Pittsburgh, PA
The Foundation Mineral and Energy Law Newsletter
Pennsylvania – Oil & Gas
(By Joseph Reinhart, Sean McGovern, Matthew Wood and Christina Puhnaty)
On February 17, 2023, the Clean Air Council (CAC) and the Environmental Integrity Project (EIP) sent a letter to the Pennsylvania Department of Environmental Protection (PADEP) requesting that the agency issue an order to Shell Chemical Appalachia LLC (Shell) to temporarily halt operations at the Shell Polymers Monaca Plant in Beaver County, Pennsylvania (Plant). See Letter from EIP & CAC to PADEP (Feb. 17, 2023). Specifically, CAC and EIP alleged that people living near the Plant had been exposed to volatile organic compounds (VOCs), nitrogen oxide (NOx), and other pollutants emitted in violation of Shell’s plan approval, the federal Clean Air Act, and the Pennsylvania Air Pollution Control Act (APCA). CAC and EIP cited PADEP’s February 2023 notice of violation (NOV) documenting the Plant’s exceedances of the 12-month rolling total emission limitations for VOCs in November and December 2022 and the 12-month rolling total emission limitations for NOx in December 2022, as well as the agency’s December 2022 NOV for the same VOCs emissions violations during September and October 2022. CAC and EIP also highlighted multiple malfunction reports submitted to PADEP by Shell documenting alleged violations of the visible emissions limitations of the Clean Air Act and Shell’s plan approval related to emissions from the Plant’s flares.
CAC and EIP urged PADEP to immediately act using the authority granted to it under the APCA, arguing that the statute allows the agency to issue orders to facilities to cease operations in violation of the APCA, plan approvals, or permits, citing as precedent a stop construction order PADEP issued in 2018 related to incidents during the construction of the Mariner East 2 pipeline. CAC and EIP requested that PADEP issue a similar order to Shell until the company can demonstrate that the Plant can operate in compliance with applicable laws. Prior to submitting their request to PADEP, CAC and EIP also sent Shell a notice of intent to sue the company under the citizen suit provisions of the Clean Air Act and the APCA to compel the Plant’s compliance with applicable requirements. See Notice of Intent to Sue (Feb. 2, 2023).
PADEP responded to CAC and EIP’s allegations in a February 28, 2023, letter in which the agency declined to issue an order to Shell, citing ongoing evaluations and inquiries, but said it would consider CAC and EIP’s letter in evaluating future enforcement actions. See PADEP Response (Feb. 28, 2023). The agency explained that according to Shell, the Plant is still in the commissioning phase, which started in mid-2022, and Shell has represented that the malfunctions and violations during commissioning will not occur during normal operations. PADEP also noted that it had fined Shell, was considering other penalties, and directed Shell to submit an emission exceedance report and mitigation plan examining the causes of, and identifying measures to prevent, the violations and malfunctions, which Shell did on January 30, 2023. Since then, PADEP requested, and Shell provided, additional technical information regarding the mitigation plan. PADEP has also issued Shell four more NOVs and Shell has submitted another malfunction report. For additional information, see https://www.dep.pa.gov/About/Regi onal/SouthwestRegion/Community%20Information/Pages/Shell-Petrochemical-Complex-.aspx.
Pennsylvania PUC Denies Petition to Reconsider Jurisdiction over Certain Class 1 Gathering Pipelines
On March 16, 2023, the Pennsylvania Public Utility Commission (PUC) entered an order (Order) denying a petition for reconsideration (Petition) of its December 8, 2022, implementation order (Implementation Order), under which the PUC asserted jurisdiction over Class 1 natural gas gathering pipelines, including Type R intrastate pipelines, and certain liquid natural gas facilities. To reach this conclusion, the PUC relied on the Gas and Hazardous Liquids Pipelines Act (Act 127), 58 Pa. Stat. §§ 801.101–.1101, and amendments to regulations made in the final Gas Gathering Rule of the Pipeline and Hazardous Materials Safety Administration (PHMSA), 86 Fed. Reg. 63,266 (Nov. 15, 2021) (to be codified at 49 C.F.R. pts. 191, 192). As de-scribed in the Implementation Order, the PUC determined that Type R lines were subject to Act 127 registration and assessment, meaning that as issued, the Implementation Order would have required operators of Type R lines to register with the PUC on an annual basis and pay annual assessments.
In its Petition, the Pennsylvania Independent Oil & Gas Association (PIOGA), a trade association representing Pennsylvania oil and natural gas interests, challenged the PUC’s conclusion. It argued that the PUC had committed an error of law because Type R lines are subject only to annual and incident reporting requirements under 49 C.F.R. Part 191, which governs annual, incident, and other reporting requirements, but not subject to safety requirements under 49 C.F.R. Part 192, which governs minimum federal safety standards. PIOGA contended that because Type R lines are not subject to the Part 192 safety regulations, they do not implicate the PUC’s pipeline safety program. As such, the PUC lacked jurisdiction under Act 127, with its accompanying registration and annual assessment requirements, which apply only to “pipelines, pipeline operators or pipeline facilities regulated under Federal pipeline safety laws.” 58 Pa. Stat. § 801.103.
The PUC rejected PIOGA’s argument, finding that Act 127 defines “Federal pipeline safety laws” as “[t]he provisions of 49 U.S.C. Ch. 601 (relating to safety), the Hazardous Liquid Pipeline Safety Act of 1979 (Public Law 96-129, 93 Stat. 989), the Pipeline Safety Improvement Act of 2002 (Public Law 107-355, 116 Stat. 2985) and the regulations promulgated under the acts.” 58 Pa. Stat. § 801.102. The PUC reasoned that because 49 C.F.R. Subtitle B, Subchapter D, Parts 190—199, were promulgated pursuant to 49 U.S.C. Ch. 601, those Parts were subject to Act 127 and thus fall under the PUC’s jurisdiction. Accordingly, the PUC denied PIOGA’s Petition and determined that Type R pipeline operators must register annually with the PUC and it must maintain a registry of these operators.
In addition to the registration requirements, the PUC clarified two points on assessment and reporting obligations for Type R pipelines. The PUC said that Act 127 assessments apply to “regulated onshore [gas] gathering pipeline miles.” 58 Pa. Stat. § 801.503(b). Because Type R pipelines are specifically excluded from that definition under 49 C.F.R. Part 192, the PUC determined that there is no basis under Act 127 to assess Type R pipeline operators. Regarding reporting, the PUC explained that although it has a duty and the authority under Act 127 to regulate pipeline operators consistent with federal pipeline safety laws, PHMSA intends to enforce the 40 C.F.R. Part 191 reporting requirements for Type R intrastate pipeline operators, meaning the PUC does not need to enforce those requirements at this time.
The Implementation Order, PIOGA’s Petition, and the Order, as well as other related documents, are available at PUC Docket # M-2012-2282031 at https://www.puc.pa.gov/search/document-search/.
PADEP Preempted by PHMSA Regarding November 2022 Incident at Natural Gas Storage Facility
The Pennsylvania Department of Environmental Protection (PADEP) and Equitrans, L.P. (Equitrans), have reached a settlement regarding the administrative order issued by PADEP on December 8, 2022 (Order). See Stipulation of Settlement, Equitrans, L.P. v. PADEP, EHB Docket No. 2023-003-B (Apr. 12, 2023). As previously reported in Vol. 40, No. 1 (2023) of this Newsletter, PADEP issued the order in response to the November 2022 incident at Equitrans’ Rager Mountain Gas Storage Reservoir (Rager Mountain Facility) in Cambria County, Pennsylvania. The order required Equitrans to, inter alia, conduct mechanical integrity testing of its Rager Mountain storage wells, recondition and plug the wells as needed, and retain a third party to audit “all aspects of Equitrans’ storage field operations.” Equitrans ap-pealed the Order in early January, arguing that PADEP’s jurisdiction over the Rager Mountain Facility was preempted by the federal Natural Gas Act and Pipeline Safety Act, which grant certain exclusive jurisdiction to the Pipeline and Hazardous Materials Safety Administration (PHMSA) and Federal Energy Regulatory Commission (FERC) with regard to interstate natural gas storage facilities.
The April 12 stipulation of settlement between PADEP and Equitrans provides that the Rager Mountain Facility is “subject to the jurisdiction of FERC under the Natural Gas Act pursuant to a certificate of public convenience and necessity, and to the jurisdiction of PHMSA under the Pipeline Safety Act.” The stipulation of settlement further provides that PADEP would rescind its order and that Equitrans would withdraw its appeal and negotiate a final safety order with PHMSA regarding the Rager Mountain Facility.
Copyright © 2023, The Foundation for Natural Resources and Energy Law, Westminster, Colorado
