Tuesday, September 3, 2019

Shale Law Weekly Review - September 3, 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.

Pipelines: Nebraska Supreme Court Rules Keystone XL Pipeline Route is in the Public Interest 
On August 23, 2019, the Nebraska Supreme Court affirmed the Nebraska Public Service Commission’s (NPSC) determination that the Keystone XL pipeline’s alternative route is in the public interest (In re Application No. OP-0003, No. S-17-1331).  Landowners and environmental groups intervened, bringing this appeal after NPSC approved the “mainline alternative route” (MAR) for TransCanada’s Keystone XL pipeline.  Addressing the issues raised by the appellants, the court found that NPSC had jurisdiction to consider TransCanada’s application; that TransCanada “met its burden of proof;” that NPSC “properly considered the MAR;” and that the intervenors were given due process.  The court explained that the legislature gave NPSC the authority to determine which pipeline route was in the public interest.  The court determined that the NPSC provided enough evidence to support its decision and that the intervenors arguments were “without merit.”

State Regulation: Environmental, Citizen Groups Petition New Mexico Supreme Court to Stay New Energy Transition Act 
On August 26, 2019, several environmental and citizen groups filed a Petition asking the Supreme Court of New Mexico to stay the state’s recently-enacted Energy Transition Act (ETA) (New Energy Economy v. New Mexico Public Regulation Comm’n, No. S-1-SC-37875). Petitioners contend that ETA grants the Public Service Company of New Mexico (PNM) excessive discretion to determine what to charge ratepayers when old plants are closed.  The petitioners argue that this discretion undermines the New Mexico Public Regulation Commission’s (Commission) authority to protect consumers from exorbitant rates.  Specifically, Petitioners argue that sections 2H, 2S, 5, 8B, 11C, 22 and 31C of ETA are unconstitutional.  ETA seeks to establish “new minimum requirements for the conversion to renewable energy resources, and adopt[] a mechanism for ‘securitizing’ costs associated with the abandonment of old plants.”  Petitioners are requesting oral arguments to present their case before the court. 

Methane Emissions: EPA Issues Proposed Rule Amending New Source Performance Standards Methane Requirements
On August 28, 2019, the Environmental Protection Agency (EPA) issued a proposed rule amending methane requirements in the 2012 and 2016 New Source Performance Standards (NSPS).  According to EPA’s policy amendments fact sheet, the proposed rule was drafted in response to President Trump’s Executive Order on Promoting Energy Independence and Economic Growth issued March 28, 2017.  The proposal states that the amendments are “intended to continue existing protections from emission sources within the regulated source category, while removing regulatory duplication.”  The proposed rule includes both primary and alternative proposals.  The primary proposal would amend the 2016 NSPS by removing methane requirements for oil and gas production and processing. This proposal would also no longer regulate oil and gas transmission and storage as sources for volatile organic compounds or greenhouse gas emissions.  Alternatively, EPA suggests keeping the same source categories, but instead rescinding requirements for all industry related methane sources. 

Pipelines: FERC Order Allows Constitution Pipeline to Move Forward 
On August 28, 2019, the Federal Energy Regulatory Commission (FERC) issued an order finding that the New York State Department of Environmental Conservation (New York DEC) waived its authority to deny a water quality certification for the Constitution Pipeline.  Constitution Pipeline Co., LLC (Constitution) initially filed a Section 401 water quality certification with New York DEC in April 2015, but the certification was denied in April 2016.  Constitution petitioned FERC, arguing that New York DEC had waived its authority to deny the certification by failing to act within a reasonable period of time.  FERC denied Constitution’s petition, and the U.S. Supreme Court later denied Constitution's petition for writ of Certiorari.  In October 2018, FERC requested that the case be held in abeyance to await the result of the Hoopa case, which posed similar questions of law (Hoopa Valley Tribe v. FERC, D.C. Cir. No. 14-1271). The court in Hoopa issued its decision on January 25, 2019, holding that the state in that case had waived their authority by failing to act within the year. Accordingly, FERC requested that this case be remanded in order to reconsider its orders. 

Production and Operation: Energy Information Administration Data Shows United States as the Global Leader in Petroleum and Natural Gas Production 
On August 20, 2019, the U.S. Energy Information Administration published data showing the United States now leads the globe in petroleum and natural gas production.  U.S. production reached record levels in 2018, with petroleum increasing by 16% and natural gas increasing by 12%.  Petroleum production in 2018 was 80% crude oil and lease condensate with natural gas plant liquids accounting for the other 20%.  Crude oil production set a new record in 2018, reaching 11 million barrels per day.  Dry natural gas production reached record amounts for the second straight year, reaching 28.5 billion cubic feet per day.  The United States has led natural gas production since surpassing Russia’s production in 2011.  The United States exceeded Saudi Arabia’s petroleum production in 2018, after the record production growth.

From the National Oil & Gas Law Experts:
Charles Sartain and Paul Yale, North Dakota: A Different Rule for Post-Production Costs In a State Lease, (August 27, 2019)

John McFarland, Energy – the Big Picture, (August 26, 2019)

Penn State Research: 

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