Circuit overturned the US EPA’s finding that a natural gas sweetening plant and approximately 100 gas wells scattered across a 43-square-mile area in Michigan should be treated as a single source for purposes of Title V of the Federal Clean Air Act. The case turned on whether the plant, wells, flares and pipelines were located on “adjacent properties” for purposes of the Title V permitting program, which requires the aggregation of individual sources in making major source determinations if certain requirements are met. In a split decision, the Sixth Circuit applied the plain meaning of the term “adjacent” and rejected the US EPA’s longstanding reliance on functional relatedness in conducting an adjacency analysis.
Read about this development and more in the Babst Calland Report. Access the Report’s executive summary here. Request a copy here.
After receiving a favorable decision from the Ohio Environmental Review Appeals Commission (ERAC) and resuming its operations treating low-salinity wastewater from hydraulic fracturing operations, Patriot Water Treatment, LLC (Patriot) has filed suit against the Ohio Department of Natural Resources (ODNR). Patriot’s operations were shut down as a result of Ohio EPA’s order denying the city of Warren a permit to receive water from Patriot and remained closed for three months until ERAC’s July 3, 2012 decision reversed Ohio EPA’s order. Patriot’s complaint, filed in the Court of Claims of Ohio on November 2, alleges that ODNR concealed public documents which could have prevented Patriot’s operations from being shut down. Patriot seeks $3.5 million in damages and attorney’s fees.
On November 6, 2012, residents of the city of Mansfield, Ohio voted to approve an environmental bill of rights that will require any company planning to construct an injection well for the disposal of brine from oil and gas production operations to obtain prior approval from the Mansfield city council. The city council decided to put the environmental bill of rights before voters in July 2012 but the bill did not garner much attention until a few weeks before the election when the Ohio Chamber of Commerce, American Petroleum Institute, and Mansfielders for Jobs issued political materials opposing the bill. The bill was approved with 62.9 percent of voters in favor of the bill.
Opponents of the environmental bill of rights have expressed concern that the regulatory scope of the bill may extend beyond injection wells. Section 1.02(H)(2) states that “No permit, license, privilege or charter issued by any State or government agency . . . which would violate the prohibitions of this Charter provision or deprive any City resident(s), of any rights, privileges, or immunities secured by this Charter, the Ohio Constitution, the United States Constitution, or other laws, shall be deemed valid within the City of Mansfield, without the written legislative consent of the City of Mansfield.” However, the bill of rights may not be enforceable and could face a court challenge since the local legislation would be preempted by state law under Ohio Rev. Code 1509.03.
Acknowledging the agency’s limited authority to regulate hydraulic fracturing under the principal environmental statutes such as the Safe Drinking Water Act and the Resource Conservation & Recovery Act, the United States Environmental Protection Agency (EPA) is now considering its authority under the Federal Insecticide, Fungicide & Rodenticide Act (FIFRA) to ensure that hydraulic fracturing is adequately regulated. Small quantities of antimicrobial chemicals are used in hydraulic fracturing operations to prevent algal and microbial growth that could impede the flow of oil or natural gas during the extraction process. Biocides commonly used in hydraulic fracturing fluid including, acrolein, dazomet, and glutaraldehyde are pesticides and therefore regulated under FIFRA. While EPA is only in the initial stages of weighing the risks associated with the use of antimicrobial chemicals in hydraulic fracturing, industry has raised several FIFRA compliance-related issues including, industry obligations under FIFRA, registration status of certain biocides, and enforcement liability.
The Indigenous Mineral Resources Incentives Development Act was signed into law by Pennsylvania Govenor Tom Corbett on October 9, 2012. The law allows the Pennsylvania Department of General Services to execute leases for the mining and removal of coal, oil, natural gas and other mineral resources underlying property owned by the state and the State System of Higher Education. The Pennsylvania Senate Republicans have a news release with an overview of the law and a description of how the lease profits are to be divided. The Marcellus Shale Coalition has a statement regarding the newly signed law. The Philadelphia Inquirer has more on the passage of the Act by the Pennsylvania Legislature in late September.