Monday, July 17, 2017

Shale Law Weekly Review - July 17, 2017

Written by Richard Neal and Torin Miller- Research Assistants

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

Pipelines: Virginia Supreme Court Says Surveyors Allowed On Private Land
On July 13, 2017, the Virginia Supreme Court ruled that surveyors for the Atlantic Coast Pipeline may enter private property to survey for the developing pipeline. Atlantic Coast Pipeline, LLC, which is incorporated in Delaware, is constructing the Atlantic Coast Pipeline, which will transport natural gas from West Virginia to North Carolina. The Virginia Supreme Court held that “a foreign corporation may exercise the entry-for survey privilege given to natural gas companies by Code § 56-49.01,” and that Code § 56-49.01 does not infringe upon the Constitution of Virginia.

Pipelines: FERC Issues Warning Letter on Rover Pipeline
On June 1, 2017, the Federal Energy Regulatory Commission (FERC) issued a letter to Rover Pipeline, LLC, suspending boring activities used to install the pipeline.  The letter comes after the company spilled approximately two million gallons boring fluid, which contained diesel fuel, while finishing a bore on the Tuscarawas River. FERC will not grant approval of continued operation until the spill's effects are remediated. According to a media report by Kallanish, the Ohio EPA has asked the Ohio Attorney General to file a civil suit against Rover Pipeline, LLC, in regard to this spill and other environmental violations, which could include $1 million civil fine. The Commission plans to continue investigation into the reasons for the spill and will take additional actions to ensure that Rover complies with all environmental conditions of its certificate.

Methane Emissions: EPA Holds Public Hearing on Methane Emissions Rule
On July 10, 2017, EPA held a  hearing on the methane emission rule. According to a list posted by EPA, the hearing had 152 speakers address the agency. According to an NGI media report, most of these speakers were part of environmental groups such as Earthjustice, Greenpeace, the Sierra Club, the National Resource Defense Council, and many others. The purpose of the public hearing was to discuss the proposed stays of the 2016 New Source Performance Standards (NSPS) to allow time for EPA to reconsider the regulations.

Methane Emissions: DC Circuit Court Orders a 14 Day Extension for Methane Emissions Rule
On July 13, 2017,  the US Court of Appeals for the DC Circuit issued an order allowing for a 14 day extension to comply with their ruling of July 3, 2017, which barred EPA from implementing a 90 day stay on the 2016 New Source Performance Standards (NSPS). The court stated in the order that the extension allows the EPA 14 days to “determine whether to seek panel rehearing, rehearing en banc, or pursue other relief.” The court further ruled, “[t]o stay issuance of the mandate for longer would hand the agency, in all practical effect, the very delay in implementation this panel determined to be ‘arbitrary, capricious, [and] . . . in excess of [EPA’s] statutory . . . authority.’” The EPA has separately proposed a two year stay on the same regulation which they started holding public hearings on July 10, 2017.

Methane Emissions: Environmental Groups File Suit over Methane Emission Rule Stay
On July 10, 2017, the Sierra Club filed a lawsuit against the Secretary of the Interior Ryan Zinke in US District Court Northern District of California , case number 3:17-cv-03885. According to a media report by Kallanish,  American Indian tribes and environmental groups like the Sierra Club and Earthjustice filed the suit against the Bureau of Land Management challenging the proposed two year stay of the methane emission reduction rule. The suit was filed on the grounds that the two year stay would reduce royalty payments to leaseholders by releasing natural gas that could be captured, as well as causing air pollution, both issues the methane emission reduction rule tries to address.

Public Lands: Ohio House Passes Legislation on the Oil and Gas Leasing Commission
On June 28, 2017, the Ohio House of Representatives passed HB 49, which is the operating budget for the 2017-2018 fiscal year. In HB 49, the House added an amendment to Section 1509.71 of the Ohio Revised Code, which was passed in 2011.  Section 1509.71 gives the governor power to appoint members to the Ohio Oil and Gas Leasing Commission, which is responsible for issuing permits to oil and gas drillers for operations on state public lands. According to a media report by the Columbus Dispatch,  Governor John Kasich has not appointed members to the commission since 2011, virtually halting any oil and gas production permits for public lands. In HB 49,  the House proposes giving the power of appointing members of commission to the leaders of the House and Senate. HB 49 is still awaiting Senate approval.

Energy Policy: Production From Marcellus Shale Will Increase 45% In Five Years
On July 13, 2017, the International Energy Agency released a report estimating that natural gas production from the Marcellus Shale will increase by 45% by 2022. As a result, “[t]he United States . . . will account for 40% of the world’s extra gas production to 2022 thanks to the remarkable growth in its domestic shale industry.” Although the United States is the world’s largest consumer and producer of natural gas, “more than half of the production increase will be used for liquefied natural gas (LNG) for export.” The report notes, “[b]y 2022, the IEA estimates that the United States will be on course to challenge Australia and Qatar for global leadership among LNG exporters.”  

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