The Foundation Mineral and Energy Law Newsletter
Pennsylvania- Mining
(By Joseph K. Reinhart, Sean M. McGovern, Gina N. Falaschi and Christina Puhnaty)
After a lengthy rulemaking process, the Pennsylvania Department of Environmental Protection’s (PADEP) CO2 Budget Trading Program rule was published in the Pennsylvania Bulletin. See 52 Pa. Bull. 2471 (Apr. 23, 2022). As previously reported in Vol. XXXVI, No. 4 (2019) of this Newsletter, on October 3, 2019, Governor Tom Wolf signed Executive Order No. 2019-07, “Commonwealth Leadership in Addressing Climate Change Through Electric Sector Emissions Reductions,” directing PADEP to initiate a rulemaking to join the Regional Greenhouse Gas Initiative (RGGI). RGGI is the country’s first regional, market-based cap-and-trade program designed to reduce carbon dioxide (CO2) emissions from fossil fuel-fired electric power generators with a capacity of 25 megawatts or greater that send more than 10% of their annual gross generation to the electric grid. The CO2 Budget Trading Program links Pennsylvania’s program to RGGI.
Following approval of the rule by the Environmental Quality Board (EQB) in July 2021 and approval by the Pennsylvania Independent Regulatory Review Commission in September 2021, the final form rulemaking was submitted to the Pennsylvania House and Senate Environmental Resources and Energy standing committees. Both houses of the legislature passed Senate Concurrent Regulatory Review Resolution 1 (S.C.R.R.R.1), which disapproved of the rulemaking, and Governor Wolf vetoed the resolution on January 10, 2022. See Vol. 39, No. 1 (2022) of this Newsletter. The Governor’s veto sent the resolution back to the legislature, where each chamber had 30 calendar days or 10 legislative days, whichever was longer, to attempt a veto override. The legislature needs a veto-proof two-thirds majority to override a veto and block a regulation. On April 4, 2022, the Pennsylvania Senate failed by one vote to reach the two-thirds majority vote needed to override Governor Wolf’s veto of S.C.R.R.R.1.
However, while S.C.R.R.R.1 was pending in the legislature, on November 29, 2021, the EQB submitted the CO2 Budget Trading Program rule to the Legislative Reference Bureau for publication in the Pennsylvania Bulletin. The Legislative Reference Bureau informed the EQB that it was not authorized to publish the rule because S.C.R.R.R.1 was still pending before the House of Representatives. On February 3, 2022, Patrick McDonnell, Secretary of PADEP and Chairperson of the EQB, filed suit in commonwealth court seeking to compel the Legislative Reference Bureau to publish the EQB’s final-form rulemaking for the CO2 Budget Trading Program. See McDonnell v. Pa. Legislative Reference Bureau, No. 41 MD 2022 (Pa. Commw. Ct. filed Feb. 3, 2022). On February 25, 2022, Senator Yaw’s office also announced that Pennsylvania Senate leaders petitioned to intervene in the lawsuit.
On April 5, 2022, the commonwealth court issued a stay preventing the Legislative Reference Bureau from publishing the EQB’s final-form rulemaking for the CO2 Budget Trading Program, pending further order of the court. Because no hearing was held on the stay, it was dissolved by operation of Pa. R. Civ. P. 1531(d) after five days.
The Legislative Reference Bureau subsequently published the rule on April 23, 2022. Two days later a group of stakeholders filed a petition for review of the rule and an application for preliminary injunction in the commonwealth court. See Bowfin KeyCon Holdings, LLC v. PADEP, No. 247 MD 2022 (Pa. Commw. Ct. filed Apr. 25, 2022). The court held a hearing on the preliminary injunction on May 10 and 11, 2022, and a ruling is expected early this summer.
If the commonwealth court does not grant the application for preliminary injunction, compliance obligations under the rule will begin July 1, 2022. Regulated sources must hold allowances equal to their CO2 emissions over a three-year compliance period. Each allowance is equal to one short ton of CO2. Regulated sources may purchase state-issued allowances at quarterly auctions or through secondary markets and can use allowances issued by any RGGI state to comply. Affected units would need to start monitoring emissions on July 1, 2022, to be able to purchase allowances for CO2 emitted on or after that date. RGGI operates on a three-year compliance schedule whereby only partial compliance is required within the first two years, and then full compliance is required after the end of the third year. The current RGGI three-year compliance period began in 2021, so 2021 and 2022 are interim compliance years and 2023 is a full compliance year. Regulated sources must acquire 50% of the necessary CO2 allowances by March 1, 2023, and acquire 100% of their allowances by March 1, 2024. The allowance price was $13.50 at the last RGGI auction on March 11, 2022. The partial year emissions cap for Pennsylvania would be 40.7 million tons of CO2 for the remainder of 2022. The total annual emissions cap will gradually decline to 58 million in 2030.
Further information regarding the rule can be found on PADEP’s RGGI webpage at https://www.dep.pa.gov/ Citizens/ climate/Pages/RGGI.aspx.
Pennsylvania Eligible for Over $26 Million in Federal Funding to Help Reclaim Abandoned Mine Lands
On March 4, 2022, Pennsylvania Governor Tom Wolf announced that the commonwealth is eligible for almost $26.5 million in Abandoned Mine Reclamation Fund program annual grants. See Press Release, Gov. Tom Wolf, “Gov. Wolf Announces $26.5 Million Federal Funding to Help Reclaim Abandoned Mine Lands” (Mar. 4, 2022). This is in addition to the almost $250 million authorized for annual distribution to Pennsylvania over 15 years from the federal Abandoned Mine Land (AML) Trust Fund. See Press Release, Gov. Tom Wolf, “Gov. Wolf Announces $244.9 Million Bipartisan Infrastructure Law Investment to Cleanup Pennsylvania’s Abandoned Mine Lands” (Feb. 7, 2022). The AML program was established pursuant to title IV of the Surface Mining Control and Reclamation Act of 1977, Pub. L. No. 95-87, 91 Stat. 445, and the $250 million annual distribution for Pennsylvania stems from President Joe Biden’s November 2021 bipartisan Infrastructure Investment and Jobs Act, Pub. L. No. 117-58, 135 Stat. 429 (2021).
In Governor Wolf’s March 4 announcement, he noted that AML funding supports jobs in coal communities and could lead to the reduction of methane emissions throughout the commonwealth. Pennsylvania expects to receive almost $4 billion over the next 15 years to address contamination and pollution caused by coal mining and the estimated 5,000 abandoned mines throughout the commonwealth. In 2019, the Pennsylvania Department of Environmental Protection (PADEP) reported that the commonwealth had over 287,000 acres of land in need of reclamation, with the estimated cost of reclamation expected to exceed $5 billion. See Fact Sheet, PADEP, “Pennsylvania’s Surface Mining Control and Reclamation Act Funded Abandoned Mine Lands Program: Past, Present, and Future” (Mar. 2019). A year-by-year summary of the AML grants awarded to Pennsylvania is available on PADEP’s website at https://www. dep.pa.gov/Business/Land/Mining/AbandonedMineReclamatio n/AMLProgramInformation/Pages/AMLFunding.aspx.
PADEP Announces Bond Rate Guidelines for Coal and Noncoal Mining Operations
On February 19, 2022, the Pennsylvania Department of Environmental Protection (PADEP) announced the bond rate guidelines for the calculation of land reclamation bonds for coal and noncoal mining operations in Pennsylvania. The coal bond rates were effective April 1, 2022, and the noncoal bond rates were effective February 19, 2022.
PADEP will use the coal bond rate guidelines to calculate land reclamation bonds for coal mining operations including surface mines, coal refuse disposal sites, coal refuse reprocessing sites, coal processing facilities, and the surface facilities of underground mining operations. These guidelines do not apply to bonds ensuring replacement of water supplies under section 3.1(c) of the Surface Mining Conservation and Reclamation Act, 52 Pa. Stat. § 1396.3a(c), or to bonds ensuring compliance with the requirements of the Bituminous Mine Subsidence and Land Conservation Act, id. §§ 1406.1—.21.
PADEP will use the noncoal bond rate guidelines to calculate land reclamation bonds for noncoal mining operations including surface mines and facilities and the surface facilities of underground mining operations. Activities including special revegetation plans, wetland mitigation, and stream channel restoration will be estimated on a case-by-case basis. Pursuant to 25 Pa. Code § 86.149 (coal) and 25 Pa. Code § 77.202 (non-coal), the bond schedule must reflect the requirement that the bond equal the estimated cost to PADEP “if it had to complete the reclamation, restoration and abatement work” required under the applicable acts, regulations, and permits. Both the coal and noncoal bond rate schedules and announcements are available on PADEP’s website at https://www.dep.pa.gov/Business/Land/Mining/BureauofMiningPrograms/Bonding/Pages/BondRates.aspx.
PADEP Publishes and Requests Comments on Draft Environmental Justice Policy
On March 12, 2022, the Pennsylvania Department of Environmental Protection (PADEP) published a revised draft of its Environmental Justice Policy (Draft EJ Policy) for public comment. See 52 Pa. Bull. 1537 (Mar. 12, 2022); PADEP, Draft EJ Policy (Mar. 12, 2022). Publication of the Draft EJ Policy comes approximately four years after PADEP published a revised version of its then-current EJ Policy focused on enhancing public participation during permit reviews in identified environmental justice (EJ) areas. PADEP withdrew that revision after public comments indicated that the proposed revisions were beyond the scope of PADEP’s stated focus. See 50 Pa. Bull. 5920 (Oct. 24, 2020). With the withdrawal, PADEP indicated that it intended to develop and integrate a broader EJ policy into its policies and practices. Id. The Draft EJ Policy incorporates, refines, and expands on the withdrawn 2018 revisions, relying on many of the developments that have occurred in the intervening years, and proposes to make significant changes to the current EJ Policy. See PADEP, Environmental Justice Public Participation Policy (Apr. 24, 2004). Below are some of the most significant changes.
Incorporation of Executive Order and Expansion of OEJ’s Role
The Draft EJ Policy incorporates Governor Tom Wolf’s October 28, 2021, executive order on EJ by citing it as an authority and addressing the requirements of the order. See Executive Order 2021-07, “Environmental Justice” (Oct. 28, 2021); Draft EJ Policy at i; see also Vol. XXXVIII, No. 4 (2021) of this Newsletter (Pennsylvania—Oil & Gas report). The executive order aligns the commonwealth with federal EJ initiatives and directs PADEP and executive agencies to address EJ across all programs. The executive order also formally established the Office of Environmental Justice (OEJ) and the Draft EJ Policy expands upon and clarifies the roles and responsibilities of the OEJ. Draft EJ Policy at 4–6. OEJ’s responsibilities include carrying out the Draft EJ Policy requirements and leading an interagency council on EJ for the commonwealth. Id. at 4.
Trigger and Opt-in Permits Are More Inclusive
The Draft EJ Policy expands the applicability of the policy to more permits, including “trigger permits,” defined as permits that “may lead to significant public concern due to potential impacts on human health and the environment.” Id. at 3. Trigger permits listed in the policy will automatically fall under the Draft EJ Policy if the project is in an “EJ Area.” Id. at 3, 6, 19–20. Trigger permits listed include surface and underground mining permits, coal refuse disposal, and large coal preparation facilities. Id. at 19. Unconventional oil and gas permits are also listed in the Draft EJ Policy as trigger permits and unconventional oil and gas permit holders must adhere to unique public participation requirements, including generating annual reports on active and anticipated drilling operations in EJ Areas. Id. at 15–16, 20.
Permits not listed as trigger permits or permits outside an EJ Area may still be considered “opt-in permits,” defined as “[a] permit that otherwise does not qualify as a public participation trigger permit, but [PADEP] believes warrants special consideration and enhanced public participation based on identified community concerns, present or anticipated environmental impacts, or reasonably anticipated significant adverse cumulative impacts.” Id. at 2. PADEP maintains broad discretion to apply the Draft EJ Policy to opt-in permits, which may include a permit for a listed opt-in facility type (appendix A of the Draft EJ Policy); a permit that “warrants special consideration,” a phrase undefined in the Draft EJ Policy; or any permit that warrants special consideration based on its “reasonably anticipated significant adverse cumulative impacts,” also undefined in the Draft EJ Policy. Id. at 2; see also id. at 20.
The Draft EJ Policy moves the definition of an “EJ Area” outside of the policy to a supplemental document, which has not yet been drafted or circulated. Id. at 1–2. According to PADEP, this supplemental document should allow for more frequent updates to data and methods used to determine “the geographic location where [PADEP’s] EJ Policy applies.” Id. at 1. Further, the Draft EJ Policy requires use of the new and frequently updated EJ Areas Viewer mapping tool, which includes environmental, demographic, and health data for use in all decisions regarding EJ in the commonwealth. Id. at 2, 5, 7. Because the EJ Areas Viewer will be frequently updated and the definition of an EJ Area will live in a supplemental document, it may prove difficult for permit applicants to predict when the Draft EJ Policy, if finalized, will apply to a project.
Enforcement and Grant Priority, Harmony with Climate Change Initiatives, and Future Updates
The Draft EJ Policy requires PADEP to prioritize inspections and compliance in EJ Areas or areas where environmental and public health conditions warrant increased attention. Id. at 16. PADEP must also develop grant guidance to prioritize EJ projects and create tracking/reporting systems for EJ projects. Id. at 17–18. The Draft EJ Policy also prompts PADEP to harmonize EJ initiatives with climate change initiatives. Id. at 17. If finalized as drafted, PADEP’s Secretary must review the EJ Policy at least every four years to determine whether revisions—via public comment and engagement processes—are necessary. Id. at 18.
PADEP accepted written comments on the Draft EJ Policy through May 11, 2022, and has suggested that the supplemental document defining “EJ Area” will be issued for public review sometime later this year. For more information on the Draft EJ Policy and how to submit comments, visit PADEP’s website at https://www.dep.pa.gov/PublicParticipation/ OfficeofEnvironmentalJustice/Pages/Policy-Revision.aspx.
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