Shale Law Weekly Review—Week of November 6, 2023

Oil & Gas Leasing: Alaska Challenges DOI’s Cancellation of Leases in Alaska National Wildlife Refuge ⚡
On October 18, 2023, the Alaska Industrial Development and Export Authority (ADIEA), a public corporation owned by the State of Alaska, sued DOI for cancelling its leases in the Alaska National Wildlife Refuge (ANWR). Alaska Indus. Dev. & Export Auth. v. U.S. Dep’t of the Interior, No. 1:23-cv-03126 (D.D.C. Oct. 18, 2023).  The leases were initially suspended by the Department of the Interior (DOI) in 2021, and later cancelled on September 16, 2023. ADIEA seeks to overturn the DOI’s decision to cancel its seven leases, arguing that the leases are required by Congress under Section 20001 of the Tax Cuts and Jobs Act. Furthermore, it argues that DOI is not authorized to cancel the leases on the basis that it had “erred in previous environmental analysis” conducted in 2019 because the error concerns only “operational rules,” which do not “implicate the validity of the Congressionally-mandated leases that DOI issued to AIDEA.” Additionally, the complaint alleges that DOI violated its own procedural rules by unilaterally cancelling the leases without a court order.

Oil and Gas Leasing: White House Releases Arctic Region Implementation Plan and Key Agency Directives for Environmental Transition
On October 23, 2023, the White House released its implementation plan for the Arctic region, entitled “Implementation Plan for the United States’ National Strategy for the Arctic Region”  (Implementation Plan). The NSAR Implementation Plan follows and was created pursuant to the National Strategy for the Arctic Region (NSAR) which was issued by the executive branch on October 7, 2022. The Implementation Plan delineates over 30 objectives and 200 directed actions, underscoring climate change mitigation, strengthened conservation, and a transition from a fossil fuel dependency in the Arctic region. Key federal agencies designated in the Implementation Plan include the Office of the Special Presidential Envoy for Climate, the State Department, the Interior Department, and the US Geological Survey, each with specified roles in achieving the objectives set forth in the plan, such as spearheading international emission reduction agreements, and promoting sustainable critical mineral production in Alaska.

Oil and Gas Leasing: Alaska Offers Royalty-Free Terms to Bid-Winner in Upcoming Cook Inlet Lease Sale
On Friday, October 13, 2023, the Alaska Department of Natural Resources Division of Oil and Gas (DNR) posted a notice of sale that outlines five upcoming oil and gas lease sales in the State of Alaska, including the Cook Inlet area. Notably, the terms and conditions for the Cook Inlet lease sale do not include a royalty provision. This is unlike the terms of the other four leases, which include fixed royalty rates varying from 12.5 percent to 16.67 percent. Under state law, the DNR has the authority to construct the terms of a lease’s royalty provision as the commissioner sees fit, including the omission of royalty payments altogether. AS 38.05.135. In a statement to the Alaska Beacon, the policy and program specialist of the DNR Division of Oil and Gas stated that this decision is intended to incentivize the development of natural gas in the Cook Inlet areas, as there are concerns about the decreasing volume of natural gas in “the state’s most populous region.”

Oil and Gas Leasing: 5th Circuit Halts Gulf Oil Lease Authorized Without New Endangered Whale Protections
On Thursday, October 26, 2023, the Fifth Circuit Court of Appeals issued an order staying a preliminary injunction granted by the lower court that authorized an oil and gas lease sale to continue in the Gulf of Mexico without the additional protections for endangered whales in the area. State of Louisiana v. Haaland (No. 2:23-cv-01157). Lease Sale 261 is a proposed lease on the Gulf of Mexico’s Outer Continental Shelf, covering approximately 70 million acres. Originally proposed to be held on September 27, 2023, Lease Sale 261 was reduced and modified by the Bureau of Ocean Energy Management (BOEM) in an effort to protect the Rice’s whale in accordance with the Endangered Species Act. However, the West District Court of Louisiana authorized the lease sale to continue as originally scheduled without BOEM’s additional protections, citing the plaintiff’s risk of irreparable economic harm as the main factor. After this ruling, the federal government and several environmental justice groups, together acting as defendants, appealed to the Fifth Circuit on September 22, 2023. As a result of this most recent ruling, the conditions of the injunction are paused until the Fifth Circuit makes a ruling on the appeal. For more background on this topic, see the Shale Law Weekly Review—Week of October 2, 2023.

Pipelines: FERC Approves Gas Transmission Northwest’s XPress Pipeline Project
On October 23, 2023, the Federal Energy Regulatory Commission (“FERC”) issued a certificate of public convenience and necessity to Gas Transmission Northwest LLC (“GTN”) enabling construction on their XPress Pipeline Project. GTN currently operates a pipeline system stemming from “Washington, to the Oregon-California border,” which the Xpress Pipeline will supply with natural gas from its Kingsgate Meter Station located in northern Idaho. FERC sided with GTN’s arguments for the pipeline’s necessity to ensure consistent fuel quantities to customers in the Pacific Northwest over arguments posed by the states of California, Oregon, and Washington that alternative energy sources could fill the void. FERC turned to precedent agreements with Cascade and Intermountain, regional service providers, and natural gas producer Tourmaline for 100% of the XPress pipeline’s capacity as “significant evidence of the need for the proposed project.” Notedly, Commissioners Clements and Danly concurred in part and dissented in part, primarily disagreeing with the FERC’s inability to state “the significance of the environmental impacts caused by the project’s greenhouse gas (GHG) emissions.” Despite these disagreements, FERC’s decision allows for GTN to begin construction in compliance with FERC’s stated environmental conditions listed in the appendix of the decision.

GHG Emissions: New York City Signs Law Requiring City Vehicles To Be Zero-Emissions By 2038
On October 23, 2023, New York City Mayor signed New York, N.Y., Int. 279-A (2023) into law. This legislation mandates the transition of all light- and medium-duty vehicles procured by the City to zero-emission vehicles after July 1, 2025, aiming for a complete transition by July 1, 2035. It extends the same requirement to heavy-duty vehicles procured after July 1, 2028, targeting a full transition by July 1, 2038. Additionally, all motorcycles in the City’s fleet are required to be zero-emission by July 1, 2035. These mandates however, “are subject to certain exceptions, such as cost, availability, and lack of charging infrastructure.”

State Regulation: California Bill Expands Scope, Penalties, and Enforcement for Violations of Oil and Gas Law
On October 7, 2023, the Governor of California signed Assembly Bill 631 into law, introducing revised enforcement and frameworks for environmental penalties within the oil and gas sector. Oil and Gas: Enforcement: Penalties, Cal. Assemb. Bill No. 631, Ch. 337, 2023 Leg., Reg. Sess. (Cal. 2023). First, Bill 631 extends a five-year statute of limitations to specified environmental protection laws, aligning them with existing oil and gas laws. Secondly, it expands the scope, penalties, and enforcement of criminal violations concerning oil and gas laws, particularly in instances where a supervisor identifies a well posing risks “to life, health, property, and natural resources.” The legislation also escalates the fines for obstructing or refusing well inspections and enforcement requirements, increasing the penalty range from $100 – $1000 to $500 – $5000. Lastly, Bill 631 establishes a robust civil penalty scheme for violations. It sets a cap of $50,000 per violation of oil and gas laws, $25,000 per separate or continuing violation of an issued order under these laws, and a daily penalty for the duration of the violation. For any intentional or negligent violations, a limit of $70,000 is imposed.

Pipelines: The Commission of the Canada Energy Regulator Recommends Approval of NorthRiver Midstream Connection Project
On October 18, 2023, the Commission of the Canada Energy Regulator (CER) recommended approval of the project application filed by NorthRiver Midstream for its NEBC Connector Project. The project involves constructing two parallel pipelines, one to transport condensate and the other to transport natural gas liquids, to connect current NorthRiver projects in British Columbia and Alberta. The CER emphasized that their recommendation included consideration of, and input from, the Indigenous Peoples. In addressing the “cumulative effects” that the project could have on Indigenous Peoples, the CER recommended an offset plan, which includes a “land securement fund” and contributions to the B.C. and Treaty 8 restoration funds. In addition to the offset plan, the CER recommended 49 conditions to “mitigate impacts [of the project] on the rights and interests of Indigenous peoples.” These conditions range from environmental protections to employment training and construction monitoring. The CER submitted its recommendation to the Minister of Energy and Natural Resources, who will then issue the recommendation to the Governor in Council for a decision. Once a final decision has been made, the CER will be able to officially issue a certificate to NorthRiver to begin construction.

 

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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.

• November 17, 2023, noon – 1pm (ET). Understanding the Basic of the Fair Labor Standards Act. (Register)

On November 6, 2023, part 1 of “Making Laws Work for You, Part 1: Ag Security Areas, Farmland Preservation, and Clean & Green—Brook Duer with SBDC Ag Center of Excellence” educational session will be held by The University of Scranton SBDC, the PA SBDC Agriculture Center of Excellence, and the Penn State Center for Agricultural and Shale Law. 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.

• November 6, 2023, noon – 1:30 pm. Making Laws Work for You, Part 1: Ag Security Areas, Farmland Preservation, and Clean & Green—Brook Duer with SBDC Ag Center of Excellence. (Register)

On Thursday, November 16, 2023, the University of Maryland Agriculture Law Education Initiative will hold the 2023 Annual Agricultural and Environmental Law Conference at the Crowne Plaza Hotel in Annapolis. From 12:45 pm–1:50 pm, Center Staff Attorney Brook Duer will present, “HPAI: How Can We Miss You, If You Won’t Go Away?” as part of the conference.

• November 16, 2023, 12:45 pm – 1:50 pm. HPAI: How Can We Miss You, If You Won’t Go Away? (Register)

Follow us on Twitter @AgShaleLaw—Top #ShaleLaw HotLinks 

Farming for Renewable Energy (The Regulatory Review)

Chevron-Hess deal may lift Bakken oil output, but no return to boom days (Reuters)

Gulf of Mexico oil, gas lease sale may be delayed again pending appeal decision (Oil & Gas Journal)

Venture Global LNG can start new units at LNG plant, says FERC (Reuters)

Exxon, Chevron make big oil acquisitions in the face of uncertain future for fossil fuels (The Hill)

Connect with us on Facebook.

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

Oil & Gas Law & Policy Resources:

Energy Connects, UK announces 27 new North Sea oil and gas licences (October 30, 2023)

Energy Connects, SATORP completes MENA’s first conversion of used cooking oil into certified SAF (October 31, 2023)

McFarland, Devillier v. State of Texas: An Important Case for Texas Landowners (November 1, 2023)

Bloomberg, Oil Advances With Broader Markets on Fed Interest-Rate Signal (November 2, 2023)

Sartain, Agreed Judgment and Division Order Don’t Avoid Double Royalty Payment (November 3, 2023)

Bloomberg, Oil Heads for Second Weekly Drop as Israel War Still Contained (November 3, 2023)

FEDERAL ACTIONS—EXECUTIVE & LEGISLATIVE

U.S. DEPARTMENT OF ENERGY PRESS RELEASES

DOE Announces Up to $440 Million to Install Rooftop Solar and Batteries in Puerto Rico’s Most Vulnerable Communities (November 2, 2023)

Biden-Harris Administration Announces $1.3 Billion to Build Out Nation’s Electric Transmission and Releases New Study Identifying Critical Grid Needs (October 30, 2023)

U.S. ENVIRONMENTAL PROTECTION AGENCY PRESS RELEASES

Biden-Harris Administration Announces State and Tribal Allocations for $48 Million Grant Program to Protect Groundwater Resources and Tackle Climate Change (November 2, 2023)

EPA Launches New Community-based Initiative to Help People Access Unprecedented Resources for Local Climate and Environmental Justice Solutions (November 1, 2023)

Oil Recovery Operations and Mill Creek Restoration near Washington, Kansas, Are Complete (October 31, 2023)

EPA Grant to California Department of Health to Help Transition to Unleaded Aviation Gasoline in Disadvantaged Communities (October 31, 2023)

FEDERAL EXECUTIVE AGENCIES (Federal Register October 28 – November 3, 2023)

Environmental Protection Agency

88 FR 74712: Proposed Rule, Comments Close 11/30/2023: “Trichloroethylene (TCE); Regulation Under the Toxic Substances Control Act (TSCA)” (October 31, 2023)

88 FR 74360: Rule: “Changes to Reporting Requirements for Per- and Polyfluoroalkyl Substances and to Supplier Notifications for Chemicals of Special Concern; Community Right-to-Know Toxic Chemical Release Reporting” (October 31, 2023)

Federal Energy Regulatory Commission

88 FR 74028: Rule: “Requests for Commission Records Available in the Public Reference Room” (October 30, 2023)

Land Management Bureau

88 FR 74890: Rule: “Onshore Oil and Gas Operations; Federal and Indian Oil and Gas Leases; Codification of Onshore Orders 1, 2, 6, and 7; Correction” (November 1, 2023)

Other Agencies

88 FR 75638: Notice: “Notice of OFAC Sanctions Actions” (November 3, 2023)

88 FR 74483: Notice, Comments Close 01/02/2024: “Agency Information Collection Proposed Extension” (October 31, 2023)

88 FR 74420: Notice: “Notice of Scope Ruling Applications Filed in Antidumping and Countervailing Duty Proceedings” (October 31, 2023)

U.S. HOUSE ENERGY AND COMMERCE COMMITTEE

H.R.6192 “To amend the Energy Policy and Conservation Act to prohibit the Secretary of Energy from prescribing any new or amended energy conservation standard for a product that is not technologically feasible and economically justified, and for other purposes.” Referred to the House Committee on Energy and Commerce. (November 2, 2023)

H.R.6185 “To require coordination among Federal agencies on regulatory actions that affect the reliable operation of the bulk-power system.” Referred to the House Committee on Energy and Commerce. (November 2, 2023)

H.R.6178 “To require the Secretary of Energy to develop a National Electric Vehicle Bidirectional Charging Roadmap, and for other purposes.” Referred to the Committee on Energy and Commerce, and in addition to the Committee on Transportation and Infrastructure, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned. (November 2, 2023)

H.R.6152 “To require the Administrator of the Environmental Protection Agency to update the modeling used for lifecycle greenhouse gas assessments for approved fuel pathways under the Renewable Fuel Standard, and for other purposes.” Referred to the House Committee on Energy and Commerce. (November 1, 2023)

H.R.6142 “To amend the Rural Electrification Act of 1936 to establish a last acre program, and for other purposes.” Referred to the Committee on Agriculture, and in addition to the Committee on Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned. (November 1, 2023)

U.S. SENATE ENERGY AND NATURAL RESOURCES COMMITTEE 

S.3201 “A bill to prohibit drilling in the Arctic Ocean.” Read twice and referred to the Committee on Energy and Natural Resources. (November 2, 2023)

STATE ACTIONS—EXECUTIVE & LEGISLATIVE 

PENNSYLVANIA EXECUTIVE AGENCIES (Pa. Bulletin Vol. 53, No. 44—November 4, 2023)

 

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