Shale Law Weekly Review - February 17, 2020

Written by:
Sara Jenkins – Research Assistant 
Chloe Marie - Research Specialist 
Jackie Schweichler – Staff Attorney
Audry Thompson – Research Assistant

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

Economic Development: Pennsylvania Congress Approves Energy Manufacturing Tax Credit 

On February 4, 2020, Pennsylvania’s House and Senate approved HB 1100, amending the 1971 Tax Reform Code and establishing a tax credit for natural gas “purchased and used in manufacturing of petrochemicals or fertilizers.” The bill was sponsored by Representative Aaron Kaufer as part of the “Energize PA Legislative Package.”  According to the House co-sponsorship memoranda, the bill is “designed to make Pennsylvania attractive to outside businesses, create family-sustaining jobs and provide economic benefits to underserved regions.”  The bill would create a tax credit for manufacturers that use natural gas to produce petrochemicals or fertilizers, invest up to $450 millions in the construction of facilities, and create 800 full-time jobs for the construction and operation of these facilities.  Eligible manufacturers would be entitled to a $0.47 tax credit per unit of natural gas that is purchased and used for petrochemical or fertilizer manufacturing.  If companies are approved for the natural gas tax credit, they will be ineligible for any other tax credits provided in HB 1100.  The bill has not yet been signed by Governor Wolf. 

Hydraulic Fracturing Bans: New York Governor Cuomo Announces Intention to Support Permanent Hydraulic Fracturing Ban 

On January 22, 2020, New York Governor Andrew Cuomo issued a press release announcing his intention to support legislation that would permanently ban hydraulic fracturing.  According to the press release, New York has been operating under a temporary hydraulic fracturing ban for the last five years, which, according to the governor, has created a “hotbed for clean energy and economic development investment” in the state.  Governor Cuomo also highlighted the success of the 76West competition and investment from businesses like Imperium3.  If passed, the legislation would “restrict the Department of Environmental Conservation from . . . authoriz[ing] an applicant to drill, deepen, plug back or convert wells that use high-volume hydraulic fracturing as a means to complete . . . a well.”

LNG Exports: Department of Energy Approves Texas Brownsville for LNG Exports to Non-Free Trade Agreement Nations

On February 10, 2020, the U.S. Department of Energy (DOE) issued an order granting Texas LNG Brownsville LLC (Texas LNG) authorization to export liquified natural gas to non-free trade agreement nations.  DOE limited Texas LNG’s export term to 20 years, with exports beginning “no later than seven years” from the date of the order.  Texas LNG will be required to file all long-term contracts with DOE within 30 days of their agreement.  DOE also posted a list on the status of long-term LNG export applications received as of January 8, 2020.  Other export projects located in Brownsville also were approved, including Annova LNG and Rio Grande LNG.  Texas LNG’s Port of Brownsville export facility is scheduled to be completed by 2025 with the capacity to produce two million tonnes of liquified natural gas per annum. 

Pipelines: Canada’s Federal Court of Appeal Dismisses Legal Challenge to Trans Mountain Pipeline Project

On February 4, 2020, the Federal Court of Appeal in Canada dismissed applications for judicial review of the Trans Mountain Pipeline Expansion Project.  The federal Cabinet first approved the project in November 2016, but the court later determined that the environmental assessment for the project was “too narrow” and that the Cabinet failed to comply with its duty to consult Indigenous peoples (Tsleil-Wautuh Nation v. Canada, 2018 FCA 153).  The matter was then sent back to the National Energy Board for review.  The National Energy Board issued a recommendation to approve the project, and the Cabinet again approved the project in June 2019.  According to the Federal Court of Appeal, the decision dated June 18, 2019, approving the expansion project was reasonable (Coldwater et al. v. Canada et al., 2020 FCA 34).  The court stated that “... the Government of Canada had remedied the flaws in consultation earlier identified by this Court and had engaged in adequate and meaningful consultation with Indigenous peoples.”

From the National Oil & Gas Law Experts:

Georges A. Bibikos, At the Well Weekly (Feb. 7, 2020)

Charles Sartain, Keeping Score in Midstream Dedications in Bankruptcy: Midstreams 2, Producers 1 (Feb. 5, 2020)

Charles Sartain, Texas Supreme Court Says Don’t Mess With a Written Contract (Feb. 11, 2020)

Charles Sartain, Produced Water in Texas … Who Owns It (Feb.13, 2020)

John McFarland, Can a Gathering Agreement Survive the Bankruptcy of the Producer? (Feb. 5, 2020)

U.S. Energy Information Agency, Natural gas prices fall to lowest level since 2016, the lowest February prices in 20 years (Feb. 3, 2020)

AGENCY PRESS RELEASES—STATE/FEDERAL

Pennsylvania Department of Energy Press Releases:

No new releases Feb. 10–17, 2020.

U.S. Department of Energy

President Trump Releases FY 2021 Budget Request (Feb. 10, 2020).

U.S. Department of Energy Issues Four LNG Export Approvals (Feb. 10, 2020).

Secretary Brouillette Statement on IEA Report (Feb. 11, 2020). 

President Trump Intends to Nominate Mark W. Menezes to be U.S. Deputy Secretary of Energy (Feb. 13, 2020).

U.S. Environmental Protection Agency

EPA FY 2021 Budget Proposal Released (Feb. 10, 2020).

EPA Announces $2.7 Billion for Infrastructure to Protect Surface Waters and Drinking Water (Feb. 12, 2020).

EPA, NFWF Announce $2.4 Million for Projects to Improve Pennsylvania Streams and the Chesapeake Bay (Feb. 12, 2020). 

Doug Benevento Nominated as EPA Deputy Administrator (Feb. 13. 2020)

STATE ACTIONS—EXECUTIVE/LEGISLATIVE

Pennsylvania Executive Agencies—Actions and Notices: 

No actions Feb. 17, 2020. 

Pennsylvania Legislature:

The House will reconvene on Monday, March 16, 2020 at 1:00PM

The Senate will reconvene on Monday, March 16, 2020 at 1:00PM unless sooner recalled by the Pres. Pro Temp.

FEDERAL ACTIONS—EXECUTIVE/LEGISLATIVE

Federal Executive Agencies—Actions and Notices: 

Energy Department

85 FR 7672 “Extending Natural Gas Export Authorizations to Non-Free Trade Agreement Countries Through the Year 2050” Proposed Rule—Comment Period (February 11, 2020). 

Environmental Protection Agency

85 FR 7999 “Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2018” Notice (February 12, 2020)

Federal Energy Regulatory Commission 

85 FR 7997 “Transcontinental Gas Pipe Line Company, LLC; Notice of Application” Notice (February 12, 2020)

85 FR 7991 “Venture Global Delta LNG, LLC; Venture Global Delta Express, LLC; Supplemental Notice of Intent for the Planned Delta LNG and Delta Express Pipeline Project Request for Comments on Environmental Issues Related to Project Modifications Under Consideration” Notice (February 12, 2020)

85 FR 7989 “Kinder Morgan Louisiana Pipeline LLC; Columbia Gulf Transmission, LLC; Notice of Availability for the Proposed Acadiana Project and the Louisiana XPress Project” Notice (February 12, 2020)

85 FR 7989 “BP Energy Company v. Natural Gas Pipeline Company of America LLC; Notice of Complaint” Notice (February 12, 2020)

85 FR 7985 “Port Arthur Pipeline, LLC; Notice of Intent to Prepare an Environmental Assessment for the Proposed Louisiana Connector Amendment Project, Request for Comments on Environmental Issues, and Notice of Public Scoping Session” Notice (February 12, 2020)

85 FR 8276 “National Fuel Gas Supply Corporation; Transcontinental Gas Pipe Line Company, LLC; Notice of Availability of the Environmental Assessment for the Proposed Fm100 and Leidy South Projects” Notice (February 13, 2020)

85 FR 8271 “Texas Eastern Transmission, LP; Notice of Intent to Prepare an Environmental Assessment for the Proposed Middlesex Extension Project, Request for Comments on Environmental Issues, and Notice of Public Scoping Session” Notice (February 13, 2020)

85 FR 8266 “Transcontinental Gas Pipe Line Company, LLC; Notice of Application” Notice (February 13, 2020)

House Energy and Commerce Committee Actions:

H.R. 5842 “To authorize the Administrator of the Environmental Protection Agency to award grants to entities to participate in decisions impacting the health and safety of their communities in connection with the release of certain hazardous air pollutants and the permitting of solid waste disposal facilities and hazardous waste facilities, and for other purposes.” Referred to the House Committee on Energy and Commerce (Feb. 11, 2020).

H.R. 5857 “To ban the practice of hydraulic fracturing, and for other purposes.” Referred to the House Committee on Natural Resources, and in addition to the Committee on Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned (Feb. 12, 2020).

Senate Energy and Natural Resources Committee Actions: 

S.3288 “A bill to provide for the protection of and investment in certain Federal lands in the State of California” Read twice and referred to the Committee on Energy and Natural Resources (February 12, 2020).

Follow us on Twitter at PSU Ag & Shale Law (@AgShaleLaw) to receive ShaleLaw HotLinks:

“The Toxic Legacy of Old Oil Wells: California’s Multibillion Dollar Problem,” LA Times

“California Communities Argue Their Climate Liability Suits Are Based on Fossil Fuel Disinformation Campaigns,” DeSmogBlog

“EIA’s Outlook: Natural Gas and Oil Remain Integral to U.S.,” API Smartbrief

“Flaring: Does New Mexico Oil Industry Light the Way Forward?,” Hart Energy

“How Louisiana Lawmakers Stop Residents’ Efforts to Fight Big Oil and Gas,” ProPublica

“Shale Gas Swamps Asia, Pushing LNG Prices to Record Lows,” Wall Street Journal

“A Seven-Mile Gas Pipeline Outside Albany Has Activists Up in Arms,” - InsideClimate News

“Energy Capital Pauses Pipeline Deals on Widening Shale Despair,” World Oil

“NYC Fossil Fuel Ban Proposal Sparks Battle,” Energywire

“In Democratic Primary, Fossil-Fuel Bans Rule - Even for Centrists,” Houston Chronicle

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