Shale Law Weekly Review – Week of February 8, 2021

Pipelines: Supreme Court Agrees to Hear PennEast Pipeline Eminent Domain Case
On February 3, 2021, the U.S. Supreme Court granted PennEast Pipeline’s Petition for Writ of Certiorari.  PennEast filed the Petition after the U.S. Court of Appeals for the Third Circuit ruled that PennEast was barred from bringing a lawsuit against New Jersey due to the state’s Eleventh Amendment immunity.  (PennEast Pipeline Co., LLC v. New Jersey, Nos. 19-1191 thru 19-1232).  PennEast was approved to begin construction on its pipeline when it sued New Jersey under the Natural Gas Act to gain access to state properties using eminent domain authority.  New Jersey argued that it could not be sued as the Eleventh Amendment to the U.S. Constitution generally provides states with immunity from private lawsuits in this context.  The Supreme Court case will be set for oral argument likely during the April 2021 argument session.

National Energy Policy: FERC Allows Additional Briefing on Order Limiting Construction Activities Under Natural Gas Act Authorizations
On January 26, 2021, the Federal Energy Regulatory Commission (FERC) issued Order 871-A which allows additional briefing of a previous order that limited the commencement of construction activities authorized under the Natural Gas Act pending rehearing considerations.  On June 9, 2020, FERC issued Order 871 which limits construction authorized under the Natural Gas Act until rehearing requests on the authorizations are filed or until the time to file rehearing requests has passed.  In recent Order 871-A, FERC explained that it would allow for additional briefing of Order 871.  FERC listed several questions that the additional briefing should address.  Among the questions was whether FERC should “withhold authorizations to commence construction during the pendency of all rehearing requests.”  Any briefs to be filed are due by February 16, 2021, and reply briefs are due by March 3, 2021.

Pipelines: Michigan Department Approves Permits for Enbridge Energy Pipeline Replacement
On January 29, 2021, the Michigan Department of Environment, Great Lakes, and Energy (EGLE) announced permit approvals for Enbridge Energy’s pipeline project.  The pipeline is planned to replace the 68-year-old Line 5 oil pipeline that runs under the Straits of Mackinac between Lake Michigan and Lake Huron.  EGLE held several public information sessions and hearings during their nine-month review of the permit applications.  According to Enbridge’s press release, the pipeline still needs additional permits from the Michigan Public Service Commission and the U.S. Army Corps of Engineers.  If completed, the Line 5 replacement is expected to significantly reduce the risk of leaks and other environmental impacts on the Great Lakes.  The operating status of the current Line 5 pipeline is being argued in federal court.  For more background information see Governor Whitmer’s Complaint against current Line 5 operations and Enbridge Energy v. Whitmer, No. 1:20-cv-01141.

Municipal Regulation: Seattle City Council Approves Fossil Fuel Ban for Some Buildings
On February 2, 2021, the Seattle City Council approved amendments to the 2018 Washington State Energy Code.  The code, now known as the Seattle Commercial Energy Code, provides regulations for the planning and construction of commercial buildings.  The intent of the code is to reduce energy consumption and carbon emissions.  The amendments ban HVAC systems that use electric resistance or fossil fuel combustion.  The code changes also require that electrical outlets and hookups be installed near all natural gas appliances in commercial dwelling units for potential future use.  Further, the rule expanded requirements for metering and recording of renewable energy production and consumption.  Previously, the rule applied to buildings larger than 50,000 square feet; under the new amendments, the requirements now apply to buildings larger than 20,000 square feet.

Pipelines: Minnesota Appellate Court Denies Stay of Commission’s Order Regarding Enbridge Line 3 Pipeline Replacement Project
On February 2, 2021 the Minnesota Court of Appeals declined to reverse the Minnesota Public Utilities Commission’s (Commission) Order allowing the Enbridge Energy Line 3 replacement project to move forward. (In the Matter of the Application of Enbridge Energy, Nos. A20-1071, 72, 74, 75, 77).  Previously on May 1, 2020, the Commission approved Enbridge’s environmental impact statement, certificate of need, and routing permit needed for Enbridge to begin construction on the Line 3 pipeline replacement.  Some local Tribes asked the Commission for a stay of its decisions.  Following the Commission’s denial of a stay, the Tribes, along with other environmentalist groups, filed motions to stay the Commission’s decisions with the Minnesota appellate court while appeals of the decisions were pending.  The Appellate Court denied both the Tribes’ and the environmentalist groups’ request to stay.  In considering factors the court may grant a stay under, the court found that the Commission did not abuse its discretion in making its decisions.  The court also agreed with the Commission’s reasoning that granting a stay would do more harm than denying it.  The court examined the environmental impact of continuing to use the existing Line 3 and the potential effect on jobs and local taxes in weighing the impacts of a stay.

Wildlife Habitat: U.S. Fish and Wildlife Service Delays Effective Date of Migratory Bird Rule
n February 5, 2021 the U.S. Fish and Wildlife Service (FWS) issued a Delay of Effective Date for its Regulations Governing Take of Migratory Birds rule (Rule).  The Rule changes previous interpretations of the scope of the Migratory Bird Treaty Act (MBTA), which was implemented for the protection of migratory birds.  The MBTA provides a list of prohibited activities regarding migratory birds including pursuing, hunting, taking, capturing, killing, or attempting to pursue, hunt, etc.  The Rule interprets the list of MBTA activities to mean actions that are “directed at” the migratory birds rather than including incidental taking of the migratory birds.  The Rule’s effective date has been changed from February 8, 2021, to March 8, 2021.  FWS is also requesting public comments on the rule to be submitted by March 1, 2021.  FWS lists the oil and gas industry as a type of business that could be affected by this rule.  According to FWS, approximately 750 thousand birds are killed in oil pits each year.

Economic Development: Treasury Bureau Delays Rule Meant to Prevent Banks from Refusing to Fund Certain Industries
On January 28, 2021, the Office of the Comptroller of the Currency (OCC) announced that it would delay the publication of a final rule, Fair Access to Financial Services, aimed at preventing large banks from denying funds based on industry type.   OCC is funded by the U.S. Department of the Treasury but operates independently.  According to its news release, OCC will halt publication of the final rule in the Federal Register to give new OCC presidential appointees time to review the rule and ensure a smooth transition.  The rule, which was finalized on January 13, 2021, was created to ensure banks were assessing the financial risk of loan applicants on a case-by-case basis using data and specified standards, instead of refusing services based solely on the applicant’s industry of business.  OCC noted in its overview of the rule that several commenters to the rule mentioned scenarios where the oil and gas industry could possibly be affected by the final rule.

Shale Law/Policy Resources of Interest:

George A. Bibikos, At the Well Weekly, Art. I, sec. 27 (Jan. 29, 2021)

Charles Sartain, ExxonMobil Discovers That Amended Tax Returns Are Dangerous (Feb. 3, 2021)

Matthew Kapinos, J. Hayden Harms & Daniel Lynch, Industry Updates from the UT Renewable Energy Law Conference (Feb. 5, 2021)

Romany Webb, Removing Carbon Dioxide Through Ocean Alkalinity Enhancement And Seaweed Cultivation: Legal Challenges And Opportunities (Feb. 2, 2021)

AGENCY PRESS RELEASES – STATE/FEDERAL

United States Environmental Protection Agency

US Will Not Appeal District Court Decision Allowing Sierra Club-DTE Energy Settlement (Feb. 4, 2021)

FEDERAL ACTIONS—EXECUTIVE/LEGISLATIVE

Federal Executive Agencies (Federal Register Feb. 1-5, 2021):

Federal Energy Regulatory Commission

86 FR 7719 Notice—Comments Period “Northern Natural Gas Company; Notice of Application and Establishing Intervention Deadline” (Feb. 1, 2021)

86 FR 7720 Notice—Comments Period “Notice of Request for Extension of Time; Eastern Gas Transmission and Storage, Inc.” (Feb. 1, 2021)

86 FR 7722 Notice—Comments Period “Eastern Gas Transmission and Storage, Inc.; Notice of Request for Extension of Time” (Feb. 1, 2021)

Federal Aviation Administration

86 FR 8250 Notice—Comments Period “Petition for Exemption; Summary of Petition Received; Google Research Climate and Energy Group” (Feb. 4, 2021)

Energy Department

86 FR 8005 Notice of Application—Comments Period “Southern LNG Company, L.L.C.; Application for Blanket Authorization To Export Previously Imported Liquefied Natural Gas to Non-Free Trade Agreement Countries on a Short-Term Basis” (Feb. 3, 2021)

86 FR 8004 Notice—Comments Period “Change In Control; ECA Liquefaction, S. de R.L. de C.V.” (Feb. 3, 2021)

House Energy and Commerce Committee Actions:

H.R. 862 “To authorize the Administrator of the Environmental Protection Agency to award grants to eligible entities to reduce greenhouse gas emissions at ports, and for other purposes” Referred to the House Committee on Energy and Commerce (Feb. 5, 2021)

H.R. 859 “To prohibit the President from issuing moratoria on leasing and permitting energy and minerals on certain Federal land, and for other purposes” Referred to the House Committee on Energy and Commerce (Feb. 5, 2021)

H.R. 794 “To require the President to declare a national climate emergency under the National Emergencies Act, and for other purposes” Referred to the Subcommittee on Economic Development, Public Buildings, and Emergency Management (Feb. 5, 2021)

H.R. 806 “To establish a Clean Energy and Sustainability Accelerator, and for other purposes” Referred to the Committee on Energy and Commerce (Feb. 4, 2021)

H.R. 575 “To establish a more uniform, transparent, and modern process to authorize the construction, connection, operation, and maintenance of international border-crossing facilities for the import and export of oil and natural gas and the transmission of electricity” Referred to the Subcommittee on Economic Development, Public Buildings, and Emergency Management (Feb. 4, 2021)

H.R. 751 “To prohibit a moratorium on the use of hydraulic fracturing” Referred to the Committee on Natural Resources, and in addition to the Committee on Energy and Commerce (Feb. 3, 2021)

H.R. 684 “To authorize the Keystone XL Pipeline” Referred to the Committee on Natural Resources, and in addition to the Committee on Energy and Commerce (Feb. 2, 2021)

Senate Energy and Natural Resources Committee:

1. 227 “A bill to amend the Farm Security and Rural Investment Act of 2002 to provide grants for deployment of renewable fuel infrastructure” Read twice and referred to the Committee on Energy and Natural Resources (Feb. 2, 2021)
2. 196 “A bill to require the Secretary of Energy to establish an energy efficiency materials pilot program” Read twice and referred to the Committee on Energy and Natural Resources (Feb. 3, 2021)
3. 180 “A bill to withdraw certain Bureau of Land Management land from mineral development” Read twice and referred to the Committee on Energy and Natural Resources (Feb. 2, 2021)
4. 171 “A bill to authorize the Keystone XL Pipeline” Read twice and referred to the Committee on Energy and Natural Resources (Feb. 2, 2021)

Follow us on Twitter @AgShaleLaw—Top #ShaleLaw HotLinks Feb. 1-5, 2021:

“Supreme Court Will Hear Case on PennEast Pipeline” The Hill

“Debate Over Natural Gas Pipeline Rehearing Procedures Simmering at FERC” Natural Gas Intelligence

“U.S. Driller That Produces 70 Barrels a Day Sees Stock Soar” E&E News

“U.S. Oil Pushes ‘Clean Shale’ as Biden Mounts Climate Attack” Bloomberg

“Court Says Dakota Access Pipeline Can Keep Operating But Needs More Studies” Oil and Gas Journal

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Written by:
Sara Jenkins – Research Assistant
Jackie Schweichler – Staff Attorney
Sarah Straub – Research Assistant