Wednesday, April 25, 2018

Shale Law in the Spotlight: Constitution Pipeline Project – An Overview of Status and Current Legal Developments

Written by Chloe Marie – Research Fellow

This article is intended to provide an overview of the current status of the Constitution pipeline project as well as recent legal developments related to construction activities on the project.

The Constitution pipeline is a 124-mile new project aimed at facilitating the delivery of natural gas to markets in New York and New England. More precisely, the pipeline would transport up to 650,000 dekatherms of natural gas per day from facilities in Susquehanna County, in northern Pennsylvania, to connect with the Iroquois Gas Transmission and Tennessee Gas Pipeline systems in Schoharie County, New York.

Constitution Pipeline, LLC, a subsidiary of Williams Partners L.P. operates the pipeline project, and on June 13, 2013, filed an application with the Federal Energy Regulatory Commission (FERC) for a certificate of public convenience and necessity. On October 24, 2014, FERC issued a Final Environmental Impact Statement for the proposed project and concluded that “construction and operation of the [Constitution pipeline] would result in some adverse environmental impacts, but these impacts would be reduced to less-than-significant levels.”

Subsequently, on December 2, 2014, FERC issued a Certificate of Public Convenience and Necessity to Constitution Pipeline Company, LLC, approving the construction and operation of the interstate Constitution Pipeline project. On April 27, 2015, Constitution Pipeline Company, LLC, filed a Section 401 Water Quality Certification with the New York Department of Environmental Conservation (DEC) for the proposed pipeline project.

Based on its 2016 spring forecast, Constitution Pipeline, LLC, anticipated an in-service date within the range of the fourth quarter of 2016 to the second half of 2017. The pipeline construction, however, has been impacted due to recent legal developments primarily relating to the routing of the pipeline.

On April 22, 2016, the New York DEC issued a Press Release denying Constitution Pipeline Company LLC’s application for a Section 401 Water Quality Certification. In support of this decision, Chief Permit Administrator John Ferguson declared that “although the Department repeatedly asked Constitution to analyze alternative routes that could have avoided or minimized impacts to an extensive group of water resources, as well as to address other potential impacts to these resources, Constitution failed to substantively address these concerns.”

On May 16, 2016, Constitution Pipeline Company, LLC, filed a petition for review of the New York DEC’s denial of Constitution’s application for a Section 401 Water Quality Certification in the U.S. Court of Appeals for the Second Circuit (see docket no. 16-1568). Among other arguments, Constitution Pipeline Company, LLC, alleged that the New York DEC exceeded the statutory time limitations to review the Section 401 application and, as a result, waived its right to issue a Section 401 Certification.

On August 18, 2017, the Court of Appeals held that it lacked jurisdiction over the timeliness of New York DEC’s decision and dismissed the petition in part. With regard to the merits of the case, the Court concluded that the state agency’s denial decision “was not arbitrary or capricious.”

On September 1, 2017, Constitution Pipeline Company, LLC, filed a petition for rehearing on the merits of the New York DEC’s denial of the Section 401 Certification and claimed that “the panel should not have prematurely ruled upon the merits of the Denial, but instead should have held the proceedings in abeyance pending FERC’s determination on waiver.” The U.S. Court of Appeals for the Second Circuit denied such petition on October 19, 2017.

In the meantime, on October 12, 2017, Constitution Pipeline Company, LLC, filed a petition for declaratory order asking FERC to determine that the New York DEC waived its authority to issue a water quality certification for the Constitution Pipeline Project.

In an Order dated January 11, 2018, FERC denied Constitution’s petition for declaratory order recalling that a waiver to issue certification applies only when the state agency fails to act on an application within one year and, referring to prior certification applications submitted in August 2013 and May 2014 and then withdrawn, FERC pointed out that “by withdrawing its applications before a year had passed, and by presenting New York DEC with new applications, Constitution gave New York DEC new deadlines.” As a result, FERC declared that “the record does not show that New York DEC in any instance failed to act on an application that was before it for more than the outer time limit of one year.”

On January 16, 2018, Constitution Pipeline Company, LLC, filed a petition for a writ of certiorari seeking review of the U.S. Court of Appeals for the Second Circuit before the U.S. Supreme Court (see docket no. 17-1009). In reviewing the Second Circuit Court’s decision, Constitution Pipeline Company, LLC, asked the U.S. Supreme Court to answer whether New York DEC exceeded its authority when denying Constitution’s application for a Section 401 Water Quality Certification on the basis of insufficient information regarding the proposed pipeline’s alternative routes and whether the state agency interfered with FERC’s exclusive authority over the routing of interstate natural gas pipelines.

Stay tuned for further legal developments!

This material is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture 

Monday, April 23, 2018

Shale Law Weekly Review - April 23, 2018

Written by:
Jacqueline Schweichler - Education Programs Coordinator

The following information is an update of recent local, state, national, and international legal developments relevant to shale gas.

Landowner Royalties:  EQT Sues West Virginia for Changes to Flat-Rate Royalty Calculations
On April 12, 2018, EQT Production Company (EQT) filed a lawsuit against the West Virginia Department of Environmental Protection protesting changes to West Virginia’s minimum royalty statute, W. Va. Code § 22-6-8. A new bill amending the statute was signed into law in early March. The law now mandates that the minimum royalty must be calculated based on “gross proceeds, free from any deductions for post-production expenses, received at the first point of sale to an unaffiliated third-party purchaser in an arm’s length transaction...” EQT alleges that the statute infringes on their drilling rights under flat-rate leases and violates the Contracts Clause and the Due Process Clause of the U.S. Constitution. Additional information on the changes to West Virginia’s legislation can be found in our recent Shale Law in the Spotlight article.

LNG Exports: Cove Point Terminal Ships First Commercial Cargo
On April 16, 2018, the Dominion Energy Cove Point LNG terminal in Lusby, Maryland, shipped its first commercial cargo, according to LNG World News. The article states that the destination of the LNG is unclear and that the cargo vessel is 91 percent full. Dominion Energy received approval to commence service from the Federal Energy Regulatory Commission on March 5th and entered commercial service on April 10th. The Cove Point facility can process 750 million standard cubic feet per day of inlet feed gas from the Marcellus and Utica shale plays.

International Development: Northern Territory of Australia Will Allow Hydraulic Fracturing
On April 18, 2018, the Northern Territory Government of Australia announced that hydraulic fracturing will be permitted within the Territory based on the recommendations of the recently published, Scientific Inquiry into Hydraulic Fracturing in the Northern Territory. The report recommends against allowing hydraulic fracturing in “National Parks, Conservation Areas, Indigenous Protected Areas, towns, residential and strategic assets, and areas of high cultural, environmental or tourism value.” Chief Minister Michael Gunner stated that by following the recommendations in the inquiry, they will be able to protect the environment, cultures, and lifestyles, while residents will benefit from new job creation.

Induced Seismicity: Oklahoma Corporation Commission Orders Halt to Disposal Well Operations After Earthquakes
On April 19, 2018, the Oklahoma Corporation Commission (OCC) issued a directive to halt disposal well operations in the Hennessey area following a 3.8 earthquake. Seven other disposal wells in the Arbuckle formation have been directed to reduce daily volumes by 25 percent. In addition, eight other wells in the area have been directed to reduce volumes to “their last 60 day average.” According to the press release, disposal into the Arbuckle formation creates “the largest potential risk for induced seismicity.” Earlier this month, OCC issued disposal well reduction order after a 4.6 magnitude earthquake in Garfield County.

Water Quality: DEP Releases Oil and Gas Well Structural Soundness Data
On April 13, 2018, the Pennsylvania Department of Environmental Protection (DEP) announced the release of the first four years of well structural soundness data collected by oil and gas well operators. According to DEP, the data shows that most wells in Pennsylvania “are being operated in a manner that greatly reduces the risk for groundwater impacts." Under the Mechanical Integrity Assessment Program, oil and gas well operators are required to conduct quarterly inspections and submit data for one of the inspections each year. A comprehensive analysis of the data for 2014, Explanation and Summary of Preliminary Mechanical Integrity Assessment Dataset, suggests that less than 1 percent of operator observations indicated integrity problems that could “allow gas to move outside the well footprint."

GHG Emissions: EPA Releases Report on U.S. Greenhouse Gas Emissions
On April 12, 2018, the U.S. Environmental Protection Agency (EPA) released the report, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2016. The report estimates the total greenhouse gas emissions from the United States, including carbon dioxide, methane, nitrous oxide, and other flourine-containing halogenated concentrations. The report is prepared to meet commitments under the United Nations Framework Convention on Climate Change. According to the researchers, U.S. emissions increased by 2.4 percent from 1990 to 2016 and emissions decreased by 1.9 percent from 2015 to 2016. The researchers suggest that this decrease in emissions could be due to the substitution of natural gas for coal and warmer winter conditions which resulted in a decreased demand for heating fuel.

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