The director of the Ohio Environmental Protection Agency, Scott Nally, abruptly resigned yesterday after three years on the job. Nally departed his position on short notice and did not give a specific reason for his resignation. Craig Butler, a senior director of energy and environmental policy in Ohio governor John Kasich’s office, will replace Nally on an interim basis.
The Ohio Department of Natural Resources released its first quarterly production update thanks to a new law that requires production to be reported on a quarterly versus annual basis. The report showed that Ohio’s 245 horizontal wells produced a total of 1,332,477 barrels of oil and 33,606,075 thousand cubic feet of natural gas during the third quarter of 2013 (July to September). Industry analysts say that the results are positive and indicate that the 245 wells could produce as much as $1 billion in revenue per year . Ohio’s largest producing oil well is operated by Gulfport in Harrison County and produced 41,617 barrels of oil during 70 days of production in the third quarter. The largest producing gas well is also operated by Gulfport, but in Belmont County. That well produced 1,249,739 thousand cubic feet of natural gas during 89 days of production.
As reported in December, the Pennsylvania Supreme Court on December 19, 2013 invalidated portions of Act 13, including provisions limiting local government control and provisions regarding setbacks from the waters of the Commonwealth, pursuant to Article 1, Section 27 of the Pennsylvania Constitution.
However, the Pennsylvania Office of General Counsel (OGC) today filed an Application for Reconsideration requesting that the Pennsylvania Supreme Court remand the case to the Commonwealth Court so that a hearing can be held to create a factual record because the Supreme Court’s decision relied upon broad factual findings that were not of record before any court. Second, the OGC requested that the Supreme Court remand to the Commonwealth Court the issues related to setbacks from waters of the Commonwealth.
The Pittsburgh Post-Gazette recently reported that Horsehead Corp. and Shell Chemical LP have extended their land option agreement for a third time, giving Shell more time to decide whether it will build an ethane cracker on the site of Horsehead’s Beaver County Pennsylvania smelter. Unlike the previous two extensions, the expiration date of the third extension is confidential. The third extension also includes a provision that Horsehead will soon begin demolition activities at the site and that Shell will cover the expenses. Horsehead and Shell first entered into a land option agreement in March 2012.
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:
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.