Articles, Alerts & Perspectives

Pipeline Safety Alert

(by Keith Coyle and Ashleigh Krick)

On January 11, 2021, the Pipeline and Hazardous Materials Safety Administration (PHMSA or the Agency) published a Final Rule amending the gas pipeline safety regulations at 49 C.F.R. Parts 191 and 192.  Adopted as part of the Trump administration’s efforts to reduce or eliminate unnecessary regulatory burdens, PHMSA estimates that the Final Rule will result in approximately $130 million in annualized cost savings for pipeline operators.  Although the effective date of the Final Rule is March 12, 2021, the Agency provided a deferred compliance date of October 1, 2021, for the new amendments.

Additional information about the Final Rule is provided below.

Distribution Integrity Management Program Exemptions and Farm Taps 

• Consistent with the policy announced in PHMSA’s March 2019 Exercise of Enforcement Discretion, the Final Rule provides operators with the option to maintain pressure regulating devices on farm taps under either the distribution integrity management program (DIMP) requirements or 49 C.F.R. § 192.740. The Final Rule exempts farm taps originating from unregulated production and gathering pipelines from the DIMP requirements, the overpressure protection inspection requirements in § 192.740, and the annual reporting requirements in Part 191.

• The Final Rule does not amend PHMSA’s regulations to provide additional clarity in determining what qualifies as a farm tap or where production, gathering, or transmission piping ends and distribution service line piping begins in farm tap configurations. The Agency stated that these definitional issues will be addressed in a guidance document that remains under development or in a future rulemaking proceeding.  In the preamble to the Final Rule, PHMSA emphasized that any portion of a farm tap originating from an unregulated pipeline that meets the definition of service line must still comply with all applicable Part 191 and 192 requirements.

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Pipeline Safety Alert

(by Keith Coyle and Brianne Kurdock)

On December 27, 2020, President Donald J. Trump signed the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2020 (2020 PIPES Act) into law.  Adopted as part of a broader federal spending and COVID-19 relief package, the signing of the 2020 PIPES Act represents the culmination of a multi-year effort to reauthorize the nation’s federal pipeline safety program.  The prior reauthorization of the federal pipeline safety program, enacted in the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2016 (2016 PIPES Act), expired on September 30, 2019.

The 2020 PIPES Act authorizes general funding for the Pipeline and Hazardous Materials Safety Administration’s (PHMSA) gas and hazardous liquid pipeline safety programs of $156.4 million for fiscal year (FY) 2021, $158.5 million for FY 2022, and $162.7 million for FY 2023, with additional amounts authorized in each of these FYs from the Oil Spill Liability Trust Fund for hazardous liquid pipeline safety and the user fee program for underground gas storage facilities.  The 2020 PIPES Act also prescribes specific funding amounts that PHMSA must use for certain activities, including for recruitment and retention of federal pipeline safety personnel, operational expenses, and federal grant programs.

In addition to authorizing funding levels through FY 2023, the 2020 PIPES Act contains several amendments to the Federal Pipeline Safety Laws.  Some of the key changes are highlighted below.

Title I of the 2020 PIPES Act:

• Establishes a new 3-year program for advancing pipeline safety technologies, testing, and operational practices.
• Adds an operator’s self-disclosure to the list of factors that PHMSA must consider in assessing administrative civil penalties.
• Recognizes additional due process protections for PHMSA enforcement proceedings, including that:
• • An operator be allowed to request that matters of fact and law be resolved in a consent agreement and consent order.

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Babst Calland recently named Ben Clapp, Alyssa E. Golfieri, and Gary E. Steinbauer as shareholders in the Firm.

Ben Clapp is a member of the Environmental, Energy and Natural Resources, and Emerging Technologies groups. Mr. Clapp advises clients on the environmental components of complex transactions, including identifying and analyzing significant environmental liability and compliance issues arising in connection with mergers and acquisitions, asset sales, securities offerings, project financings, and corporate restructurings, and works to resolve, manage, allocate or mitigate these environmental risks in the client’s best interest.  Mr. Clapp assists buyers, sellers, financing sources, and underwriters in transactions taking place across a wide range of industries, including the upstream, midstream, and downstream oil and gas sectors, renewable energy, real estate, utilities, chemicals, manufacturing, mining, pharmaceuticals, pulp and paper, and food and beverage.

Mr. Clapp is a 2008 graduate, cum laude, of the American University Washington College of Law.

Alyssa E. Golfieri is a member of the Public Sector and Energy and Natural Resources groups. Ms. Golfieri’s practice focuses primarily on municipal and land use law, with an emphasis on zoning, subdivision, land development, and municipal ordinance enforcement. Ms. Golfieri represents the Firm’s municipal clients on a wide array of local government issues, including the preparation of zoning and land development ordinances pursuant to the Pennsylvania Municipalities Planning Code, the processing of land development applications, responses to record requests submitted under the Pennsylvania Right-to-Know Law, navigation of public bidding matters, abatement of property maintenance issues, defense of Notices of Violations before zoning hearing boards and magisterial district judges, and compliance with both the Pennsylvania Sunshine Act and the Pennsylvania Public Official and Employee Ethics Act. Ms. Golfieri has also served as assistant solicitor for several years, and is currently the solicitor for the Borough of Ford City. …

Pipeline Safety Alert

(by Keith Coyle and Ashleigh Krick)

On December 21, 2020, the U.S. Congress passed the Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2020 (the Act) as part of a larger year-end spending and COVID-19 relief package.  The Act reauthorizes the federal pipeline safety program through September 30, 2023, and establishes annual funding levels for the 2021, 2022, and 2023 fiscal years.  The Act also makes other important changes to the federal pipeline safety laws administered by the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA or the Agency).

The Act requires PHMSA to issue new rules for gas pipeline leak detection and repair programs and idle pipelines, update the operations and maintenance standards for certain large-scale liquefied natural gas facilities, and finalize outstanding rulemakings for gas gathering lines, class location changes, and the definition of unusually sensitive areas.  The Act establishes additional due process protections for PHMSA enforcement actions, authorizes a new declaratory order proceeding, and obligates PHMSA to consider an operator’s self-report in assessing a civil penalty.  Other noteworthy provisions in the Act include authorizing the implementation of a new pipeline safety testing program, the performance of various research and development studies, and the creation of a National Center of Excellence for Liquefied Natural Gas Safety.  Lastly, the Act contains various new requirements for distribution lines in response to the 2018 incident in Merrimack Valley, Massachusetts.

The Act does not include several provisions that Congress proposed in earlier versions of the legislation.  For example, the Act does not eliminate PHMSA’s obligation to consider the costs and benefits of changes to the pipeline safety regulations or prohibit the use of direct assessments as part of a pipeline operator’s integrity management program.  …

Environmental Alert

(by Robert Stonestreet)

On December 16, 2020, the United States Fish and Wildlife Service (Service) adopted a final regulation to define the term “habitat” for use when designating “critical habitat” areas under the Endangered Species Act (ESA). 85 Fed Reg 81411.  The ESA already defines the term “critical habitat,” which in general means areas designated as essential to preserve or promote recovery of threatened or endangered species regardless of whether those species are actually present in the area.  The term “habitat,” however, is not itself defined in the ESA or pre-existing regulations.  As detailed in the Environmental Alert published on August 10, 2020 (available here), the Service proposed two potential “habitat” definitions on August 5, 2020 for public comment. 85 Fed Reg 47333.  In the final rulemaking, the Service chose to adopt a “habitat” definition that is markedly different than the two definitions proposed for public comment back in August.  The adopted definition reads as follows:

For the purposes of designating critical habitat only, habitat is the abiotic and biotic
setting that currently or periodically contains the resources and conditions necessary to support one or more life processes of a species.

According to the Service, “[a]biotic means derived from non-living sources such as soil, water, temperature, or physical processes” and the term “biotic” means “derived from living sources such as a plant community type or prey species.”  The preamble portion of the Federal Register entry notes that the phrase “resources and conditions” is intended to clarify that habitat “is inclusive of all qualities of an area that can make that area important to the species.”

Compare that definition to the two definitions proposed for public comment on August 5, 2020, which appear below:

Primary Proposed Definition:  The physical places that individuals of a species depend upon to carry out one or more life processes. …

Environmental Alert

(by Lisa Bruderly and Tim Bytner)

On December 10, 2020, U.S. EPA issued for public comment its draft guidance (Draft Guidance) regarding the U.S. Supreme Court’s County of Maui “functional equivalent” analysis within the Clean Water Act (CWA) National Pollutant Discharge Elimination System (NPDES) program (85 Fed. Reg. 79489). The comment period closes on January 11, 2021.

In County of Maui v. Hawaii Wildlife Fund, 140 S. Ct. 1462 (2020), the Supreme Court held that a NPDES permit is required in instances when a point source discharge of a pollutant through groundwater to a navigable water is the “functional equivalent” of a direct pollutant discharge from a point source into a navigable water. Babst Calland discussed the Supreme Court’s April 23, 2020 decision, and its far-reaching implications, in its May 11, 2020, PIOGA Press article titled “Potential Clean Water Act Liability Extends to Discharges to Groundwater That Reach Surface Water.”

The Supreme Court offered a non-exclusive list of seven factors to consider on a case-by-case basis:

• Transit time;
• Distance traveled;
• Nature of the material through which the pollutant travels;
• Extent to which the pollutant is diluted or chemically changed as it travels;
• Amount of pollutant entering the navigable waters relative to the amount of the pollutant that leaves the point source;
• Manner by or area in which the pollutant enters the navigable waters; and
• Degree to which the pollution (at that point) has maintained its specific identity.

Emphasis on Threshold Requirements for NPDES Permits

The Draft Guidance stresses that the County of Maui decision did not change the structure of the NPDES permit program, and, at most, only adds another step in determining whether a NPDES permit is required under a limited number of scenarios. …

Environmental Alert

(by Lisa Bruderly)

On December 5, 2020, the Pennsylvania Environmental Quality Board (EQB) published in the Pennsylvania Bulletin proposed revisions to more than 30 provisions of the dam safety and waterway management regulations under 25 Pa. Code Chapter 105. The public comment period will remain open until February 3, 2021.

The revisions will significantly amend the Pennsylvania Department of Environmental Protection (PADEP) regulations regarding the permitting of obstructions and encroachments of waters of the Commonwealth under Chapter 105. The proposed revisions are expected to create expansive new requirements, almost certainly increasing the time and effort required to complete individual/joint Chapter 105 permit applications.  These new requirements, if promulgated, will also likely increase PADEP application review times, particularly at the outset when the agency and the regulated community are becoming familiar with the new requirements.  Additionally, revised compensatory mitigation criteria could expand the extent of mitigation required for a project.  On the other hand, the addition of six new permit waivers means that certain projects may no longer be required to obtain a Chapter 105 permit.

According to the public comment notice, other revisions include adding or changing 18 definitions, adding antidegradation and cumulative impact subsections to the applicant information requirements, providing a new option for dam owners to satisfy proof of financial responsibility obligations, amending the wetland replacement criteria regarding compensatory mitigation for unavoidable impacts to aquatic resources, and adding new structures and activities that may be exempt from submerged lands licensing charges.

The proposed revisions to Chapter 105 have been anticipated for more than one year. In anticipation, PADEP solicited input from multiple Commonwealth agencies and commissions. It also consulted  its Agricultural Advisory Board, Water Resources Advisory Committee and Citizens Advisory Council. …

Environmental Alert

(by Matt Wood and Colleen Grace Donofrio)

On November 25, 2020, Governor Tom Wolf signed ACT 127 of 2020 (House Bill 1808), which, when effective on January 24, 2021, will amend Pennsylvania’s Solid Waste Management Act (SWMA) to support advanced plastics recycling operations in the Commonwealth by exempting qualifying operations from the waste management requirements.  ACT 127 accomplishes this by amending the SWMA to exempt the conversion of plastics at facilities with advanced recycling processes from the waste “processing” and “treatment” requirements under the SWMA and its implementing regulations.  These facilities turn hard-to-recycle plastics (e.g., plastic bags, wrappers, PVC 3, LDPE 4, PP 5, PS 6, Other 7) into useable raw materials and products.

Specifically, ACT 127 amends the SWMA to define:

• “Post-use polymers” – post-use plastics from residential, municipal, or commercial sources that would not otherwise be recycled and, when converted using advanced recycling, are not considered waste.
• “Advanced recycling” –  a manufacturing process whereby post-use polymers are converted into basic hydrocarbon raw materials, feedstocks, chemicals, liquid fuels, waxes, lubricants, and other related products.  Conversion processes include, but are not limited to, pyrolysis, gasification, depolymerization, catalytic cracking, reforming, and hydrogenation.
• “Advanced recycling facility” – receives, separates, stores, and converts post-use polymers into raw materials and products.

Facilities coming under the exclusion are not regulated as waste “processing” or “treatment” facilities but still need to comply with all other applicable environmental requirements (e.g., air, water).  Facilities that only perform a portion of these services (e.g., segregation facilities) do not qualify for the exemption from the waste requirements.

ACT 127 is likely to attract new advanced recycling businesses to Pennsylvania and thereby foster job creation, drive investment and innovation, and create regulatory certainty, with the added benefit of recycling more plastics.  …

Energy Alert

(by Tim Miller and Katrina Bowers)

The United States Court of Appeals for the Fourth Circuit (Fourth Circuit) has vacated a judgment of the United States District Court for the Northern District of West Virginia that held an oil and gas lease failed to sufficiently indicate the method for calculating post-production costs to be deducted from royalty payments pursuant to West Virginia law. The lease provided that the lessor would bear some part of the post-production costs and contained a detailed list of post-production expenses that were deductible from royalties, but the District Court held the accounting methodology was not sufficiently disclosed. In Young v. Equinor USA Onshore Properties, Inc., No. 19-1334 (4th Cir. Dec. 1, 2020), the Fourth Circuit held that West Virginia law does not require that an oil and gas lease set out an “Einsteinian proof” for calculating post-production costs and, in fact, could be satisfied by a simple formula. In holding that the lease sufficiently indicated the method for calculation in compliance with West Virginia law, the Fourth Circuit explained that the method was to add all the identified, reasonable, and actually incurred post-production costs, deduct them from the lessee’s gross proceeds, and then adjust for the lessor’s share of the total pooled acreage and royalty rate. This opinion also questions the continued viability of the West Virginia Supreme Court’s holding in the Estate of Tawney v. Columbia Nat. Res., LLC, 219 W. Va. 266, 633 S.E.2d 22 (2006) in light of critical comments in a subsequent royalty case decided by the West Virginia Supreme Court in 2017, Leggett v. EQT Prod. Co., 238 W. Va. 264, 800 S.E.2d 850 (2017). …