Shale Law Weekly Review—Week of October 25, 2021

Pipelines: North Dakota District Court Rules in Favor of Energy Company in Dispute Over Royalty Payments and Post-Production Costs ⚡
On October 13, 2021, the Northwest Judicial District Court, McKenzie County, issued a ruling in favor of Newfield Exploration Company in a case where the subject matter of the dispute is whether the energy company could deduct post-production costs from royalty payments owed to the state of North Dakota. Newfield Exploration Co., et al. v. State of North Dakota, et al., No. 27-2018-CV-00143. The district court initially sided with Newfield, determining that the lease “allows the reduction of the royalty payments to account for expenses incurred to make the natural gas marketable.” The state appealed the decision to the Supreme Court of North Dakota, which reversed it on July 11, 2019, finding that the term “gross proceeds” used in the lease meant the “lessor’s royalty is calculated based on the total amount received for the product without deductions for making the product marketable.” Newfield Exploration Co., et al. v. State of North Dakota, et al., No. 2019 ND 193. The case was remanded to the lower court for further adjudication. In its recent judgment, the court questioned whether there was an actual breach of contract between the parties because the state failed to “provide[] the court with any contract or lease between it and Newfield that allows this court to meaningfully review the contract obligations and whether a breach has occurred.”

Pipelines: The D.C. Circuit Court of Appeals Denied Case Rehearing Petition over Insufficiency of FERC’s NEPA Analysis
On October 15, 2021, the U.S. Court of Appeals for the District of Columbia Circuit denied Rio Bravo Pipeline Company, LLC’s petition seeking a rehearing of that court’s prior decision. Vecinos para el Bienestar, et al. v. FERC, No. 20-1045. On August 3, 2021, the D.C. Circuit Court ruled that the Federal Energy Regulatory Commission (FERC) failed to sufficiently address the impacts on climate change of three liquefied natural gas (LNG) export terminals located in Cameron County, Texas, under the National Environmental Policy Act (NEPA) standards. The court remanded the matter to the Commission without vacatur for further proceedings. On September 17, 2021, Respondent-Intervenor Rio Bravo Pipeline Co., LLC, filed a petition for panel rehearing of the court’s ruling over social cost of carbon tool. See SLWR – September 27, 2021, “LNG Infrastructure: District of Columbia Circuit Court Petitioned to Rehear Prior Ruling Over Social Cost of Carbon Tool.”

Shale Law/Policy Resources of Interest:

Charles Sartain and Brittany Blakey, Statute of Frauds Torpedoes an Overriding Royalty Sale (October 20, 2021).

Maria Antonia Tigre, The Contribution of Automakers to Climate Change: Broadening the Reach of Private Sector Defendants in Climate Litigation (October 14, 2021).

AGENCY PRESS RELEASES – STATE/FEDERAL

Pennsylvania Department of Environmental Protection

No relevant actions.

U.S. Department of Energy

DOE Awards Nearly $40 Million for Grid Decarbonizing Solar Technologies (October 19, 2021).

DOE Announces $105 Million for Small Businesses to Invest in Clean Energy Research and Development (October 18, 2021).

U.S. Environmental Protection Agency

Wichita State University Environmental Finance Center Selected for EPA Grant Funding to Create WaterCorps Career Network (October 19, 2021).

New England Experienced an Increase in the Number of Unhealthy Air Quality Days During the 2021 Ozone Season (October 19, 2021).

EPA Seeks Input on Proposed PFAS National Primary Drinking Water Regulation (October 19, 2021).

EPA Administrator Regan Announces Comprehensive National Strategy to Confront PFAS Pollution (October18, 2021).

STATE ACTIONS—EXECUTIVE/LEGISLATIVE

Pennsylvania Executive Agencies—Actions and Notices (Pa. Bulletin Vol. 51, No. 43—October 23, 2021)

Department of Environmental Protection

51 Pa.B. 6704 Notice: “Bid Opportunity [‘Cleaning Out and Plugging One Abandoned Well, Stewardson Township, Potter County’].”

51 Pa.B. 6706 Notice: “Public Notice of Draft NPDES General Permit for Discharges from Hydrostatic Testing of Tanks and Pipelines (PAG-10).”

Susquehanna River Basin Commission

51 Pa.B. 6593 Rules and Regulations: “Review and Approval of Projects [Update Regarding Project Approval and Review, Rules for Groundwater Withdrawals, and Revision of Triggers for Grandfathered Sources].”

Pennsylvania Legislature

SB 806 “An Act amending. . . the Oil and Gas Lease Act, further providing for definitions, for payment information to interest owners and for accumulation of proceeds from production.” Re-referred to Appropriations [Senate] (October 19, 2021)

SB 275 “An Act amending Title 53 (Municipalities Generally) of the Pennsylvania Consolidated Statutes, in preemptions, providing for restrictions on utility services prohibited [restricting municipality ability to prohibit sale or usage of electricity based on its source].” First consideration [Senate] (October 19, 2021).

FEDERAL ACTIONS—EXECUTIVE/LEGISLATIVE

Federal Executive Agencies (Federal Register October 18 – October 22, 2021):

Coast Guard

86 FR 57896 Rule: “Updates to Marine Engineering Standards [Updates and elimination of ‘outdated or unnecessarily prescriptive regulations’]” (October 19, 2021).

Energy Department

86 FR 58260 Notice: “Intent to Revise Power Marketing Policy Cumberland System of Projects [for Provisions addressing RECs]” (October 21, 2021).

Environmental Protection Agency

86 FR 58652 Notice: “Proposed Consent Decree, Clean Air Act Citizen Suit [Regarding Suit ‘to compel the Administrator to assemble, publish, and publish notice of comprehensive documents setting forth the requirements of the state implementation plans (“SIPs”)’]” (October 22, 2021).

86 FR 57757 Rule: “Washington: Final Approval of State Underground Storage Tank Program Revisions, Codification and Incorporation by Reference” (October 19, 2021).

86 FR 57585 Rule: “Denial of Petition for Reconsideration and Administrative Stay: ‘Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NNSR): Project Emissions Accounting’” (October 18, 2021).

Federal Energy Regulatory Commission

86 FR 58649 Notice: “Electric Transmission Incentives Policy Under Section 219 of the Federal Power Act; Notice Inviting Post-Workshop Comments” (October 22, 2021).

86 FR 58261 Notice: “Transcontinental Gas Pipe Line Company, LLC; Notice of Schedule for Environmental Review of the Happytown Abandonment Project” (October 21, 2021).

86 FR 58264 Notice: “Columbia Gas Transmission, LLC; Notice of Request Under Blanket Authorization and Establishing Intervention and Protest Deadline [for Installation, Modification, and Expansion of Existing Crossover Between Line A-159 and A-79]” (October 21, 2021).

86 FR 58073 Notice: “WBI Energy Transmission, Inc.; Notice of Request Under Blanket Authorization and Establishing Intervention and Protest Deadline [for Abandonment of Six Natural Gas Storage Wells in Montana]” (October 20, 2021).

Justice Department

86 FR 58103 Notice: “Notice of Lodging of Proposed Consent Decree Under the Clean Water Act and Oil Pollution Act [for Discharge of Crude Oil from and Illinois Pipeline]” (October 20, 2021).

86 FR 57855 Notice: “Notice of Lodging of Proposed Consent Decree Under the Clean Air Act [for ‘alleged violations involve flares used at petrochemical manufacturing plants owned and operated by the defendants’]” (October 19, 2021).

Ocean Energy Management Bureau

86 FR 57689 Notice: “Notice on Outer Continental Shelf Oil and Gas Lease Sales [List of Restricted Joint Bidders]” (October 18, 2021).

Pipeline and Hazardous Materials Safety Administration

86 FR 58389 Notice: “Pipeline Safety: Pipeline Transportation; Hydrogen and Emerging Fuels Research and Development (R&D) Public Meeting and Forum [November 30, 2021 through December 2, 2021]” (October 21, 2021).

Susquehanna River Basin Commission

86 FR 58378 Notice: “Projects Approved for Consumptive Uses of Water” (October 21, 2021).

Transportation Statistics Bureau

86 FR 57744 Notice: “Agency Information Collection Activity: Notice of Request for Approval to Continue to Collect Information: Barrier Failure Reporting in Oil and Gas Operations on the Outer Continental Shelf” (October 18, 2021).

House Energy and Commerce Committee Actions:

H.R.5701 “To repeal the renewable fuel program of the Environmental Protection Agency.” Referred to the House Committee on Energy and Commerce (October 22, 2021).

H.R.5698 “To direct the Administrator of the Environmental Agency to establish a program to enhance the transparency, quality, and availability of life-cycle assessment data, and harmonize life-cycle assessment approaches to calculating greenhouse gas emissions and other environmental factors, in the production of products made primarily of eligible materials through environmental product declarations or a similar mechanism as determined appropriate by the Administrator, and for other purposes.” Referred to the Committee on Energy and Commerce, and in addition to the Committees on Oversight and Reform, and Science, Space, and Technology. . . (October 22, 2021).

H.R.5621 “To require the Comptroller General of the United States to conduct an analysis of the costs of converting light-duty vehicles in the Federal fleet to electric vehicles, and for other purposes.” Referred to the Committee on Oversight and Reform, and in addition to the Committee on Energy and Commerce. . . (October 19, 2021).

H.R.5619 “Marginal Well Protection Act [‘To prohibit. . . imposing a fee on certain facilities for methane emissions’]” Referred to the House Committee on Energy and Commerce (October 19, 2021).

H.R.2826 “To establish a Global Climate Change Resilience Strategy, to authorize the admission of climate-displaced persons, and for other purposes.” Referred to the House Subcommittee on Immigration and Citizenship (October 19, 2021).

H.R.2751 “PFAS Accountability Act of 2021 [‘to codify a federal cause of action and a type of remedy available for individuals significantly exposed to per- and polyfluoroalkyl substances’ and to encourage related research]” Referred to the House Subcommittee on the Constitution, Civil Rights, and Civil Liberties (October 19, 2021).

H.R.2644 “Green New Deals for Cities Act of 2021 [‘This bill authorizes the Department of Housing and Urban Development to provide funding to states, local governments, or Native American nations to carry out Green New Deal projects’] Referred to the House Subcommittee on the Constitution, Civil Rights, and Civil Liberties (October 19, 2021).

H.R.2434 “Environmental Justice Act of 2021 [Requires Agencies to Recognize and Mitigate Inequal Adverse Effects of Environmental Policies on Communities of Color, Indigenous Communities, and Low-Income Communities for Past, Present, and Future Actions]” Referred to the House Subcommittee on the Constitution, Civil Rights, and Civil Liberties (October 19, 2021).

H.R.2046 “Energy Security Cooperation with Allied Partners in Europe Act of 2021 [Requirements for US International Energy Policy Including Natural Gas Exports to NATO Members]” Referred to the House Subcommittee on Immigration and Citizenship (October 19, 2021).

H.R.332 “Recognizing the duty of the Federal Government to create a Green New Deal” Referred to the House Subcommittee on the Constitution, Civil Rights, and Civil Liberties (October 19, 2021).

Senate Energy and Natural Resources Committee:

S.2836 “America’s Revegetation and Carbon Sequestration Act of 2021” Hearings held by the Senate Committee on Energy and Natural Resources (October 21, 2021).

S.2996 “Alaska Offshore Parity Act [‘distribution of certain outer Continental Shelf revenues to the State of Alaska’]” Read twice and referred to the Senate Committee on Energy and Natural Resources (October 19, 2021).

S.2433 “Federal Land Asset Inventory Reform Act of 2021 [‘to develop and maintain a current and accurate multipurpose cadastre (inventory) of federal real property to support federal land management activities’]” Hearings Held by the Senate Committee on Energy and Natural Resources Subcommittee on Public Lands, Forests, and Mining (October 19, 2021).

S.2130 “RISEE Act of 2021 [to Reallocate Certain Outer Continental Shelf Revenues and Support Renewable Energy Development]” Hearings Held by the Senate Committee on Energy and Natural Resources Subcommittee on Public Lands, Forests, and Mining (October 19, 2021).

S.607 “End Speculative Oil and Gas Leasing Act of 2021 [‘specifies requirements for the leasing of oil and gas resources on federal lands’]” Hearings Held by the Senate Committee on Energy and Natural Resources Subcommittee on Public Lands, Forests, and Mining (October 19, 2021).

Follow us on Twitter @AgShaleLaw—Top #ShaleLaw HotLinks October 16–October 22, 2021:

Enbridge Temporarily Stops Michigan Pipeline Due to Protests, Associated Press

USA EIA Bumps Up Oil Price Forecast, Rigzone

Behind the Energy Crisis: Fossil Fuel Investment Drops, and Renewables Aren’t Ready, Wall Street Journal

Global Gas Crisis Is Spilling over into Oil Markets, IEA Says, BNN Bloomberg

California Appellate Court Overturns Fracking Ban in Monterey, Courthouse News

Canadian Firm Reveals Plan For $2.8b North Dakota Gas Plant, Associated Press

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Written by:
Noah Gochnauer, Research Assistant
Chloe Marie, Research Specialist
Jackie Schweichler, Staff Attorney