Thursday, July 18, 2019

Shale Law in the Spotlight – The Pennsylvania Public Utility Commission Proposes Rulemaking Addressing Pipeline Safety Standards

Written by Chloe Marie – Research Specialist

On June 13, 2019, the Pennsylvania Public Utility Commission (Commission) published a notice of proposed rulemaking seeking comment on possible amendments or enhancements to regulations governing pipeline safety standards. On that same day, the Commission also published a notice of proposed rulemaking addressing financial reporting for public utilities. The Commission is looking for public input into ways of better regulating the design, construction, operations, and maintenance of public utilities, such as transportation pipelines in intrastate commerce. Ultimately, the Commission is considering whether the hazardous liquid public utility safety standards laid down in Chapter 59 of the Pennsylvania Code should be amended. In addition, with regard to financial reporting requirements, the Commission proposed to review the current public utility reporting regulations codified in Chapter 73 of the Pennsylvania Code to determine whether annual depreciation reporting, service life study reporting, and capital investment reporting requirements should be included in the legislation.

This article addresses both advance notices and provide an overview of the specific areas where comments have been requested.

First, the Commission is asking for observations and comments on the existing Part 195 regulations relating to the minimum construction and design standards of hazardous liquid public utilities especially with regards to pipeline materials and specifications, coverings over buried pipelines, underground clearances, and valves. Section 195.8 currently requires that all pipelines carrying hazardous liquids must be constructed with steel pipe; however, the Commission has requested discussion on other potential materials to be used in the construction of these pipelines. The Commission also is seeking comment on the depth-of-cover placement over a buried pipeline necessary to protect the pipeline from accidental damage, which is regulated under Section 195.248. Furthermore, the Commission is requesting comment on the initial distance of 12 inches set forth in Section 195.250 between a pipe installed underground, especially a hazardous liquid public utility pipeline, and other underground services. Finally, the Commission has asked for comment on the appropriate location of pipeline valves regulated under Section 195.258 to further reduce the risk of damage or pollution from accidental hazardous liquid discharge.

Second, the Commission has requested comment on the existing minimum operation and maintenance standards particularly when considering pipeline conversion, construction compliance, pressure testing and maximum operating pressure, line markers, inspection of pipeline rights-of-ways, emergency flow restricting devices, leak detection, and corrosion control and cathodic protection. The Commission is seeking comment on the question of how to improve the procedure involving the conversion of pipeline infrastructure as set out in Section 195.5 and how to best operate and maintain hazardous liquid public utility pipelines based on their ages, as specified in Section 195.401(c). In addition, the Commission is looking for input on pressure testing frequency for all hazardous liquid public utility pipelines as well as recording requirements for pressure testing and maximum operating pressure. The Commission also seeks comment involving the care of pipeline rights-of-way and inspection frequency, currently set to be “at least 26 times each calendar year,” according to Section 195.412. As for the impacts of hazardous liquid public utility pipelines on the environment, the Commission seeks comment on the installation of remote-control valves on such pipelines located in highly sensitive areas to serve as preventative measures on “whether minimum threshold requirements can be established for leak detection systems in all pipelines and what leak detection technologies are appropriate for use.” The Commission also invites the public to express opinions on the adequacy of measures aimed at preventing hazardous liquid public utility pipelines from suffering both external and internal corrosion.

Third and last, the Commission seeks public input on a variety of other topics, including utility interactions with local government officials, specific enhancements to public awareness programs, regulation of construction techniques (such as horizontal directional drilling), accident and reporting criteria and notification, protection of public and private water wells and supplies, background investigations of employees and contractors, and integration of new regulations on existing facilities. In the Advance Notice, the Commission declared that it needs to “proceed expeditiously, but cautiously, acknowledging that [its] actions must be compatible with the federal pipeline safety laws at 49 CFR Part 195” before adding that “significant improvements to hazardous liquid public utility safety standards can be accomplished by building upon the federal pipeline safety laws.”

The public has until August 28, 2019, to submit their comments, after which the Commission will review and consider all relevant comments and issue a formal Notice of Proposed Rulemaking with proposed regulations.

Notice of Proposed Rulemaking Regarding Depreciation Reporting and Capital Planning for Crude Oil, Gasoline, or Petroleum Products Transportation Pipelines

In this Notice of Proposed Rulemaking, the Commission proposes to require that crude oil, gasoline, and petroleum products transportation pipeline public utilities file annual depreciation reports, service life study reports, and capital investment plan reports. The purpose of these reports is to determine whether a public utility will be in a financial position to provide a reliable service to the community. In this regard, the Commission declared that it cannot “properly evaluate the justness and reasonableness of a public utility’s rates and rate structure without examining a company’s earnings and depreciation practices.”

The public has 30 days from the date of the Notice publication in the Pennsylvania Bulletin to submit their comments. The Notice has not yet been published in the Bulletin.


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

Monday, July 15, 2019

Shale Law Weekly Review - July 15, 2019

Written by:
Sara Jenkins - Research Assistant
Jackie Schweichler - Staff Attorney

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

Infrastructure: Environmental Group files Lawsuit Against Washington State for Issuing Permit for LNG Facility 
On July 9, 2019, the Advocates for a Cleaner Tacoma (ACT) filed a Petition for Judicial Review of Agency Action against the Washington State Department of Ecology for issuing a permit for a liquified natural gas (LNG) facility (Advocates for a Cleaner Tacoma v. Washington State Dep’t of Ecology). According to the Petition, the Department issued Administrative Order 13764, granting water quality certification for Puget Sound Energy, Inc.’s proposed LNG facility. ACT contends that the Department violated the State Environmental Policies Act by issuing the permit even though analysis of greenhouse gas emissions for the LNG facility project was determined to be inadequate. The Puget Sound Energy LNG facility is being constructed at the Port of Tacoma, and is expected to be used to fuel ships, and to provide natural gas for local and commercial customers. According to the project’s website, the facility will be too small to be used for LNG exports.

Pipelines: Dakota Access Seeks to Waive Hearing Requirements for Additional Pipeline Pump Station 
On July 10, 2019, the North Dakota Public Service Commission (Commission) issued a Notice of Opportunity for Hearing following a request by Dakota Access, LLC, to waive hearing requirements for an additional Dakota Access pipeline pump station. According to the notice, the additional station would be located in Emmons County and would transport up to 1.1 million barrels of crude oil per day. Dakota Access filed an application to amend the pipeline’s current Certificate of Corridor Compatibility 179 and Route Permit 191 to allow for the additional pump station. The Commission is accepting written public comments on the application. Additionally, those with an interest in the project can file a request for hearing on the matter. The notice states that the Commission may make a decision without a hearing.

Production and Operation: Energy Information Administration Releases Short-Term Energy Outlook
On July 9, 2019, the Energy Information Administration (EIA) released its Short-Term Energy Outlook (forecast). Some highlights from the forecast include an increase in global oil production by 0.1 million barrels per day over the next year, due to the expected decrease in oil demand for 2019. The forecast also states the “U.S. crude oil production averaged 11.0 million b/d in 2018, up 1.6 million b/d from 2017, achieving a record high for total production and year-over-year growth.” Average gas prices for June were lower than May and are expected to remain around $2.65 per gallon in 2019 and $2.76 per gallon in 2020. The forecast predicts that U.S. electricity generation from coal will continue to decline, along with the use of nuclear power.

Public Health: Ohio Department of Natural Resources Works to Correct Data Used in University of Toledo Hydraulic Fracturing Study 
On June 21, 2019, Athens News published an article stating the Ohio Department of Natural Resources (ODNR) was working with the University of Toledo to correct data used in the University study associating indoor radon levels with hydraulic fracturing activities. The University also now includes a note in the news release of the study, stating the University was working with the ODNR to “examine the terminology used in this study related to fracking wells.” The study titled, Impact of the Hydraulic Fracturing on Indoor Radon Concentrations in Ohio: A Multilevel Modeling Approach, was published by Frontiers in Public Health on April 10, 2019. According to Athens News, the study incorrectly stated the total number of deep-shale hydraulic wells in Ohio, as well as incorrectly stated the number of deep-shale wells in certain counties in the state. Mark Bruce, a spokesperson for the ODNR’s Division of Oil and Gas Resource Management told Athens News that “[t]he Division is ready to help the authors [of the study] utilize and analyze oil and gas well data so that cited information is presented accurately because currently the Division is confident it is not.”

From the National Oil & Gas Law Experts:

Ann Navaro & Christine Wyman, Highlights from the Trump Administration’s Rulemaking Agenda, (July 9, 2019)

Pennsylvania Legislation:
Act 20: Provides for transfer of money from the Oil and Gas Lease Fund into the Marcellus Legacy Fund (Enacted from SB 712 - June. 28, 2019).

Act 1A: Details Oil and Gas Lease Fund Appropriations (Enacted from HB 790 - June 28, 2019)

Act 14A: Details federal appropriation amounts for natural gas pipeline safety (Enacted from SB 242 - June 28, 2019)

SB619: would amend the Clean Streams Law to only require reporting to DEP if the unauthorized discharge could cause a violation of water quality or if it is reportable under federal requirements (Third consideration and final passage (Senate), Referred to Environmental Resources and Energy (House) - June 27, 2019)

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Thursday, July 11, 2019

Shale Law in the Spotlight – Pennsylvania Supreme Court Rules that Residents of Neighboring Municipality Can Provide Testimonial Evidence in Land Use Hearing on the Impacts of Natural Gas Drilling

Case Summary: EQT Production Company et al. v. Borough of Jefferson Hills, No. 4 WAP 2018

Written by Chloe Marie – Research Specialist

On May 31, 2019, the Supreme Court of Pennsylvania issued an opinion addressing whether residents living in neighboring municipalities can provide testimonial evidence at a land use public hearing about the impacts of unconventional natural gas drilling. The Supreme Court concluded that such evidence may be considered by the municipality in the granting of conditional use approval for a natural gas drilling operation.

Factual Background

In September 2015, EQT filed an application with the Borough of Jefferson Hills, Allegheny County, for conditional use approval of a proposed project involving the construction and operation of a natural gas production complex at the Bickerton well site located within the Borough.

In November 2015, the Borough Council carried out a public hearing on the application as required pursuant to the Municipalities Planning Code. Some of the individuals who provided testimony at the hearing did not live within the Borough, but rather lived in neighboring Union Township, Washington County, near the Trax Farm well site. During their testimony, these individuals reported about their personal experiences with EQT’s drilling and operational practices at the Trax Farm well site and discussed their perceptions of how EQT’s activities had affected their health and quality of life as well as their community’s environment. They complained at the hearing that EQT’s drilling activities at the Trax Farm site resulted in a wide range of adverse impacts, including actual damage to and interference with the use and enjoyment of their properties, concerns related to air pollution and water quality, and other health issues. After hearing this testimony, the Borough Council denied EQT’s application. The Council concluded that even though EQT had complied with the general standards for the grant of a conditional use application as set forth in Section 1003(b)-(f) of the Borough’s Zoning Ordinance and the specific requirements under the Borough’s Zoning Code, EQT did not meet its burden of proof for a conditional use permit because the evidence showed that “permitting the proposed natural gas production facility as a conditional use does not protect the health, safety and welfare of the Borough and its residents as required by the objective standards of the Borough Zoning Ordinance Section 1003(a).” EQT appealed the Council’s decision to the Court of Common Pleas of Allegheny County.

EQT’s Appeal to the Court of Common Pleas

The Court of Common Pleas reversed the Council’s decision denying the conditional use application. The court concluded that because EQT met all of the requirements and standards under the Borough’s Zoning Ordinance and Zoning Code, the burden of proof then shifted to the objectors to prove that the proposed use would negatively impact the general public. The court found that the objectors had failed to satisfy their burden of proof as their testimony was merely “speculative.” The Borough appealed this decision to the Pennsylvania Commonwealth Court.

Borough’s Appeal to the Commonwealth Court

The Commonwealth Court affirmed the order of the Court of Common Pleas reversing the Council’s decision. In so doing, the Commonwealth Court agreed with the lower court on the speculative nature of the objectors’ testimony. The court declared that the testimony “about problems at the Trax Farm site and the general harms posed by drilling activities and operation of unconventional wells [are deemed] insufficient to prove that the development of the Bickerton site would have a negative impact on the public health, safety, and welfare which was greater than that normally associated with any other unconventional well site.” The Borough then filed an appeal with the Supreme Court of Pennsylvania, which the court agreed to hear.

The Supreme Court Ruling

Before the Supreme Court, the Borough argued that the Commonwealth Court’s decision disregarded the probative value of the objectors’ testimony merely due to geographical considerations and pointed out that the testimony “was highly relevant to their burden to show that the proposed Bickerton site would adversely affect the health, safety, and welfare of the residents of the Borough, given that the Trax Farm site was ‘similar’ to the proposed Bickerton site and that Union Township and the Borough share a common municipal border.” The Borough raised its concerns that this would set a “draconian” standard for the admissibility of testimony at a land use hearing by ruling out testimony that would otherwise be considered relevant and credible. Furthermore, the Borough contended that such a standard would be “unworkable” in cases involving municipalities that had no experience with unconventional drilling activities within their boundaries where evidence of past similar practices in other municipalities could be useful. In addition, the Borough claimed that the Commonwealth Court’s decision would infringe upon the ability of municipalities to examine the past practices and conduct of an applicant in order to ensure the health, safety, and welfare of its citizens.

In response, EQT contended that the Commonwealth Court did not consider the objectors’ testimony to be inadmissible but rather found it “legally insufficient” to meet the objectors’ burden of proof that such project at the Bickerton site would endanger the health, safety, and welfare of the community. Most of all, EQT argued that the objectors did not present proper evidence as they mentioned only their  experiences with the Trax Farm site, rather than providing testimony regarding the Bickerton site. In addition, EQT alleged that “none of the witnesses who testified to their experiences with the Trax Farm site were qualified to render an expert opinion regarding potential community impacts from the Bickerton site, or whether EQT’s operations there would comport with the Borough ordinance.”

In its analysis, the Supreme Court explained that local municipalities should not be required to follow technical rules of evidence when conducting hearings as they have a primary duty to guarantee the protection of their citizens. Thus, local municipalities should endeavor to consider “all relevant evidence of reasonably probative value.” The court declared that the lower court’s characterization of the objectors’ testimony as “speculative” was inaccurate, and the court gave particular “credence to the Borough’s concern that the panel decision in this matter will be interpreted as a categorical bar to the admissibility of this type of firsthand experiential evidence in future conditional use hearings.”

The court relied upon Visionquest National Limited v. Board of Supervisors of Honey Brook Township, 569 A.2d 915 (Pa. 1990), for the proposition that evidence relating to past conduct and practices of an applicant for conditional use approval is relevant and probative in determining whether the applicant’s project would cause adverse impacts to the health, safety and welfare of the community. Although the Visionquest case involved past actions within the same municipality, the court found that it applied to the testimony related to the Trax Farm site as it found “a significant degree of similarity between the nature of the proposed land use at the Bickerton site and the present use of the Trax Farm site.” Because the Bickerton well site is proposed to have similar operations to those at the Trax Farm site and will be constructed and operated by the same company, the court concluded that the objectors’ testimony was  sufficient regarding the impacts that Borough residents may experience.

Consequently, the Pennsylvania Supreme Court vacated the order of the Commonwealth Court and remanded this matter for further consideration in light of this opinion.


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