Wednesday, March 22, 2017

Shale Law in the Spotlight: DEP Addresses Oil and Gas Methane Emissions Reduction Strategy

Written by Chloe Marie – Research Fellow

The extent to which methane emissions from natural gas development is an issue that requires additional regulatory measures has been hotly contested across the country. Proponents of more stringent requirements against oil and gas operators claim that action is required to combat climate change while opponents of new regulations claim that these regulations will impose unnecessary obligations upon an important industry. On January 19, 2016, Governor Wolf issued a press release announcing the proposed implementation of a strategy plan by the Department of Environmental Protection (DEP) to reduce methane emissions. In his press release, Governor Wolf declared that as “the second-leading producer of natural gas in the nation behind Texas, [Pennsylvania is] uniquely positioned to be a national leader in addressing climate change while supporting and ensuring responsible energy development, creating new jobs, and protecting public health and our environment.”

This strategy plan was presented as an integral part of the updated Pennsylvania Climate Change Action Plan, which was published by DEP in August 2016. In the updated Climate Change Action Plan, DEP stated that “Pennsylvania’s gross GHG emissions are projected to be lower in 2030 than in 2000, with reductions in the residential, commercial, transportation, agriculture and waste sectors.”  The strategy plan is comprised of specific measures including those listed below:

·       DEP plans to replace the August 2013 Category No. 38 conditional permit exemption (exemption 38) for unconventional wells with a new Air Quality General Permit for oil and gas exploration, development, and production facilities, including well pads, known as GP-5A. More precisely, unconventional wells in Pennsylvania are currently exempted from air quality permitting requirements provided that the operator or owner meets all application requirements established in the Category No. 38 exemption criteria. The new General Permit will establish requirements for the use of Best Available Technology (BAT) for sources at unconventional natural gas wells.

·       DEP proposes to review the existing GP-5 applicable to sources located at natural gas compressor stations and/or processing facilities and provides for updates to the existing BAT requirements and Leak Detection and Repair (LDAR) program for new sources. DEP also intends to amend and strengthen the requirements for affected sources and expand the applicability of GP-5 to cover sources located at natural gas transmission stations. To advance this objective, in February 2017, DEP issued an updated Technical Support Document addressing the new GP-5A permit for Unconventional Natural Gas Well Site Operations and Remote Pigging Stations and the revised GP-5 for Natural Gas Compressor Stations and/or Processing Facilities.

·       DEP plans to bring forward specific proposals to address existing source emissions. In October 2016, U.S. EPA released its final Control Techniques Guidelines (CTG) for the Oil and Natural Gas Industry with recommendations to states to reduce VOC and methane emissions from certain existing oil and gas industry emission sources.

·     DEP will work through the Pennsylvania Pipeline Infrastructure Task Force (PITF) to implement best management practices (BMPs), including best available technology (BAT), to reduce fugitive methane emissions from oil and gas industry infrastructure.

Following the release of the strategy plan, three state senators from Pennsylvania – namely Senator President Pro Tempore Joe Scarnati, Senate Majority Leader Jake Corman and Senator Gene Yaw, Majority Chair of the Senate Environmental Resources and Energy Committee  – sent a letter to the Acting Secretary of Environmental Protection, Patrick McDonnell, dated February 6, 2017, asking a number of key questions regarding the proposed revisions to the existing GP-5 permit and the new proposed GP-5A permit.

The senators expressed concern that such changes would “[add] new degrees of complexity to the permitting and site construction process that may significantly impair the competitiveness of the Commonwealth and strongly discourage the investment of private capital into Pennsylvania.” They questioned DEP’s legal authority to look into matters relating to methane emissions and asked for more information about the scientific evidence gathered to establish methane limitations on the unconventional oil and gas industry. In addition, the senators requested further explanation regarding the cost-benefit analysis of proposed permits, the content requirements for the permit application, and the legal justification chosen to impose methane limitations on only the unconventional oil and gas industry.

On February 24, 2017, Acting DEP Secretary Patrick McDonnell responded to the senators’ letter stating that “DEP believes that proposed GP-5A and the proposed revisions to GP-5 balance the needs of industry for cost-effective operation and the needs of the public for enhanced environmental protection.” In the same letter, Secretary McDonnell also claimed that DEP is required to implement federal regulations governing control of methane emissions pursuant to Section 4 of the Air Pollution Control Act and the Clean Air Act permitting in Pennsylvania. With regard to the omission of the conventional oil and gas industry, Secretary McDonnell reasoned that it comprises a small portion of total gas production in Pennsylvania and is addressed through EPA requirements.

The draft GP-5 and GP-5A permits are available for public comment until June 5, 2017.

Monday, March 20, 2017

Shale Law Weekly Review - March 20, 2017

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.

Maryland House Approves Bill to Ban Hydraulic Fracturing in the State
On March 10, 2017, the Maryland House passed a bill that requires the Department of the Environment to adopt regulations banning hydraulic fracturing in the state. The bill, House Bill 1325, is called Oil and Natural Gas - Hydraulic Fracturing - Prohibition. The bill passed with a vote of 97-40 and was subsequently read to the Senate on March 13, 2017.

Court Denies Standing Rock Injunction and Emergency Order
On March 14, 2017, the United States District Court for the District of Columbia denied the Standing Rock Sioux Tribe’s Motion for Injunction Pending Appeal. (Standing Rock Sioux Tribe, et al., v. U.S. Army Corps of Engineers, et al.) Standing Rock filed this appeal as a response to last week’s denial of their motion for a Preliminary Injunction which was brought for the purpose of stopping the flow of oil within the pipeline. In addition, on March 18, 2017, the U.S. Appeals Court denied a request for an emergency order to prevent operation of the pipeline, according to NBC News.

BLM Completes Environmental Assessment for Drilling Project in ND
On March 10, 2017, the United States Bureau of Land Management (BLM) completed their environmental assessment of proposed drilling within the Berthold Reservation in North Dakota. The BLM will grant a permit to Slawson Exploration Company to drill 8 of 11 wells from a pad near Lake Sakakawea. According to a BLM press release, “the well pad will be located approximately 800 feet from the lake, with the production facilities located three quarters of a mile away.” The proposal for the project was completed in May 2016.

Department of Justice Files Motion to Halt Litigation on BLM Hydraulic Fracturing Rule
On March 15, 2017, the Department of Justice filed a motion with the United States Court of Appeals for the 10th Circuit requesting to hold their appeal in abeyance. The litigation involves the rule, Hydraulic Fracturing on Federal and Indian Lands, issued by the Bureau of Land Management (BLM) in 2015. The new administration has announced its intent to rescind the rule at issue and therefore wishes to halt litigation until the matter is resolved.

Purdue Study Shows Methane Emissions Higher than EPA Estimates
On March 13, 2017, researchers from Purdue University published a study on methane emissions in the  journal Environmental Science & Technology. The study is called “Assessing the Methane Emissions from Natural Gas-Fired Power Plants and Oil Refineries.” The study compared emission data collected from several natural gas power plants and oil refineries with emission data gathered by the Environmental Protection Agency (EPA). The study found that CH4 and CO2 emissions were greater than reported by EPA estimates.

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Friday, March 17, 2017

Global Shale Law Compendium: Shale Governance in the European Union

Written by Chloe Marie – Research Fellow

The Global Shale Law Compendium series will address legal developments and other issues related to the governance of shale oil and gas activities in various countries and regions of the world. For our first article, we will highlight governance actions within the European Union generally to address legal and policy aspects of shale development. Issues related to governance within individual EU Member States will be addressed in future articles.

While the shale gas revolution experienced in the United States has not yet translated to corresponding activity in Europe, the European Commission has been following the issue of potential development very attentively for several years. Some EU Member States have shown a strong interest in encouraging development of their shale resources while others have demonstrated opposition to any level of development due to concerns about the potential impacts of hydraulic fracturing on the environment and public health. Given the wide disparity in the viewpoints of Member States, the European Commission has undertaken significant activities to determine the precise extent to which shale development should be governed at the EU-level. 

Pursuant to Article 4(2) of the Treaty of the Functioning of the European Union, the energy area is of shared competence between the European Union and the Member States. Member States are free to set their own energy priorities and retain the power to regulate the exploitation of energy resources. All Member States, however, must comply with a number of directives addressing environmental protection standards affecting the extractive industries. Those directives have been transposed to legislation within each of the Member States. These EU directives include the Strategic Environmental Assessment (SEA), the Environmental Impact Assessment (EIA), Natura 2000, and the Environmental Liability directives, which establish EU environmental compliance requirements within the Member States. All extractive industries also are required to meet the environmental standards of the Mining Waste, Carbon Capture and Geological Storage, Industrial Emissions, and Seveso II directives. With regard to more specific issues relating to water and chemical use, each Member State must satisfy the requirements of the Water Framework and Groundwater directives as well as the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) regulation. Finally, the European Commission has developed the Hydrocarbons directive to ensure non-discriminatory access to energy sources and markets through licensing bids.

These directives impose numerous standards and requirements for environmental protection, but they are focused on exploration and production of hydrocarbons using conventional technologies, rather than modern unconventional techniques such as high-volume hydraulic fracturing. The absence of a specific legal framework raised concerns as to whether more governance was needed to address the perceived scientific uncertainty, social implications and environmental issues of shale development. To better understand the concerns raised by the public and stakeholders, from 2011 to 2014, the European Commission requested multiple studies and reports from various external consultants to address shale gas development and the use of high-volume hydraulic fracturing. Those studies and reports questioned the effectiveness of the existing European environmental regulatory framework and pointed out that the operational realities and impacts from unconventional gas activities were very different than those from conventional development. Their conclusions implied that Member States might have experienced issues in interpreting the existing general European regulatory framework to properly govern the development of their shale gas resources. In this context, the question arose as to whether the European Commission should consider new legislation.
On January 22, 2014, the European Commission published a Recommendation on minimum principles for shale gas development aimed at guiding Member States that were carrying out or planning to carry out shale gas prospects using hydraulic fracturing. The principles, however, were not legally binding, and the European Commission merely invited Member States to adopt the substance of the Recommendation to be utilized along with their existing legislation on conventional hydrocarbons for more interpretive clarity. Those Member States that had chosen to allow the exploration of shale gas were to reflect the Recommendation in their legislation by July 28, 2014, and they also were asked to provide annual information on the extent to which the principles had been applied in their national laws and regulations.
The European Commission also informed Member States and stakeholders that it would be reviewing the Recommendation approximately eighteen months after its publication. As part of the review process, an online survey questionnaire was made available for Member States to provide feedback from their experiences with the implementation of the Recommendation in their national legislation. Member States were to indicate their positions concerning shale gas development and changes made in their legislation by December 1, 2014.
In February 2016, the European Commission published a final report assessing the application of the Recommendation in relevant Member States based on data collected and analyzed from January 2014 to August 2015. The Commission found that only 11 out of 28 Member States replied to the questionnaire indicating whether or not they granted or were planning to grant authorizations to pursue development of their shale gas reserves. These Member States included Austria, Denmark, Germany, Hungary, Lithuania, Netherlands, Poland, Portugal, Romania, Spain, and the United Kingdom. The final report showed that there have been changes made to the planning and permitting process in only three countries – Lithuania, Portugal and the UK.
Recently, in December 2016, the European Parliament and Council submitted a report to the European Commission on the effectiveness of the Commission Recommendation and declared that “Member States differ in their interpretations of some provisions of relevant Union environmental legislation” before adding that “while existing legislation establishes a legal framework for shale gas activities, the objective of providing legal certainty and predictability to competent authorities and operators is . . . not fully met.” As a result, the Commission intends to “focus on . . . increasing transparency and monitoring . . . fostering the correct and uniform application of relevant provisions across Member States . . . addressing the environmental impacts and risks of hydrocarbon exploration and extraction; and . . . filling research gaps on health impacts and risks of hydrocarbon extraction.” The European Commission made a commitment to “reassess” the effectiveness of its Recommendation “at the latest every three years.”
Our next article will discuss the legal, policy, and governance issues related to shale gas development in France.