EPA Proposes to Re-Evaluate "Waters of the United States" Definition

By: Michael K. Reer

On June 27, 2017, the U.S. Environmental Protection Agency and U.S. Army Corps of Engineers released a proposed rule for publication in the Federal Register

that would rescind the current definition of “waters of the United States” under the Clean Water Act and re-codify the pre-2015 definition utilized by the agencies. The agencies moreover announced that the proposed rule is the first step in a “comprehensive, two-step process intended to review and revise the definition of ‘waters of the United States’ consistent with” President Trump’s February 28, 2017 Executive Order “Restoring the Rule of Law, Federalism, and Economic Growth by Reviewing the ‘Waters of the United States’ Rule.” Once the pre-2015 definition is re-codified, the agencies state that they will pursue a notice and comment rulemaking to conduct a substantive re-evaluation of the definition.


During the second-step re-evaluation, the agencies state that they will develop a new definition that takes “into consideration the principles that Justice Scalia outlined in the Rapanos plurality opinion.” In Rapanos, Justice Scalia authored a plurality opinion that concluded that “waters of the United States” – and therefore the jurisdiction of federal agencies under the Clean Water Act – include only those relatively permanent, standing, or continuously flowing bodies of water. Conversely, Justice Scalia’s plurality opinion stated that water bodies that flow intermittently or ephemerally are not “Waters of the United States.” Moreover, Justice Scalia’s opinion stated that wetlands are not jurisdictional based on a mere hydrologic connection to “waters of the United States.”  Instead, for a wetland to be considered jurisdictional, there must be an inherent ambiguity concerning where the jurisdictional water ends and the wetland begins.
Wednesday, July 12, 2017

EPA's Stay of Methane Rule Vacated

By: Michael K. Reer

On July 3, 2017, the U.S. Court of Appeals for the District of Columbia Circuit vacated the U.S. Environmental Protection Agency’s stay of the final rulemaking “Emission Standards for New, Reconstructed, and Modified Sources.” The rulemaking amended the new source performance standards under the Clean Air Act for the oil and natural gas source category, most significantly for greenhouse gases and volatile organic compounds. Although the final rule took effect on August 2, 2016, EPA Administrator Scott Pruitt granted a petition seeking reconsideration of the rule on April 18, 2017 and issued a 90-day stay of the rule. By way of background, the Clean Air Act requires EPA to grant a petition for reconsideration, even after the effective date of the rule, if a petitioner makes an objection to the rule that was impracticable to raise within the comment period and that is of central relevance to the outcome of the rule. If EPA is required to grant the petition for reconsideration, the Clean Air Act allows a 90-day stay of the rule.

In granting several petitions for reconsideration, EPA stated that some aspects of the final rule were not logical outgrowths of the proposed rule. EPA reasoned that because the final rule was not a logical outgrowth of the proposed rule, petitioners did not have a fair opportunity to comment on the regulations that would become final. The Court of Appeals for the District of Columbia Circuit rejected EPA’s logical outgrowth argument, noting that in the preamble to the proposed rule, EPA requested comment on several regulatory concepts that were included in the final rule as regulations. In short, the Court of Appeals reasoned that even though parts of the final regulations were expressed as regulatory concepts in the proposed rulemaking – and not in terms of draft regulations – the final rule did not fail the logical outgrowth test.  

Tuesday, July 11, 2017

OHIO MARKETABLE TITLE ACT REMAINS A WORK IN PROGRESS


The Ohio Supreme Court’s 2016 watershed decision in Corban vs. Chesapeake Exploration, LLC closed the door to certain surface owners claiming vested title under Ohio’s Dormant Mineral Act. That decision simultaneously appeared to create a new opportunity for certain owners to establish mineral title under Ohio’s Marketable Title Act (“MTA”), which has been in effect since 1961.

On June 29, 2017, in one of the first decisions interpreting the MTA since the Corban decision, Ohio’s Seventh District Court of Appeals reversed the trial court’s decision and held that a chain of title reference to a previous mineral reservation is not required to include a recording reference in order to defeat a claim under the MTA. The court held that the determination of whether a reference is sufficiently “specific” to defeat a claim under the MTA will be made by looking to whether the reference included (1) the type of mineral right created, (2) the nature of the encumbrance, (3) the original owner of the interest, and (4) whether it referenced the instrument creating the interest. By holding that the last of these requirements can be satisfied without a volume and page recording reference, the court expressly disagreed with a 1983 decision of Ohio’s Fifth District Court of Appeals.

This decision removes what could have been a bright-line rule in the gray areas of the MTA. Ultimately, the Ohio Supreme Court will likely have to confront the ambiguities of the MTA before practitioners and owners can be fully confident in its application.
Monday, July 10, 2017

Drilling Permit Upheld by Commonwealth Court

By: Michael K. Reer

On June 12, 2017, the Pennsylvania Commonwealth Court affirmed an Environmental Hearing Board decision that upheld the issuance of a drilling permit to an operator in Warren, Pennsylvania. The operator received a drilling permit for an unconventional slant well that would bottom-hole underneath a petroleum refinery. The refinery expressed concern that hydraulic fracturing activities could impact a 3.6 million gallon gasoline tank on the surface. In response, the operator agreed to not fracture into certain formations near the tank, to utilize conductivity and video logs when drilling, to avoid the vicinity of zones indicated by logs as having excessive water, and to cease operations if pressure gauges indicated communication with another well. Nonetheless, the refinery appealed the Pennsylvania Department of Environmental Protection’s grant of a permit.

In upholding the EHB’s confirmation of the permit, the Commonwealth Court expressly rejected the refinery’s argument that PADEP may not grant drilling permits that conflict with the “purposes” of the Commonwealth’s Oil and Gas Act. Rather, the Commonwealth Court found that the Department may only reject a drilling permit for one of the six enumerated reasons in the Act and that “if none of the six statutory reasons for denial exist, then the Department is required to issue the permit within 45 days.” The Commonwealth Court also rejected the refinery’s assertion that the Department is required to apply “strict scrutiny” to permit applications with “unique characteristics” that make fracturing an “abnormally dangerous activity.” Notably, the Commonwealth Court found that “while not binding on this Court, the United States District Court for the Middle District of Pennsylvania has held that hydraulic fracturing is not an abnormally dangerous activity under Pennsylvania law.”

The case is United Refining Co. v. Dep’t of Envtl. Prot., No. 1321 C.D. 2016 (Pa. Commw. Ct. June 12, 2016).
Tuesday, June 13, 2017

FERC Opens Investigation Into Tuscarawas River Horizontal Drilling

By: Michael K. Reer

On June 1, 2017, the Federal Energy Regulatory Commission announced an investigation into the alleged use of petroleum hydrocarbon constituents during horizontal directional drilling activities on the Rover Pipeline Project in Ohio. The announcement of an investigation follows a May 10, 2017 letter from FERC that limited the company’s authority to conduct horizontal directional drilling activities after an inadvertent return of approximately 2 million gallons of drilling fluid during completion of drilling under the Tuscarawas River. According to the FERC letter announcing the investigation, testing by the Ohio Environmental Protection Agency revealed petroleum hydrocarbon constituents, commonly found in diesel fuel, in samples of drilling fluid near the Tuscarawas River.

FERC states that the presence of petroleum hydrocarbons “suggests a violation of Environmental Condition No. 1 of the Commission’s February 2, 2017 Order Issuing Certificates” – which requires the operator to adhere to construction procedures described in its application and identified in the associated Environmental Impact Statement. According to FERC, the application and associated EIS stated that the operator was committed to using drilling fluid composed only of a “slurry made of nontoxic/non-hazardous bentonite clay and water” – which would preclude the use of petroleum hydrocarbon constituents.
Monday, June 12, 2017

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

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