Pennsylvania DEP Expanding Air Monitoring Network Near Natural Gas Development

On April 27, 2016, the Pennsylvania Department of Environmental Protection (DEP) announced that it has initiated an “unprecedented expansion” of the Commonwealth’s particulate matter air monitoring network to include additional monitors in areas near natural gas development.  The expansion project will include 10 additional DEP monitoring stations and has a target completion date of fall 2017.

DEP plans to implement the expansion project in three stages, with one monitoring station added to each of 10 counties.  DEP completed Phase 1 earlier this year with the addition of air monitoring stations in Towanda Township, Bradford County, and Holbrook Township, Greene County.  The Department expects to complete Phase 2 by the end of 2016 by adding monitoring stations in Fayette, Indiana, Lycoming, Susquehanna, and Wyoming Counties.  Phase 3 has a target completion date of fall 2017 and will include air monitoring stations in Clarion, Jefferson, and McKean Counties.

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.

Pennsylvania IRRC Approves Chapter 78/78a Regulations

On April 21, 2016, the Independent Regulatory Review Commission (IRRC) approved the Environmental Quality Board’s Chapter 78 (conventional wells) and Chapter 78a (unconventional wells) regulations by a vote of 3-2.  Vice Chairman Mizner, in making a motion to disapprove the regulation, noted that the Department of Environmental Protection did not:

  1. provide enough information on the cost of the regulations;
  2. meet its burden to show that the revisions as applied to conventional operations are necessary;
  3. conduct the required flexibility analysis for small businesses;
  4. adequately consult with the Conventional Oil and Gas Advisory Committee or the Oil and Gas Technical Advisory Board; or
  5. develop a consensus on the regulations with industry.

The motion to disapprove the regulation failed by a vote of 3-2, followed by the motion to approve the regulation.  Commissioners voting to approve the regulation noted that consensus on the regulation was likely impossible to achieve but that the Department had acted earnestly to develop necessary regulations for an evolving industry and that current regulations are not adequate.

Both the House and Senate Environmental Resources and Energy Committees previously voted to disapprove the regulations.  IRRC’s approval begins a 14-day window in which the legislative committees may report to the House or Senate a concurrent resolution barring the revisions.  If a resolution adopted by the General Assembly is not vetoed, or if the Governor’s veto is overridden, the Environmental Quality Board is barred from promulgating the final regulations.  The Attorney General will conduct a review of the regulation as to form and legality before the regulation may be published in the Pennsylvania Bulletin as final.  Publication of the rule as final could occur in June or July of 2016, becoming effective immediately on the day of publication.

Ohio EPA Seeks Comment on Draft General Permits for Compressor Stations

On April 7, 2016, the Ohio Environmental Protection Agency (OEPA) announced a public comment period for a package of draft general permits for oil and natural gas midstream compressor stations.  Applicants seeking coverage under a general permit would be required to demonstrate that the facility meets the general permit eligibility criteria.  A general permit establishes pre-defined permit terms, including requirements relating to equipment installation, operating standards, monitoring, recordkeeping, and reporting.  OEPA stated that the new general permits would authorize emissions from a wide variety of sources, including: natural gas-fired compressor engines; diesel engines; dehydrators; flares; compressors; equipment (pipes, pumps, etc.); liquid storage tanks; truck loading operations; and pigging operations.  Comments are due May 18, 2016.

Federal Magistrate Judge Allows Suit Challenging Pennsylvania Township’s Injection Well Ban To Proceed

On March 29, Federal Magistrate Judge Susan Paradise Baxter dismissed a motion made by Highland Township in Elk County, PA (the “Township”) and allowed a suit brought by Seneca Resources Corporation (“Seneca”) to proceed. The action filed by Seneca challenges an ordinance banning injection wells within the Township. Prior to the filing of the suit, Seneca had received a federal permit from the United States Environmental Protection Agency to convert some of its natural gas wells in the Township into underground injection wells. Seneca then applied for a permit from the PA Department of Environmental Protection (“DEP”), and the DEP indicated that it was suspending any review of the permit application in light of the conflict with the Township’s ordinance. Seneca filed its complaint on February 18, 2015, stating that the ordinance violates the state and federal Constitutions and is preempted by several state and federal laws. The Township filed a motion to dismiss the complaint, alleging that Seneca did not have standing to challenge the ordinance. The Judge denied the Township’s motion to dismiss and held that Seneca does have standing to proceed with its suit. The Judge found that Seneca had met all of the requirements for demonstrating constitutional standing. Seneca sustained and continues to sustain injury as a result of the ordinance, because the DEP suspended its review of Seneca’s permit application due to the conflict with the ordinance. In addition, Seneca demonstrated that a favorable decision is substantially likely to redress the injury, because it would remove the ordinance as an impediment to the DEP’s review of Seneca’s permit application.

Pipeline Safety Alert: Five Questions About PHMSA’s Proposed Rules for Gas Transmission and Gathering Lines

On March 17, 2016, the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a pre-publication version of its long-awaited notice of proposed rulemaking (NPRM) for gas transmission and gathering lines.  The 549-page NPRM has been issued in response to issues raised in National Transportation Safety Board recommendations, congressional mandates, and Government Accountability Office reports.  PHMSA has provided a short, 60-day comment period, which will be a challenge to those developing comments on a proposed rule of this complexity and length.  For more information, read our Pipeline Safety Alert.

TransCanada to Buy Columbia Pipeline Group

According to a report by the Charleston Gazette-Mail, TransCanada will be purchasing Columbia Pipeline Group for $13 billion. TransCanada had previously proposed the Keystone XL pipeline, and owns more than 42,000 miles of pipeline in North America.  TransCanada will acquire about 15,000 miles of pipeline, as well as processing and underground storage facilities, through the purchase of Columbia.

EPA Announces Plan to Regulate Methane from Existing Sources

Today the U.S. Environmental Protection Agency (EPA) announced the next step in its strategy for reducing methane emissions from the oil and natural gas sector: regulating emissions from existing sources.  According to EPA’s fact sheet, the agency will issue an Information Collection Request (ICR) “to require companies operating existing oil and gas sources to provide information to assist in the development of comprehensive regulations to reduce methane emissions.”  EPA plans to reach out to stakeholders about the ICR process in the next few weeks and begin the formal ICR process next month.  A draft ICR will be released for public comment.

PADEP Releases Final Pipeline Infrastructure Task Force Report

On February 18, 2016, Pennsylvania Department of Environmental Protection (PADEP) Secretary John Quigley held a press conference to announce the release of the final Governor’s Pipeline Infrastructure Task Force (PITF) Report.  Secretary Quigley stated that the final report contains only minor modifications to the draft report, but adds an executive summary and appendices.  The final report includes all draft recommendations, including 11 that do not appear to have garnered majority support from the task force members in weighted voting.  Appendix C to the final report assigns various government entities and/or industry with responsibility for following up on each individual recommendation.

Keith Coyle, a shareholder in Babst Calland’s new Washington, D.C. office and member of its Pipeline and HazMat Safety Practice Group, served on the Task Force.

Forced Pooling Bill Introduced in West Virginia

As reported by the Wheeling Intelligencer, for the fifth year out of the last six, pooling legislation has been introduced in the West Virginia House of Delegates (HB 4426). A similar measure failed to pass in 2015 after a 49-49 vote on the final day of the legislative session. HB 4426 allows drillers who own or have leased 80 percent of the acreage in a proposed unit to unitize the remaining acreage if mineral owners cannot be located or refuse to sign leases. However, unlike prior versions, the current bill would forbid companies from deducting post-production expenses from royalty checks payable to such mineral owners. Opponents of “lease integration,” as it has been called in West Virginia, maintain that drillers should not be allowed to incorporate unleased oil and gas interests into planned well units because such incorporation co-opts landowners’ rights to execute oil and gas leases affecting their separate property.  HB 4426 is currently under consideration by the West Virginia House Energy Committee.