Articles, Alerts & Perspectives

FNREL Mineral and Energy Law Newsletter

Pennsylvania – Oil & Gas

(By Joseph K. Reinhart, Sean M. McGovern, Matthew C. Wood and Gina N. Falaschi)

On October 5, 2021, Pennsylvania Attorney General Josh Shapiro announced that the Environmental Crimes Section had charged Energy Transfer, L.P. (Energy Transfer), parent company of Sunoco Pipeline, L.P. (Sunoco), with 46 counts of environmental crimes. The charges stemmed from an investigation by the Forty-Fifth Statewide Investigating Grand Jury (Grand Jury), which concluded that Sunoco had violated Pennsylvania law in connection with its construction of the Mariner East 2 pipeline, a project that crosses 17 counties in the commonwealth. Two charges were later added from a criminal referral from the Pennsylvania Department of Environmental Protection (PADEP), bringing the total charges to 48. Among other things, Attorney General Shapiro and the Grand Jury alleged that Sunoco had repeatedly allowed—and failed to report to PADEP, as required by law—spills, leaks, and losses of drilling fluid during horizontal directional drilling (HDD) activities. The Grand Jury also heard testimony from landowners complaining of impacts to their properties, including to drinking water sources, and found that Sunoco’s HDD activities had impacted multiple recreational lakes in different counties. See generally Police Criminal Complaint, Commonwealth v. Energy Transfer, L.P., No. CR- 302-2021 (Pa. Commw. Ct. Oct. 5, 2021); Grand Jury’s Presentment (Oct. 5, 2021).

On December 6, 2021, two months after Attorney General Shapiro announced the criminal charges, PADEP and the Department of Conservation and Natural Resources (DCNR) announced that it had reached a settlement with Sunoco that requires the company to address impacts from releases of drilling fluid and mud that occurred in August 2020 at Marsh Creek Lake State Park in Chester County, Pennsylvania. …

FNREL Mineral and Energy Law Newsletter

Pennsylvania – Oil & Gas

(By Joseph K. Reinhart, Sean M. McGovern, Matthew C. Wood and Gina N. Falaschi)

On November 29, 2021, the Pennsylvania Supreme Court overturned a decision by the Pennsylvania Commonwealth Court, ruling that UGI Storage Company (UGI) could be held liable for taking oil and gas drilling rights in a proposed protective buffer zone around the Meeker natural gas storage field in Tioga County, Pennsylvania. In 2009, UGI, a quasi-public entity with the power of eminent domain, sought from the Federal Energy Regulatory Commission (FERC) a certificate of public convenience and necessity to acquire and operate certain facilities related to the interstate transportation and sale of natural gas owned by UGI Central Penn Gas, Inc. (CPG), including a 1,216- acre underground storage field in Tioga County and an additional 2,980-acre protective buffer zone around the storage field.

FERC granted UGI’s application for the storage field but denied its request for the full buffer zone (citing issues with notification and property rights requirements in accordance with applicable federal regulations). The decision resulted in only parts of the buffer zone being certificated. In 2015, certain property owners sought the appointment of a board of viewers to assess damages for de facto condemnation of their properties under section 502(c) of the Eminent Domain Code, 26 Pa. Cons. Stat. § 502. The property owners claimed that although only certain segments of the buffer zone had been certificated, UGI was treating the properties within the uncertificated segments in the same manner as those within the certificated are- as as protection for the integrity and security of the storage field. …

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 15, 2022, the Pennsylvania Department of Environmental Protection (PADEP) published draft General Permit WMGR163 (Draft Permit) in the Pennsylvania Bulletin for public comment. See 52 Pa. Bull. 419 (Jan. 15, 2022). PADEP created the Draft Permit as a result of the July 9, 2021, passage of Act 70, which amended the Administrative Code of 1929. As pro- posed, the Draft Permit would authorize the short-term processing, transfer, and beneficial use of oil and gas liquid waste to hydraulically fracture or otherwise develop an oil or gas well under the authority of the Solid Waste Management Act, 35 Pa. Stat. §§ 6018.101–.1003, and the Municipal Waste Planning, Recycling and Waste Reduction Act, 53 Pa. Stat. §§ 4000.101–.1904. The Draft Permit covers facilities that process and beneficially reuse oil and gas liquid waste for no longer than 180 consecutive days.

If finalized as proposed, any company interested in using the Draft Permit will have to register its authorized activities with PADEP pursuant to 25 Pa. Code § 287.643. PADEP will be prohibited from requiring an applicant to obtain a determination of applicability from the agency (25 Pa. Code § 287.641(c)) prior to the issuance of the final permit as authorized under 25 Pa. Code § 287.641(d) for the land application of material. Key provisions in the Draft Permit include:

1. Facilities are authorized to process and transfer oil and gas liquid waste for no more than 180 consecutive days during the permit’s one-year coverage
2. The permittee may not store more than 1,000,000 gallons of oil and gas liquid waste on-site at any one
3. Oil and gas liquid waste is not subject to concentration limits or chemical testing in order to be stored in an impoundment (unlike General Permit WMGR123).

…

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 preparing to finalize a rulemaking that adopts reasonably available control technology (RACT) requirements and RACT emission limitations for existing oil and natural gas sources of volatile organic compound (VOC) emissions. This proposal is based on the U.S. Environmental Protection Agency’s (EPA) October 2016 Control Techniques Guidelines (CTG) for the Oil and Gas Industry, 81 Fed. Reg. 74,798 (Oct. 27, 2016), which provide RACT requirements for VOC emissions from existing oil and gas sources. The rule would apply to owners and operators of any of the following oil and natural gas sources of VOC emissions that were in existence on or before the effective date of this rulemaking: storage vessels (in all segments except natural gas distribution), natural gas-driven continuous bleed pneumatic controllers, natural gas-driven diaphragm pumps, centrifugal and reciprocating compressors, and fugitive emission components.

Pennsylvania’s Environmental Quality Board (EQB) first published a proposed rulemaking on May 23, 2020. 50 Pa. Bull. 2633 (May 23, 2020); see Vol. XXXVII, No. 3 (2020) of this Newsletter. The proposed rulemaking was published for public comment, three virtual hearings were held, and the comment period ended on July 27, 2020. PADEP received roughly 4,500 comments from approximately 36,000 commenters. PADEP is preparing, but has not yet released, a comment and response document for the rulemaking.

The draft final-form rule was presented to the Air Quality Technical Advisory Committee in December 2021 and was presented to PADEP’s other advisory committees in January 2022. …

FNREL Water Law Newsletter

(By Lisa M. Bruderly, Mackenzie Moyer and Evan M. Baylor)

On October 16, 2021, the Pennsylvania Department of Environmental Protection (PADEP) published a revised draft technical guidance document entitled “Guidance on Notification Requirements for Spills, Discharges, and Other Incidents of a Substance Causing or Threatening Pollution to Waters of the Commonwealth Under Pennsylvania’s Clean Streams Law,” PADEP Doc. No. 383-4200-003 (Oct. 16, 2021) (Spill Guidance). See 51 Pa. Bull. 6559 (Oct. 16, 2021). This guidance replaces the first draft published on August 8, 2020, in response to comments on that draft. The intended purpose of the Spill Guidance is to address what spills, discharges, or other incidents need to be immediately reported to PADEP.

Background of Immediate Notification Procedures

Pennsylvania’s Clean Streams Law, 35 Pa. Stat. §§ 691.1–.1001, requires PADEP to protect the waters of the commonwealth from activities that pollute or have the potential to pollute these waters. Chapters 91 and 92a of Pennsylvania’s regulations, specifically, 25 Pa. Code §§ 91.33 and 92a.41, require immediate notification to PADEP when a spill, discharge, or other incident results in an unpermitted discharge of a sub- stance that causes, or threatens to cause, pollution of the waters of the commonwealth, endangerment to downstream users, or damage to property.

Specifically, section 91.33(a) requires the responsible person to immediately notify PADEP

[i]f, because of an accident or other activity or incident, a . . . substance which would endanger downstream users of the waters of this Commonwealth, would otherwise result in pollution or create a danger of pollution of the waters, or would damage property, is discharged into these waters . …

FNREL Water Law Newsletter

(By Lisa M. Bruderly, Mackenzie Moyer and Evan M. Baylor)

On January 25, 2022, the Pennsylvania Department of Environmental Protection (PADEP) published a long-awaited technical guidance document, entitled “Pennsylvania  Function- Based Aquatic Resource Compensation Protocol,” PADEP Doc. No. 310-2137-001 (effective Mar. 1, 2022) (Mitigation Guidance), for evaluating and valuing aquatic resource compensatory mitigation.

As background, a draft version of the Mitigation Guidance was published in March 2014. PADEP revised that draft to in- corporate feedback from other federal and Pennsylvania agencies, PADEP’s Water Resources Advisory Committee, and public comments.

The Pennsylvania Dam Safety and Encroachments Act, 32 Pa. Stat. §§ 693.1–.27, and its implementing regulations, 25 Pa. Code ch. 105, require a person to obtain a permit from PADEP to construct, operate, maintain, modify, enlarge, or abandon a dam, water obstruction, or encroachment that alters the course, current, or cross section of a body of water. Mitigation Guidance at 1. A mitigation plan is typically required with the permit application, including, as applicable, a plan to compensate  for the impact to regulated waters as a result of the project. Id. at 2.

The stated purposes of the Mitigation Guidance are to:

1. provide an acceptable methodology to evaluate functional compensation offsets associated with proposed aquatic resource impacts and determine compensatory mitigation requirements;
2. assist in identifying measures that minimize proposed project impacts on aquatic resource functions to reduce subsequent compensation requirements; and
3. provide a means for evaluating compensation proposals performed on-site, at a mitigation bank, or through an in-lieu fee

Id.

The Mitigation Guidance is intended to ensure consistency in determining compensation requirements and valuing compensation projects.  …

Law360

(By Robert Stonestreet, Christopher (Kip) Power and Ben Clapp)

State and federal lawmakers are creating economic opportunities for the coal industry and landowners to support production of critical materials in high demand for technology products.

The term “critical materials” refers to a group of 50 minerals, elements, substances and materials, including substances known as rare earth elements, that the U.S. Department of Energy has identified as key components of products that are essential to the economic or national security of the U.S., and that are susceptible to supply chain disruption.

According to the U.S. Geological Survey, approximately 97% of rare earth elements are produced in China. The federal legislation known as the Infrastructure Investment and Jobs Act, or IIJA, seeks to reduce the risk of supply chain disruption by diversifying and domesticating production of these materials.

To that end, the act allocates over $1.3 billion to support a number of new and existing DOE initiatives directed toward research, development and production of critical materials generally — and in some cases, rare earth elements specifically.

Rare earth elements are essential for many high-tech products, such as smartphones and other sophisticated electronic devices. They are key components of important defense applications, such as guidance systems, sonar and radar. These elements also serve as important raw materials used in the manufacture of renewable energy equipment, such as solar panels and wind turbines.

Rather than being rare, these elements exist in many places throughout the U.S. and the rest of the world, although generally in very low concentrations that make them difficult to economically recover and process. …

The Legal Intelligencer

(by Lisa Bruderly)

The controversy continues over the hotly contested definition of “waters of the United States” (WOTUS), a phrase that determines the scope of federal jurisdiction over streams, wetlands and other waterbodies under the Clean Water Act (CWA). The U.S. Environmental Protection Agency (USEPA) and the U.S. Army Corps of Engineers (Corps) published a proposed revision to the WOTUS definition on December 7, 2021 (Rule 1), with the public comment period closing on February 7, 2022. Nearly 90,000 comments were received.

This proposed definition is similar to the pre-2015 definition of WOTUS, which is currently in effect, but it also includes updates to reflect relevant Supreme Court decisions (e.g., Rapanos v. United States) that occurred in the early 2000s. Much of the controversy surrounding the WOTUS definition relates to the two tests identified in the Rapanos decision. Justice Antonin Scalia issued the plurality opinion in Rapanos, holding that WOTUS would include only “relatively permanent, standing or continuously flowing bodies of water” connected to traditional navigable waters, and to “wetlands with a continuous surface connection to such relatively permanent waters.” Justice Anthony Kennedy, however, advanced a broader interpretation of WOTUS in his concurring opinion, which relied on the concept of a “significant nexus.” In his opinion, Justice Kennedy stated that wetlands should be considered as WOTUS “if the wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity of other covered water.”

If promulgated, the December 2021 proposed WOTUS definition would incorporate Justice Kennedy’s significant nexus test into the regulations, by designating waters such as wetlands, lakes and streams as WOTUS if they “alone or in combination with similarly situated waters in the region, significantly affect the chemical, physical, or biological integrity” of traditionally navigable waters. …

Babst Calland announced the addition of two professionals to its Washington, D.C. office – former PHMSA Official Christopher Hoidal as Senior Director of Safety and former API Policy Advisor, Christopher Kuhman as an Associate.

Chris Hoidal recently joined Babst Calland as Senior Director of Safety in the Energy and Natural Resources, Environmental and Pipeline and HazMat Safety groups. Mr. Hoidal advises clients throughout the United States on the regulation of transportation pipelines, LNG facilities and other regulated energy facilities. He has over 30 years of experience in various leadership roles with the U.S. Department of Transportation, Pipeline and Hazardous Materials Safety Administration (PHMSA).

Mr. Hoidal has extensive knowledge of the pipeline safety regulations, industry codes and standards, and agency policy. He guides industry stakeholders seeking to improve regulatory compliance and safety performance, conducting transactional due diligence, and building remedial programs to address accidents and near-miss events. Mr. Hoidal also advises clients on special permits, inspection preparation, enforcement, rulemaking and policy development.

Mr. Hoidal worked for the United States Department of Transportation from 1990 to 2021, and the Pipeline and Hazardous Materials Safety Administration’s Office of Pipeline Safety since 1993.  Prior to joining the Firm, Mr. Hoidal served as a Senior Technical Advisor in PHMSA’s Office of Pipeline Safety between 2018 and 2021.  In this role, he supported PHMSA in the development of recent rules and guidance, including the 2019 Gas “Mega Rule.” Before this role, Chris served for 20 years as PHMSA’s Western Region Director for the Office of Pipeline Safety.

Mr. Hoidal has his Bachelor of Science in Geotechnical Engineering from the University of Nevada (1980), and Master of Business Administration from the University of Colorado (1983).

Chris Kuhman recently joined Babst Calland as an associate in the Energy and Natural Resources and Pipeline and HazMat Safety groups. …

PIOGA Press

(By Lisa Bruderly and Evan Baylor)

The U.S. Environmental Protection Authors: Agency (EPA) and the U.S. Army Corps of Engineers have recently issued updates regarding Nationwide Permits (NWPs) under Section 404 of the Clean Water Act (CWA) and Section 10 of the Rivers and Harbors Act of 1899, as well as a new proposed definition of waters of the United States (WOTUS). More developments on both subjects are anticipated in 2022 from these agencies, as well as from the U.S. Supreme Court.

On December 27, 2021, the Corps published a final rule reissuing 40 existing NWPs and issuing one new NWP (Water Reclamation and Reuse Facilities) (86 Fed. Reg. 73522). Broadly, NWPs authorize certain work in streams, wetlands and other WOTUS when those activities will result in no more than minimal individual and cumulative adverse environmental effects. This final rule rounds out NWP rulemaking activities that began in September 2020, when the Corps, under the Trump administration, proposed to reissue the 52 existing NWPs and issue five new NWPs.

As background, in January 2021, the Corps modified and reissued 12 of the existing NWPs and issued four of the five proposed NWPs. The January 2021 final rule also revised and reissued the NWP general conditions and definitions. The focus of that rule was largely to revise and reissue NWPs that relate to the energy industry, including the division of existing NWP 12 (Utility Line Activities) into three NWPs, depending on the type of utility line: oil and natural gas pipeline activities (NWP 12), electric utilities and telecommunications (NWP 57), and utility lines for water and other substances (NWP 58). The December 2021 rule does not address these 16 NWPs that were finalized in January 2021. …

The Legal Intelligencer

(by Anna Jewart and Blaine Lucas)

In recent years, public support for renewable energy generation has increased across the United States. According to a recent article published by the National Agricultural Law Center, 89% of Americans support expanding solar power generation and 83% support wind power expansion. See, Peggy Kirk Hall, Whitney Morgan and Jesse Richardson, “Land Use Conflicts Between Wind and Solar Renewable Energy and Agricultural Uses,” Nat’l Ag. Law Center (Jan. 10, 2022). National approval, however, often fails to translate into local support.  Those seeking to site wind or solar projects are frequently met with opposition from neighbors, many of whom may be generally supportive of renewable energy, but when it comes time to decide where generation will occur, they repeat the well-known adage, “Not in my back yard.” In fact, local objection to renewable projects frequently mirrors that which has been levied for decades against traditional energy development. Concerns over aesthetics, noise, storm water, or traffic can be expected whether an applicant proposes an oil and gas well or a wind farm. In either instance, broad concerns over impacts on the community often devolve into highly technical debates over compliance with not only the local ordinances, but the validity or reliability of different scientific methods or standards. As a result, zoning hearings on any energy project may become full-blown battles of the experts. In Atlantic Wind v. Zoning Hearing Board of Penn Forest Township, No. 585 C.D. 2020, No. 591 C.D. 2020, No. 20 C.D. 2021, No. 242 C.D. 2021, (Pa. Cmwlth. Jan. 12, 2022), the Pennsylvania Commonwealth Court considered whether a zoning hearing board properly handled competing expert testimony over what metrics to use in calculating maximum noise levels. …

Pennsylvania Business Central

Tim Schoonover is a shareholder in the Energy and Natural Resources, Litigation and Public Sector groups of law firm Babst Calland. Tim has practiced law in the Centre County region since 1997. He currently serves as Solicitor for Haines Township, and is the former Solicitor to Benner Township and counsel to AccuWeather, Inc. Tim has significant experience with Marcellus Shale related issues, including contract matters and land use litigation issues. His practice also focuses on the areas of real estate, corporate/business law, municipal law, litigation, and estate planning and administration.

Tim received his J.D. from the Ohio Northern University Pettit College of Law in 1995. He is an active volunteer in Centre County having held board positions for the Centre County Bar Association, State College Jaycees, Infant Evaluation Program, Habitat for Humanity of Greater Centre County, Centre County Housing and Land Trust, and YMCA of Centre County.

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