On February 23, 2017, the Pennsylvania Department of Environmental Protection (PADEP) announced an extension of the public comment period regarding recently proposed draft general air permits for the oil and natural gas industry. Comments are now due by June 5, 2017. PADEP has proposed to issue a new general permit known as GP-5A for unconventional natural gas well site operations and remote pigging stations, as well as revise the existing general permit known as GP-5 for natural gas compression and/or processing facilities. PADEP’s proposal would also revise the Air Quality Permit Exemptions list. Refer to our Administrative Watch for more information. A formal notice regarding the comment deadline extension was also published in the Pennsylvania Bulletin dated February 25, 2017.
On January 11, 2017, the Pennsylvania Commonwealth Court held Section 301 of the Clean Streams Law “is a provision that prohibits acts or omissions resulting in the initial active discharge or entry of industrial waste into waters of the Commonwealth and is not a provision that authorizes the imposition of ongoing penalties for the continuing presence of an industrial waste in a waterway of the Commonwealth following its initial entry into the waterways of the Commonwealth.” EQT Production Co. v. Com., Dep’t of Envtl. Prot., 485 MD 2014, slip op. at *24 (Jan. 11, 2017).
This case arose out of a release from an impoundment at a Marcellus Shale well pad site in Tioga County, Pennsylvania. It is undisputed that EQT stopped the source of the release within twelve days of reporting it on May 30, 2012 and thereafter entered the Act 2 program to achieve cleanup standards for soil and groundwater. In May 2014, the Department sought a non-negotiable penalty of $1.2 million for the release. EQT filed a complaint in Commonwealth Court in September 2014 challenging the Department’s use of a “continuing violation” theory to support this penalty calculation. Subsequently, in October 2014, the Department filed a Complaint for Civil Penalties with the Pennsylvania Environmental Hearing Board, seeking a penalty of $4.5 million for the same release. The Department’s post-hearing brief in the EHB proceeding states that a penalty of nearly $470 million is supported by the Clean Streams Law.
The Department argued in the Commonwealth Court that “the illegal activity continues so long as the leaked industrial waste exists in any water of the Commonwealth” and that “the natural flow of waste from that water into another water of the Commonwealth” constitutes a new violation. Id. at *17-18. The Court noted that adopting the Department’s theory “would result in potentially limitless continuing violations for a single unpermitted release” and “would be tantamount to punishing a polluter indefinitely.” Id. at *20-21. The Court stated that the Department’s theory was “not supported by the statutory provisions and framework or the rules of statutory construction.” Id. at *20.
By clarifying the limits of the Department’s penalty authority to the days a waste or pollutant actually enters into groundwater or surface water, this precedential decision prevents the Department from threatening unauthorized civil penalties under the Clean Streams Law to leverage settlements in any context involving the Clean Streams Law, not just in the oil and gas industry.
On February 18, 2016, Pennsylvania Department of Environmental Protection (PADEP) Secretary John Quigley held a press conference to announce the release of the final Governor’s Pipeline Infrastructure Task Force (PITF) Report. Secretary Quigley stated that the final report contains only minor modifications to the draft report, but adds an executive summary and appendices. The final report includes all draft recommendations, including 11 that do not appear to have garnered majority support from the task force members in weighted voting. Appendix C to the final report assigns various government entities and/or industry with responsibility for following up on each individual recommendation.
Keith Coyle, a shareholder in Babst Calland’s new Washington, D.C. office and member of its Pipeline and HazMat Safety Practice Group, served on the Task Force.
The Pennsylvania Department of Environmental Protection (DEP) recently announced the draft final revisions to the “Environmental Protection Performance Standards at Oil and Gas Well Sites” rulemaking (Chapters 78 and 78a). Following the most recent round of public comment, DEP decided not to include the provisions for noise mitigation and centralized storage tanks for wastewater in the final regulations. DEP indicated that a separate process is more appropriate for noise mitigation due to the complex nature of noise mitigation. With regard to centralized storage tanks, DEP decided it would continue to regulate these facilities under the residual waste regulations. The amendments will be discussed at the upcoming meetings of the Conventional Oil and Gas Advisory Committee and, Oil and Gas Technical Advisory Board in late August and early September, respectively.
A Pennsylvania senate committee recently unanimously approved two bills regarding oil and gas royalty calculations. StateImpact Pennsylvania reported that Senate Bills 147 and 148 were approved by the Senate Environmental Resources and Energy Committee on Wednesday, January 21, 2015. If passed into law, SB 147 would require operators to disclose more information on royalty checks, including calculations and joint ventures between companies. The bill would also permit landowners to inspect company records, even if that right is not set forth in an oil and gas lease. SB 148 would prohibit operators from retaliating against landowners who question the calculation of their royalty payments. The bills are two of several that have been introduced in the state house and senate in the last year.
A third bill, Senate Bill 279, also passed the senate committee with unanimous approval. This bill would create the Pennsylvania Grade Crude Development Advisory Council, which would advise and assist the state Department of Environmental Protection with the differing regulations for conventional oil and gas operations and unconventional oil and gas operations. All three bills will move forward for consideration by the full senate.
The Pennsylvania Department of Environmental Protection (DEP) has finalized revisions to the General Plan Approval and/or General Operating Permit (BAQ-GPA/GP-5 or General Permit) for Natural Gas Compression and/or Processing Facilities (known as “GP-5”). Revisions to GP-5 include removal of the 100,000 ton per year greenhouse gas applicability threshold and addition of an annual compliance certification requirement. Changes to the permit were proposed in November 2014. DEP received public input from ten commenters.
The Pennsylvania Department of Environmental Protection (DEP) has announced the results of its highly anticipated study on potential exposure to Technologically Enhanced Naturally Occurring Radioactive Materials (TENORM) associated with oil and gas development. Initiated in January 2013 at the direction of Governor Tom Corbett, the study included sampling of drill cuttings, flowback and produced waters, and various treatment solids, as well as radiological surveying of well sites, landfills, and other areas involved in disposal or treatment of drilling wastes. In general, the study found that “there is little potential for harm to workers or the public from radiation exposure due to oil and gas development”. However, the study report includes recommendations for future actions, including additional research and investigation.
The Pittsburgh Post-Gazette reports that Pennsylvania Governor-Elect Tom Wolf has announced the nominations of individuals to head some of the state agencies. He announced the nomination of John Quigley, who served as the Secretary of the Department of Conservation and Natural Resources under Governor Rendell, to be Secretary of the Department of Environmental Protection. The Governor-Elect also announced Cindy Dunn to serve as Secretary of the Department of Conservation and Natural Resources. The Governor-Elect expects to have a full Cabinet announced by the time he is sworn in on January 20th.
StateImpact, a reporting collaboration supported by NPR, that the Federal Energy Regulatory Commission has approved a proposed interstate pipeline that would transport Marcellus Shale natural gas from Pennsylvania to New York and New England markets. The 30-inch pipeline would cover 124 miles, connecting gas production in Susquehanna County, Pennsylvania to existing transmission lines in New York. The pipeline will be operated by subsidiaries of Williams Partners, Cabot Oil and Gas, Piedmont Natural Gas, and WGL Holdings. The Pennsylvania Department of Environmental Protection, the U.S. Army Corps of Engineers and the New York Department of Environmental Conservation must still issue final permits.
This week the Pennsylvania Department of Environmental Protection (PADEP) announced the availability of emissions data from oil and gas operations in the Commonwealth. According to the PADEP press release, the data represents “2012 emissions levels from Marcellus Shale natural gas production and processing operations as well as compressor stations that receive gas from traditional oil and gas well sites.” PADEP reportedly received data from “56 Marcellus Shale operators covering 8,800 natural gas wells and 70 operators of 400 compressor stations.” Air contamination sources in the industry report emissions annually to PADEP.
The PA Environmental Digest reported that the Pennsylvania Department of Environmental Protection introduced a new online Oil and Gas Mapping Tool. The new mapping tool displays the location of wells across Pennsylvania. It allows users to search for wells by type (conventional, unconventional and coal bed methane) and status (active, plugged or abandoned). Users will be able to view the wells through a satellite photo view, topographic map view and animated map view. Once a well is selected, the mapping tool will display well information such as the operator name, well permit number, location information and name of the well.
On August 26, 2013, Hilcorp Energy Company (Hilcorp) filed a complaint and application requesting that the Pennsylvania Environmental Hearing Board (PAEHB) issue an order to establish well spacing and drilling units pursuant to the Oil and Gas Conservation Law of 1961 for a 3,267 acre reservoir of natural gas in the Utica-Point Pleasant formation beneath Mercer and Lawrence counties, known as the “Pulaski Accumulation”, since Hilcorp was unable to obtain leases from all property owners in this parcel. After conducting a prehearing conference and considering legal memoranda by the Pennsylvania Department of Environmental Protection (PADEP) and Hilcorp regarding whether the PAEHB had original jurisdiction to issue well spacing and drilling unit orders under the Oil and Gas Conservation Law, the PAEHB’s Chief Judge Renwand issued an opinion and order on November 20, 2013 dismissing Hilcorp’s well spacing and drilling unit application because the PADEP, and not the PAEHB, has original jurisdiction to issue well spacing and drilling unit orders under the Oil and Gas Conservation Law. Chief Judge Renwand’s opinion noted that the Oil and Gas Conservation Commission, the since-abolished entity established by the Oil and Gas Conservation Law to issue well spacing and drilling unit orders, “was a very specialized and technical agency” with the “power to file enforcement actions”, issue permits, hold public hearings, and conduct other regulatory type actions. According to Chief Judge Renwand, these powers, duties, and responsibilities of the former Oil and Gas Conservation Commission are analogous to the current powers, duties, and responsibilities of the PADEP and not related to the PAEHB’s role “as an independent quasi-judicial agency” that is “completely independent of the [former, now PADEP] Department of Environmental Resources.” Judge Mather wrote a concurring opinion noting that the PADEP currently has “effective and binding regulations” at 25 Pa. Code Chapter 79 that implement the Oil and Gas Conservation Law and direct the PADEP “to issue orders establishing well spacing and drilling units, in the first instance, that can then be appealed to the Board.”
As we reported back in May of this year, a review team assembled by the State Review of Oil & Natural Gas Environmental Regulations (“STRONGER”) completed an in-state review of Pennsylvania’s Oil and Gas Regulatory Program. STRONGER’s review team recently published its final written report regarding its May 2013 review on its website that highlights the strengths of Pennsylvania’s program and identifies several recommendations for the program to consider moving forward. Some strenths of Pennsylvania’s program included its increase of “staff levels to address additional permitting, inspection, and enforcement activities related to increased unconventional well development,” as well as its initiation of a “comprehensive evaluation of radiation levels specificially associated with unconventional gas development” (generally referred to as the “TENORM Study”). In addition to recommending that Pennsylvania complete its TENORM Study, the STRONGER report also included a recommendation that Pennsylvania “maintain consistent standardized data for tracking vioaltions and enforcement actions.” According to the Pennsylvania Department of Environmental Protection’s press release, the Department will work to implement these recommendations in addition to other recommendations made in STRONGER’s final report.
On September 20th, Governor Corbett announced that he nominated Ellen Ferretti of Luzerne County as Secretary of the Department of Conservation and Natural Resources (DCNR) and E. Christopher Abruzzo of Dauphin County as Secretary of the Department of Environmental Protection (DEP). Ms. Ferretti had been serving as deputy secretary for parks and forestry until she was named interim secretary of the DCNR in June. Mr. Abruzzo was serving as Governor Corbett’s deputy chief of staff until he was appointed interim secretary of the DEP in April. The Pittsburgh Post-Gazette reports that both nominations will be subject to state Senate approval.
The Pennsylvania Department of Environmental Protection will publish its final technical guidance document “Addressing Spills and Releases at Oil & Gas Well Sites or Access Roads” in the September 21, 2013 Pennsylvania Bulletin. The proposed Spill Policy was originally published in the April 14, 2012 Pennsylvania Bulletin for public comment, and the Department’s responses to the 67 comments from 12 commentors are included in a Comment and Response document published on the Department’s website today. The final Spill Policy is effective as of September 21, 2013.