March 20, 2023
Shale Law Weekly Review—Week of March 20, 2023
Methane Emissions: DOE Offers $47 Million to Fund Methane Emissions Reduction Technologies ⚡
On Monday, March 13, 2023, the Department of Energy (DOE) announced $47 million in funding that will be made available for 22 new projects focused on methane emissions reduction. These projects will develop technologies to detect, quantify, and reduce methane emissions in regions of the United States that are oil and natural gas producing. The technologies being developed are categorized into five areas, which involve the mitigation of emissions from oil and gas machinery, monitoring and measuring of emissions from oil and gas facilities, investigation of methane storage tanks, integration of methane monitoring platforms, and quantification of methane emissions from oil and gas basins. As explained by the announcement, the 22 projects will be managed by the DOE Office of Fossil Energy and Carbon Management.
GHG Emissions: Maryland Adopts Multi-state Rule to Achieve 100% EV Sales By 2035
On Monday, March 13, 2023, Maryland Governor Wes Moore announced the state’s decision to adopt Advanced Clean Cars II, a multi-state rule first adopted by California for the purpose of phasing out the sale of gas-powered cars and light trucks over the next twelve years. Maryland’s decision to adopt this rule was largely predicated on an analysis by the Maryland Department of the Environment, which found that a substantial decline in gas-powered vehicle sales will reduce vehicular emission of nitrogen oxides by more than 6,000 tons and vehicular and power plant emission of carbon dioxide by over 82 million metric tons. The department’s analysis also considers the impact on in-state health variables such as respiratory and cardiovascular illness, finding that the health benefits will equal about $39.9 million per year by 2040.
Federal Lands: Environmental Groups Sue BLM, FWS, and DOI over Approval of Willow Oil and Gas Project
On Tuesday, March 14, 2023, six environmental groups filed a complaint in the District Court of Alaska seeking declaratory and injunctive relief against three government organizations for their decisions to approve an oil and gas development project in the northeastern region of Alaska’s National Petroleum Reserve. Sovereign Inupiat for a Living Arctic et al v. Bureau of Land Management et al, No. 3:23-cv-00058-SLG (D. Alaska). In their complaint, Plaintiffs assert that the decisions by the Bureau of Land Management (BLM) and the Department of the Interior (DOI) to approve the project violated the National Environmental Policy Act (NEPA), the Naval Petroleum Reserves Production Act (NPRPA), the Alaska National Interest Lands Conservation Act (ANILCA). Further, Plaintiffs challenge the biological opinion (BiOp) for Willow filed by the Fish and Wildlife Service (FWS), asserting that it violated the Administrative Procedure Act (APA). Plaintiffs contend that, before approving Willow, DOI and BLM failed to conduct sufficiently careful analysis, which includes the consideration of reasonable and less impactful alternatives, thereby violating NEPA, NPRPA, and ANILCA. With respect to the BiOp issued on January 13, 2023, which found that the project will not jeopardize the existence of polar bears in the region, Plaintiffs assert that the FWS failed to factually justify its conclusion and rationale, thereby violating the APA as an “arbitrary and capricious” determination. Altogether, the environmental groups seek a declaration by the court that the decisions leading to the approval of Willow did not follow applicable law and that an injunction should be granted until such laws are followed.
LNG Exports: Environmental Groups Sue DOE for Ten-year Delay in Gas Export Regulations
On Monday, March 13, 2023, the Sierra Club filed a petition in the D.C. Circuit Court of Appeals on behalf of itself and four other environmental groups, seeking a writ of mandamus to compel the Department of Energy (DOE) to respond to a petition filed in 2013. In re Sierra Club, et al, No. 23-1065 (D.C. Cir.). The 2013 petition, which was filed by the Sierra Club and the other groups involved in this action, requested the DOE to issue rules involving then proposed exports of liquified natural gas (LNG) and whether they were “consistent with the public interest” as required under section 3(a) of the Natural Gas Act (NGA). Petitioners assert that because the DOE has not responded to this petition in nearly ten years, and because of the continued and significant impact of LNG exports on the environment, climate, and economy, the court should compel the DOE to respond to their 2013 petition. With respect to environmental and economic impact, Petitioners point specifically to the Gulf Coast and Delaware River Communities, asserting that they will suffer substantially from additional climate change and industrial pollution if new and proposed LNG export facilities are approved. The petition is largely grounded in the public interest section of the NGA, which requires the DOE to reject “exports to non-free trade agreement countries where such exports would be ‘[in]consistent with the public interest.’ 15 U.S.C. § 717b(a).” Petitioners contend that the neither the language of the NGA nor the DOE through agency action has explicitly defined an export that is “consistent with the public interest.” Rather, Petitioners assert that the DOE has only ever employed “ad-hoc” analyses of how LNG exports accord with the public interest, thereby failing to appropriately consider their impact on the public’s interest in the environment, climate, and economy.
Community Impacts: California District Court Rules Against Oil Company for Spills Caused by Gross Negligence
On Thursday, March 2, 2023, the District Court for the Central District of California entered final judgment against oil company HVI Cat Canyon Inc. (HVI), which was found liable for 29 oil spills and other natural resource damages in an order filed on February 25, 2023. United States, et al. v. HVI Cat Canyon, Inc., formerly known as Greka Oil & Gas Inc., No. 2:11-cv-05097-FMO-SS (C.D. Cal.). As explained in a release by the Office of Public Affairs for the Department of Justice, HVI was sued by the U.S. Environmental Protection Agency, the U.S. Coast Guard, the California Department of Fish and Wildlife, and the California Regional Water Quality Control Board, Central Coast Region. Together the federal government and the state of California sought “civil penalties, response costs, and damages” resulting from numerous oil spills in the Santa Barbara County Region. After concluding, based on the totality of the circumstances, that the discharge of roughly 26,584 barrels of crude oil from 2005-2010 was a result of gross negligence by HVI, the court awarded the full amount sought by the government. In total, HVI was found liable to the federal government for $55 million in civil penalties and “$2.5 million in cleanup costs.” HVI was also found liable to California for civil penalties totaling $7.7 million and for natural resource damages and cleanup costs totaling roughly $200,000.
Oil & Gas Law & Policy Resources:
Lockman & Nishi, Sabin Center Files Amicus Brief in Support of New GHG Vehicle Emissions Standards (March 13, 2023)
Bloomberg, Biden Backs $8 Billion Alaska Oil Project Despite Climate Peril (March 13, 2023)
Bloomberg, Germany Pushing for Near-Term Deal on Combustion-Engine Talks (March 13, 2023)
Bloomberg, Oil Extends Decline as Fed Watchers Wait for US Inflation Data (March 14, 2023)
Sartain, Texas Supreme Court Rules on “Bespoke” Add-Back Royalty Clause (March 16, 2023)
Bloomberg, Oil Set for Biggest Weekly Drop in Almost a Year on Bank Turmoil (March 17, 2023)
Follow us on Twitter @AgShaleLaw—Top #ShaleLaw HotLinks March 11– March 17, 2023:
San Francisco Bay Area to phase out natural gas furnaces and water heaters (The Hill)
US senators seek to expand sales of ethanol-gas blend with support from Big Oil (AGWEEK)
British Columbia’s new energy action framework to cap emissions, LNG facilities in focus (Offshore Energy)
With environmental approval in place, Canada’s Cedar LNG inks long-term liquefaction services deal (Offshore Energy)
Biden Budget Proposes Elimination of Oil, Gas Tax Subsidies (Rigzone)
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Penn State Farmland Energy Legal Podcast: Listen to the latest episode here.
FEDERAL ACTIONS—EXECUTIVE & LEGISLATIVE
U.S. DEPARTMENT OF ENERGY
DOE Invests $47 Million to Reduce Methane Emissions From Oil and Gas Sector (March 13, 2023)
Biden-Harris Administration Announces $750 Million to Advance Clean Hydrogen Technologies (March 15, 2023)
DOE Announces $590 Million To Increase Bioenergy Research (March 17, 2023)
Readout of Deputy Secretary Turk’s Visit to Brazil, Chile, and Argentina (March 17, 2023)
U.S. ENVIRONMENTAL PROTECTION AGENCY
Biden-Harris Administration Proposes First-Ever National Standard to Protect Communities from PFAS in Drinking Water (March 14, 2023)
EPA and DOJ File Clean Air Act Complaint Against Diesel Spec Inc. for the Sale of Vehicle Emission “Defeat Devices” (March 17, 2023)
FEDERAL EXECUTIVE AGENCIES (Federal Register March 11–March 20, 2023):
Energy Department
88 FR 15510: Rule: “Energy Conservation Program: Test Procedure for Consumer Boilers” (March 13, 2023)
Environmental Protection Agency
88 FR 15629: Proposed Rule, Comments Close 4/13/23: “Air Plan Approval; Illinois; Second Maintenance Plan for 1997 Ozone NAAQS; Jersey County Portion of St. Louis Missouri-Illinois Area” (March 14, 2023)
Susquehanna River Basin Commission
88 FR 16075: Notice: “Projects Approved for Consumptive Uses of Water” (March 15, 2023)
Bureau Of Indian Affairs
88 FR 16386: Proposed Rule, Comments Close 4/7/23: “Mining of the Osage Mineral Estate for Oil and Gas” (March 17, 2023)
Interior Department
88 FR 15734: Notice, Comments Close 4/28/23: “Deepwater Horizon Natural Resource Damage Assessment Open Ocean Trustee Implementation Group Draft Restoration Plan 3 and Environmental Assessment: Birds” (March 14, 2023)
Ocean Energy Management Bureau
88 FR 16030: Notice: “Notice of Availability of the Proposed Notice of Sale for Gulf of Mexico Outer Continental Shelf Oil and Gas Lease Sale 261” (March 15, 2023)
Other Agencies
88 FR 16776: Proposed Rule, Comments Close 5/19/23: “Endangered and Threatened Wildlife and Plants; Endangered Species Status With Critical Habitat for Texas Heelsplitter, and Threatened Status With Section 4(d) Rule and Critical Habitat for Louisiana Pigtoe” (March 20, 2023)
88 FR 16310: Rule: “Update to Electrical Engineering Regulations” (March 16, 2023)
88 FR 15956: Notice: “Takes of Marine Mammals Incidental to Specified Activities; Taking Marine Mammals Incidental to Pile Driving Training Exercises at Naval Base Ventura County, Port Hueneme” (March 15, 2023)
U.S. HOUSE ENERGY AND COMMERCE COMMITTEE
H.R.1 “Lower Energy Costs Act” Referred to the Subcommittee on Water Resources and Environment. (March 15, 2023)
U.S. SENATE ENERGY AND NATURAL RESOURCES COMMITTEE
S.809 “A bill to transfer funds for Energy Efficiency Improvements and Renewable Energy Improvements at Public School Facilities to the Attorney General to award grants to States to promote safety and security in schools.” Read twice and referred to the Committee on Energy and Natural Resources. (March 15, 2023)
S.783 “A bill to require the Energy Information Administration to submit to Congress and make publicly available an annual report on Federal agency policies and regulations and Executive orders that have increased or may increase energy prices in the United States, and for other purposes.” Read twice and referred to the Committee on Energy and Natural Resources. (March 14, 2023)
STATE ACTIONS—EXECUTIVE & LEGISLATIVE
PENNSYLVANIA EXECUTIVE AGENCIES (Pa. Bulletin Vol. 53, No. 11 March 18, 2023)
DEPARTMENT OF ENVIRONMENTAL PROTECTION
53 Pa.B. 1515: Applications: “APPLICATIONS FOR NATIONAL POLLUTANT DISCHARGE ELIMINATION SYSTEM (NPDES) PERMITS AND WATER QUALITY MANAGEMENT (WQM) PERMITS UNDER THE CLEAN STREAMS LAW AND FEDERAL CLEAN WATER ACT”
53 Pa.B. 1614: Notices: “Environmental Assessment Approval for PENNVEST Funding Consideration”
53 Pa.B. 1576 Notices: “Planning Grant Awards under Section 901 of the Municipal Waste Planning, Recycling and Waste Reduction Act, Act 101 of 1988”
PENNSYLVANIA LEGISLATURE
HB 314 “An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, in sales and use tax, further providing for exclusions from tax.” Referred to FINANCE, [House] (March 13, 2023)
HB 381 “An Act amending Title 74 (Transportation) of the Pennsylvania Consolidated Statutes, in turnpike, further providing for collection and disposition of tolls and other revenue.” Referred to TRANSPORTATION, [House] (March 14, 2023)
HB 367 “An Act amending Title 58 (Oil and Gas) of the Pennsylvania Consolidated Statutes, in development, providing for hydraulic fracturing fluid tracer.” Referred to ENVIRONMENTAL RESOURCES AND ENERGY, [House] (March 14, 2023)
HB 425 “An Act amending Title 66 (Public Utilities) of the Pennsylvania Consolidated Statutes, in service and facilities, providing for pipeline safety.” Referred to CONSUMER PROTECTION, TECHNOLOGY AND UTILITIES, [House] (March 15, 2023)
SB 230 “An Act amending the act of November 30, 2004 (P.L.1672, No.213), known as the Alternative Energy Portfolio Standards Act, further providing for definitions and for alternative energy portfolio standards; providing for solar photovoltaic technology requirements, for community solar program standards and for contracts for solar photovoltaic technologies by Commonwealth agencies; further providing for portfolio requirements in other states; and making a repeal.” Referred to CONSUMER PROTECTION AND PROFESSIONAL LICENSURE, [Senate] (March 15, 2023)
Written by:
Kole Zellers, Research Assistant
Kendal Ashman, Research Assistant
Jackie Schweichler, Staff Attorney
