Legislative Update: West Virginia Governor Signs House Bill No. 4091 into Law

On February 17, 2020, West Virginia Governor Jim Justice signed into law House Bill 4091, allowing for expedited oil and gas well permitting for horizontal wells. Under the bill, which amends W. Va. Code § 22-6A-7, operators may pay an additional fee to enter into an expedited permit application process for drilling certain horizontal wells.  The additional expedited permit fee is $20,000 for the initial horizontal well and $10,000 for each additional well drilled on a single well pad at the same location.  Within 45 days of the applicant’s submission of the permit application, the Secretary of Environmental Protection must issue or deny the permit. If there is no decision within 45 days, the Secretary is required to refund the applicant a pro-rated amount of the expedited application fee for each day with no decision, up to the 60th day, at which point the expedited fee would be fully refunded.

The bill also provides for an expedited permit modification process, allowing the operator to pay an expedited application fee of $5,000 for a modification to an existing permit. The Secretary must issue a decision on the modification within 20 days or refund the applicant a daily, pro-rated amount.

Half of the funds collected from the expedited applications will be used by the Department of Environmental Protection to cover the administrative costs of processing the applications. The remaining balance will be used for reclamation and plugging of orphaned oil and gas wells throughout the State.

The expedited permitting processes under the law do not apply to deep wells, so operators could only utilize these expedited processes for horizontal wells with target formations of the Marcellus Shale or shallower formations. The bill is effective ninety days from passage, on May 5, 2020.

PADEP Extends Public Comment Deadline for Draft Air Permits, Revised Exemption List

On February 23, 2017, the Pennsylvania Department of Environmental Protection (PADEP) announced an extension of the public comment period regarding recently proposed draft general air permits for the oil and natural gas industry.  Comments are now due by June 5, 2017.  PADEP has proposed to issue a new general permit known as GP-5A for unconventional natural gas well site operations and remote pigging stations, as well as revise the existing general permit known as GP-5 for natural gas compression and/or processing facilities.  PADEP’s proposal would also revise the Air Quality Permit Exemptions list.  Refer to our Administrative Watch for more information.  A formal notice regarding the comment deadline extension was also published in the Pennsylvania Bulletin dated February 25, 2017.

U.S. Army Corps of Engineers Releases Final Pennsylvania General Permit

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.

Administrative Watch: Pennsylvania Methane Reduction Strategy Expected to Transform Air Program for Oil and Natural Gas Sector

On January 19, 2016, Pennsylvania Governor Tom Wolf and the Department of Environmental Protection (DEP) announced a sweeping new regulatory strategy for reducing methane emissions from oil and natural gas operations in the Commonwealth.  Methane, the primary constituent of natural gas, is considered by federal and state agencies to be a potent greenhouse gas which contributes to climate change.  Governor Wolf stated that Pennsylvania, as the nation’s second-largest producer of natural gas, is “uniquely positioned to be a national leader in addressing climate change.”

The Pennsylvania methane reduction strategy is expected to result in significant changes to the air permitting and regulatory regime that currently applies to oil and natural gas industry sources.  For more information, read our Administrative Watch.

Ohio Adopts Horizontal Well Site Construction Rules

The Ohio Department of Natural Resources (ODNR), Division of Oil and Gas Resources Management has adopted rules requiring the approval of plans for horizontal well sites prior to the construction or material modification of the sites.  The rules, codified at OAC 1501:9-2-01, 1501:9-2-02, and 1501:9-12-01, became effective on July 16, 2015.

The rules require the electronic submission of an application for approval of the well site (consisting of the well pad, access roads, areas altered to install ponds and other water control components, storage facilities, and other areas altered for drilling and production operations), and provide that construction or material modification of the site may not commence without first obtaining a permit from the Chief of the Division.  The rules prescribe the information to be provided in the application, including detailed drawings of all features within the well site boundary prepared and certified by a professional engineer, a sediment and erosion control plan, a dust control plan, a geotechnical report, and a stormwater hydraulic report.

The applicant and a representative of the Chief must meet at the site within 15 days of notification by the Chief that the application is complete.  The applicant must submit certification by a professional engineer after completion of the well site that the site has been constructed in conformity with the approved application.  The text of the rules, a discussion of the rules’ contents, and forms prescribed by the Chief are available on the Division’s website.

Pennsylvania Natural Gas Operator Prevails in Air Aggregation Case

Earlier this week, the U.S. District Court for the Middle District of Pennsylvania granted a motion for summary judgment in favor of a natural gas operator in a closely-watched case involving air aggregation issues.  In 2011, Citizens for Pennsylvania’s Future (PennFuture) filed suit alleging that Ultra Resources, Inc. (Ultra) constructed a major source of nitrogen oxides (NOx) without the appropriate New Source Review (NSR) permit.  The case involved eight compressor stations in Tioga and Potter counties for which Ultra had obtained separate authorizations from the Pennsylvania Department of Environmental Protection (DEP) to use the General Plan Approval/General Operating Permit known as “GP-5”.  PennFuture viewed the compressor stations as functionally interrelated, operating in concert with a metering station as a single facility with potential NOx emissions in excess of the NSR major source threshold, thereby subjecting Ultra to heightened permitting requirements.

In granting Ultra’s motion for summary judgment, the District Court concluded that Ultra’s compressor stations did not constitute a single facility.  The regulatory definition of a single facility requires, in relevant part, that sources be “located on one or more contiguous or adjacent properties” in order to be aggregated into a single facility.  The central issue in this case was whether Ultra’s compressor stations are on “adjacent” properties.

The District Court found that Ultra’s compressor stations are not on “adjacent” properties under either the distance-based, plain meaning approach advocated by Ultra, or the functional relationship theory put forth by PennFuture.  According to the District Court, the stipulated facts showed that the compressor stations are not “sufficiently close to, or near enough, each other to be considered adjacent.”  Also, with respect to functional relationship, the District Court found no unique facts suggesting that Ultra’s emission sources were “unusual or outside of the normal oil and gas configurations and arrangements contemplated by [DEP].”

Although the District Court concluded that “the plain meaning of ‘contiguous’ and ‘adjacent’ should control a determination of whether two or more facilities should be aggregated,” it specifically “decline[d] to hold that functional interrelatedness can never lead to, or contribute to, a finding of contiguousness or adjacency.”  Read our Administrative Watch for additional information regarding the District Court decision in Citizens for Pennsylvania’s Future v. Ultra Resources, Inc.

W. Va. Permit Transfer Legislation Becomes Effective Law

As reported by the Charleston Gazette on February 4, 2015, West Virginia Governor Earl Ray Tomblin has signed legislation originally known as Senate Bill 280, which streamlines the transfer process of well work permits to eliminate a requirement that companies must re-apply for well work permits after acquiring assets from existing operations in West Virginia. The approved change was introduced and fast-tracked by both the House of Representatives and Senate in favor of Southwestern Energy Company, which bought $5 billion in assets from Chesapeake Energy Corporation in October of 2014. Please see our original blog post on S. B. 280 for further information.

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