Tuesday, June 4, 2019

Shale Law Weekly Review - June 4, 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.

State Regulation: Oregon Senate Passes Oil and Gas Moratorium Bill
On May 29, 2019, the Oregon Senate passed a bill which will ban oil and gas production and exploration within the state for the next five years.  The bill, HB 2623, creates a five year moratorium on hydraulic fracturing but exempts natural gas storage wells, geothermal, and existing coal bed methane wells.  The Senate version of the bill decreased the original length of the moratorium from the House version of the bill which would have prohibited oil and gas exploration for ten years.  The Senate changes to the bill must now be approved by the House before it can be sent to Governor Kate Brown.

Air Quality: Two Year Study Concludes Air Quality Near Pennsylvania Oil and Gas Development Sites Will Not Impact Public Health
On May 10, 2019, Gradient Corporation issued a report concluding that air quality near oil and gas development sites will not impact public health. The report outlines a two-year study of air quality and wind direction in Washington County, Pennsylvania that monitored three different sites near the Yonker well pad. The report was requested by Range Resources - Appalachia, LLC, to evaluate any public health concerns for the Fort Cherry School District campus, located upwind from the Yonker well site. The study found that “PM2.5 and VOC concentrations were consistently below health-based air comparison values,” and were not expected to pose any health risks.

Pipelines: Court Rules Environmental Group Can Dispute Lack of Annual Pipeline Inspections
On May 23, 2019, The United States District Court for the District of Montana denied the Department of Transportation's (DOT) Motion to Dismiss a case brought by environmental group, WildEarth Guardians (WildEarth)(WildEarth Guardians v. Chao, et al, 4:18-cv-00110-BMM).  WildEarth filed the Complaint in August 2018, alleging DOT is in violation of the Mineral Leasing Act, which requires DOT’s Secretary to inspect oil and gas pipelines located on federal lands on an annual basis.  DOT filed a Motion to Dismiss for lack of jurisdiction and failure to state a claim.  The court found that WildEarth sufficiently asserted a failure to act claim, and the lack of administrative proceedings in the case established jurisdiction.

Pipelines: PHMSA’s Proposed Rule on Natural Gas Pipeline Safety Moves to White House for Review
On May 22, 2019, the Office of Information and Regulatory Affairs received a proposed rule regarding the revision of natural gas pipeline safety requirements.  Notice of the proposed rule was filed in the Federal Register on April 8, 2019, by the Pipeline and Hazardous Materials Safety Administration (PHMSA).  The proposed rule, titled Pipeline Safety: Safety of Gas Transmission and Gathering Pipelines, seeks to amend safety regulations pertaining to onshore gas transmission and gathering pipelines.  The amendments would include the revision and repair criteria for pipeline defects, the addition of requirements for monitoring gas quality, and the addition of requirements for mitigating internal corrosion.  PHMSA drafted the proposed rule in response to several incidents that have occurred on gas pipeline systems, as well as to offer clarity and enhancements to current safety regulations.

LNG Exports: FERC and Department of Energy Issue Approvals for Freeport LNG’s Train 4 Project
On May 28, 2019, U.S. Department of Energy announced its approval of additional exports of natural gas from Freeport’s LNG terminal, located on Quintana Island, Texas.  The approval follows the Federal Energy Regulatory Commission’s (FERC) approval for the construction of Freeport LLC’s (Freeport) fourth natural gas liquefaction unit (Train 4).  The Train 4 project is an expansion to three trains already under construction at the Quintana Island terminal.  The project is expected to increase the total export capacity of the LNG terminal to 0.74 billion cubic feet of natural gas per day.

International Development: European Court Dismisses Lawsuit Seeking to Amend Climate Change Legislation
On May 8, 2019, the General Court, Second Chamber, of Luxembourg dismissed a case seeking to amend climate change legislation that aims to reduce greenhouse gas emissions by 40% by 2030 (Carvalho, et al v. European Parliament, et al, T-330/18). The case was brought by landowners and farmers who live in various countries within the European Union.  In the Application, Plaintiffs argue that the ETS Directive,  Effort Sharing Regulation, and LULUCF Regulation (GHG Emissions Acts) are unlawful due to the Treaty on the Functioning of the European Union (TFEU) that requires emissions to be reduced by 50% to 60% by 2030.  Plaintiffs requested that the court order an annulment and amendment of the provisions to reflect reduction of emissions by 50% to 60%.  Defendants, the European Parliament and the Council of the European Union, argued that the legislation did not alter Plaintiffs' fundamental rights. Additionally, Defendants’ argued that the legislation did not directly affect Plaintiff’s individual legal situation given the GHG Emissions Acts are general in nature and could apply to an indeterminate number of people.  Ultimately, the court found that Plaintiffs did not have standing and could not request annulment of the legislation.

National Energy Policy: IEA Study Suggests Declining Use of Nuclear Power May Lead to Increased Carbon Emissions
On May 28, 2019, the International Energy Agency (IEA) released a study which concluded that decreased use of nuclear energy could lead to increased carbon emissions.  The study, titled Nuclear Power in a Clean Energy System, analyzes the cost of extending the use of aging nuclear reactors with the cost of implementing new clean energy projects.  IEA simultaneously issued a press release with the study stating that failure to extend the use of nuclear power plants could increase CO2 emissions by four billion metric tons.  According to the study, nuclear reactors provide 10% of the global electricity supply, making it the second largest source of low-carbon electric power.  The study offers several policy recommendations including, extending the use of existing nuclear plants, updating safety regulations, and creating a favorable financing framework for new and existing plants.

From the National Oil & Gas Law Experts:
George Bibikos, At the Well Weekly, (May 31, 2019)

Charles Sartain, Lessor, Should You Cash That Royalty Check?, (May 29, 2019)

Pennsylvania Legislation:
SB694: would allow well bores to cross multiple unites, so long as the owner has the right to drill those units (Referred to Environmental Resources and Energy - May 31, 2019)

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