December 5, 2023

Shale Law Weekly Review—Week of December 4, 2023

Pipelines: FERC Authorizes Construction of the Southeast Energy Connector Project ⚡
On November 16, 2023, FERC issued an order authorizing the construction and operation of the Southeast Energy Connector Project (SECP). Transcontinental Gas Pipe Line Co. LLC, 185 FERC ¶ 61133, Docket No. CP22-501-000 (2023). The order authorizes the construction and operation of Transcontinental Gas Pipe Line Co. LLC (Transco)’s pipeline and associated compression facilities in Chilton and Coosa Counties, Alabama. Transco is a wholly owned subsidiary of Williams Gas Pipeline Company, LLC. According to the order by FERC, the SECP is designed to supply energy to Mississippi and Alabama through a power generation facility located in Shelby County, Alabama. In a related filing on November 3, 2023, FERC published a Notice of Intent to “prepare an environmental impact statement (EIS) that will discuss the environmental impacts of the [SECP] involving construction and operation of natural gas facilities” constructed and operated by Transco. 87 Fed. Reg. 66284 (Nov. 3, 2022). The comment deadline for the notice ended on November 28, 2023.

Air Quality: 5th Circuit Vacates Port Arthur LNG Plant Permit Issued by Texas Commission on Environmental Quality
On November 14, 2023, the United States Court of Appeals for the Fifth Circuit vacated an emissions permit issued by the Texas Commission on Environmental Quality (TECQ) for Sempra Infrastructure’s Port Arthur LNG plant. Port Arthur Cmty Actn Netwk v. TCEQ, No. 22-60556 (5th Cir. 2023).  The Port Arthur LNG plant is a “major stationary source,” under the Clean Air Act, in part due to its capacity to produce over 250 tons of air pollutants per year. TECQ, when it issued the permit to construct the Port Aurthur LNG plant, declined to impose the same emissions limits that it had imposed on the Rio Grande LNG plant, an equivalent major stationary source.  The Port Arthur LNG plant’s permit allowed for higher emission limits than the Rio Grande LNG plant’s permit – which was issued in 2020 and was not operational at the time and whose limits were set at a “Best Available Control Technology” (BACT) standard. The court held that TECQ acted arbitrarily and capriciously when it issued the permit for the Port Arthur plant because it limits were “not ‘at least equivalent’ to those imposed on Rio Grande plant,” irrespective of the fact that the Rio Grande plant was not operational at the time. The court cited to the TECQ’s own guidance manual, which it interpreted as requiring new facilities to “reduce emissions to a degree ‘at least equivalent’ to prior facilities that were ‘previously accepted’” or at least consider such reduction. Additionally, the 5th Circuit cited to TCEQ’s inconsistent interpretation of the term “operational” in its manual as further evidence that TCEQ’s actions were a departure from its “policy of adhering to earlier permit limits.” 

Pipelines: FERC Affirms Decision Finding Colonial Pipeline’s Fuel Transportation Pricing Strategy Unreasonable
On Thursday, November 16, 2023, the Federal Energy Regulatory Commission (FERC) issued an “Order on Initial Decision,” which addresses several complaints challenging, most principally, the legality of Colonial Pipeline Company’s (Colonial) product loss allocation (PLA) strategy for fuel transportation pricing. Colonial is a pipeline company that operates a mainline system across several states, spanning from the Gulf of Mexico to the East Coast. The underlying complaints were brought by numerous shippers that transport fuel across these regions via Colonial’s transportation service, which is authorized by a FERC tariff. The complaints allege, among other things, that the transportation rates charged by Colonial are unlawfully excessive and that the company’s methods for calculating PLA charges violate the Interstate Commerce Act and FERC tariff regulations. The November 16 order affirms in part and reverses in part FERC’s Initial Decision, holding that while Colonial’s tariff did authorize the company to “assess a PLA charge,” there are aspects of Colonial’s PLA mechanism that are “not just and reasonable.” Additionally, the order reverses the initial order’s imposition of a “fixed percentage-of-value” mechanism to replace Colonial’s PLA and orders Colonial to implement a “single cents-per barrel PLA” instead. Moreover, the order affirms Colonial’s “market-based” authority in the Gulf Coast market and reverses the revocation of Colonial’s market authority in the Alabama market. Finally, the order holds that reparations are not to be paid to the shippers, concluding that they “did not suffer any damages from the PLA charges” because Colonial was not charging “more than its actual PLA costs.”

State Regulation: Michigan Legislature Requires Electric Providers to Invest in Clean Energy
On November 14, 2023, the Michigan legislature passed Senate Bill 271, which purportedly aims to “promote the development and use of clean and renewable energy resources and the reduction of energy waste.” The Bill, in Section 51, requires “electric provider[s] [to] achieve a clean energy portfolio” of 80% in the years 2035 through 2039 and 100% by 2040 and beyond. The Bill defines “clean energy portfolio” to be “the percentage of an electric provider’s total retail electric sales consisting of clean energy or renewable energy.” This imposition applies to all energy providers regulated by the Michigan Public Service Commission. Further, regulated energy providers must “submit a plan to comply with the clean energy standard as part of that electric provider’s integrated resource plans.” In addition, the Bill, Section 28, requires regulated electric providers to “achieve a renewable energy credit portfolio” of 15% by 2029, 50% in the years 2030 through 2034, and 60% by 2035 and beyond. The Bill will next be passed to the Governor of Michigan for approval.

 

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CENTER PROGRAMS & RESOURCES

Understanding Agricultural Law – A free monthly Zoom webinar series for all agricultural and rural business advisors. One hour of substantive CLE credit available for Pennsylvania-licensed attorneys at no charge. Recordings and materials from the series, more information, and registration available here.

On December 11, 2023, at 12:00 pm, The University of Scranton SBDC, the PA SBDC Agriculture Center of Excellence, and the Penn State Center for Agricultural and Shale Law are co-sponsoring a webinar titled “Making Laws Work for You, Part 2: Right to Farm, ACRE, and the Agritourism Activity Protection Act—Brook Duer with SBDC Ag Center of Excellence.” This webinar series will provide plain-language examples of how five Pennsylvania laws—the Agricultural Area Security Law; the Agricultural Conservation Easement Purchase Program; Clean & Green Taxation; Right to Farm Law; the Agriculture, Communities and Rural Environment (ACRE) law; and the Agritourism Activity Protection Act—can help you preserve and protect your farm’s economic vitality and viability.

Follow us on Twitter @AgShaleLaw—Top #ShaleLaw HotLinks

CER reveals reasoning behind Trans Mountain route-deviation approval (Oil & Gas Journal)

96 Percent of Upstream Firms Developing New O&G Fields: Report (Rigzone)

EU Sets 2024 Intermediate Targets for Gas Stockpiles (Rigzone)

West Coast leaders urge feds to reverse decision allowing natural gas pipeline expansion (Idaho Capital Sun)

Connect with us on Facebook.

Penn State Farmland Energy Legal Podcast: Listen to the latest episode here.

Oil & Gas Law & Policy Resources:

Bloomberg, OPEC Defends ‘Vilified’ Oil Industry on Eve of Climate Meeting (November 28, 2023)

Sartain, Texas Court Addresses Trespass by Produced Water Injection – Part 1 (November 29, 2023)

Bloomberg, Saudis Forecast to Cut Oil Price to Asia as Competition Heats Up (November 29, 2023)

Sartain, Texas Court Considers Trespass by Produced Water Injection – Part 2 (November 30, 2023)

Garrod, et al., Three New UK Laws Impacting Autonomous Vehicles, Digital Markets and Personal Data (November 30, 2023)

Bloomberg, Occidental Petroleum in Talks to Buy CrownRock, WSJ Reports (November 30, 2023)

McFarland, The New World of “Differentiated/Certified Gas” (December 1, 2023)

FEDERAL ACTIONS—EXECUTIVE & LEGISLATIVE

U.S. DEPARTMENT OF ENERGY PRESS RELEASES

Biden-Harris Administration Announces Actions to Strengthen Clean Energy Supply Chains and Accelerate Manufacturing in Energy and Industrial Communities (November 27, 2023)

DOE Announces Over $13 Million to Connect More Puerto Rico Communities with Residential Solar and Battery Storage (November 29, 2023)

U.S. Department of Energy Announces $3 Million to Transition Tribal Colleges and Universities to Clean Energy (November 30, 2023)

Department of Energy Releases Proposed Interpretive Guidance on Foreign Entity of Concern for Public Comment (December 1, 2023)

U.S. ENVIRONMENTAL PROTECTION AGENCY PRESS RELEASES

EPA finalizes action on Fairbanks air plan, partners with state on new one, provides $10 million for more woodstove change-outs & natural gas expansion in Fairbanks, North Star Borough (November 22, 2023)

EPA Region 3 Awards Nearly $387M for Clean Water and Drinking Water Infrastructure Upgrades in Pennsylvania (November 29, 2023)

EPA’s Good Neighbor Plan Cuts Smog-Forming Pollution from Power Plants in Summer 2023 (November 30, 2023)

EPA Fines Iowa Ethanol Producer for Alleged Clean Air Act Violations (November 30, 2023)

FEDERAL EXECUTIVE AGENCIES (Federal Register November 24– December 1, 2023)

Environmental Protection Agency

88 FR 83889: Proposed Rule, Comments Close 1/16/2024: “Removal of Affirmative Defense Provisions From the National Emission Standards for Hazardous Air Pollutants for the Oil and Natural Gas Production Facility and Natural Gas Transmission and Storage Facility Source Categories” (December 1, 2023)

88 FR 82287: Proposed Rule, Comments Close 1/8/2024: “Decabromodiphenyl Ether and Phenol, Isopropylated Phosphate (3:1); Revision to the Regulation of Persistent, Bioaccumulative, and Toxic Chemicals Under the Toxic Substances Control Act (TSCA)” (November 24, 2023)

Federal Energy Regulatory Commission

Energy Department

88 FR 83426: Proposed Rule: “Energy Conservation Program: Energy Conservation Standards for Oil, Electric, and Weatherized Gas Consumer Furnaces” (November 29, 2023)

88 FR 82343: Notice: “National Petroleum Council” (November 24, 2023)

Land Management Bureau

88 FR 83959: Notice, Comments Close 01/02/2024: “Notice of Intent To Amend Resource Management Plans for Section 368 Energy Corridor Revisions and Prepare an Associated Environmental Impact Statement” (December 1, 2023)

Natural Resources Revenue Office

88 FR 83962: Notice, Comments Close 1/30/2024: “Agency Information Collection Activities; Collection of Monies Due the Federal Government; and Processing Refund Requests Related to Overpayments Made to ONRR” (December 1, 2023)

Safety and Environmental Enforcement Bureau

88 FR 83694: Proposed Rule, Comments Close 2/28/2024: “Oil and Gas and Sulfur Operations in the Outer Continental Shelf-Documents Incorporated by Reference” (November 30, 2023)

Other Agencies

88 FR 83571: Notice: “Notice of Certain Operating Cost Adjustment Factors for 2024” (November 30, 2023)

88 FR 83573: Notice, Comments Close 01/02/2024: “Agency Information Collection Activities; Submission to the Office of Management and Budget; U.S. Fish and Wildlife Service Grassland Easements” (November 30, 2023)

88 FR 83726: Rule: “Endangered and Threatened Wildlife and Plants; Threatened Species Status With Section 4(d) Rule for North American Wolverine” (November 30, 2023)

88 FR 83165: Notice, Comments Close 12/28/2023: “Monthly Notice; Applications and Amendments to Facility Operating Licenses and Combined Licenses Involving No Significant Hazards Considerations” (November 28, 2023)

88 FR 82832: Notice: “Taking and Importing Marine Mammals; Taking Marine Mammals Incidental to Geophysical Surveys Related to Oil and Gas Activities in the Gulf of Mexico” (November 27, 2023)

U.S. HOUSE ENERGY AND COMMERCE COMMITTEE

H.R.6536 “To provide that local governments may receive grants to carry out HOMES rebate programs and high-efficiency electric home rebate programs in States in which the applicable State energy office is not carrying out such a program, and for other purposes.” Referred to the House Committee on Energy and Commerce. (November 30, 2023)

H.R.6508 “To require the Administrator of the Environmental Protection Agency to ensure that flexible fuel vehicles may use certain gram per mile carbon dioxide values for purposes of determining fleet average carbon dioxide standards for certain vehicles.” Referred to the House Committee on Energy and Commerce. (November 29, 2023)

U.S. SENATE ENERGY AND NATURAL RESOURCES COMMITTEE 

S.3373 “A bill to require the Federal Energy Regulatory Commission to extend the time period during which licensees are required to commence construction of certain hydropower projects.” Read twice and referred to the Committee on Energy and Natural Resources. (November 30, 2023)

STATE ACTIONS—EXECUTIVE & LEGISLATIVE   

PENNSYLVANIA EXECUTIVE AGENCIES (Pa. Bulletin Vol. 53, No. 48—Decmeber 2, 2023)

Department of Environmental Protection

53 Pa.B. 7376: Notices: “Applications, Actions and Special Notices”

 

Written by:
Kendal Ashman, Research Assistant
Kole Zellers, Research Assistant
Dillon Lightfoot, Research Assistant
Sergio Porras, Research Assistant
Jackie Schweichler, Staff Attorney