On January 27, 2017, Federal Energy Regulatory Commissioner Norman C. Bay announced his resignation, effective February 3, 2017. Bay’s resignation will create a third vacancy on the five-commissioner panel, leaving FERC one commissioner short of a quorum.

Routine FERC business delegated to the agency’s employees will continue after February 3, but the vacancy will prevent FERC from voting to advance or permit major projects, including several pending interstate natural gas pipeline projects. Major pipeline projects that could see delays resulting from Bay’s resignation include Energy Transfer Partners, LP’s proposed 710-mile “Rover” pipeline, Transcontinental Gas Pipe Line Company, LLC’s proposed 199.4-mile “Atlantic Sunrise” pipeline expansion, and the 120-mile “PennEast” pipeline.

President Donald J. Trump is expected to nominate up to three Commissioners to the bipartisan regulatory agency, but the nominees must be confirmed by the United States Senate—a process that could take several months as the Senate confirms the new President’s Cabinet, sub-Cabinet and judicial nominees.
Tuesday, January 31, 2017

Railroad Commission Streamlines Oil and Gas Well Reporting

By:  Michael K. Reer

In January 2017, the Texas Railroad Commission announced that oil and natural gas producers may now file well log data electronically.  The Commission estimates that the new electronic filing system will save operators $362,000 annually and make well log data more easily accessible to the public.  The Commission also anticipates that the new electronic reporting system will save the state $105,000 and nearly 4,000 hours of staff time “by eliminating the need for staff to receive the paper copies of these well logs and convert them to electronic files.”

Friday, January 27, 2017

Commonwealth Court Limits Clean Streams Law Penalties

On January 11, 2017, the Pennsylvania Commonwealth Court issued a significant decision granting declaratory relief with respect to the proper interpretation of Section 301 of the Clean Streams Law. Specifically, the Commonwealth Court held that Section 301 of the Clean Stream Law does not authorize the Pennsylvania Department of Environmental Protection to impose ongoing penalties for the continuing presence of an industrial waste in a waterway of the Commonwealth following the initial entry of the pollutants.

The case arose from a dispute between a natural gas operator and PADEP concerning the appropriate penalty amount for an impoundment leak that occurred in 2012. Following the discovery of a leak in the impoundment, the natural gas operator notified PADEP, emptied the impoundment, patched the liner, installed sumps and trenches at five downgradient locations to collect and intercept affected groundwater, and removed all affected soil.

PADEP subsequently proposed a Consent Assessment of Civil Penalty for the leak in the amount of $1,270,871, based, in part, on “new, continuing, and ongoing impacts to the multiple waters of the Commonwealth.”  PADEP interpreted the Clean Streams Law as authorizing a penalty under a continuing violation theory for every day that industrial waste remains in a water of the Commonwealth. The operator disagreed with PADEP’s interpretation, urging the Commonwealth Court to rule that a violation occurs only on the days that the pollution is discharged from an area outside of the waters of the Commonwealth.

In agreeing with the operator’s interpretation, the Commonwealth Court noted that to “rule otherwise would be tantamount to punishing a polluter indefinitely, or at least for as long as the initially-released industrial waste remains in the waters of the Commonwealth, for the same violation—i.e., the initial release.”
Thursday, January 26, 2017

No Temporary Stay for BLM Flaring Rule

On January 16, 2017, the U.S. District Court for the District of Wyoming denied a motion for a preliminary injunction requested by three states and three trade associations that would have stayed the Department of the Interior, Bureau of Land Management’s “Waste Prevention, Production Subject to Royalties, and Resource Conservation” rule. Although the states and trade associations contend that the Waste Prevention Rule represents unlawful agency action because it exceeds BLM’s authority and is otherwise arbitrary and capricious, the District Court determined that the petitioners did not establish a “clear and unequivocal” right to relief.

BLM states

that the Waste Prevention Rule is intended to reduce waste of natural gas from venting, flaring, and leaks during oil and natural gas production activities on onshore federal and Indian leases. Specifically, the rule amends federal regulations with respect to when produced gas lost through venting, flaring, or leaks is subject to royalties. Any gas flared in excess of the final rule’s capture requirements is deemed an avoidable loss and subject to royalties. Moreover, the final rulemaking also requires operators to inspect equipment twice per year, timely repair any leaks found, and update certain equipment that BLM believes contributes to lost gas such as storage vessels, well maintenance, drilling, and completion.

Wednesday, January 25, 2017

Commonwealth Court to Again Hear Oral Argument on Impact Fees

In December 2016, the Pennsylvania Commonwealth Court agreed to hear additional oral argument in Snyder Brothers, Inc. v. Pa. Public Utility Comm’n. The case concerns the proper interpretation of Pennsylvania’s Act 13 of 2012, which exempts from the Commonwealth’s impact fee those unconventional gas wells “incapable of producing more than 90,000 cubic feet of gas per day during any calendar month . . .” Snyder Brothers argues that Act 13 exempts those marginal wells that are incapable of producing more than 90,000 cubic feet of gas per day during one or more months of the year. The Pennsylvania Public Utility Commission interprets the provision as requiring operators to pay the impact fee on each unconventional well that is capable to producing 90,000 cubic feet of gas per day in one or more months of the year. The PUC has ordered Snyder Brothers to pay $500,000 in impact fees on wells that have produced 90,000 cubic feet of gas per day in some, but not all, calendar months.
Tuesday, January 24, 2017

Trump Administration Halts New Regulations


On January 20, 2017, Reince Priebus, Assistant to the President and Chief of Staff, issued a memorandum to the heads of all executive departments and agencies concerning ongoing regulatory projects.  Specifically, Priebus instructed agency heads to: (1) immediately withdraw all regulations pending before the Office of the Federal Register; and (2) where possible, postpone by 60 days the effective date of certain regulations published in the Federal Register that have not yet taken effect.  Priebus excluded from his directive those regulations subject to statutory or judicial deadlines and those emergency regulations relating to health, safety, financial, or national security matters.  Priebus also noted in his memorandum that agencies may be required to propose an additional rulemaking to delay the effective date for regulations have already been published in the Federal Register. 

Monday, January 23, 2017

Energy Companies Pursue Incidental Take Permit for Five Bat Species

In December 2016, the U.S. Fish and Wildlife Service held five public meetings to discuss a proposal by nine oil and natural gas companies for an incidental take permit related to five bat species in Appalachia. If approved, the incidental take permit would exempt future oil and natural gas development operations conducted by the nine companies from the Endangered Species Act’s prohibition on incidental takes of threatened or endangered species. The meetings were intended to assist the Service in gathering public input as the environmental review process begins to determine the potential impacts of issuing the incidental take permit.

If approved, the Service would issue a 50-year incidental take permit as part of a habitat conservation plan proposed by the oil and natural gas companies. The proposed habitat conservation plan includes measures to ensure that impacts from incidental takes of covered species and impacts to those species’ habitats will be minimized and mitigated to the maximum extent practicable. If approved, the incidental take permit would cover a wide spectrum of oil and natural gas activities, including activities associated with access roads, staging areas, seismic operations, well pads, drilling rigs, waterlines, disposal wells, impoundments, gathering and midstream pipelines, well pad restoration, and well plugging.

Since 2006, certain bat species have suffered devastating effects from white-nose syndrome, a fungus that inhibits normal hibernating activities. Hibernacula with white-nose syndrome have mortality rates between 90-100%, and the disease was the predominant reason why the Service listed the Northern Long-Eared Bat as threatened on January 14, 2016.

On January 17, 2017, the U.S. Geologic Survey published “Effects of Wind Energy Generation and White-Nose Syndrome on the Viability of the Indiana Bat,” a study that examined the combined impact of wind turbine collisions and white-nose syndrome on Indiana Bat populations in the midwestern United States.
Wednesday, January 18, 2017

SCOTUS to Review Clean Water Act Case

On January 13, 2017, the Supreme Court of the United States granted certiorari in Nat’l Ass’n of Manufacturers v. Dep’t. of Def., et al., a case from the U.S. Court of Appeals for the Sixth Circuit. The case arises from a challenge to the U.S. Environmental Protection Agency and U.S. Army Corps of Engineers “Waters of the U.S.” rulemaking, published June 29, 2015, which defined the scope of waters protected under the Clean Water Act. 

Several states and industry associations challenged the rulemaking upon publication, alleging that the definition exceeded the scope of the Clean Water Act. EPA and the Army Corps of Engineers allege that, under the Clean Water Act, judicial review of the final rulemaking must occur at the U.S. Court of Appeals. Several states and trade associations disagree, arguing that the Clean Water Act requires judicial review from a U.S. District Court.

Multiple circuit court challenges have since been consolidated at the Sixth Circuit. In October 2015, the Sixth Circuit stayed the rule nationally pending further review. EPA and the Army Corps of Engineers have since resumed nationwide use of the agencies’ prior regulations regarding the scope of “waters of the United States.” In February 2016, a Sixth Circuit panel determined in a 2-1 ruling that jurisdiction was exclusive to the U.S. Court of Appeals. The Supreme Court is likely to determine whether the Clean Water Act vests judicial review in the federal circuit or district courts.
Monday, January 16, 2017

EPA Publishes Risk Management Rule

On January 13, 2017, the U.S. Environmental Protection Agency published “Accidental Release Prevention Requirements: Risk Management Programs under the Clean Air Act,” a final rule amending EPA’s Risk Management Program regulations at 40 CFR part 68, in the Federal Register.  Specifically, the final rule makes several revisions and additions to the Risk Management Program accident prevention program requirements, emergency response requirements, and requirements applicable to the public availability of certain chemical hazard information. The final rule becomes effective March 14, 2017.

Law 360 has published “EPA Finalizes Revisions to Risk Management Program Regulations,” a Harris, Finley & Bogle article examining the final rulemaking.  A copy of the article is available here.  

Friday, January 13, 2017

DRBC Releases Proposed Draft Regulations to States

By:  Michael K. Reer

On January 4, 2016, the Pennsylvania Department of Environmental Protection reported that the Commonwealth attended a Delaware River Basin Commission meeting in November 2016 at which draft regulations covering oil and natural gas development activities in the Delaware River Basin were discussed. In 2010, the DRBC placed a moratorium on shale gas development projects until the Commission could finalize new regulations governing the practice.

The DRBC has broad authority under the Delaware River Basin Compact to “establish standards of planning, design and operation of all projects and facilities in the basin which affect its water resources . . .” The Delaware River Basin includes portions of New York and New Jersey and the eastern third of Pennsylvania. Approximately 36% of the basin contains Marcellus shale. The DRBC has expressed concern that shale gas drilling projects could: (1) reduce the flow in local streams and aquifers; (2) add pollutants into the ground water or surface water; and (3) result in inadequately treated natural gas wastewater.

On May 17, 2016, the Wayne Land and Mineral Group, LLC filed a complaint against the DRBC in federal district court, alleging that the DRBC does not have authority to prohibit shale gas drilling operations within the basin. The case is ongoing and captioned as Wayne Land & Mineral GRP., LLC v. Del. River Basin Comm’n, No. 3:16-CV-00897 (M.D. Pa. filed May 17, 2016).
Thursday, January 12, 2017

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