PHMSA Releases Emergency Order Interim Final Rule

On October 14, the Pipeline & Hazardous Materials Safety Administration (PHMSA) published its Interim Final Rule (IFR) entitled “Pipeline Safety: Enhanced Emergency Order Procedures” in the Federal Register.  The agency had previously issued a pre-publication version of this rule on October 4.  See Babst Calland’s Pipeline Safety Alert.  PHMSA will use these new regulations to implement its emergency order authority conferred by Congress in the “Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2016” (PIPES Act).  PHMSA may issue an emergency order to address an unsafe condition or practice, or a combination of unsafe conditions or practices that pose an imminent hazard to public health and safety or the environment.   The IFR contains administrative procedures that PHMSA must follow in determining if an imminent hazard exists, the factors that must be considered before PHMSA issues an emergency order, and the content of those orders, including a description of the persons subject to the restrictions, prohibitions, or safety measures and the standards and procedures for obtaining relief. The IFR also creates a process for administrative review of an emergency order that is largely patterned on the statutory text in 49 U.S.C. § 60117(o), including the referenced procedural rules for HazMat emergency orders in 49 C.F.R. § 109.19.

PHMSA may use this authority starting today, October 14.  Interested parties may file comments on this final rule until December 13, 2016.

PHMSA Releases a Final Rule Expanding the Required Use of Excess Flow Valves

On October 14, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published its Final Rule entitled “Expanding the Use of Excess Flow Valves in Gas Distribution Systems to Applications Other Than Single-Family Residences” (EFV Final Rule) in the Federal Register. The agency had previously issued a pre-publication version of this rule on October 7. See Babst Calland’s Pipeline Safety Alert.  In response to statutory changes and a National Transportation Safety Board recommendation, PHMSA is expanding the existing requirement that operators install an excess flow valve (EFV) on certain natural gas distribution pipelines to include additional types of new or replaced service lines. The agency is also requiring curb valves or other manual shut-off valves on new or replaced service lines with meter capacities above 1,000 standard cubic feet per hour and requiring operators to notify customers of their right to request the installation of an EFV on certain types of service lines. The EFV Final Rule will become effective on April 14, 2017.


Administrative Watch: 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.

Ohio Supreme Court Rules on Interpretation of Ohio Dormant Mineral Act

Today, the Ohio Supreme Court issued three written opinions interpreting the Ohio Dormant Mineral Act (O.R.C. §5301.56) (the “ODMA”) and decided 10 related cases based upon its decisions set forth in the written opinions. Notably, in Corban v. Chesapeake Exploration L.L.C., (Slip Opinion No. 2016-Ohio-5796), the Supreme Court held that the 1989 version of the ODMA (the “1989 Act”) did not automatically abandon oil, gas and mineral rights in favor of the surface owner. Instead, the Supreme Court interpreted the statute to require the surface owner to seek a judicial decree that the mineral rights were abandoned. The Court focused on the statutory phrase “shall be deemed abandoned and vested in the owner of the surface” in determining that the legislature intended the 1989 Act to serve as a method of terminating abandoned mineral rights through a quiet title action rather than automatically transferring the mineral interests to the surface owner by operation of law. Additionally, the Court held that payment of delay rentals under a lease does not constitute a “title transaction” under Ohio law since the payment of delay rentals are not filed or recorded in the county recorder’s office.

In Walker v. Shondrick-Nau, Exr., (Slip Opinion No 2016-Ohio-5793), the Ohio Supreme Court built upon its decision in Corban and held that, if a surface owner failed to quiet title under the 1989 Act prior to the enactment of the 2006 version of the ODMA (the “2006 Act”), then the 1989 Act is unavailable and the surface owner can only pursue a claim to abandon mineral interests under the 2006 Act.

Finally, in Albanese, Exr. v. Batman et al., (Slip Opinion No. 2016-Ohio-5814), the Ohio Supreme Court followed the rationale of Corban regarding the necessity of filing an action to quiet title under the 1989 Act prior to the enactment of the 2006 Act. The Court further held that under the 2006 Act mineral rights cannot be deemed abandoned if the owner of the minerals had not been served notice of the abandonment pursuant to the 2006 Act. The notice requirement is mandatory under the 2006 Act.

Citing to the above cases, the Supreme Court decided 10 additional cases consistent with the three written opinions. The 10 cases are listed below:

Carney et al. v. Shockley et al., (Slip Opinion No. 2016-Ohio-5824)
Dahlgren et al. v. Brown Farm Prop. L.L.C., et al., (Slip Opinion No. 2016-Ohio-5818)
Eisenbarth et al. v. Reusser et al., (Slip Opinion No. 2016-Ohio-5819)
Farnsworth et al. v. Burkhart et al., (Slip Opinion No. 2016-Ohio-5816)
Swartz v. Householder et al., (Slip Opinion No. 2016-Ohio-5817)
Shannon et al. v. Householder et al., (Slip Opinion No. 2016-Ohio-5817)
Taylor et al. v. Crosby et al., (Slip Opinion No. 2016-Ohio-5820)
Thompson et al. v. Custer et al., (Slip Opinion No. 2016-Ohio-5823)
Tribett v. Shepherd et al., (Slip Opinion No. 2016-Ohio-5821)
Wendt et al. v. Dickerson et al., (Slip Opinion No. 2016-Ohio-5822)

Pipeline Safety Alert: FAA Issues Performance-Based Standards for Applicants Seeking a Waiver of the Small Unmanned Aircraft Rules

The Federal Aviation Administration (FAA) recently issued Performance-Based Standards highlighting information that an applicant must include in order to seek a waiver of Part 107, the rules that apply to the operation of a small unmanned aircraft system.  The FAA previously released the form and instructions on how to apply for a waiver from certain requirements (See previous Babst Calland pipeline safety alerts for more information on the Small UAS Final Rule and the waiver process.).  Babst Calland’s Pipeline and HazMat Safety team has prepared a Pipeline Safety Alert noting observations on the Performance-Based Standards as they pertain to the line-of-sight requirement (14 C.F.R. § 107.31).

Pipeline Safety Alert: FAA Releases Application and Instructions for Small Drone Waivers

On August 29, 2016, the Federal Aviation Administration (FAA) released the form and on how to apply for a waiver from certain requirements included in the “Operation and Certification of Small Unmanned Aircraft Systems” Final Rule.  This final rule went into effect on August 29, 2016, and permits the use, with certain limitations, of small unmanned aircraft systems (small drones) for non-hobby and non-recreational purposes. Babst Calland’s Pipeline and HazMat Safety team has prepared a Pipeline Safety Alert providing additional details on the application process.

PHMSA Issues New Advisory Bulletin Covering “Purged but Active” Pipelines

Today, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published an Advisory Bulletin entitled  “Clarification of Terms Relating to Pipeline Operational Status.”  Section 23 of the PIPES Act required PHMSA to issue an ADB within 90 days of enactment summarizing the procedures for changing the status of a pipeline facility from “active” to “abandoned”.  Historically, PHMSA has stated that it does not recognize “idle” status for pipelines (only active or abandoned).  PHMSA’s ADB introduces the concept of “purged but active” status, arguably a new category for operational status.  The ADB states that PHMSA is considering a future rulemaking requiring operators to notify the agency of “purged but active” pipelines, but that in the meantime “owners or operators planning to defer certain activities for purged pipelines should coordinate the deferral in advance with regulators.”  PHMSA’s guidance on integrity management currently allows deferral of certain inspection activities for out-of-service pipe. 


Pennsylvania Supreme Court Affirms Title Washing

On July 19, in Herder Spring Hunting Club v. Keller (Case No. 5 MAP 2015), the Pennsylvania Supreme Court ruled in a 5-0 decision to confirm the practice of “title washing” of unseated or unimproved land in Pennsylvania. Prior to January 1, 1948, “title washing” occurred through a tax sale of unseated land from which oil, gas and/or minerals (the “subsurface estate”) had been previously severed. If the subsurface estate had not been separately assessed, the tax sale of the unseated land would extinguish the prior severance and vest the tax sale purchaser with full ownership in the surface and subsurface estates. If the oil and gas had been separately assessed, then the tax sale of the surface would have no effect on the subsurface estate. After January 1, 1948, mineral estates were no longer separately assessed from the surface in Pennsylvania and title washing could no longer occur.

In Herder Spring, the Court held that a 1935 tax sale for unseated land which was subject to an unassessed 1899 subsurface severance conveyed both the surface and subsurface estates. Citing prior case law, the Court reasoned that, under the prior tax sale law, taxes on unseated land were against the land itself rather than any particular owner. The law placed a duty on the owner of a severed interest to notify the taxing authorities. Tax commissioners had no duty to search the deed records to discover severances relating to unimproved lands. Therefore, if the subsurface was never separately assessed, then the property would be assessed and taxed as a whole, and a tax sale thereunder would encompass the entire estate. Additionally, the Court pointed out that owners of the mineral estate had two years to challenge the tax sale or redeem the property, but failed to do so. The Court also rejected the Appellants’ due process and estoppel by deed argument.

The Court limited its holding in Herder Spring to a very narrow subset of cases and noted that its decision would not govern: (i) tax sales for assessments of surface or mineral rights only; (ii) tax sales where severances occurred after the tax assessment; or (iii) situations in which surface owners can meet the adverse possession standard.

Justice Todd filed a concurring opinion agreeing with the majority but for its position on Appellants’ due process claim that notice by publication of the tax sale was inadequate. According to Justice Todd, such claim was waived for purposes of this appeal because it was untimely raised.