Monday, June 29, 2020

Shale Law Weekly Review - June 29, 2020

Written by:

Sara Jenkins – Research Assistant 

Jackie Schweichler – Staff Attorney

Kaela Gray – Research Assistant

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

Pipelines: FERC Approves Mountain Valley Pipeline Extension Project

On June 18, 2020, the Federal Energy Regulatory Commission (FERC) issued an Order granting authorization for a Mountain Valley Pipeline, LLC extension project.  The project proposes to add 75.1 miles of natural gas pipeline to the 303.5-mile planned pipeline.   The project consists of pipeline, a new compressor station, and four interconnects with meter stations, all located within Virginia and North Carolina.  FERC issued the order after concluding that environmental impacts listed in the project’s Final Environmental Impact Statement were acceptable considering the public benefits of the project.  FERC’s order consists of a certificate of public convenience and necessity and is subject to several environmental conditions listed in Appendix of the order.  FERC mentioned that Mountain Valley’s mainline system is currently under a stop work order, and construction on the new extension project will not commence until the stop work order is lifted.  

Pipelines: Ninth Circuit Vacates Injunctions on Keystone XL Pipeline Project

On June 6, 2020, the U.S. Court of Appeals for the Ninth Circuit issued an Order vacating injunctions placed on the Keystone XL pipeline project. (Indigenous Envtl. Network v. U.S. Dep’t of State, No. 18-36068).  The previous district court order had enjoined construction or operation of the Keystone pipeline project until the U.S. Department of State supplemented the project’s 2014 final supplemental Environmental Impact Statement to comply with the National Environmental Policy Act and the Administrative Procedure Act.  TransCanada Corporation and TransCanada Keystone Pipeline, LP filed a motion to dismiss their appeal as moot after President Trump issued a new permit for the project in March 2019.  With the most recent decision, the Court of Appeals vacated prior district court judgments, dissolved the injunctions, and remanded the case to the district court for dismissal of the case as being moot.

Pipelines: Michigan Appeals Court Upholds Summary Judgment Ruling Regarding Enbridge Line 5 Pipeline

On June 11, 2020, the Michigan Court of Appeals affirmed a summary judgment ruling in favor of Enbridge Energy, LP regarding its Line 5 pipeline. (Enbridge Energy, LP, v. State of Michigan, No. 351366).  Enbrige planned to construct a utility tunnel for the Line 5 pipeline, at the request of the state, using authority under the 2018 Act 359 (Act).   The Michigan governor then raised concerns on the constitutionality of Act 359 and issued an executive order that halted the Enbridge utility tunnel project. Enbridge filed for a determination that the Act was constitutional and was granted summary judgment in the case.  The Michigan Court of Appeals ultimately agreed with the lower court’s determination that the Act is constitutional and affirmed the summary judgment decision. 

Public Lands: BLM Issues Guidance on Oil and Gas Royalty Rate Reductions

In June 2020, the U.S. Bureau of Land Management (BLM) issued guidance for onshore oil and gas operators who wished to apply for royalty rate reductions due to COVID-19.  Applications would be for temporary relief only and would not reduce the royalty rate more than 0.5 percent. Applications require a statement with supporting documentation that the operator would be able to produce in paying quantities were it not for the pandemic.  The application also requires an economic analysis showing that the leases are “uneconomic at the current royalty rate.”  The current guidance was amended from previous guidance issued by the BLM, which required a showing of “uneconomic at the current royalty rate, but would be economic with a royalty rate reduction.” 

Infrastructure: PHMSA Issues Final Rule Allowing LNG Transport by Rail 

On June 19, 2020, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a final rule allowing the transport of liquified natural gas (LNG) by rail tank cars.  In issuing the final rule, PHMSA determined that transportation of LNG by rail complies with the Federal Hazardous Materials Transportation law and is a safe alternative for transport.  The rule allows for LNG transport in rail tank cars with a DOT-113C120W specification that have had enhancements made to the outer tank material and thickness.  The rail car specifications are “subject to operational controls for braking, monitoring, and route analysis.”  The final rule will take effect on July 19, 2020, when it is officially published in the Federal Register. 

COVID-19: Senate Committee Holds Hearing on COVID-19 Mineral Supply Chain Impact

On June 24, 2020, the U.S. Senate Committee on Energy and Natural Resources held a hearing to discuss the impact of COVID-19 on mineral supply chains.  During the hearing, Chairman Lisa Murkowski pointed out concerns from a World Bank report that clean energy demand for lithium, graphite, and cobalt will increase 500 percent by 2050.  Senator Murkowski detailed the difficulty the pandemic has made for importing needed clean energy minerals from Africa and South America.  Senator Murkowski proposed passing the introduced American Mineral Security Act to promote a domestic mineral supply chain.  The Act specifically excludes “fuel minerals, including oil, natural gas, or any other fossil fuels” from the list of critical minerals.

From the National Oil & Gas Law Experts:

John McFarland, Pipeline Loses Condemnation Appeal – Hlavinka v. HSC Pipeline (June 23, 2020). 

John McFarland, Recovery of the Oil Market (June 22, 2020).


Pennsylvania Department of Energy Press Releases:

Statement from Wolf Administration on Grand Jury Report on Unconventional Gas Operations in Pennsylvania (June 25, 2020).

DEP Launches Expanded Online Permitting Options to Assist Businesses (June 22, 2020).

U.S. Department of Energy

DOE Announces New Lab Consortia to Advance Hydrogen and Fuel Cell R&D (June 23, 2020).

U.S. Environmental Protection Agency

EPA Grant to Arkansas Department of Environmental Quality Will Support Illinois River Watershed Collaboration (June 26, 2020).

EPA Administrator Wheeler Talks USMCA Environmental Provisions on BNN Bloomberg (June 25, 2020).


Pennsylvania Executive Agencies—Actions and Notices: 

Pennsylvania Public Utility Commission, Pipeline Assets (June 27, 2020).

Pennsylvania Legislature:

HB 1311 “An Act amending the act of June 28, 1995 (P.L.89, No.18), known as the Conservation and Natural Resources Act, in Department of Conservation and Natural Resources, further providing for fees and charges.” Re-committed to Rules (June 22, 2020).

SB 1217 “An Act amending Title 58 (Oil and Gas) of the Pennsylvania Consolidated Statutes, in development, providing for prohibition of natural gas hydraulic fracturing.” Referred to Environmental Resources and Energy (June 22, 2020).

SB 1218 “A Joint Resolution proposing an amendment to the Constitution of the Commonwealth of Pennsylvania, prohibiting hydraulic fracturing.” Referred to Environmental Resources and Energy (June 22, 2020). 

SB 763 “An Act amending the act of April 27, 1966 (1st Sp.Sess., P.L.31, No.1), known as The Bituminous Mine Subsidence and Land Conservation Act, further providing for compilation and analysis of data.” Removed from table (june 22, 2020).

SB 258 “An Act amending Title 66 (Public Utilities) of the Pennsylvania Consolidated Statutes, in service and facilities, providing for pipeline emergency management information.” Removed from table (June 22, 2020).

SB 284 “An Act amending the act of November 29, 2006 (P.L.1435, No.156), known as the Public Utility Confidential Security Information Disclosure Protection Act, further providing for definitions; providing for pipeline operation and emergency response plans; and further providing for prohibition.” Removed from table (June 22, 2020).

HB 99 “An Act imposing a duty on the Department of Environmental Protection to maintain a system for applicants to track the status of certain permit applications; and providing for permit notifications.” Laid on the table (June 24, 2020).


Federal Executive Agencies—Actions and Notices: 

Environmental Protection Agency

85 FR 37571 “National Oil and Hazardous Substances Pollution Contingency Plan; National Priorities List: Deletion of the First Piedmont Rock Quarry (Route 719) Superfund Site”  Rule (June 23, 2020).

85 FR 37619 “National Oil and Hazardous Substances Pollution Contingency Plan; National Priorities List: Deletion of the First Piedmont Rock Quarry (Route 719) Superfund Site”  Proposed Rule (June 23, 2020).

85 FR 37763 “National Oil and Hazardous Substances Pollution Contingency Plan; National Priorities List: Partial Deletion of the Allied Chemical and Ironton Coke Superfund Site” Rule (June 24, 2020). 

85 FR 38327 “Massachusetts; Negative Declaration for the Oil and Gas Industry; Withdrawal of Direct Final Rule” Air Quality State Implementation Plans; Approvals and Promulgations, Rule (June 26, 2020).

Federal Energy Regulatory Commission 

85 FR 37939 “Request for Exemption of Time: Atlantic Coast Pipeline, LLC; Dominion Energy Transmission, Inc.” Notice, Request for Exemption of Time (June 24, 2020).

Internal Revenue Service

85 FR 38024 “Enhanced Oil Recovery Project” Notice (June 24, 2020).

Pipeline and Hazardous Material Safety Administration

85 FR 37496 “Pipeline Safety: Meeting of the Gas and Liquid Pipeline Safety Advisory Committees” Meeting Notice (June 22, 2020).

House Energy and Commerce Committee Actions:

H.R.7303 “To provide additional funds for Federal and State facility energy resiliency programs, and for other purposes.” Referred to the House Committee on Energy and Commerce (June 24, 2020).

Senate Energy and Natural Resources Committee Actions: 

S.4060 “A bill to provide additional funds for Federal and State facility energy resiliency programs, and for other purposes.” Read twice and referred to the Committee on Energy and Natural Resources (June 24, 2020).

S.4029 “A bill to express the sense of Congress regarding the need for a nationwide moratorium on electric and natural gas utility disconnections during the nationwide emergency relating to the spread of the novel coronavirus.” Read twice and referred to the Committee on Energy and Natural Resources (June 22, 2020).

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

“US gives go-ahead for LNG rail shipments,” Bloomberg

“API Testifies To Senate On COVID-19 Impact On Natural Gas And Oil Sector, Discuss Long-Term Industry Outlook,” Oil and Gas Online

“Nearly $2B In Natural Gas Revenues Generated From Existing Impact Taxes In Pennsylvania,” Oil and Gas Online 

“‘Desperate’ To Get Natural Gas Out Of Appalachia, Pipeline Builders Face Long Battle Even After Supreme Court Victory,” Forbes

“Workforce Reductions Threaten Shale Recovery,” Argus Media

“Vatican calls on Catholics to divest from fossil fuels,” Reuters

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