Babst Calland congratulates Attorney Tim Miller as the recipient of this year’s Energy & Mineral Law Foundation John L. McClaugherty Award, which recognizes outstanding contributions to the Foundation and the field of energy and mineral law. Each year, EMLF recognizes leaders who have shaped EMLF, and who are recognized as industry and community leaders.
To view the EMLF award presentation, click here.
Smart Business
(By Sue Ostrowski featuring Marc Felezzola)
If you are building new commercial construction, or making improvements to your existing facility, it is critical before starting to take steps to protect yourself from potential mechanics’ liens. Failing to do so could result in making double payments, or potentially forfeiting your property to foreclosure, says Marc Felezzola, a shareholder in Babst Calland’s Construction, Environmental and Litigation groups.
For example, if a prime contractor — someone who contracts directly with the owner — fails to pay a subcontractor — anyone who supplies labor or materials to the prime contractor or its direct subcontractor — the subcontractor can file a mechanics’ lien against the property on which the project was built. And if the subcontractor is not paid the lien amount, it can foreclose on the lien, force a sheriff sale of the property and take its payment from the proceeds of that sale.
This is true even if the owner has paid the contractor for the subcontractor’s work, meaning the owner could be subject to the double jeopardy of having to pay for subcontractor labor and materials twice.
“When you improve real property with construction, contractors and subcontractors confer a benefit that increases the property’s value,” Felezzola says. “The law allows for a lien against the property to secure payment for the benefit someone has contributed to increasing that value. As an owner, protecting yourself requires forethought before construction starts, to set the project up for transparency about potential lienholders and limit the scope of that potential to those with whom the owner directly contracts.”
Smart Business spoke with Felezzola about three ways to protect yourself before beginning a construction project. …
GO-WV
(By Robert Stonestreet)
What does the West Virginia oil and gas industry have in common with freshwater mussels, how the federal government chooses to define the term “habitat,” and drilling activity on federal lands in the west? Quite a bit, actually. As explained below, recent developments on each of these topics intersect with the regulatory programs that govern oil and gas operations in West Virginia.
WVDNR Mussel Guidance
On June 23, 2022, the West Virginia Division of Natural Resources (WVDNR) published final guidance reflecting the agency’s recommendations for other state and federal government agencies to consider when issuing environmental permits authorizing activities that may impact freshwater mussels. Why does this matter to the West Virginia oil and gas industry? Because the guidance hopefully resolves a long running effort to address what some viewed as improper efforts by the WVDNR to directly regulate oil and gas operations.
In addition to various permits required by the West Virginia Department of Environmental Protection (WVDEP) and the United States Army Corps of Engineers (Corps) for activities that impact certain streams, operators are required to obtain a “right of entry” permit from the WVDNR before any disturbance may take place in or under certain size streams. This permit stems from the State of West Virginia’s claim to own the stream bed of certain waterways. Activities requiring a “right of entry” permit include installation of equipment to withdraw water for use in well completion or other activities.
Several years ago, WVDNR began attempting to impose conditions in “right of entry” permits that would regulate the design of certain stream crossings and impose restrictions on when and how much water could be withdrawn from a stream. …
Environmental Alert
(By Varun Shekhar and Gina Falaschi)
On the final day of its 2021-2022 term, the United States Supreme Court released its 6-3 ruling in West Virginia v. EPA that narrows the EPA’s authority to regulate greenhouse gas emissions from power plants.
A coalition of states and power and coal companies led by West Virginia’s Attorney General Patrick Morrisey petitioned the Supreme Court to review a 2021 decision from the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit).[1] That decision struck down the Trump administration’s 2019 Affordable Clean Energy (ACE) rule, which had replaced the Obama administration’s 2015 Clean Power Plan. Specifically, the petitioners asked the Supreme Court to revisit the D.C. Circuit’s holding that EPA’s ACE rule, and simultaneous repeal of the Clean Power Plan, was based on a “mistaken reading of the Clean Air Act”—namely, that the “generation shifting” scheme employed by the Clean Power Plan cannot be a “system of emission reduction” under Section 111 of the Clean Air Act.
Under the Clean Power Plan, EPA calculated rate-based (amount of carbon dioxide emitted per megawatt hour generated) and mass-based (total amount of carbon dioxide emitted per year) targets for each state through application of three “building blocks” that were deemed to constitute the “best system of emission reduction…adequately demonstrated” (BSER). These “building blocks” include: (1) improvements to heat rates (a measure of heat input to power output efficiency) achieved at individual power generation facilities; (2) shifting power generation to natural gas-fired or combined cycle (NGCC) facilities; and (3) increased power generation from renewable and zero-emitting sources. The latter two “building blocks” constituted the Clean Power Plan’s “generation shifting” scheme, such that the EPA determined that the BSER included restructuring the nation’s overall mix of electricity generation, to transition from 38 percent from coal-fired sources to 27 percent from coal-fired sources by 2030. …
Melissa M. Rounds recently joined Babst Calland as senior counsel in the Energy and Natural Resources Group. Mrs. Rounds has represented clients in the oil and gas industry for more than 15 years and has assisted producers in a variety of transactional matters, including real estate closings, preparation of documents for leasing purposes and examining and certifying title. Her work includes resolving complex title defects, coordinating urgent title projects, working in-house with major energy producers to provide comprehensive lease analysis and assistance with mineral purchases, and providing legal analysis for changes in statutory and case law.
Mrs. Rounds’ work on behalf of the oil and gas community is primarily focused in Morgantown, West Virginia. Her representation in the Morgantown area includes working with operators to reach drilling commitments, and interactions with county officials in major producing counties in northcentral West Virginia.
Prior to joining Babst Calland, Mrs. Rounds was the owner and attorney for Melissa Rounds Law. She is a 2006 graduate of West Virginia University College of Law.
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Mining
(By Joseph K. Reinhart, Sean M. McGovern, Gina N. Falaschi and Christina Puhnaty)
On March 4, 2022, Pennsylvania Governor Tom Wolf announced that the commonwealth is eligible for almost $26.5 million in Abandoned Mine Reclamation Fund program annual grants. See Press Release, Gov. Tom Wolf, “Gov. Wolf Announces $26.5 Million Federal Funding to Help Reclaim Abandoned Mine Lands” (Mar. 4, 2022). This is in addition to the almost $250 million authorized for annual distribution to Pennsylvania over 15 years from the federal Abandoned Mine Land (AML) Trust Fund. See Press Release, Gov. Tom Wolf, “Gov. Wolf Announces $244.9 Million Bipartisan Infrastructure Law Investment to Cleanup Pennsylvania’s Abandoned Mine Lands” (Feb. 7, 2022). The AML program was established pursuant to title IV of the Surface Mining Control and Reclamation Act of 1977, Pub. L. No. 95-87, 91 Stat. 445, and the $250 million annual distribution for Pennsylvania stems from President Joe Biden’s November 2021 bipartisan Infrastructure Investment and Jobs Act, Pub. L. No. 117-58, 135 Stat. 429 (2021).
In Governor Wolf’s March 4 announcement, he noted that AML funding supports jobs in coal communities and could lead to the reduction of methane emissions throughout the commonwealth. Pennsylvania expects to receive almost $4 billion over the next 15 years to address contamination and pollution caused by coal mining and the estimated 5,000 abandoned mines throughout the commonwealth. In 2019, the Pennsylvania Department of Environmental Protection (PADEP) reported that the commonwealth had over 287,000 acres of land in need of reclamation, with the estimated cost of reclamation expected to exceed $5 billion. …
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Mining
(By Joseph K. Reinhart, Sean M. McGovern, Gina N. Falaschi and Christina Puhnaty)
On February 19, 2022, the Pennsylvania Department of Environmental Protection (PADEP) announced the bond rate guidelines for the calculation of land reclamation bonds for coal and noncoal mining operations in Pennsylvania. The coal bond rates were effective April 1, 2022, and the noncoal bond rates were effective February 19, 2022.
PADEP will use the coal bond rate guidelines to calculate land reclamation bonds for coal mining operations including surface mines, coal refuse disposal sites, coal refuse reprocessing sites, coal processing facilities, and the surface facilities of underground mining operations. These guidelines do not apply to bonds ensuring replacement of water supplies under section 3.1(c) of the Surface Mining Conservation and Reclamation Act, 52 Pa. Stat. § 1396.3a(c), or to bonds ensuring compliance with the requirements of the Bituminous Mine Subsidence and Land Conservation Act, id. §§ 1406.1—.21.
PADEP will use the noncoal bond rate guidelines to calculate land reclamation bonds for noncoal mining operations including surface mines and facilities and the surface facilities of underground mining operations. Activities including special revegetation plans, wetland mitigation, and stream channel restoration will be estimated on a case-by-case basis. Pursuant to 25 Pa. Code § 86.149 (coal) and 25 Pa. Code § 77.202 (non-coal), the bond schedule must reflect the requirement that the bond equal the estimated cost to PADEP “if it had to complete the reclamation, restoration and abatement work” required under the applicable acts, regulations, and permits. Both the coal and noncoal bond rate schedules and announcements are available on PADEP’s website at https://www.dep.pa.gov/Business/Land/Mining/BureauofMiningPrograms/Bonding/Pages/BondRates.aspx. …
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Mining
(By Joseph K. Reinhart, Sean M. McGovern, Gina N. Falaschi and Christina Puhnaty)
After a lengthy rulemaking process, the Pennsylvania Department of Environmental Protection’s (PADEP) CO2 Budget Trading Program rule was published in the Pennsylvania Bulletin. See 52 Pa. Bull. 2471 (Apr. 23, 2022). As previously reported in Vol. XXXVI, No. 4 (2019) of this Newsletter, on October 3, 2019, Governor Tom Wolf signed Executive Order No. 2019-07, “Commonwealth Leadership in Addressing Climate Change Through Electric Sector Emissions Reductions,” directing PADEP to initiate a rulemaking to join the Regional Greenhouse Gas Initiative (RGGI). RGGI is the country’s first regional, market-based cap-and-trade program designed to reduce carbon dioxide (CO2) emissions from fossil fuel-fired electric power generators with a capacity of 25 megawatts or greater that send more than 10% of their annual gross generation to the electric grid. The CO2 Budget Trading Program links Pennsylvania’s program to RGGI.
Following approval of the rule by the Environmental Quality Board (EQB) in July 2021 and approval by the Pennsylvania Independent Regulatory Review Commission in September 2021, the final form rulemaking was submitted to the Pennsylvania House and Senate Environmental Resources and Energy standing committees. Both houses of the legislature passed Senate Concurrent Regulatory Review Resolution 1 (S.C.R.R.R.1), which disapproved of the rulemaking, and Governor Wolf vetoed the resolution on January 10, 2022. See Vol. 39, No. 1 (2022) of this Newsletter. The Governor’s veto sent the resolution back to the legislature, where each chamber had 30 calendar days or 10 legislative days, whichever was longer, to attempt a veto override. …
FNREL Water Law Newsletter
(By Lisa M. Bruderly & Mackenzie Moyer)
On March 19, 2022, the Pennsylvania Department of Environmental Protection (PADEP) published a draft technical guidance document entitled “Trenchless Technology Guidance,” PADEP Doc. No. 310-2100-003 (Mar. 19, 2022). See 52 Pa. Bull. 1693 (Mar. 19, 2022). The purpose of this draft guidance document is to outline the steps and options to consider, and implement as appropriate, when proposing to use a trenchless technology installation method on any portion of a project. PADEP intends for this draft guidance to help “avoid, minimize, or eliminate environmental impacts” associated with trenchless technology installation. Trenchless Technology Guidance at 2. The public comment period on the draft guidance closed on May 18, 2022.
The draft guidance developed out of a stakeholder workgroup required as part of a settlement with the Clean Air Council, the Delaware Riverkeeper Network, and the Mountain Watershed Association regarding the PADEP-issued permits for the Mariner East II pipeline project. Two workgroups were formed out of that settlement to create guidance related to two topics: (1) alternatives analysis and (2) trenchless technology. The draft “Alternatives Analysis Technical Guidance Document” was published for public comment in October 2021. PADEP is currently working to revise the guidance in response to comments. The draft Trenchless Technology Guidance is the second draft guidance to come from these workgroups.
Trenchless technology is defined in the draft guidance as “[a] type of subsurface construction work that requires few trenches or no trenches which includes any trenchless construction methodology, including, without limitation: horizontal directional drilling, guided auger bore, cradle bore, conventional auger bore, jack bore, hammer bore, guided bores, and proprietary trenchless technology . . …
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(By Joseph K. Reinhart, Sean M. McGovern, Matthew C. Wood and Gina N. Falaschi)
On March 15, 2022, the Environmental Quality Board approved final regulations establishing reasonably available control technology (RACT) requirements for volatile organic compounds (VOCs) and other pollutants from existing oil and natural gas production facilities, compressor stations, processing plants, and transmission stations. The regulation will be submitted to the U.S. Environmental Protection Agency (EPA) for approval as part of the commonwealth’s state implementation plan under the Clean Air Act. As reported in more detail in Vol. 39, No. 1 (2022) and Vol. XXXVII, No. 3 (2020) of this Newsletter, under the new regulation, oil and natural gas operators with facilities that exceed VOC emission thresholds would be required to do more frequent leak detection and repair monitoring on certain equipment at their facilities.
The rulemaking had advanced to the Pennsylvania House and Senate Environmental Resources and Energy Committees and the Independent Regulatory Review Commission (IRRC) for consideration. After the House Environmental Resources and Energy Committee issued a disapproval letter for the rulemaking on April 26, 2022, however, the Pennsylvania Department of Environmental Protection (PADEP) withdrew the rule from consideration by the IRRC to reevaluate the rulemaking. The Committee’s disapproval letter alleges that PADEP failed to comply with Act 52 of 2016, which requires that any rulemaking concerning conventional oil and gas wells be undertaken separately and independently from those concerning unconventional oil and gas wells or other subjects. PADEP has stated that it needs to finalize the rule by June 16, 2022, to avoid sanctions by the EPA under the Clean Air Act. …
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(By Joseph K. Reinhart, Sean M. McGovern, Matthew C. Wood and Gina N. Falaschi)
On February 23, 2022, the Murrysville Watch Committee (MWC) petitioned the Supreme Court of Pennsylvania to allow an appeal of its unsuccessful challenge of the Municipality of Murrysville’s Oil and Gas Ordinance (Ordinance), which authorized oil and gas wells as a conditional use in Murrysville’s Oil and Gas Recovery Overlay District (Overlay District), including parts of the rural residential zoning district. As adopted, the Ordinance’s geographic and other limitations (e.g., required setbacks from well pads) restricted unconventional oil and gas development to only 5% of Murrysville’s land mass. MWC originally filed a validity challenge to the Ordinance in October 2018 before the Murrysville Zoning Hearing Board (Board), claiming, among other things, violations of due process, equal protection, and the Environmental Rights Amendment (ERA) to the Pennsylvania Constitution, Pa. Const. art. I, § 27. Broadly, MWC contended that unconventional oil and gas drilling is an industrial activity incompatible with residential zoning districts. The Board held multiple hearings, denied MWC’s challenge, and issued 167 findings of fact related to its decision. Without presenting any additional evidence, MWC appealed the Board’s decision to the Westmoreland County Court of Common Pleas, which affirmed the Board’s decision, noting that the record showed that MWC provided no evidence to differentiate the Ordinance from other, similar ordinances upheld on appeal, the precedential application of which foreclosed MWC’s challenges. MWC subsequently appealed that decision to the Commonwealth Court of Pennsylvania.
On January 24, 2022, the commonwealth court affirmed the trial court’s and Board’s decisions. …
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(By Joseph K. Reinhart, Sean M. McGovern, Matthew C. Wood and Gina N. Falaschi)
The Pennsylvania Department of Environmental Protection (PADEP) is proceeding with two updates amending 25 Pa. Code ch. 78 (conventional oil and gas well regulations). See DEP Regulatory Update (Apr. 23, 2022). The final chapter 78 rulemaking approved by the Environmental Quality Board (EQB) and Independent Regulatory Review Commission (IRRC) in 2016 was used as the basis for the proposed updates. See Meeting Minutes, Oil & Gas Technical Advisory Board (TAB) (Sept. 17, 2020).
The first draft update, “Environmental Protection Performance Standards for Conventional Oil and Gas Operators” (#7-539), proposes updates to well reporting requirements and protection and replacement of public or private water supply regulations to reflect Act 13 of 2012, bonding requirements to reflect Act 57 of 1997, and updates to assessment and inactive status designation regulations to reflect current PADEP practice. Other surface and non-surface activity updates address permit issuance, underground injection well permitting, impoundments and borrow pits, erosion and sedimentation and site restoration requirements, and mechanical integrity testing and reporting. See TAB Meeting (Jan. 14, 2022); Proposed Chapter 78 Annex A Rulemaking (Aug. 19, 2021). This update was most recently presented to the Pennsylvania Grade Crude Development Advisory Council (CDAC) on December 16, 2021, and TAB on May 5, 2021.
The second update, “Waste Management and Related Issues at Conventional Oil and Gas Well Sites” (#7-540), addresses proper handling, storage, processing, and disposal of drill cuttings and waste water generated by conventional oil and gas operations. …
FNREL Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(By Joseph K. Reinhart, Sean M. McGovern, Matthew C. Wood and Gina N. Falaschi)
On January 31, 2022, Pennsylvania Governor Tom Wolf announced Pennsylvania was allocated a total of $104 million in Phase I funding to support the cleanup of orphaned and abandoned oil and natural gas wells throughout the state. See Press Release, Gov. Tom Wolf, “Gov. Wolf Announces $104 Million from President Biden’s Bipartisan Infrastructure Law to Support Orphaned, Abandoned Well Cleanup in PA” (Jan. 31, 2022). The $104 million allocation is based on Pennsylvania’s notice of intent (NOI) to the U.S. Department of the Interior (DOI) indicating the commonwealth’s interest in applying for federal grant money for plugging orphaned wells and remediating orphaned well sites. See Press Release, DOI, “Biden Administration Announces $1.15 Billion for States to Create Jobs Cleaning Up Orphaned Oil and Gas Wells” (Jan. 31, 2022). The grants are part of $1.15 billion the federal government has allocated to states under the DOI with specific goals of reducing methane emissions and other pollution, and creating jobs. See Fact Sheet, White House, “Biden Administration Tackles Super-Polluting Methane Emissions” (Jan. 31, 2022); Infrastructure Investment and Jobs Act, Pub. L. No. 117-58, 135 Stat. 429 (2021). In the future, formula grants will allow the commonwealth to access more than $330 million in additional funding for the same purposes. See News Release, Senator Bob Casey, “Pennsylvania to Receive $104 Million to Clean Up Orphaned Oil and Gas Wells” (Jan. 31, 2022).
The Pennsylvania Oil and Gas Act defines an “abandoned well” as a well that (1) has not been used to produce, extract, or inject any gas, petroleum, or other liquid within the preceding 12 months; …
Pittsburgh Business Times
(Featured Babst Calland panelists Kevin Garber and Jim Curry)
Sparked by the newly released Allegheny Conference for Community Development’s long-term vision for achieving 70% reduction in carbon dioxide emission by 2050 and anticipating an upcoming Department of Energy funding opportunity announcement (FOA), local industry leaders gathered recently to discuss the benefits of a hydrogen economy.
The panelists included University of Pittsburgh Swanson School of Engineering Professor and Researcher, Gotz Veser; Babst Calland Shareholder and Environmental Attorney, Kevin Garber; Babst Calland Shareholder and Energy Attorney, Jim Curry; and Vice President, Corporate Strategy for Duquesne Light Company, Brian Guzek. The conversation was moderated by Chief Strategy and Research Officer for the Allegheny Conference on Community Development, Vera Krekanova.
Collaboration is key
These leaders all agreed that in order to build momentum toward a hydrogen economy in this region now, a collaboration of community resources, academia, energy and other industries, and public entities is key to producing a successful application proposal. More specifically, according to Krekanova, “if hydrogen and carbon capture utilization and storage (CCUS) could be well understood and thoughtfully negotiated, they can produce positive benefits for the environment, for the economy, and for the people.”
“One of the strengths … in the region here is, we have the industry base, we have the academic base, the research base,” Veser said.
Creating and strengthening opportunities for public and private partnerships and using those pooled resources and expertise will create additional opportunities in this region, he added.
“We can make hydrogen from natural gas, we can do carbon capture, we know how to do this. …
Legal Intelligencer
(By Robert Max Junker)
There is one in every town. The abandoned lot, corner or block. Maybe it once housed a building that was torn down long ago. Perhaps it served as the neighborhood sandlot for pick-up baseball games in the summer before the new all-season turf field was installed in the athletic complex. Might be one owner or several parcels with various owners. Likely it has delinquent taxes piling up. Possibly there was an approval in the past with much fanfare, but then the market collapsed, the groundbreaking was canceled and permits expired. People drive past all the time and wonder, “What are they ever going to build there?”
Although land is valuable because they are not making any more of it, a variety of factors can prevent otherwise viable property from being developed. In situations where there are local government hurdles to development, a would-be developer can have several options. A rezoning to change the zoning map and the type of permitted uses on the property is one option. But rezoning comes with risks both to the developer including a spot zoning challenge by neighbors and to the local government due to the possibility that the developer does a project that is now permitted in the new zoning district even though it was not what was proposed during the legislative rezoning process.
Another option for a more targeted development where the local government will have assurances that it will get what was promised is a use variance. Although not as common as the ubiquitous dimensional variance that seek to alter building setbacks or heights beyond what is allowed in the zoning ordinance, a use variance in the right circumstances can be a viable path for both the local government and the developer. …