Ohio EPA Reportedly Fines, FERC Limits Construction of Rover Pipeline

By: Michael K. Reer

On May 9, 2017, the Pittsburgh Post-Gazette reported that the Ohio Environmental Protection Agency fined the builder of the Rover natural gas pipeline $430,000 for multiple water and air pollution violations. According to the Ohio EPA, construction of the pipeline has resulted in 18 incidents involving mud spills from drilling, stormwater pollution, and open burning. The next day, on May 10, 2017, the Federal Energy Regulatory Commission issued a letter to the pipeline company, limiting the company’s authority to conduct horizontal directional drilling along the project until the company complies with certain measures outlined by Commission staff.

The Rover pipeline is expected to cost some $4.2 billion to construct and, once finished, will carry natural gas from West Virginia, western Pennsylvania, and eastern Ohio into Michigan.
Friday, May 12, 2017

Senate Fails to Pass Resolution on Waste Reduction Rule

By: Michael K. Reer

On May 10, 2017, a Senate resolution that would nullify the Bureau of Land Management’s “Methane and Waste Reduction Rule” failed a procedural vote in the U.S. Senate 49-51. Under the Congressional Review Act, Congress can nullify recent federal regulations by passing a joint resolution signed by the President or over the President’s veto. The Waste Reduction Rule is designed to reduce venting, flaring and leaks during production activities on federal and Indian lands by amending federal regulations that specify when produced gas lost through venting, flaring or leaks is subject to royalties. Operators must pay BLM royalties on natural gas flared in excess of the capture requirements stated in the final rulemaking. The final rulemaking also requires operators to inspect certain equipment twice a year, make timely repairs to any leaks found, and update certain equipment that BLM believes contributes to lost gas.
Thursday, May 11, 2017

CSB to Investigate Colorado Explosion

By: Michael K. Reer

On May 5, 2017, the U.S. Chemical Safety Board announced that it is sending an investigative team to examine the site of an oil and gas related explosion in Firestone, Colorado that resulted in two fatalities and one serious injury. According to the press release, “preliminary information indicates that the well was no longer in service, but an uncapped flow line came within several feet of the home and was the likely source of the explosion.” CSB investigators will examine the circumstances leading up to the explosion.
Tuesday, May 09, 2017

Trump Formally Nominates Two FERC Commissioners

By: Blake C. Billings

On May 8, 2017, the White House announced that President Donald J. Trump will nominate Neil Chatterjee and Robert Powelson as commissioners of the Federal Energy Regulatory Commission. Chatterjee is an energy policy advisor and liaison to the Senate Committee on Energy and Natural Resources for Senate Majority Leader Mitch McConnell, and Powelson is a commissioner of the Pennsylvania Public Utility Commission and President of the National Association of Regulatory Utility Commissioners.

If confirmed by the United States Senate, the nominees would fill two of the current vacancies on the five-commissioner panel and restore quorum to the regulatory body, which has been unable to permit major interstate natural gas pipeline projects since February 3, 2017.
Tuesday, May 09, 2017

PADEP Penalty Updates

By: Michael K. Reer

In April 2017, the Pennsylvania Department of Environmental Protection reached three penalty settlements with operators, which totaled nearly $1 million in penalty collections.

On April 10, 2017, PADEP announced a $400,000 settlement with an operator for air quality violations at a facility in Delaware County. According to PADEP, emissions reports submitted by the operator showed that the facility exceeded several permit limits for pollutants such as hydrogen sulfide, carbon monoxide, sulfur dioxide, and nitrogen oxide. Moreover, the reports failed to satisfy the Commonwealth’s data availability requirements. In addition to the civil penalty, the operator has since installed a flare gas recovery system to recover flare gas and reduce emissions.

On April 11, 2017, PADEP announced a $185,000 settlement with an operator related to violations of the Clean Streams Law, Dam Safety and Encroachment Act, and Oil and Gas Act. According to PADEP, inspections of the operator’s pipeline revealed several erosion and sediment control violations, including: (1) failure to comply with the conditions of the Erosion Control Permit and maintain best management practices during earth moving activities; (2) failure to prevent accelerated erosion and sedimentation; (3) discharge of sediment into the waters of the Commonwealth; and (4) constructing an encroachment or water obstruction without a permit.

On April 24, 2017, PADEP announced a $375,000 settlement with an operator related to violations of the Clean Streams Law, Dam Safety and Encroachment Act, Oil and Gas Act; and Solid Waste Management Act in Forest, McKean, and Elk Counties. The violations included: (1) failure to comply with the conditions of the Erosion Control Permit and maintain best management practices during earth moving activities; (2) discharge of an estimated 70 to 100 barrels of crude oil which flowed across land then into a tributary of Windfall Run, a High Quality Cold Water Fishery in McKean County; (3) discharge of an estimated 500 barrels of flowback fluid generated from a valve failure to the ground and surrounding wetlands in Forest County; and (4) failure to follow the approved water management plan for 105 days in McKean County when the operator withdrew water during a drought watch.

Monday, May 08, 2017

Another FERC Commissioner to Leave

By:  Michael K. Reer

On April 28, 2017, the Associated Press reported that Federal Energy Regulatory Commissioner Colette Honorable will not seek reappointment after her term expires in June. Honorable’s departure leaves FERC with just one commissioner, far short of the three commissioners needed for a quorum. Without a quorum, natural gas pipeline projects totaling more than $10 billion in investment could face significant delays in obtaining the FERC permits necessary for construction. On March 9, 2017, the Wall Street Journal reported that President Donald Trump was prepared to nominate three republicans to the commission, but the senate has yet to receive the formal nominations.

According to the Associated Press: “Lawmakers from both parties have expressed alarm at the prolonged vacancies. Senate Energy Committee Chairwoman Lisa Murkowski, R-Alaska, has pressed the White House for months on the issue to no avail.”
Thursday, May 04, 2017

States Sue Over Valuation Rule Delay

By: Michael K. Reer

On April 26, 2017, the states of California and New Mexico filed a lawsuit in the U.S. District Court for the Northern District of California that challenges the Bureau of Land Management’s February 22, 2017 decision to delay the effective date of the “Consolidated Federal Oil & Gas and Federal & Indian Coal Valuation Reform Rule.” BLM’s decision to postpone the effective date of the final rulemaking was made in light of a lawsuit filed by several trade associations challenging the rule in the U.S. District Court for the District of Wyoming. BLM has since published a proposal to repeal the rule in its entirety.

BLM previously stated that the Valuation Rule would increase royalty collections on federal lands between $71.9 million and $84.9 million annually. According to California and New Mexico, because the final rule became effective January 1, 2017, it was improper for BLM to postpone the effective date on February 22, 2017 – after the final rule was already effective. The states argue that Section 705 of the Administrative Procedure Act does not permit the federal government to delay a rule that is already effective.
Wednesday, May 03, 2017

Texas Supreme Court Clarifies RRC Jurisdiction

By: Michael K. Reer

On April 28, 2017, the Texas Supreme Court delivered an opinion in Forest Oil Corp. v. El Rucio Land and Cattle Co., Inc., No. 14-0979 (Tex. 2017). One of the principal questions in the case concerned whether the Railroad Commission has exclusive or primary jurisdiction over claims of environmental contamination related to oil and natural gas development, thus precluding suits for damages and other judicial relief. The Texas Supreme Court found that the Railroad Commission does not have exclusive jurisdiction over common-law actions related to contamination, particularly where the plaintiff brings a breach of contract cause of action related to a surface use agreement. The Court cautioned, however, that “an operator can reduce or eliminate the landowner’s damages” “by seeking an RRC determination of contamination allegations and complying with RRC cleanup orders.”
Tuesday, May 02, 2017

NPS Approval of Seismic Surveys Upheld

By: Michael K. Reer

On April 27, 2017, the U.S. District Court for the Middle District of Florida upheld the National Parks Service’s approval of Burnett Oil Co., Inc.’s Plan of Operations to conduct a three-dimensional seismic geophysical survey using vibroseis technology within the Big Cypress National Preserve in South Florida. The Natural Resources Defense Council and other environmental advocacy organizations challenged NPS approval of Burnett’s Plan of Operations under the Administrative Procedure Act, National Environmental Policy Act, Endangered Species Act, and NPS regulations.

While the federal government owns the surface of Big Cypress National Preserve, a significant portion of the mineral interests underlying the surface are privately owned. Development of the minerals interests is governed by federal regulations codified at 36 C.F.R. Part 9, which apply to “all activities within any unit of the National Park System in the exercise of rights to oil and gas not owned by the United States where access is on, across, or through federally owned or controlled lands or waters.” To achieve access to the mineral interests, operators must secure approval of a Plan of Operations from the NPS. Federal regulations provide that NPS “shall not approve a plan of operations . . . until the operator shows that the operations will be conducted in a manner which utilizes technologically feasible methods least damaging to the federally-owned or controlled lands . . .”

The District Court found that NPS adequately evaluated and considered the Plan of Operations submitted by the operator and the potential impacts to the park that the Plan of Operations would entail. Notably, the District Court upheld the NPS decision to consider a Plan of Operations that covered approximately 25% of the acreage held by the operator. Although the environmental advocacy groups argued that NEPA requires NPS to consider the cumulative impact of the “reasonably foreseeable” development of the remaining acreage, the District Court noted that future development operations “cannot be meaningfully analyzed until there is some degree of certainty about the scope of the project and specific actions proposed.”

The case is Nat. Res. Def. Council v. Nat. Park Serv., No: 2:16-cv-585-FtM-99CM, (M. Fl. 2017).
Monday, May 01, 2017

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