The 2021 Babst Calland Report Highlights Legal and Regulatory Perspectives at a Transformational Time for the U.S. Energy Industry

A Recent Conversation with U.S. Senator Joe Manchin Featured in this Report

Law firm Babst Calland today published its 11th annual energy industry report: The 2021 Babst Calland Report – Legal & Regulatory Perspectives for the U.S. Energy Industry. Each of our nation’s energy sectors is impacted by local, state and federal policies, many of which are addressed in this inclusive report on legal and regulatory developments for the energy industry in the United States.

The Babst Calland Report represents the timely collective perspectives of more than 45 energy attorneys on the current state of the U.S. natural gas and oil, coal, and renewable energy sectors. For the first time, this Report is presented as an easy-to-navigate digital site featuring 12 sections, addressing the following key topics:

  • Business Outlook for the U.S. Energy Industry
  • Climate Change Initiatives from the Biden Administration
  • Pipeline & Hazardous Materials Safety Administration Priorities
  • Environmental Law Developments
  • Environmental Justice Issues
  • Appalachian Basin Regional Developments
  • Coal Mining Regulatory Changes
  • Expansion of the U.S. Renewable Energy Market
  • Real Estate & Land Use Developments
  • Litigation Trends
  • Changes in Employment & Labor Law
  • Emerging Technologies Affecting the Energy Industry

Joseph K. Reinhart, shareholder and co-chair of Babst Calland’s Energy and Natural Resources Group, said, “The energy industry, once again, is at an inflection point and a moment of resiliency as it experiences a rebound in pricing and recovers from the impact of the global pandemic. Evidenced by the signing of several Executive Orders, President Biden has made climate change a focal point of U.S. energy policy. The full impact of the new administration’s “government-wide” approach to regulatory and social environmental policies will be unclear for months.

“This transformational time promises to bring significant changes for the U.S. energy industry. It is vital for any energy organization to consider the forewarnings, the risks, and the legal and regulatory implications to its business.”

Report Features Video Commentary from U.S. Senator Joe Manchin

This edition features commentary from Senator Joe Manchin (D-WV), Chairman of the U.S. Senate Energy and Natural Resources Committee, who spoke with Babst Calland energy clients at a special briefing on June 25, 2021. A link to the webinar recording is available in this Report.

To request a copy of The 2021 Babst Calland Report, click here.

Updates on key developments in energy and natural resources law beyond this Report are available directly by the attorneys who represent clients in a wide spectrum of industry sectors and legal practice areas.

The Babst Calland Report Highlights Legal and Regulatory Challenges for the U.S. Oil and Gas Industry

The law firm of Babst Calland published its 10th annual energy industry report: The 2020 Babst Calland Report – The U.S. Oil & Gas Industry: Federal, State, Local Challenges & Opportunities; Legal and Regulatory Perspective for Producers and Midstream Operators. 

In this Report more than 50 energy attorneys provide perspective on the current state of the U.S. natural gas and oil production industry and its growth to historic highs due to more than a decade of advances in on-shore horizontal drilling and high-volume hydraulic fracturing. It asserts that despite current challenges, a maturing shale industry is poised for future growth as natural gas and oil producers have driven down the costs of production. Transportation options for moving these natural resources from growing areas of production to customers continue to be built, even with new hurdles from regulators and other stakeholders.

Joseph K. Reinhart, shareholder and co-chair of Babst Calland’s Energy and Natural Resources Group, said, “The U.S. natural gas and oil industry has experienced tremendous growth and change since we first published this Report in 2011. Fast forward to an unprecedented 2020 with a pandemic, a corresponding economic slow-down and oversupply of natural gas and crude oil. With increased public and government pressure, sustained low prices, and less-reliable financing options, resiliency will continue to be the driving force of a dynamic energy market that continues to evolve.”

Report highlights

The Babst Calland Report is an annual review of the issues and trends at the federal, state and local level in the oil and gas industry over the past year. The 102-page Report covers a range of topics from the industry’s business outlook, regulatory enforcement and rulemaking to developments in pipeline safety and litigation trends. The Firm’s collective legal experience and perspectives on these and related business developments are highlighted in this Report, including those summarized below:

  • Long-term, U.S. energy production appears poised to continue to outstrip domestic consumption due in some measure to increased consumption efficiency, along with the obvious ramifications from the natural gas revolution.
  • The regulatory environment is focused on climate change, reducing emissions, water quality developments, and enforcement. Increased volumes of written agency guidance, enforcement, and penalties continue to challenge the industry.
  • Citizens groups continue to actively challenge federal and state initiatives designed to expand natural gas and oil development, creating delays and uncertainties.
  • Land use and zoning challenges continue at the local level. Increasing industry headwinds have resulted in a slowdown of new permitting activity amid ongoing challenges and ordinance restrictions.
  • Public interest in pipeline safety has grown amid opposition and new rules from the Pipeline and Hazardous Materials Safety Administration in response to increased public and congressional pressure to initiate and finalize new or revised pipeline safety regulations. Operators seek to install new or replace existing pipelines throughout the U.S. while advocacy groups aggressively oppose many pipeline projects.
  • Title legislation and court decisions vary by state and basin. In Pennsylvania, for example, Act 85 took effect in January 2020 and defines the conditions in which oil and gas producers may drill a lateral wellbore that crosses between two or more pooled units.
  • Although 2019 saw renewed claims of adverse health effects allegedly related to oil and gas development, support for such claims continues to be limited, as now noted by numerous publications.
  • Unmanned aircraft systems take hold in the energy sector. Despite the pandemic and its impacts, unmanned aircraft systems (UAS) have emerged as essential tools for the energy industry for conducting complex inspection and monitoring of difficult to access infrastructure and locations.
  • From a workforce standpoint, COVID-19 conditions and other wage and hour regulations, amendments to the Family Medical Leave Act, and expanded unemployment benefits under the CARES Act have had an impact on companies across the country.

The natural gas and oil industry continues to expand its reach and impact on U.S. energy supply and independence. Each company has its own set of opportunities and challenges to navigate based on its financing, debt, shareholder goals, and operations and infrastructure footprint. Nonetheless, the United States’ plentiful supply of natural gas and oil is expected to continue to fuel the country’s economic future and support national security.

Request a copy of the Report

Babst Calland’s Energy and Natural Resources attorneys support clients operating in multiple locations throughout the nation’s shale plays. To request a copy of the Report, contact

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.

The 2019 Babst Calland Report Highlights Federal, State and Local Challenges and Opportunities for the U.S. Oil and Gas Industry

The law firm of Babst Calland today released its annual energy industry report: The 2019 Babst Calland Report – The U.S. Oil and Gas Industry: Federal, State and Local Challenges & Opportunities; Legal and Regulatory Perspective for Producers and Midstream Operators.

In this Report, Babst Calland energy attorneys provide perspective on issues, challenges, opportunities and recent developments in the oil and gas industry that are relevant to producers and midstream operators.

According to the International Energy Agency, “the second wave of the U.S. shale revolution is coming” and the United States will account for a 70 percent increase in global oil production and a 75 percent expansion in LNG trade in the next five years. 

On a year-over-year basis, natural gas production continues to increase in each of the seven largest shale basins in the United States. Most notably, oil and natural gas production is being driven by three of the largest producing basins including Appalachia in Pennsylvania, West Virginia and Ohio, the Permian Basin in Texas and New Mexico, and the Haynesville Basin in southwestern Arkansas, northwest Louisiana, and east Texas.

Joseph K. Reinhart, shareholder and co-chair of Babst Calland’s Energy and Natural Resources Group, said, “Domestic shale producers and operators continue to face myriad legal and regulatory challenges by regulatory agencies, the courts, activists, and the market. This annual review is a snapshot of the issues and trends on the federal, state and local level in the oil and gas industry over the past year.”

The 92-page Babst Calland Report covers a range of topics from the industry’s business outlook, regulatory enforcement and rulemaking to developments in pipeline safety and litigation trends. A few of the Report’s highlights include:

  • The U.S. Department of Energy’s Energy Information Administration (EIA) reports both oil and dry natural gas production set U.S. records this year. Oil production hit 12.4 million barrels per day in May, natural gas soared above 90 billion cubic feet per day. U.S. production of gas liquids also set records and now account for over a quarter of U.S. petroleum product output.
  • This year, the oil and gas industry received mixed messages regarding environmental matters. On the federal level, the Trump administration generally loosened regulatory and/or statutory constraints, such as narrowing the Clean Water Act definition of “Waters of the United States.” In contrast, at the state level, some agencies introduced or considered more rigorous standards, including Pennsylvania’s proposed cap-and-trade program.
  • Public interest in pipeline safety has grown significantly in recent years. Consequently, operators’ installation of new pipeline infrastructure to transport energy products from the nation’s shale plays to domestic and foreign markets has resulted in increased scrutiny.
  • In Pennsylvania, the contours of the Robinson Township II decision continue to be litigated and legislated by local governing bodies, while the Commonwealth Court provided clarity concerning a municipality’s right to determine the location of oil and gas operations. In West Virginia, the extent of a county government’s ability to investigate alleged nuisances is being considered in the state’s highest court. In Colorado, new legislation has empowered local governments to take a much more active role in regulating oil and gas development.
  • Significant title issues concerning oil and gas property rights continue to be addressed in states in shale plays throughout the country. The desire to improve efficiencies has resulted in the use of allocation wells and cross unit drilling, particularly in Texas and Oklahoma.
  • Nuisance claims, alleging that excessive noise, traffic, dust, light, air pollution and impaired water quality interfere with the use and enjoyment of private property, continue to be asserted across the shale plays.
  • An increasing number of oil and gas companies recognize the advancements in commercial unmanned aircraft systems (UAS) technology and the utility and cost savings associated with using UAS to inspect and monitor assets such as pipelines and infrastructure.

After more than a decade, the shale gas industry continues to expand its reach and impact on our country’s energy supply and independence. Babst Calland’s Energy and Natural Resources attorneys support clients operating in multiple locations throughout the nation’s shale plays. To request a copy of the Report, contact

The 2018 Babst Calland Report Focuses on the Appalachian Basin Oil & Gas Industry Forging Ahead Despite Obstacles

Babst Calland today released its annual energy industry report: The 2018 Babst Calland Report – Appalachian Basin Oil & Gas Industry: Forging Ahead Despite Obstacles; Legal and Regulatory Perspective for Producers and Midstream Operators.  This annual review of shale gas development activity in the Appalachian Basin acknowledges an ongoing rebound despite obstacles presented by regulatory agencies, the courts, activists, and the market. To request a copy of the Report, contact

In this Report, Babst Calland attorneys provide perspective on issues, challenges, opportunities and recent developments in the Appalachian Basin and beyond relevant to producers and operators. According to the U.S. Energy Information Administration’s May 2018 report, the Appalachian Marcellus and Utica shale plays account for more than 40 percent of U.S. natural gas output, compared to only three percent a decade ago. Since then, the Appalachian Basin has become recognized in the U.S. and around the world as a major source of natural gas and natural gas liquids.

The industry has been forging ahead amidst relatively low natural gas prices, infrastructure building, acreage rationalization and drilling plans that align with business expectations. The policy landscape continues to evolve with ever-changing federal and state environmental and safety regulations and tax structures along with a patchwork of local government requirements across the multi-state region.

Joseph K. Reinhart, shareholder and co-chair of Babst Calland’s Energy and Natural Resources Group, said, “This Report provides perspective on the challenges and opportunities of a shale gas industry in the Appalachian Basin that continues to enjoy a modest rebound. While more business-friendly policies and procedures are emanating from Washington, D.C., threats of trade wars are raising concerns about the U.S. energy industry’s ability to fully capitalize on planned exports to foreign markets.”

To read more: click here.

Environmental Legal Perspective: The Underground Reach of the Clean Water Act: It’s Not Just for Surface Water

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.

Environmental Alert: U.S. Supreme Court Decision Revives Multiple Federal District Court Lawsuits Challenging the Clean Water Rule

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.

PADEP’s Chapter 78a Rulemaking Goes into Effect for Unconventional Operations in Pennsylvania

On Saturday October 8, 2016, the Pennsylvania Department of Environmental Protection’s new Chapter 78a regulations associated with unconventional wells went into effect when they were published in the Pennsylvania Bulletin.  For unconventional well operators, there are substantial changes from prior law affecting operations over the entire life of the well, from permitting to site construction, waste handling, impoundments, pipelines, site restoration and spill remediation.  For more information, check out our Administrative Watch.

SRBC Issues Notice of Proposed Rulemaking

On September 21, 2016, the Susquehanna River Basin Commission (SRBC) published a Notice of Proposed Rulemaking/Notice of Public Hearings in the Federal Register.  The proposed regulations would affect application requirements for project approval and renewal, standards for the review of projects (including consumptive use mitigation proposals), and procedures for hearings and enforcement actions.  There are also several proposed definitional changes.  For example, the SRBC has proposed a new definition of “production fluids”, a term used throughout SRBC regulations applicable to unconventional natural gas projects.

Supplemental information about the rulemaking is available on the SRBC’s webpage.  The SRBC has also scheduled informational webinars in October (11th and 17th), and four public hearings on the rulemaking later this year.  Comments are due on the proposed rulemaking on or before January 30, 2017.

In connection with the proposed rulemaking the SRBC also issued a draft Consumptive Use Mitigation Policy, which describes the SRBC’s interpretation of proposed changes to consumptive use mitigation requirements.  Written comments on the policy are due by January 6, 2017.

PHMSA Increases Maximum Civil Penalties for Violations of Pipeline Safety Laws and Regulations

On June 30, 2016, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued an interim final rule, effective August 1, 2016, titled “Pipeline Safety:  Inflation Adjustment of Maximum Civil Penalties.”  This interim rule increases the maximum administrative civil penalties that may be issued for a violation of the pipeline safety laws and regulations from $200,000.00 per violation per day up to $205,638.00, and from $2 million for a related series of violations up to $2,056,380.00.  The interim rule also increases the maximum for the additional civil penalties applicable to violations of PHMSA’s LNG regulations from $50,000.00 to $75,123.00 and increases the maximums for violations of the pipeline safety whistle blower protection laws from $1,000.00 to $1,194.00.  PHMSA issued the rule pursuant to the “Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015” and used a multiplier of 1.02819 pursuant to guidance provided by the Office of Management and Budget in order to calculate the increase.

Governor Signs the Pennsylvania Grade Crude Development Act

On June 23, 2016, Governor Tom Wolf signed the Pennsylvania Grade Crude Development Act (S.B. 279), which abrogates the Environmental Quality Board’s revisions to the Chapter 78 regulations concerning conventional oil and natural gas wells.  The Act provides that any future EQB rulemakings concerning conventional oil and natural gas wells must be undertaken “separately and independently” of those applicable to unconventional wells and must include a regulatory analysis form submitted to the Independent Regulatory Review Commission that is restricted to the subject of conventional wells.  The Act also creates the Pennsylvania Grade Crude Development Advisory Council (“PGCDAC”), which will consist of 17 members, including representatives from the Pennsylvania Independent Oil and Gas Association, Pennsylvania Grade Crude Oil Coalition, and the Pennsylvania Department of Environmental Protection.  The PGCDAC is tasked with, among other items:  (1) examining and making recommendations regarding certain existing technical regulations; (2) reviewing and commenting on the formulation and drafting of all technical regulations promulgated under the Oil and Gas Act; and (3) exploring the development of a regulatory scheme that provides for environmental oversight and enforcement specifically applicable to the conventional oil and natural gas industry.  The Act takes effect immediately.

BLM Hydraulic Fracturing Rule Struck Down by Federal Court

On June 21, 2016, the U.S. District Court for the District of Wyoming (“District Court”) set aside the U.S. Department of the Interior, Bureau of Land Management’s (“BLM’s”) “Hydraulic Fracturing on Federal and Indian Lands” rule, finding that the rule exceeded BLM’s statutory authority.  Challengers to the rule previously succeeded in obtaining a preliminary injunction in September 2015, pending a final decision on the merits of the case.  In the merits decision issued this week, the District Court held that “Congress has not delegated to the Department of Interior the authority to regulate hydraulic fracturing.”

The BLM rule would have, among other requirements, mandated that operators planning to conduct hydraulic fracturing on federal and Indian lands:  (1) submit detailed information regarding the proposed operation, including wellbore geology information and the estimated length of fracture propagation; (2) design and implement a casing and cementing program that meets certain best management practices and performance standards; (3) manage recovered fluids in rigid enclosed, covered, or netted and screened aboveground storage tanks, with very limited exceptions; and (4) disclose the chemicals to be used in hydraulic fracturing to BLM and the public, with limited exceptions for trade secrets.

BLM is expected to appeal the District Court’s decision to the U.S. Court of Appeals for the Tenth Circuit.

EPA Releases Key Methane Reduction Measures and Final Source Aggregation Rule

Today the U.S. Environmental Protection Agency (EPA) announced the availability of several highly-anticipated regulatory measures affecting both existing and new emission sources in the oil and natural gas sector.  EPA has released the pre-publication version of its final New Source Performance Standards (NSPS) rulemaking to reduce emissions of methane and volatile organic compounds from new, modified, and reconstructed sources.  The agency received more than 900,000 public comments on the proposed NSPS rulemaking that was released in August 2015.

In March, EPA announced its intent to also regulate methane emissions from existing sources in the oil and natural gas sector.  Today EPA issued a draft Information Collection Request (ICR) directing oil and natural gas companies to submit extensive information to support the development of a federal rule targeting existing sources.  Public comments will be accepted for 60 days following publication of the draft ICR in the Federal Register.  As a related measure, EPA will soon release a voluntary “Request for Information” inviting industry, government, and public interest stakeholders “to provide information on innovative strategies to accurately and cost-effectively locate, measure and mitigate methane emissions.”

Additionally, today EPA released the pre-publication version of its final Source Determination Rule aimed at clarifying the term “adjacent” for air permitting purposes.   The final rule is intended to clarify when oil and gas equipment and activities constitute a single source that is subject to “major source” permitting requirements under the Clean Air Act.  In general, according to EPA’s fact sheet, the final rule provides that pollutant-emitting activities are adjacent “if they are located on the same site or on sites that share equipment and are within 1/4 mile of each other.”

Finally, EPA also released the pre-publication version of a final Federal Implementation Plan rule to clarify air permitting requirements for oil and natural gas sources located in Indian Country, specifically.

House ERE Committee Moves to Bar Chapter 78/78a Regulatory Package

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.

Statement from Environmental Regulatory Attorney Jean Mosites Who Testified at Yesterday’s Chapter 78 Hearing in Harrisburg

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.