Tuesday, April 14, 2020

Shale Law Weekly Review - April 14, 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.
Biofuels: Court of Appeals Denies Request for Rehearing on Renewable Fuel Standard Exemptions
On April 7, 2020, the U.S. Court of Appeals for the Tenth Circuit denied a request for rehearing from small oil refineries regarding renewable fuel standard exemptions. (NCGA news release, Renewable Fuels Association v. EPA, No. 18-9533).  The request was filed in response to a January 2020 ruling by the court that vacated the Environmental Protection Agency’s (EPA) extension of renewable fuel standard exemptions to three small oil refineries. (Jan. Order, pg. 99).  EPA issued a news release stating that it planned to implement the court’s January decision once all “appeals have been resolved and the court’s mandate has been issued.”  EPA also indicated that ensuring compliance of small refineries was low on its priority list during the Covid-19 pandemic. 

Infrastructure: West Virginia Governor Signs Critical Infrastructure Protection Act  
On March 25, 2020, West Virginia Governor Jim Justice signed House Bill 4615, establishing protections for critical infrastructure.  The bill creates criminal and civil penalties for persons who “willfully and knowingly” trespass on property containing a “critical infrastructure facility.” (pg. 5).  Some critical infrastructure facilities defined in the bill include petroleum refineries, natural gas compressor stations, liquified natural gas terminals, and crude oil storage facilities. (pg. 4).  Misdemeanor violations include entering the property without permission and could result in fines ranging from $100 to $1,000, and/or up to a year in jail. (pg. 5).  A felony occurs if damage to the property exceeds $2,500, with penalties for a felony including fines up to $20,000. (pg. 6).

GHG Emissions: Court of Appeals Rules EPA Improperly Issued Regulation Regarding Greenhouse Gas-Producing Chemicals
On April 7, 2020, the U.S. Court of Appeals for the District of Columbia Circuit ruled that the Environmental Protection Agency (EPA) improperly issued a 2018 regulation regarding certain greenhouse gas-producing chemicals.  (Natural Resources Defense Council v. Wheeler, No. 18-1172).  Previously in a 2015 regulation, EPA changed the status of hydrofluorocarbons (HFCs) from acceptable to unacceptable for use in certain products.  The 2015 regulation established that companies using ozone-depleting chemicals could not replace those chemicals with HFCs. (Opinion pg. 6).  The 2015 regulation also prevented companies already using HFCs as a replacement for ozone-depleting chemicals from continuing to use them. (Opinion pg 6).  In a 2017 opinion, the Court of Appeals held that EPA could prevent manufacturers from replacing ozone-depleting chemicals with HFC’s but that EPA did not have authority to prevent manufacturers that had already made the switch from continuing to use HFCs. (See, Mexichem Fluor, Inc., v. EPA, No. 15-1329).  In response to the court’s 2017 opinion, EPA issued the 2018 regulation explaining they would stop applying HFC restrictions altogether.  See “Protection of Stratospheric Ozone: Notification of Guidance and a Stakeholder Meeting Concerning the Significant New Alternatives Policy (SNAP) Program,” 83 Fed. Reg. 18,431, 18,432 (Apr. 27, 2018). (2020 opinion, pg. 7).  The court ultimately held that EPA’s 2018 regulation was issued improperly, without using notice-and-comment requirements. (2020 opinion, pg 27). Thus, the court vacated the 2018 regulation and remanded the decision back to EPA for further proceedings. (pg. 27).  

Landowner Royalties: Ohio District Court Grants Judgments for Chesapeake and Total in Royalties Case 
On March 30, 2020, the U.S. District Court for the Northern District of Ohio granted summary judgements for Chesapeake Exploration and Total E&P USA (Defendants) in an oil and gas royalties case. (Zehentbauer Family v. Chesapeake Exploration, LLC, No. 4:15CV2449).  Plaintiffs, a class of landowners, filed suit alleging Defendants were not paying the full royalties due under their oil and gas leases. (pg. 12).  The Plaintiffs disputed the calculating method used by Defendants in determining the royalties amounts and alleged Defendants were passing improper post-production costs to the landowners. (pg. 12).  The court ultimately agreed with Defendants’ interpretation of the leases royalty provisions, allowing deductions for post-production costs. (pg. 36).  

Pipelines: Court of Appeals Agrees to Pause Appeals for Constitution Pipeline Water Quality Disputes 
On April 8, 2020, the U.S. Court of Appeals for the Second Circuit ordered that appeals regarding the Constitution pipeline’s water quality certificate will be held in abeyance.  (New York State Dept. of Envtl. Conservation v. FERC, No. 19-4338, and Holleran v. FERC, No. 20-487).  The court stated that the pending appeals would be held in abeyance until the Federal Energy Regulatory Commission’s certificate of public convenience and necessity for the pipeline expires on December 2, 2020.  The court noted that reinstatement of the appeals was possible if Petitioners notified the court of a change in circumstances.  The order follows Williams’ cancellation of the Constitution pipeline project.  According to Reuters, Williams announced the cancellation on February 24, 2020, stating that returns for the project had diminished to where “further development is no longer supported.” 
From the National Oil & Gas Law Experts:
Charles Sartain, What Did the Mineral Deed Convey? (Apr. 9, 2020)
John McFarland, Who is Responsible for the Oil Glut? (Apr. 6, 2020)

Pennsylvania Department of Energy Press Releases:

U.S. Department of Energy

U.S. Environmental Protection Agency

Pennsylvania Executive Agencies—Actions and Notices: 
50 Pa.B. 2061 “Extension of National Discharge Pollutant Elimination System General Permit for Discharges from Hydrostatic Testing of Tanks and Pipelines” Notice (Apr. 11, 2020)

Pennsylvania Legislature:
No actions Apr. 6 -13, 2020

Federal Executive Agencies—Actions and Notices: 

Federal Energy Regulatory Commission 
85 FR 19471 “Alliance for Open Markets, BP Canada Energy Marketing Corp., Oasis Petroleum Marketing LLC and Tenaska Marketing Ventures v. Northern Border Pipeline Company; Notice of Complaint” Notice (Apr. 7, 2020)
85 FR 19752 “Columbia Gas Transmission, LLC; Notice of Schedule for Environmental Review of the Leach XPress Project Amendment” Notice (Apr. 8, 2020)
85 FR 19936 “Iroquois Gas Transmission System, L.P.; Notice of Schedule for Environmental Review of the Enhancement by Compression Project” Notice (Apr. 9, 2020)
85 FR 19938 “Tennessee Gas Pipeline Company, LLC and Southern Natural Gas Company, LLC; Notice of Schedule for Environmental Review of the Evangeline Pass Expansion Project” Notice (Apr. 9, 2020)
85 FR 20264 “ANR Pipeline Company; Notice of Request Under Blanket Authorization” Notice (Apr. 10, 2020)
85 FR 20266 “ConocoPhillips Company, Shell Energy North America (US), L.P., XTO Energy Inc. v. Northern Border Pipeline Company; Notice of Complaint” Notice (Apr. 10, 2020)

Land Management Bureau
85 FR 19954 “Agency Information Collection Activities; Oil and Gas Leasing: National Petroleum Reserve - Alaska” Notice (Apr. 9, 2020)

House Energy and Commerce Committee Actions:
No new actions Apr. 6 - 13, 2020

Senate Energy and Natural Resources Committee Actions: 
No new actions Apr. 6 - 13, 2020.
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