Shale Law Weekly Review – April 23, 2019

State Regulation: Colorado Governor Signs New Oil and Gas Regulations into Law
On April 16, 2019, Colorado Governor Jared Polis signed into law SB19-181, Protect Public Welfare Oil and Gas Operations. The new law amends the purpose of the state’s Oil and Gas Conservation Act by prioritizing public health, safety, welfare, and the environment when regulating oil and gas development.  Notably, the bill provides local governments with greater authority to regulate the siting of drilling operations, inspect facilities, and impose fines for spills (p.1-2).  In addition, the bill requires drillers to continuously monitor their air pollution and minimize their methane emissions (p.2-3).

Wastewater Treatment/Disposal: Fifth Circuit Orders EPA to Create New Wastewater Regulations
On April 12, 2019, the U.S. Court of Appeals for the Fifth Circuit issued an opinion in a case brought by environmental groups challenging EPA regulations governing wastewater from steam-electric power plants, which had not been updated since 1982 (Southwestern Electric Power Company v. Environmental Protection Agency, No. 15-60821) (p.1-2). In 2015, EPA issued the final rule Effluent Limitation Guidelines and Standards for the Steam Electric Power Generating Point Source Category which sets a best available technology (BAT) standard for preventing pollution into waterways. The rule allows these plants, in certain cases, to use best available technology from 1982 instead of the present day (p.2-3). Ultimately, the Fifth Circuit found that this decision by EPA fell short of the standard of “reasoned decisionmaking” and that the agency did not “stay within the bound of its statutory authority.” The court, therefore, vacated and remanded the portions of the rule at issue (p.53).

LNG Exports: FERC Issues Final Environmental Impact Statement for Gulf LNG Project
On April 17, 2019, the Federal Energy Regulatory Commission (FERC) announced that it had issued the final environmental impact statement for the proposed Gulf LNG Liquefaction Project in Mississippi. The project will involve the construction of two liquefaction trains with a total capacity of ten million tons of LNG per year.  The project will use 5 miles of existing pipeline and will be connected to existing export facilities on the Gulf Coast. FERC ultimately found that, while the project would have some significant adverse environmental effects, mitigation measures would be able to reduce them to non-significant levels.

LNG Exports: FERC Issues Final Environmental Impact Statement for Jacksonville LNG Project
On April 12, 2019, the Federal Energy Regulatory Commission announced that it had issued a final environmental impact statement for the proposed Jacksonville LNG export facility in Florida. The project, once completed, will have a processing capacity of 1.5 million gallons of liquefied natural gas per day and will ship to both domestic and international markets. Construction is currently slated to begin in the second half of 2019 and finish in 2021. FERC ultimately found that the project would have some limited adverse environmental impacts, but that mitigation measures would prevent them from becoming significant.

Landowner Royalties: Court Strikes Down Repeal of Oil and Gas Valuation Rule
On April 12, 2019, California and New Mexico Attorneys General issued a statement following a recent court ruling that struck down the repeal of a rule regulating royalty payments for Federal and Indian leases (State of California, et al. v. United States Dept. of the Interior, Case No. C 17-5948).  The rule, or Consolidated Federal Oil & Gas and Federal & Indian Coal Valuation Reform (Valuation Rule) was first published in July 2016.  According to California Attorney General Becerra, stopping the repeal of the rule will increase royalty payments for American landowners by $71 million per year.  The court held that by attempting to repeal the Valuation Rule, the Office of Natural Resources Revenue (ONRR) violated the Administrative Procedures Act.  The court stated that ONRR failed to explain inconsistencies and did not consider alternatives to repealing the rule.

From the National Oil & Gas Law Experts:
George Bibikos, At the Well Weekly, (April 19, 2019)
Charles Sartain, Executive Right Holder Liable for Refusing to Lease, (April 18, 2019)
John McFarland, Texas Outfitters v. Nicholson and the Duty of the Holder of the Executive Right, (April 18, 2019)

Pennsylvania Legislation:
HB 509: would reform the permitting process for agencies to increase transparency (Reported as committed – April 16, 2019)

Follow us on Twitter at PSU Ag & Shale Law (@AgShaleLaw) to receive ShaleLaw HotLinks:
“Republicans revive push to scrap LNG export constraints” – Greenwire
“Wash. lawmakers commit to 100% clean energy” – Greenwire
“Moody’s: Gas pipeline shortages will hamper Permian producers through 2020” – Houston Chronicle
“EPA’s latest annual U.S. greenhouse gas inventory shows decline” – Oil & Gas Journal
“Sen. Manchin speaks at roundtable on potential Appalachian storage hub” – WV News
“Methane-tracking spacecraft to offer Earthly data on oil, gas emissions” – Natural Gas Intel
“Trump plan to ship natural gas by rail stokes fear of ‘bomb trains’” – Bloomberg
“These candidates vow to leave fossil fuel reserves in the ground, a 180º turn from Trump” – Inside Climate
“Whitmer reopens talks with Enbridge; revised Line 5 tunnel deal an option” – The Detroit News
“Massive Wyo. project rouses sage grouse concerns” – Greenwire

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Written by:
Brennan Weintraub – Research Assistant
Jackie Schweichler – Staff Attorney