Shale Law Weekly Review – April 7, 2020

National Energy Policy/Public Health: EPA Announces Temporary Policy Change for Environmental Compliance Obligations Amid Covid-19
On March 26, 2020, the U.S. Environmental Protection Agency (EPA) announced a temporary policy change for environmental compliance obligations amid the Covid-19 outbreak.  EPA recognized that many firms under environmental compliance obligations may have had changing circumstances due to Covid-19 social distancing protocols that restrict the ability to continue with normal business operations.  The policy’s scope is intended to address staff shortages that may affect laboratory services, reporting and emissions requirements, or management of hazardous waste and drinking water.  EPA outlined enforcement discretion for civil violations in the following areas: routine compliance monitoring and reporting by regulated entities; settlement agreement and consent decree reporting obligations and milestones; facility operations; public water systems regulated under the Safe Drinking Water Act; and critical infrastructure.  The policy change does not apply to criminal actions, Superfund enforcement, or product imports.

Tax Policy: Pennsylvania Governor Vetoes Energy Tax Credit Bill
On March 27, 2020, Pennsylvania Governor Tom Wolf vetoed House Bill 1100 which sought to provide an energy and fertilizer manufacturer’s tax credit.  The bill was passed by the Senate and conferred by the House on February 4, 2020.  The bill designated a tax credit for companies that purchased natural gas and used it in the manufacturing of petrochemicals or fertilizers.  In his announcement, Governor Wolf stated, “Although the bill requires payment of prevailing wages for facility construction . . . the critical enforcement and investigative tools provided under the Pennsylvania Prevailing Wage Act are absent from this bill.”  Governor Wolf also cited a need to focus on passing other bills that promote jobs for those impacted by the Covid-19 outbreak.

Public Lands: Federal Court Upholds BLM Decision to Repeal 2015 Hydraulic Fracturing Rule
On March 27, 2020, the U.S. District Court for the Northern District of California upheld the Bureau of Land Management’s (BLM) decision to repeal their 2015 rule regulating hydraulic fracturing on federal and Indian lands. (State of California v. Bureau of Land Management, No. 18-cv-00521-HSG, and Sierra Club v. Zinke, No. 18-cv-00524-HSG).  The rule titled, Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands, was repealed by BLM in response to President Trump’s Executive Order 13783 promoting energy independence.  The State of California and several environmental advocacy groups filed suit against BLM for the repeal of the rule alleging violations of several federal statutes, including the Mineral Leasing Act and the Endangered Species Act.  The court found that BLM provided a reasonable explanation for determining that their pre-2015 regulations were sufficient in addressing hydraulic fracturing on federal lands.  Additionally, the court held that BLM’s conclusion that there would be “no effect to threatened species” as a result of the rule repeal was not “arbitrary and capricious in light of the totality of the record.”

Pipelines: FERC Denies Rehearing on Columbia Gas Transmission Project
On March 25, 2020, the Federal Energy Regulatory Commission (FERC) issued an Order denying a rehearing on the approval of Columbia Gas Transmission and Columbia Gulf Transmission’s pipeline projects (Projects).  Allegheny Defense Project, along with other environmental advocacy groups, filed the request for rehearing alleging that the Project’s Environmental Impact Statement (EIS) did not comply with the Natural Gas Act (NGA) and the National Environmental Policy Act (NEPA).  FERC’s Order addressed each concern raised by the Petitioners including: impacts to water resources, endangered species, air quality and climate change.  FERC found that the EIS met NGA and NEPA requirements in each area of concern.  Commissioner Glick filed a dissent in part regarding the Commission’s consideration of impacts to climate change.  Commissioner McNamee filed a concurrence to further address whether FERC is required to consider environmental effects of upstream production or downstream use of natural gas.

Air Quality: EPA Science Advisory Board Declines to Review Proposed Rule on Oil and Natural Gas Emissions Standards
On March 30, 2020, the U.S. Environmental Protection Agency’s Science Advisory Board (SAB) scheduled a public teleconference on a proposed rule regarding oil and natural gas emissions standards.  According to Inside EPA, SAB declined to review the proposed rule due to time constraints before the final rule is published.  The rule titled, Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources Review, proposes to rescind the methane-specific requirements of the new source performance standards related to production and processing. (rule summary).  EPA also is considering “alternative interpretations to its statutory authority to regulate pollutants under the Clean Air Act.”

Pipelines: Texas Court Denies Preliminary Injunction, Allowing Kinder Morgan Pipeline Project to Continue
On March 19, 2020, the U.S. District Court for the Western District of Texas denied a Preliminary Injunction that was requested to delay Kinder Morgan’s natural gas pipeline project. (City of Austin v. Kinder Morgan Texas Pipeline, LLC, No. 1:20-CV-138-RP).  After being denied a Temporary Restraining Order on the project, the City of Austin filed for a Preliminary Injunction under the Endangered Species Act (ESA) and the National Environmental Policy Act (NEPA).  The City of Austin argued that Kinder Morgan must first obtain an incidental take permit under the ESA before proceeding with pipeline construction that will travel through golden-cheeked warbler habitat.  The City of Austin also argued that the U.S. Fish and Wildlife Service’s issuance of a Biological Opinion and Incidental Take Statement regarding the pipeline’s construction was a “major federal action” subject to NEPA procedures.  The District Court ultimately denied the Preliminary Injunction finding that the City of Austin failed to show “irreparable harm” to a protected species, and that other alleged harms were too speculative for injunctive relief.  To read about the District Court’s previous denial of the Temporary Restraining Order, see our Shale Law Weekly Review for February 25, 2020.

Pipelines: Federal District Court Rules Environmental Impact Statement Needed for Dakota Access Pipeline
On March 25, 2020, the U.S. District Court for the District Court of Columbia ruled that the U.S. Army Corps of Engineers (Corps) must prepare an Environmental Impact Statement (EIS) for the Dakota Access Pipeline (Pipeline). (Standing Rock Sioux Tribe v. U.S. Army Corps of Engineers, No. 16-1534 (JEB)).  The Corps previously issued a Finding of No Significant Impact for an easement that the pipeline needs to cross under Lake Oahe, a reservoir in the Missouri River.  The Standing Rock Sioux Tribe along with other tribes located near the easement location filed suit challenging the Corps’ finding that construction of the pipeline would have no significant impact on the environment.  The nearby Tribes use the lake for various purposes including drinking water and agricultural uses.  The court found that the Corps did not adequately address expert comments that raised questions regarding “leak-detection systems, operator safety records, adverse conditions, and worst-case discharge.”  Therefore, the court concluded that the Corps will need to prepare an EIS to address the expert concerns.  The court did not rule on the status of the easement, but allowed each party to prepare arguments for what should happen to the easement while the EIS is being prepared.

Pipelines: South Dakota Governor Signs Riot Boosting Bill
On March 18, 2020, South Dakota Governor Kristi Noem signed HB 1117, amending liability for riot boosting and establishing an “incitement to riot” section.  The bill amends several sections of the statute, including sections on “riot,” “definitions,” “liability for riot or riot boosting,” and “recovery of damages.”  The bill creates a new “incitement to riot section” that includes “instigating, inciting, or directing” the use of force or violence with three or more people.  Governor Noem stated that the purpose of HB 1117 is to ensure that future pipelines in the state will be constructed safely and efficiently.  The State House of Representatives passed the bill 45 to 25, and the State Senate passed the bill 27 to 8. According to the bill, violations of the “riot” section or “incitement to riot” section are class 4 felonies.

From the National Oil & Gas Law Experts:
Charles Sartain, Surrounding Circumstances Don’t Always Inform Deed Construction (Mar. 31, 2020)
Conrad Hester, Carnivorous Clauses: Piranha Partners Consumes Entire ORRI (Mar. 30, 2020)
Michael J. Byrd, COVID-19, Oil Price War Now Threatening U.S. Oil Leases (Mar. 30, 2020)
Michael J. Byrd, Maintaining Your Lease When There’s Nowhere to Send Your Oil (Mar. 30, 2020)
John McFarland, Parsley and Pioneer Formally Ask RRC to Prorate Production (Mar. 30, 2020)

AGENCY PRESS RELEASES—STATE/FEDERAL

Pennsylvania Department of Energy Press Releases:
No new releases Mar. 30 – Apr. 6, 2020.

U.S. Department of Energy
U.S. Department of Energy to Make Strategic Petroleum Reserve Storage Capacity Available to Struggling U.S. Oil Producers (Apr. 2, 2020)

U.S. Environmental Protection Agency
U.S. DOT and EPA Put Safety and American Families First with Final Rule on Fuel Economy Standards (Mar. 31, 2020)
EPA Takes Step Toward Granting Wyoming Primacy for Certain Underground Injection Wells (Apr. 1, 2020)

STATE ACTIONS—EXECUTIVE/LEGISLATIVE

Pennsylvania Executive Agencies—Actions and Notices:
No actions Apr. 6, 2020.

Pennsylvania Legislature:
H.B. 1100 “Energize PA Legislative Package” Veto No. 2 (Mar. 30, 2020)
S.B. 1099 “Pennsylvania Energy and Water Efficiency Standards Act.” Referred to Consumer Protection and Professional Licensure (Apr. 3, 2020)

FEDERAL ACTIONS—EXECUTIVE/LEGISLATIVE

Federal Executive Agencies—Actions and Notices:

Energy Department
85 FR 18944 “Lake Charles Exports, LLC; Application to Amend Existing Long-Term Authorizations to Export Liquefied Natural Gas to Non-Free Trade Agreement Countries” Notice (Apr. 3, 2020)

Environmental Protection Agency
85 FR 18221 “National Fuel Gas Supply Corporation; Notice of Intent to Prepare an Environmental Assessment for the Amendment to West Side Expansion and Modernization Project and Request for Comments on Environmental Issues” Notice (Apr. 1, 2020)
85 FR 18227 “Alternative Methods for Calculating Off-Cycle Credits Under the Light-Duty Vehicle Greenhouse Gas Emissions Program: Application From Toyota Motor North America” Notice (Apr. 1, 2020)
85 FR 18228 “Proposed Information Collection Request; Comment Request; Regulation of Fuels and Fuel Additives; Gasoline Volatility” Notice (Apr. 1, 2020)

Federal Energy Regulatory Commission
85 FR 17868 “Transcontinental Gas Pipe Line Company, LLC; Notice of Schedule for Environmental Review of a Proposed Amendment of the Northeast Supply Enhancement Project” Notice (Mar. 31, 2020)
85 FR 17869 “Double E Pipeline, LLC; Notice of Availability of the Environmental Assessment for the Proposed Double E Pipeline Project” Notice (Mar. 31, 2020)
85 FR 17870 “Iroquois Gas Transmission System, L.P.; Notice of Intent to Prepare an Environmental Assessment for the Proposed Enhancement by Compression Project and Request for Comments on Environmental Issue” Notice (Mar. 31, 2020)
85 FR 18224 “Transcontinental Gas Pipe Line Company, LLC; Notice of Extension of Time Request” Notice (Apr. 1, 2020)
85 FR 18573 “Northwest Pipeline, LLC; Notice of Extension of Time Request” Notice (Apr. 2, 2020)

House Energy and Commerce Committee Actions:
No new actions Mar. 30 – Apr. 6, 2020

Senate Energy and Natural Resources Committee Actions:
No new actions Mar. 30 – Apr. 6, 2020.

Follow us on Twitter at PSU Ag & Shale Law (@AgShaleLaw) to receive ShaleLaw HotLinks:
“Pipeline Operators May Seek Legal Protection as Pandemic Causes Oil Demand to Plummet,” Houston Chronicle
“Controversial Keystone XL Pipeline Construction to Proceed,” The Hill
“Fracking Once Lifted Pennsylvania. Now It Could Be a Drag,” The New York Times
“‘Rocks Don’t Go Bankrupt;’ Experts Say Shale Will Rise Again,” Yahoo! Finance
“Court OKs Trump Repeal of Obama Public Lands Fracking Rule,” The Hill
“Exclusive: Civil Rights Leaders Oppose Swift Move Off Natural Gas,” Axios
“Pennsylvania’s Orders to Stem Coronavirus Outbreak Pause Several Natural Gas Projects,” S&P Global
“Pennsylvania Governor Vetoes Gas Tax Credit Bill,” The Center Square
“Support Builds in Texas for Mandatory Production Cuts,” Energywire
“Oil Companies on Tumbling Prices: ‘Disastrous, Devastating,’” The New York Times

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