Shale Law Weekly Review – May 26, 2020

Water Quality/ Pipelines: New York Denies Water Quality Permit for NESE Pipeline Project
On May 15, 2020, the New York State Department of Environmental Conservation (Department) denied a Water Quality Certification application for the Northeast Supply Enhancement Project (Project) proposed by the Transcontinental Gas Pipe Line Company (Transco).  Transco was granted a certificate for the Project by the Federal Energy Regulatory Commission on May 3, 2019, subject to the approval of a state-issued Water Quality Certificate.  On May 17, 2019, Transco submitted its Water Quality application to the Department and the application received over 16,000 comments from the public. The Department denied the application on the basis that Transco was unable to “demonstrate the Project’s compliance with all applicable water quality standards.”  The Department further found that impacts from the Project would include resuspension of mercury and copper concentrations and disturbance of shellfish beds.  The Department also stated in a press release that the Project was unnecessary to meet the state’s energy needs.  Transco, owned by Williams, stated in a previous press release that the Project was “critical” for converting heating oil to natural gas and for keeping up with demand.

Public Lands: U.S. Department of Interior Ends Rent Hiatus for Solar and Wind Companies, Issues Retroactive Bills
On May 18, 2020, Reuters reported that the U.S. Department of the Interior issued retroactive rent bills to solar and wind companies on public lands.  According to Reuters, the Interior Department put a hold on rent for solar and wind in 2018 to investigate company complaints that public land rent rates were too high to make them competitive with rents on private property.  The Interior Department’s Bureau of Land Management (BLM) calculates land rents for wind and solar energy development in accordance with the Federal Land Policy and Management Act (FLPMA) and 43 CFR Part 2806.  Reuters reports that although the rent bills were a surprise to the Large-scale Solar Association, some companies likely set aside funds in anticipation of retroactive rent charges.  According to BLM’s website, BLM has approved 25 solar projects and 35 wind energy projects on public lands as of March 2018.

Oil and Gas Leasing: Bureau of Land Management Temporarily Cuts Royalty Rates for Oil and Gas Producers on Public Lands
On May 20, 2020, the Associated Press (AP) reported that the Bureau of Land Management (BLM) began temporarily reducing royalty rates for oil and gas producers on public lands.  According to AP, the reduced rates are being issued to provide relief to companies who cannot operate economically during the Covid-19 pandemic and will last a maximum of 60 days.  States with several federal oil and gas leases include Utah, Wyoming, New Mexico, North Dakota, California, Colorado, Alaska, and Montana.  BLM has included Covid-19 national emergency guidance on their website for lease suspension and royalty rate reduction.  Companies wishing to seek a reduction in royalty rates or a lease suspension under “force majeure” must fill out an application with the BLM state office and meet certain requirements.

From the National Oil & Gas Law Experts:
George Bibikos, Oil + Gas Update – Texas Supremes Address ORRIs, PA Supremes Poised to Decide O+G Lease-Busting Case, and Army Corps NWP Goes Down (May 15, 2020)
Charles Sartain, Offer to Acquire Leases Could Not be Conditioned on a JOA (May 19, 2020)
John McFarland, Texas Supreme Court Weighs In On Application of Rule Against Perpetuities to Overriding Royalty Reservations (May 18, 2020)
Michael Gerrard, New York, New Jersey Pipeline Decisions are Hard Blow to Natural Gas and Strong Support for New York’s New Climate Law (May 18, 2020)

AGENCY PRESS RELEASES—STATE/FEDERAL

Pennsylvania Department of Energy Press Releases:
No new releases May 18–22, 2020.

U.S. Department of Energy
U.S. Department of Energy Announces $53 Million for Small Business Research and Development Grants (May 21, 2020).
Department of Energy to Resume Cleanup at Energy Technology Engineering Center (May 20, 2020).

U.S. Environmental Protection Agency
U.S. EPA Reaches $6.5 Million Settlement to Clean Up Groundwater Contamination at Southern California Superfund Site (May 21, 2020).
U.S. EPA requires northern California steel manufacturer USS POSCO Industries to improve oil spill prevention program (May 21, 2020).
EPA Awards $1.4 Million Grant to the University of Puerto Rico to Reduce Diesel Emissions around the Port of San Juan (May 19, 2020).
EPA Provides $6 Million to Reduce Excess Ag Runoff to the Chesapeake Bay (May 18, 2020).

STATE ACTIONS—EXECUTIVE/LEGISLATIVE

Pennsylvania Executive Agencies—Actions and Notices:
50 Pa.B. 2633, Control of VOC Emissions from Oil and Natural Gas Sources, Proposed Rulemaking (May 23, 2020).

Pennsylvania Legislature:
The House will reconvene on Tuesday, June 1, 2020 at 1:00PM
The Senate will reconvene on Monday, May 26, 2020 at 1:00PM unless sooner recalled by the Pres. Pro Temp.

FEDERAL ACTIONS—EXECUTIVE/LEGISLATIVE

Federal Executive Agencies—Actions and Notices: 

Environmental Protection Agency
85 FR 31286 “Coal- and Oil-Fired Electric Utility Steam Generating Units—Reconsideration of Supplemental Finding and Residual Risk and Technology Review” Rule (May 22, 2020).
85 FR 31183 “Reformulated Gasoline and Conventional Gasoline: Requirements for Refiners, Oxygenate Blenders, and Importers of Gasoline; Requirements for Parties in the Gasoline Distribution Network (Renewal)” Notice (May 22, 2020).
85 FR 29882 “South Dakota; Infrastructure Requirements for the 2015 Ozone National Ambient Air Quality Standards; Revisions to the Administrative Rules” Proposed Rule (May 19, 2020).
Federal Energy Regulatory Commission
85 FR 30951 “Revisions to Oil Pipeline Regulations Pursuant to the Energy Policy Act of 1992” Notice of Annual Change in the Producer Price Index for Finished Goods (May 21, 2020).
85 FR 30691 “Michael Mabee Related to Critical Infrastructure Protection Reliability Standards” Complaint Notice (May 20, 2020).
Interior Department
85 FR 30732 “Exxon Valdez Oil Spill Public Advisory Committee” Meeting Notice (May 20, 2020).
Pipeline and Hazardous Material Safety Administration
85 FR 30673 “Vapor Pressure of Unrefined Petroleum Products and Class 3 Materials” Proposed Rule for Hazardous Materials (May 20, 2020).

House Energy and Commerce Committee Actions:
No new actions May 19-May 22, 2020.

Senate Energy and Natural Resources Committee Actions:
S.3816 “A bill to authorize the Secretary of Energy to carry out a program to lease underused facilities of the Strategic Petroleum Reserve, and for other purposes.” Read twice and referred to the Committee on Energy and Natural Resources (May 21, 2020).

Follow us on Twitter at PSU Ag & Shale Law (@AgShaleLaw) to receive ShaleLaw HotLinks:
“Study Shows Methane Leaks in PA May Be Higher than State Reports,” Shale Gas Reporter
“Tree Deaths in Urban Settings Are Linked to Leaks from Natural Gas Pipelines Below Streets,” Inside Climate News
“Trump Administration Cuts Royalty Rates for Oil and Gas,” AP News
“N.Y. Rejects $1B Pipeline Over Climate, Water Concerns,” EE News
“Pandemic Causes Maintenance Delays at Oil, Gas Facilities,” Reuters
“Past its Peak? Battered Oil Demand Faces Threat from Electric Vehicles,” Reuters
“Coronavirus Widens Wlimate Rift Between European and U.S. Oil Majors,” Reuters

Connect with us on Facebook! Every week we will post the CASL Ledger which details all our publications and activities from the week.

Want to get updates, but prefer to listen? Check out the Shale Law Podcast! We can always be found on our Libsyn page, iTunes, Spotify, or Stitcher.

Written by:
Sara Jenkins – Research Assistant 
Jackie Schweichler – Staff Attorney
Kaela Gray – Research Assistant