The Beaver County Commissioners have approved the creation of a 325-acre tax-exempt zone aimed at enticing Shell to proceed with the construction of an ethane cracker plant in the region. According to one commissioner, “It’s an important piece of the puzzle, but it still doesn’t guarantee a final decision.” Not only would Shell be exempt from property taxes, but also, its earned income, net profits, business privilege, and mercantile taxes would be abated. Read more here.
On August 8, 2013, the Pennsylvania Department of Environmental Protection (PADEP) announced significant changes to its air permitting policy regarding unconventional gas well sites. Pursuant to the state Air Pollution Control Act, PADEP may identify sources or categories of sources that are exempt from plan approval (i.e., source construction or modification permit) requirements. Since 1996, PADEP offered a broad “automatic” exemption for oil and gas exploration and production facilities and operations. This exemption was narrowed considerably this week when PADEP published a revised version of its “Air Quality Permit Exemption List.”
Specifically, PADEP has revised the exemptions for Category No. 33, pertaining to compressed natural gas fueling, and Category No. 38, pertaining to oil and gas exploration, development, production facilities and associated equipment and operation. The most notable change is with respect to Category No. 38: PADEP will now require unconventional operators to satisfy criteria stricter than federal air regulations – namely 40 CFR 60 Subpart OOOO, issued by U.S. EPA last year and currently being revised – in order to qualify for the plan approval exemption. For example, the operator will need to implement a leak detection and repair (LDAR) program across the entire well pad and facility, although the federal regulations require LDAR for storage vessels only.
Unconventional operators have a choice between demonstrating satisfaction of the stringent criteria in exemption Category No. 38 or seeking a plan approval from PADEP. Conventional well operations remain broadly exempt from the plan approval requirement. For purposes of the Air Quality Permit Exemption List, PADEP defines a conventional well as any well that does not meet the statutory definition of “unconventional well” in Act 13 of 2012. Even when a well site is exempt from the requirement to obtain a plan approval, it is still subject to all other applicable air quality regulations, such as the reporting and recordkeeping requirements of 40 CFR 60 Subpart OOOO.
PADEP received 651 comments on the revisions to its Air Quality Permit Exemption List. A comment response document is available.
On August 7, 2013, the Susquehanna River Basin Commission appointed Project Review Manager Andrew D. Dehoff as executive director, effective September 19, 2013. Mr. Dehoff will be the third executive director in the history of the SRBC and will succeed Paul O. Swartz, who has served as executive director since 1992. Mr. Dehoff has been with the SRBC since 1995. As Project Review Manager, Mr. Dehoff oversaw the technical review of all applications for water use projects in the Susquehanna River Basin.
The Pennsylvania Public Utility Commission (PUC) filed two applications this week with the Pennsylvania Supreme Court in cases related to Act 13. In the appeal related to the constitutionality of Act 13 the PUC filed an Application to Resubmit Case, which requests that the case be resubmitted, at minimum, on briefs to the full Supreme Court and, if the court chooses, that additional oral argument be held. The PUC stated that the Application is appropriate because the pending issues are of broad concern to the Commonwealth and its municipalities and because Section 3304 of Act 13 was declared unconstitutional by a fiercely divided Commonwealth Court. Justice Correale Stevens was recently sworn in to replace Justice Joan Orie Melvin, who resigned from the Supreme Court in May following criminal convictions. While Justice Stevens brings the Supreme Court up to seven members, the Supreme Court issued a statement that Justice Stevens would not participate in deciding any case on which he had not heard oral argument. This Application is clearly an attempt for the PUC to get the case before the full Supreme Court.
Also of note is an Application for Reconsideration filed by the PUC in an appeal related to an order of the Commonwealth Court enjoining the PUC from reviewing municipal ordinances. On October 25, 2012, Senior Judge Keith B. Quigley issued an order enjoining enforcement of Section 3305 of Act 13 because it “is a vehicle by which Section 3304 is enforced.” The PUC appealed that order to the Supreme Court. On July 25, 2013, the Supreme Court quashed the PUC’s Notice of Appeal. The PUC requests that the Supreme Court grant reconsideration of the July 25th order quashing the Notice of Appeal before the entire Supreme Court for the following reasons: the October 25, 2012 order of Judge Quigley was subject to appeal, and it was incorrect to quash the Notice of Appeal; if the Commonwealth Court’s decision is upheld, it is unclear if that decision would resolve all issues regarding Act 13 because Judge Quigley’s order enjoined enforcement of Act 13 Sections 3301-3301 and 3305, even though Section 3301-3305 were never challenged and Section 3305 was determined to be constitutional; the Supreme Court should clarify explicitly why the Notice of Appeal was quashed; the July 25th order is inconsistent with other Supreme Court decisions; and the pending case regarding the overall constitutionality of Act 13 may not dispose of all issues.
The Pennsylvania Department of Environmental Protection (PADEP) recently announced that its long-term Marcellus air sampling study in southwestern Pennsylvania will continue for the remainder of the 2013 year. PADEP also released a guidance document which gives detailed information on the study, including its sampling design and methods of analysis for data collected. The sampling will include ground-level ozone, particulate matter, carbon monoxide, nitrogen oxides, hydrogen sulfide, methane and various volatile organic compounds and hazardous air pollutants. A final report is expected to be released in the first quarter of 2014.
MarketWatch reports that Range Resources will convert its vehicle fleet to cleaner-burning compressed natural gas. Range’s current fleet consists of approximately 184 CNG vehicles, about 100 of which operate in southwestern Pennsylvania. Most of the vehicles are Chevrolet Silverado 2500 and Ram 2500 models. According to the report, Range expects its investment to pay for itself within two years. Range joins other Marcellus operators, such as Chesapeake Energy and EQT Corp., which have also announced similar transitions to CNG, according to the Pittsburgh Post-Gazette.
As we previously reported in June, the Pennsylvania Democratic Party voted to pass a resolution supporting a statewide moratorium on hydraulic fracturing. We recently learned that on June 15, 2013, eighteen Democrats from Pennsylvania’s House of Representatives (including House Minority leader Frank Dermody) wrote a letter to the Pennsylvania Democratic Party expressing their concern regarding the Party’s vote to support a statewide moratorium, specifically stating that it was “short sighted and ignores the many positive impacts Pennsylvania is experiencing due to the growth of the natural gas industry in this state.” The letter goes on to say that the authors “believe that a moratorium on hydraulic fracturing is not in the best interest of the Commonwealth or the citizens of Pennsylvania.”
In a statement issued this morning, Kathryn Klaber announced that she will step down from her position as the CEO of the Marcellus Shale Coalition. Ms. Klaber has led the MSC since late 2009. She will play a key role in a nationwide search to select the MSC’s next leader. MSC Chair Dave Spigelmyer praised Ms. Klaber’s leadership, noting that she worked with both the Rendell and Corbett administrations “to modernize and strengthen the Commonwealth’s regulatory framework” and build “a topnotch community outreach and advocacy infrastructure …”
The Pennsylvania Department of Environmental Protection announced on Monday that the public comment period for proposed policy changes would be extended from July 22nd to August 27th because of a printing error in the Pennsylvania Bulletin that provided the incorrect e-mail address for comments. The draft policy would impact the permit review process by proposing procedures for public hearings, and for receiving and responding to public comments. All permits that are published in Pennsylvania’s official information outlet, the Pennsylvania Bulletin, will be affected by this proposed policy change, including permits for oil and natural gas wells.
The Wall Street Journal reports that a group of Brazilian business and energy industry professionals known as the Brazil Industries Coalition is visiting Pennsylvania this week in an attempt to learn from the state’s experience and to evaulate the possibility of sending exports to Brazil. The group is meeting with Pennsylvania regulators and operators and will tour a drilling site. The WSJ cites to the National Confederation of Industry, which states that energy costs in Brazil are among the highest in the world. One Brazilian energy company executive noted that one unit of natural gas sells for $18.00 in Brazil. In the United States, that same unit would sell for about $4.00.
The Department of Energy’s National Energy Technology Laboratory released a statement at the end of last week regarding its preliminary findings in its study to monitor for impacts of hydraulic fracturing on groundwater, noting that “nothing of concern has been found thus far.” Additionally, the NETL’s reported discussions with the AP that same day confirmed that the NETL’s preliminary findings have shown that there is “no evidence that chemicals from the natural gas drilling process moved up to contaminate drinking water aquifers at a western Pennsylvania drilling site.” According to the AP’s report, this is the first time that an operator permitted government scientists to inject tracers into the hydraulic fracturing fluid to track the distribution of the fluid underground. The study is expected to be completed by the NETL by the end of the year, at which time a final report will be released.
Newly-appointed Pennsylvania Supreme Court Justice Correale Stevens will not participate in ruling on the legality of Act 13 or on any other case that has gone through oral argument. With only six justices participating in the decision, the Act 13 decision could end up in a tie vote that would effectively affirm the Commonwealth Court’s July 2012 opinion.
In tomorrow’s Pennsylvania Bulletin, the Pennsylvania Department of Environmental Protection (PADEP) will issue a notice regarding the establishment of subcommittees by the Oil and Gas Technical Advisory Board (OGTAB) to discuss specific provisions at public meetings concerning “public resource protection, prehydraulic fracturing assessment, waste management at well sites and water supply restoration standards,” which are part of the PADEP’s draft proposed rulemaking under 25 Pa. Code Chapter 78, Subchapter C (“Environmental Protection Performance Standards”). These public meetings are scheduled for July 17-18 in Greensburg, August 14-15 in State College, and September 18-19 in Harrisburg.
The Corning Leader reports that, in response to Governor Corbett’s recent letter to the Delaware River Basin Commission, a 1,300 member landowner group has threatened to sue the DRBC. The Northern Wayne Property Owners Alliance sent a letter to the executive director of the DRBC threatening a lawsuit unless the Commission schedules a vote on regulations that would allow drilling to begin. The DRBC imposed a moratorium on Marcellus Shale drilling in 2010.
The Scranton Times-Tribune reports that UGI Penn Natural Gas customers continue to pay one-third less to heat their homes than they paid five years ago. According to the Marcellus Shale Coalition, this is a nationwide trend. The lower rates are a direct result of the natural gas production from the Marcellus and Utica shales.