Monday, March 2, 2020

Shale Law Weekly Review - March 2, 2020

Written by:
Sara Jenkins – Research Assistant 
Jackie Schweichler – Staff Attorney
Brennan Weintraub – Research Assistant
The following information is an update of recent local, state, national and international legal developments relevant to shale gas. 
Pipelines: Supreme Court Hears Oral Arguments Related to Construction of the Atlantic Coast Pipeline Across the Appalachian Trail
On February 24, 2020 the U.S. Supreme Court heard oral arguments related to construction of the Atlantic Coast pipeline across the Appalachian Trail (Atlantic Coast Pipeline v. Cowpasture River Preservation Ass’n, No. 18-1587).  On June 25, 2019, Atlantic Coast Pipeline filed a Petition asking the Supreme Court to review a decision by the U.S. Court of Appeals for the Fourth Circuit.  The Fourth Circuit ruled that the U.S. Forest Service did not have the authority to grant a special use permit giving the Atlantic Coast Pipeline a right-of-way for construction across the Appalachian Trail on land located in the George Washington National Forest. Typically, the Supreme Court accepts 100 to 150 cases out of over 7,000 cases that are petitioned to the Court each year. The Supreme Court is expected to issue a decision by the end of their current term, sometime in June or July of this year. 

Municipal Regulation: California Energy Commission Approves Local Ordinances Limiting Natural Gas in New Residential Construction
On February 20, 2020, the California Energy Commission approved various local ordinance applications requiring new residential construction to be all-electric.  Several local jurisdictions including Santa Rosa, Mountain View, Windsor, and Los Gatos sought to exclude natural gas completely from new residential construction.  Other local jurisdictions including Berkeley, Palo Alto, Milpitas, Healdsburg, and Brisbane require electricity for most uses in new construction while allowing natural gas for limited use in fireplaces and cooking.  Most of the local ordinance proposals also included requirements for installing solar panels on new residential construction. Additionally, Berkeley, Mountain View, and Palo Alto ordinances limit natural gas usage in some new commercial construction. 

Municipal Regulation: Arizona Governor Signs Bill Preventing Municipalities from Denying Building Permits Based on Utility Provider
On February 21, 2020, Arizona Governor Doug Ducey signed House Bill 2686 preventing municipalities from denying building permits based on the proposed utility provider for the project.  The bill also states that municipalities cannot restrict the use of a particular utility by issuing fees that would be higher than fees imposed on other utility providers.  The bill restricts the use of fines, penalties, or other requirements that may restrict a “utility provider’s authority to operate or serve customers.”  The bill also extends the same language to counties issuing building permits for construction costing $1,000 or more.

Wildlife Habitat: Idaho District Court Approves Injunction on Oil and Gas Leases within Sage Grouse Habitat Areas
On February 27, 2020, the U.S. District Court for the District of Idaho issued a decision granting an injunction against oil and gas leases within federally recognized sage grouse habitat areas (Western Watersheds Project v. Zinke, No. 1:18-cv-00187-REB).  In doing so, the court set aside June and September 2018 oil and gas lease sales in Nevada, Utah, and Wyoming. (pg. 4). Petitioners, Western Watersheds Project and Center for Biological Diversity, argued that new lease issuing procedures used by the U.S. Bureau of Land Management (BLM) did not allow for proper public input regarding the leases’ effects on sage grouse populations. (pg. 2).  Petitioners requested the preliminary injunction until BLM could change its leasing procedures though notice-and-comment rulemaking. (pg. 2).  The court ultimately agreed with Petitioners and reinstated the previous leasing procedures that were issued in 2010. 

Pipelines: Pennsylvania Public Utility Commission Motions to Amend and Approve Settlement Agreement with Sunoco Pipeline
On February 27, 2020, the Pennsylvania Public Utility Commission filed a motion to amend and approve a settlement with Sunoco Pipeline, LLC following a 2017 leak of the Mariner East 1 Pipeline in Morgantown, Pennsylvania.  The Commission's motion amends the settlement that was previously approved by an Administrative Law Judge in December 2019.  The proposed amendments are related to a Remaining Life Study that the parties agreed was necessary to determine the pipeline’s remaining life related to age, coating, and soil conditions. In the motion, the Commission clarified that while Sunoco would choose three experts to complete the study, the ultimate decision on which expert will be used falls with the Commission’s Bureau of Investigation and Enforcement.  The Commission also sought to add a provision requiring the expert’s disclosure of any projects previously worked on involving Sunoco or Sunoco’s parent company.  The motion will be approved as a Modified Settlement Agreement if no adverse comments are received within 10 days of the motion. 

Public Lands: Report Claims $12.4 Billion in Federal Revenue Lost as a Result of Outdated Royalty Rates 
In February 2020, Taxpayers for Common Sense issued a report claiming that the federal government had lost $12.4 billion in revenue due to outdated royalty rates.  The report states that the Mineral Leasing Act set the royalty rate for oil and gas extraction on federal lands at 12.5 percent in 1920. (pg. 2).  The Bush Administration increased royalty rates for offshore drilling to 18.75 percent, but the rate for onshore drilling has remained the same. The study calculated that if onshore royalty rates had been increased to 18.75 percent at the same time as offshore rates, the federal government would have collected an additional $12.4 billion in royalties.
From the National Oil & Gas Law Experts:
George A. Bibikos, At the Well Weekly (Feb. 21, 2020)
John McFarland, The Future of Alternative Energy (Feb. 24, 2020)

Pennsylvania Department of Energy Press Releases:
No new releases Feb. 24- Mar. 2, 2020.

U.S. Department of Energy

U.S. Environmental Protection Agency

Pennsylvania Executive Agencies—Actions and Notices: 
50 Pa.B. 1320, “Liquefied Petroleum Gas Facility; Notice of Application” Notice (Feb. 29, 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 Executive Agencies—Actions and Notices: 
Federal Energy Regulatory Commission 
85 FR 10666, “Transcontinental Gas Pipe Line Company, LLC; Notice of Intent to Prepare an Environmental Document for a Proposed Amendment of the Northeast Supply Enhancement Project and Request for Comments on Environmental Issues” Notice (Feb. 25, 2020)
85 FR 11064, “Mountain Valley Pipeline, LLC; Notice of Availability of the Final Environmental Impact Statement for the Proposed Southgate Project” Notice (Feb. 26, 2020)
85 FR 11066, “North Baja Pipeline, LLC; Notice of Schedule for Environmental Review of the North Baja XPress Project” Notice (Feb. 26, 2020)
85 FR 11360, “Texas Eastern Transmission, LP; Notice of Schedule for Environmental Review of the Middlesex Extension Project” Notice (Feb. 27, 2020)
85 FR 11361, “Tennessee Gas Pipeline Company, LLC; Southern Natural Gas Company, LLC; Notice of Application” Notice (Feb. 27, 2020)
85 FR 12280, “Texas Eastern Transmission, LP; Notice of Intent to Prepare an Environmental Assessment for the Proposed Lily Expansion Project and Request for Comments on Environmental Issues” Notice (Mar. 2, 2020)

Land Management Bureau
85 FR 10617, “Onshore Oil and Gas Operations - Annual Civil Penalties Inflation Adjustments” Rule (Feb. 25, 2020)

House Energy and Commerce Committee Actions:
No new actions Feb. 25- Mar. 2, 2020

Senate Energy and Natural Resources Committee Actions: 
No new actions Feb. 25–Mar. 2, 2020.
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