On May 4, 2016, seven environmental groups followed through on a prior threat to sue the United States Environmental Protection Agency (EPA) by filing a lawsuit against the EPA in a bid to force the agency to develop tailored rules for the disposal, storage, transportation, and handling of oil and gas waste under the Resource Conservation and Recovery Act (RCRA) Subtitle D solid waste program. In an effort to trigger movement on the issue, the environmentalists had previously sent the EPA a 60-day Notice of Intent to Sue in August 2015; however, according to the environmentalists, the agency did not formally respond to the Notice. The Complaint, filed with the U.S. District Court for the District of Columbia, alleges that the agency has not within the statutorily required three-year timeframe (1) reviewed and, where necessary, revised RCRA’s Subtitle D solid waste regulations for oil and gas waste, and (2) reviewed and/or revised its guidelines for state solid waste management plans for oil and gas waste.
For more information, read our Administrative Watch.
On May 3, 2016, the Pennsylvania House Environmental Resources and Energy Committee (“ERE Committee”) voted 19-8 to advance a concurrent resolution that would disapprove the Chapter 78/78a regulations that were approved for promulgation by the Environmental Quality Board (“EQB”) in February of this year. The concurrent resolution states that the regulations: (1) violate Act 126 of 2014, which requires EQB to promulgate conventional and unconventional regulations separately; (2) disregard the Pennsylvania Supreme Court’s ruling in Robinson Township, which enjoined portions of Section 3215 of the Oil and Gas Act (also known as Act 13 of 2012); and (3) do not comply with the Regulatory Review Act. The House and Senate have 30 calendar days, or 10 voting session days, whichever is longer, from the date the resolution is reported out of committee to pass the concurrent resolution and present it to the Governor. If the Governor does not veto the concurrent resolution, or if his veto is overridden by the General Assembly, EQB will be barred from promulgating the regulations.
On May 2, 2016, the U.S. Army Corps of Engineers (“USACOE”) released the final Pennsylvania State Programmatic General Permit-5 (“PASPGP-5”). USACOE administers this permit program jointly with the Pennsylvania Department of Environmental Protection (“DEP”) to authorize the placement of dredged or fill material into regulated waters. USACOE has issued PASPGP-5 for a five-year period. The permit will go into effect on July 1, 2016.
PASPGP-5 replaces the previously issued PASPGP-4 and contains significant modifications from PASPGP-4. Perhaps most notably, PASPGP-5 replaces the Category I through III system of agency review in favor of a “Reporting” versus “Non-Reporting” system. In general, Category I and II activities under PASPGP-4 are called “Non-Reporting Activities” under PASPGP-5, and Category III Activities are now called “Reporting Activities.” PASPGP-5 also includes terms that address the “grandfathered” status of certain activities that were previously authorized under PASPGP-4. In some cases, such projects must be submitted to USACOE to determine if the project qualifies for coverage under PASPGP-5.
On April 27, 2016, the Pennsylvania Department of Environmental Protection (DEP) announced that it has initiated an “unprecedented expansion” of the Commonwealth’s particulate matter air monitoring network to include additional monitors in areas near natural gas development. The expansion project will include 10 additional DEP monitoring stations and has a target completion date of fall 2017.
DEP plans to implement the expansion project in three stages, with one monitoring station added to each of 10 counties. DEP completed Phase 1 earlier this year with the addition of air monitoring stations in Towanda Township, Bradford County, and Holbrook Township, Greene County. The Department expects to complete Phase 2 by the end of 2016 by adding monitoring stations in Fayette, Indiana, Lycoming, Susquehanna, and Wyoming Counties. Phase 3 has a target completion date of fall 2017 and will include air monitoring stations in Clarion, Jefferson, and McKean Counties.
The following statement is from Babst Calland environmental regulatory attorney Jean Mosites who provided testimony at yesterday’s daylong public hearing on the subject of proposed revisions to 25 Pa. Code Chapter 78 submitted by the Department of Environmental Protection.
As evidenced by the quality and quantity of thoughtful testimony given by businesses that will be impacted by these regulations, yesterday’s 3-2 vote by the Independent Regulatory Review Commission (IRRC) will not necessarily be the final word on Chapter 78. While legal and procedural concerns were discussed at the IRRC meeting yesterday in its review of the final form rule-making to revise 25 Pa. Code Chapter 78, the Commissioners were required to vote on this extensive and complicated regulatory package as a whole in an up or down vote.
In my testimony yesterday, I indicated that the DEP did not meet its obligations under the Regulatory Review Act (RRA). It failed to comply with critical provisions of the RRA at key points along this entire rulemaking process. The final form rule does not reflect either consensus or balance, is not justified by a compelling public need and will do far more harm than good for this industry and the Commonwealth, its environment and its citizens.
The rule will now be reviewed by the Attorney General as to form and legality and may be considered by the House and Senate Environmental Resources and Energy Committees for a joint resolution to bar the regulation, a resolution that would go to the Governor for signature or veto. Barring any unforeseen developments, the rule could be published as final and immediately effective in June or July 2016.
On April 21, 2016, the Independent Regulatory Review Commission (IRRC) approved the Environmental Quality Board’s Chapter 78 (conventional wells) and Chapter 78a (unconventional wells) regulations by a vote of 3-2. Vice Chairman Mizner, in making a motion to disapprove the regulation, noted that the Department of Environmental Protection did not:
- provide enough information on the cost of the regulations;
- meet its burden to show that the revisions as applied to conventional operations are necessary;
- conduct the required flexibility analysis for small businesses;
- adequately consult with the Conventional Oil and Gas Advisory Committee or the Oil and Gas Technical Advisory Board; or
- develop a consensus on the regulations with industry.
The motion to disapprove the regulation failed by a vote of 3-2, followed by the motion to approve the regulation. Commissioners voting to approve the regulation noted that consensus on the regulation was likely impossible to achieve but that the Department had acted earnestly to develop necessary regulations for an evolving industry and that current regulations are not adequate.
Both the House and Senate Environmental Resources and Energy Committees previously voted to disapprove the regulations. IRRC’s approval begins a 14-day window in which the legislative committees may report to the House or Senate a concurrent resolution barring the revisions. If a resolution adopted by the General Assembly is not vetoed, or if the Governor’s veto is overridden, the Environmental Quality Board is barred from promulgating the final regulations. The Attorney General will conduct a review of the regulation as to form and legality before the regulation may be published in the Pennsylvania Bulletin as final. Publication of the rule as final could occur in June or July of 2016, becoming effective immediately on the day of publication.
On April 7, 2016, the Ohio Environmental Protection Agency (OEPA) announced a public comment period for a package of draft general permits for oil and natural gas midstream compressor stations. Applicants seeking coverage under a general permit would be required to demonstrate that the facility meets the general permit eligibility criteria. A general permit establishes pre-defined permit terms, including requirements relating to equipment installation, operating standards, monitoring, recordkeeping, and reporting. OEPA stated that the new general permits would authorize emissions from a wide variety of sources, including: natural gas-fired compressor engines; diesel engines; dehydrators; flares; compressors; equipment (pipes, pumps, etc.); liquid storage tanks; truck loading operations; and pigging operations. Comments are due May 18, 2016.
On March 29, Federal Magistrate Judge Susan Paradise Baxter dismissed a motion made by Highland Township in Elk County, PA (the “Township”) and allowed a suit brought by Seneca Resources Corporation (“Seneca”) to proceed. The action filed by Seneca challenges an ordinance banning injection wells within the Township. Prior to the filing of the suit, Seneca had received a federal permit from the United States Environmental Protection Agency to convert some of its natural gas wells in the Township into underground injection wells. Seneca then applied for a permit from the PA Department of Environmental Protection (“DEP”), and the DEP indicated that it was suspending any review of the permit application in light of the conflict with the Township’s ordinance. Seneca filed its complaint on February 18, 2015, stating that the ordinance violates the state and federal Constitutions and is preempted by several state and federal laws. The Township filed a motion to dismiss the complaint, alleging that Seneca did not have standing to challenge the ordinance. The Judge denied the Township’s motion to dismiss and held that Seneca does have standing to proceed with its suit. The Judge found that Seneca had met all of the requirements for demonstrating constitutional standing. Seneca sustained and continues to sustain injury as a result of the ordinance, because the DEP suspended its review of Seneca’s permit application due to the conflict with the ordinance. In addition, Seneca demonstrated that a favorable decision is substantially likely to redress the injury, because it would remove the ordinance as an impediment to the DEP’s review of Seneca’s permit application.
On March 17, 2016, the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a pre-publication version of its long-awaited notice of proposed rulemaking (NPRM) for gas transmission and gathering lines. The 549-page NPRM has been issued in response to issues raised in National Transportation Safety Board recommendations, congressional mandates, and Government Accountability Office reports. PHMSA has provided a short, 60-day comment period, which will be a challenge to those developing comments on a proposed rule of this complexity and length. For more information, read our Pipeline Safety Alert.
According to a report by the Charleston Gazette-Mail, TransCanada will be purchasing Columbia Pipeline Group for $13 billion. TransCanada had previously proposed the Keystone XL pipeline, and owns more than 42,000 miles of pipeline in North America. TransCanada will acquire about 15,000 miles of pipeline, as well as processing and underground storage facilities, through the purchase of Columbia.
Today the U.S. Environmental Protection Agency (EPA) announced the next step in its strategy for reducing methane emissions from the oil and natural gas sector: regulating emissions from existing sources. According to EPA’s fact sheet, the agency will issue an Information Collection Request (ICR) “to require companies operating existing oil and gas sources to provide information to assist in the development of comprehensive regulations to reduce methane emissions.” EPA plans to reach out to stakeholders about the ICR process in the next few weeks and begin the formal ICR process next month. A draft ICR will be released for public comment.
On February 18, 2016, Pennsylvania Department of Environmental Protection (PADEP) Secretary John Quigley held a press conference to announce the release of the final Governor’s Pipeline Infrastructure Task Force (PITF) Report. Secretary Quigley stated that the final report contains only minor modifications to the draft report, but adds an executive summary and appendices. The final report includes all draft recommendations, including 11 that do not appear to have garnered majority support from the task force members in weighted voting. Appendix C to the final report assigns various government entities and/or industry with responsibility for following up on each individual recommendation.
Keith Coyle, a shareholder in Babst Calland’s new Washington, D.C. office and member of its Pipeline and HazMat Safety Practice Group, served on the Task Force.
As reported by the Wheeling Intelligencer, for the fifth year out of the last six, pooling legislation has been introduced in the West Virginia House of Delegates (HB 4426). A similar measure failed to pass in 2015 after a 49-49 vote on the final day of the legislative session. HB 4426 allows drillers who own or have leased 80 percent of the acreage in a proposed unit to unitize the remaining acreage if mineral owners cannot be located or refuse to sign leases. However, unlike prior versions, the current bill would forbid companies from deducting post-production expenses from royalty checks payable to such mineral owners. Opponents of “lease integration,” as it has been called in West Virginia, maintain that drillers should not be allowed to incorporate unleased oil and gas interests into planned well units because such incorporation co-opts landowners’ rights to execute oil and gas leases affecting their separate property. HB 4426 is currently under consideration by the West Virginia House Energy Committee.
StateImpact Pennsylvania reports that Pennsylvania Governor Tom Wolf wants natural gas drillers to pay a 6.5% severance tax on natural gas production, which he estimates will bring in $217.8 million dollars for the 2016/2017 fiscal year, a fraction of the billion dollars he projected last year’s severance tax proposal would generate.
The newest enactment of the proposed severance tax will keep the state’s impact fee, but will offer producers a credit for those fees which would reduce their severance tax payments. That proposal was not included in last year’s unsuccessful attempt to impose a tax of 5 percent plus a separate fee of 4.7 cents per thousand cubic feet of gas each well produces. The proposal has been met with fierce opposition from industry leaders, who state that Governor Wolf is ignoring market realities of low oil and gas prices which have recently forced producers to cut capital expenditures.
As reported by The Scranton Times-Tribune, Pennsylvania State Representative Scott Petri (R-178th Leg. Dist., Bucks County) recently introduced legislation that would allow the Turnpike Commission to grant pipeline operators the right to use its existing right-of-way for the construction of parallel gas pipelines in exchange for a transmission fee. Representative Petri asserts that passage of the bill will ultimately generate state revenue and minimize the impact of transmission line development on private property owners. Although the Turnpike Commission has not yet determined how much of the state’s 550 mile turnpike system may be suitable for parallel gas pipelines, the proposed legislation comes at a time when midstream development and operations in the Marcellus Shale are on the rise, as state officials predict that thousands of miles of new pipelines will be needed to transport gas to new markets. Representative Petri also suggests that Interstates 80 and 79, which span 311.07 miles and 182.72 miles in Pennsylvania, respectively, could provide additional opportunities for parallel gas pipelines upon federal approval.