The Nickel Report

On May 1, the Council on Environmental Quality (CEQ) published the final Phase 2 rule overhauling the National Environmental Policy Act (NEPA) implementing regulations. The final rule, titled the “Bipartisan Permitting Reform Implementation Rule” (Phase 2 Rule), will apply to all actions starting the NEPA processes beginning after July 1, 2024, and the agencies have discretion to apply to NEPA reviews that are currently underway.

On August 22, 2023, the Department of the Interior (“DOI”) announced that the Bureau of Safety and Environmental Enforcement (“BSEE”) has issued the final Well Control Rule for drilling, workover, completion and decommissioning operations.  This final rule clarifies blowout preventer (“BOP”) system requirements, modifies certain specific BOP equipment capability requirements, and builds upon the regulatory reforms that were originally implemented by the DOI after 2010.  The BSEE is setting an effective date of 60 days following publication of the final rule, by which time oil and gas operators in the federally regulated outer Continental Shelf will be required to comply with most of the final rule’s provisions. Operators have a one-year deferred compliance date following publication of the final rule to equip subsea BOP stacks with the remotely operated vehicle intervention capability to both open and close each shear ram, ram locks, and one pipe ram as required by 30 CFR § 250.734(a)(4).  The final rule:

The lesser prairie-chicken (LPC) is a grouse that occupies a five-state range, including the western areas of Kansas and Oklahoma, the Texas Panhandle, eastern New Mexico, and southeastern Colorado.  As we explained in a previous article, in response to litigation and following a nearly thirty-year history of regulatory listing and delisting, the US Fish and Wildlife Service (FWS or Service) proposed to re-list two distinct population segments (DPS) of the LPC under the Endangered Species Act (ESA) in June, 2021.[1]  86 Fed. Reg. 29,432 (June 1, 2021).  The Service has now issued a final rule listing the Southern DPS of the LPC (covering southwest Texas Panhandle and eastern New Mexico) as endangered and the Northern DPS of the LPC (covering southwestern to southcentral Kansas, western Oklahoma, northeast Texas Panhandle, and southeast Colorado) as threatened under the ESA.  87 Fed. Reg. 72,674 (Nov. 25, 2022).  The rule becomes effective on January 24, 2023. 

In Executive Order 14008 President Biden paused oil and gas lease sales on public lands and offshore waters. Thereafter, the Bureau of Ocean Energy Management (BOEM) canceled Lease Sales 258 (in Alaska's Cook Inlet) and 259 (in the Gulf of Mexico). Congress, however, required BOEM to hold both lease sales in the Inflation Reduction Act (IRA).

Below, we briefly summarize recent developments for each lease sale and subsequent opportunities available to upstream oil and gas companies.

On July 20, 2022, in Naturaland Trust v. Dakota Finance, LLC, No. 21-1517, a split Fourth Circuit panel held that a state agency’s notice of violation did not “commence an action” within the meaning of 33 U.S.C. § 1319(g)(6)(A)(ii). That provision states that a Clean Water Act violation “shall not be the subject of” a citizen suit for civil penalties if a state “has commenced and is diligently prosecuting” an action with respect to the violation “under a State law comparable to” the Clean Water Act. The court also held that this provision is not jurisdictional.

On May 18, 2022, in York et al. v. Northrop Grumman Corp. Guidance and Electronics Co. Inc. et al., No. 21-cv-03251 (W.D. Mo.), a federal district court dismissed state-law tort claims for alleged groundwater contamination, finding that they were preempted by an existing Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) consent decree. The court rejected the plaintiffs’ argument that two CERCLA “savings clauses” allow their claims to proceed.

Last week, in Residents of Gordon Plaza, Inc. v. Cantrell, the Fifth Circuit denied a petition for rehearing en banc of a recent decision affirming the dismissal of a Resource Conservation and Recovery Act (RCRA) citizen suit. The key issue in the underlying appeal, 25 F.4th 288 (5th Cir. 2022), was whether certain maintenance activities qualify as a “removal” action under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The court affirmed that the maintenance activities do indeed constitute a “removal action.” Therefore, the suit was barred under 42 U.S.C. § 6972(b)(2)(B)(iv), which precludes RCRA citizen suits where a “responsible party is diligently conducting a removal action” pursuant to a CERCLA consent decree with EPA.

On December 27, 2021, the US Army Corps of Engineers (Corps) issued a final nationwide permit (NWP) rule  renewing a critical permitting tool for both the government and the regulated community. To comply with the Clean Water Act (CWA or the Act), projects with minimal adverse environmental effects can obtain authorization for the discharge of dredged or fill material into “waters of the United States” (WOTUS) through the Corps’ streamlined NWP process.  With this rule, the Corps reissued 40 existing NWPs and one new NWP.  These 41 NWPs will combine with 16 NWPs issued on January 13, 2021 to authorize use of the full suite of NWPs through March 14, 2026.

Building on the Biden Administration’s strategy to achieve net-zero greenhouse gas (GHG) emissions by 2050, and as world leaders begin gathering in Glasgow, Scotland, yesterday, the US Environmental Protection Agency (EPA) issued a proposal under the Clean Air Act to significantly expand regulation of methane from oil and gas operations in the United States. The proposal—issued in conjunction with measures proposed by at least five other cabinet-level agencies to address GHG emissions—is part of President Biden’s “whole of government” approach to addressing climate change and represents EPA’s most ambitious regulatory effort to date to curb oil and gas sector emissions. EPA estimates compliance costs of $12 billion (present value, 3% discount rate) for existing sources, which it indicates would be offset by an estimated $4.7 billion (present value) through the capture of natural gas pursuant to the fugitive emission requirements in the proposal.

Using carbon dioxide to produce oil could be a key technology to transition to an energy landscape with lower greenhouse gas emissions.

Injecting CO2 into an oil formation to produce oil is known as enhanced oil recovery (EOR).  The injected CO2 not only increases pressure in the formation, which aids production, but under certain conditions, the CO2 will mix with oil trapped within the rock in the formation, causing it to become mobile and able to be produced.

Recent federal court decisions continue to show that Article III standing can be a formidable defense to environmental citizen suits, particularly following the Supreme Court’s decision Spokeo v. Robins, 578 U.S. 330 (2016) (vacating decision below and emphasizing that an alleged injury in fact must be “concrete and particularized”).  Just last week, for example, a North Carolina federal court dismissed on standing grounds almost all of the plaintiffs’ Clean Air Act citizen suit claims asserted against the University of North Carolina at Chapel Hill (UNC).  Center for Biological Diversity v. University of North Carolina, No. 1:19-CV-1179, 2021 U.S. Dist. LEXIS 163459 (M.D.N.C. Aug. 30, 2021).  In their complaint, the plaintiffs asserted nine claims, including seven for alleged failures to maintain records, inspect equipment, report permit deviations to government authorities, and monitor pollution controls, as required by UNC’s Title V permit.  On summary judgment, the plaintiff citizen groups offered declarations from two members who alleged “health, aesthetic, and recreational interests in air quality in Chapel Hill and the areas around UNC’s campus.”

In the face of accelerating EPA and state regulatory activity on per- and polyfluoroalkyl substances (“PFAS”)[i], Congress is pressing forward with measures that would address or impose limitations on these “forever chemicals.” More than thirty such legislative measures are currently pending in Congress covering a number of subjects related to PFAS including, but not limited to, those involving military uses, funding assistance, detection and research, product stewardship, site remediation, and regulatory mandates. Of these, the most comprehensive initiative ...

After a disappointing showing in Mexico’s recent mid-term elections, President Andrés Manuel López Obrador (commonly referred to as AMLO) and his party (i.e., Movimiento Regeneratión National or MORENA, commonly referred to as Morena) will face greater hurdles to unwinding “la Reforma Energética” (2013 Energy Reforms), the energy policy reforms adopted by the then-ruling party, the Partido Revolucionario Institucional (PRI).

The Railroad Commission of Texas (RRC) has made known its commitment to expedited filings and approvals for the regulated community as well as public access to information and improved transparency for all parties. This effort is exemplified by the recently announced Pipeline Inspection, Permitting and Evaluation System (PIPES) program. Organizations can now file reports, inspections, and other documents as well as pay fees online. Organizations can also upload documents for RRC review. In addition, PIPES provides public users access to publicly available RRC documents. As the online availability of reports and other documents expands, it becomes even more important for organizations to focus on timely accurate filings as well as an organization’s online public profile.

On Wednesday, June 16, 2021, EPA held the first of two public “listening sessions” to inform its review of the Risk Management Program (RMP) regulations pursuant to Executive Order 13990.  According to Carlton Waterhouse, EPA Deputy Assistant Administrator for the Office of Land & Emergency Management (OLEM), the listening sessions are “a first step in considering improvements to the RMP rule, so EPA can better address the impacts of climate change on facility safety and protect communities from chemical accidents, especially vulnerable and overburdened communities living near RMP facilities.”

In April 2020, the Supreme Court issued its opinion in County of Maui v. Hawaii Wildlife Fund et al., 140 S. Ct. 1462 (2000), vacating the Ninth Circuit’s decision.  The appeals court had affirmed a district court’s finding of Clean Water Act (“CWA”) liability for the County’s alleged failure to obtain a discharge permit for subsurface releases of pollutants that reach navigable waters by way of groundwater.  In vacating the judgment below, the Supreme Court rejected the Ninth Circuit’s conclusion that a discharge permit is required where pollutants reaching navigable waters are “fairly traceable” to a point source.  It set forth a new standard for determining when a source needs an NPDES permit:  “the statute requires a permit when there is a direct discharge from a point source into navigable waters or when there is the functional equivalent of a direct discharge.”  Id. at 1468 (emphasis added).

The lesser prairie-chicken—a grouse whose range covers the western portions of Kansas and Oklahoma; the Texas Panhandle, including the Llano Estacado; eastern New Mexico; and southeastern Colorado—is subject to yet another proposed listing under the Endangered Species Act (“ESA”).  On June 1, 2021, the US Fish & Wildlife Service (“FWS” or the “Service”) proposed to re-list two distinct population segments (“DPS”) of the species.  86 Fed. Reg. 29,432 (June 1, 2021).  The proposal is subject to a 60‑day public comment period, through August 2.  FWS is expected to issue a final decision within a year.

In April 2020, the Supreme Court issued its opinion in County of Maui v. Hawaii Wildlife Fund et al., 140 S. Ct. 1462 (2000), vacating the Ninth Circuit’s decision.  The appeals court had affirmed a district court’s finding of Clean Water Act (“CWA”) liability for the County’s alleged failure to obtain a discharge permit for subsurface releases of pollutants into groundwater that conveys pollutants to navigable waters.  In vacating the judgment below, the Supreme Court rejected the Ninth Circuit’s “fairly traceable” test and set forth a new standard for determining when a source needs an NPDES permit:  “the statute requires a permit when there is a direct discharge from a point source into navigable waters or when there is the functional equivalent of a direct discharge.”  Id. at 1468 (emphasis added).  In other words, “an addition falls within the statutory requirement that it be ‘from any point source’ when a point source directly deposits pollutants into navigable waters, or when the discharge reaches the same result through roughly similar means.”  Id. at 1476 (emphasis added).

On January 15, 2021, the Texas Commission on Environmental Quality (“TCEQ”) received approval to implement the National Pollutant Discharge Elimination System (“NPDES”) program for oil and gas discharges. [1]  Generally, as a result of this approval, applicants for NPDES permits for produced water, hydrostatic test water, and gas plant effluent will only require a single TCEQ authorization rather than authorizations from both the Railroad Commission of Texas (“RRC”) and the U.S. Environmental Protection Agency (EPA) as previously had been required. [2]

On November 27, 2020, the US Environmental Protection Agency (“EPA”) published notice that the Texas Commission on Environmental Quality (“TCEQ”) has applied to the US EPA for National Pollutant Discharge Elimination System (“NPDES”) program authorization for discharges of produced water, hydrostatic test water and gas plant effluent. [1] TCEQ’s application (“Application”) was filed in response to a bill passed during the last Texas legislative session that required TCEQ to submit to EPA no later than September 1, 2021, a request for NPDES permitting authority for discharges of produced water, hydrostatic test water and gas plant effluent associated with oil and gas activities currently under the jurisdiction of the Railroad Commission of Texas (RRC). [2] Under this legislation, state authority to regulate these discharges will transfer from the RRC to TCEQ upon EPA’s grant of NPDES permitting authority to TCEQ. Should EPA grant NPDES permitting authority to TCEQ for these discharges, a prospective permittee would generally only need to obtain a single TCEQ authorization (rather than an authorization from both the RRC and EPA). [3]

On November 9, 2020, EPA’s Office of Research and Development (ORD) released its long-awaited draft handbook that details the office’s process for developing chemical hazard assessments for its Integrated Risk Information System (IRIS) Program. The ORD Staff Handbook for Developing IRIS Assessments (IRIS Handbook) gives useful insight into ORD’s process to develop its IRIS assessments, which provide important toxicological information that federal and state environmental agencies consider when making regulatory and cleanup decisions under multiple statutory programs. EPA will accept comments on the draft handbook and charge questions until March 1, 2021.

Last month, the Texas Commission on Environmental Quality (“TCEQ”) launched a temporary “Find It and Fix It” program effective through January 31, 2021 to facilitate air quality compliance for companies with oil and gas operations in the Permian Basin.  Regulated entities that comply with the requirements of the temporary program may be eligible for enforcement discretion. 

As we reported in an earlier posting, on June 4, 2020, the Massachusetts Attorney General’s Office (“AGO”) filed a petition, which requested the Massachusetts Department of Public Utilities (“DPU”) to open an investigation into potential changes to local natural gas distribution company (“LDCs”) operations to support the Commonwealth’s legislatively mandated greenhouse gas (“GHG”) emission limit reductions (the “Petition”). Specifically, the AGO’s Petition seeks to evaluate the industry, regulatory and policy adjustments that are requisite to meet the state GHG limits, and to “determine what near and long-term adjustments are necessary to maintain a safe and reliable gas distribution system and protect consumer interests as the Commonwealth transitions” to carbon neutrality by 2050.

“Decommissioning” is the process of terminating oil and gas operations at offshore platforms. It includes dismantling and removal of platforms and related infrastructure to restore the ocean and seafloor to pre-lease conditions. As elaborated in a prior post, decommissioning may involve partial structure removal or toppling in place, including the creation of artificial reefs. The U.S. Department of Interior’s Bureau of Safety and Environmental Enforcement (BSEE) estimates that about 3,700 active oil and gas platforms are under its jurisdiction, 40 percent of which are over 25 years old and likely to require decommissioning soon.

California Gov. Jerry Brown signed SB 1371 nearly six years ago, directing the California Public Utilities Commission and the California Air Resources Board to work together to further the dual goals of minimizing safety hazards associated with gas pipeline leaks and reducing pipeline greenhouse gas emissions.

On June 4, 2020, the Massachusetts Attorney General’s Office (AGO) filed a Petition requesting the Massachusetts Department of Public Utilities (DPU) to open an investigation into potential changes to natural gas distribution operations to support the Commonwealth’s legislatively mandated greenhouse gas (GHG) emission limit reductions (the Petition).

As we have previously reported, in July 2020, the Council on Environmental Quality (CEQ) published its highly anticipated final rule to improve its National Environmental Policy Act (NEPA) regulations, the first comprehensive revision of the NEPA implementing regulations in over forty years.  The final rule, which has generated much controversy and spurred numerous lawsuits, goes into effect today.  This post provides a brief update on the pending litigation and implementation of the new rule.

In March of this year, we provided an update regarding how lower courts were applying the Supreme Court’s landmark decision in Kisor v. Wilkie, 139 S. Ct. 2400 (2019), which addressed the question of whether the Court should overrule the Auer doctrine, named after the 1997 Supreme Court case Auer v. Robbins.  The Auer doctrine rests on the premise that agencies are in a better position than courts to interpret their own regulations.  Under the doctrine, courts generally defer to an agency’s reasonable readings of its own “genuinely ambiguous” regulations.  In a 5-4 decision, the Court declined to abandon the Auer doctrine on grounds of stare decisis but seemed to outline restrictions on the scope and applicability of the doctrine, including the rule that deference to an agency’s interpretation of an ambiguous regulation is not appropriate if the interpretation does not reflect the “fair and considered judgment” of the agency.  This means that deference may not be appropriate if the interpretation creates “unfair surprise,” such as when the agency’s interpretation conflicts with a prior interpretation or upends a party’s reliance on established practices.  Kisor, 139 S. Ct. at 2417-18.

Flaring has the attention of RRC, Producers and Stakeholders

Flaring has the attention of the Texas Railroad Commission (RRC), oil and natural gas companies and stakeholders such as royalty owners, investors and environmental groups. Requests for RRC authorization of flaring has been on the increase in the Permian Basin. As a result, a number of interested parties are looking at regulatory changes. Some interested parties voice concern that a valuable resource is being wasted, others state that the definition of natural gas 'waste' is too limited, still others are concerned about methane emissions and some all of the above. Though the interested parties may not always be aligned, there is a general sense that regulatory amendments are needed.

Company Boards of Directors and senior executives of oil and gas companies should take notice of a May 14, 2020, guidance document issued by the Chemical Safety Board (CSB) entitled, “CSB Best Practice Guidance for Corporate Boards of Directors and Executives in the Offshore Oil and Gas Industry for Major Accident Prevention.,”  And don’t be deceived by its title reference to offshore activities.  Companies also need to pay mind to the guidance for onshore operations.  Why?  If there is an accident, government agencies will likely argue that the principles articulated apply equally as well on dry land.

On June 30, 2020, Democratic members of the House Select Committee on the Climate Crisis unveiled a 538-page report that calls for reaching net-zero greenhouse gas (GHG) emissions economy-wide by 2050. The report, titled “Solving the Climate Crisis: The Congressional Action Plan for a Clean Energy Economy and a Healthy and Just America,” includes over a hundred policy recommendations to meet the 2050 goal.

On June 30, 2020, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit” or “Court”) issued an en banc rehearing order holding that the Natural Gas Act (“NGA”) does not permit the Federal Energy Regulatory Commission (“FERC”) to issue tolling orders for the sole purpose of preventing rehearing requests from being denied by operation of law.  See Allegheny Defense Project, et al. v. FERC, No. 17-1098 (“Allegheny”).  The decision upends a practice that has been used by FERC for decades to delay addressing the merits of requests for rehearing.  Because the NGA and the Federal Power Act (“FPA”) have essentially identical rehearing provisions, Allegheny’s holding is very likely to be extended to rehearing requests under the FPA.

On June 1, the U.S. Environmental Protection Agency (EPA) Administrator, Andrew Wheeler, signed a final rule seeking to increase predictability for applicants by clarifying the regulations that govern the Clean Water Act (CWA) Section 401 water quality certification process.

Last week, the U.S. Environmental Protection Agency (“EPA”) issued its final report addressing the input received by various stakeholders relating to the management of wastewater from the oil and gas industry.  The report entitled Summary of Input on Oil and Gas Extraction Wastewater Management Practices Under the Clean Water Act is the culmination of a stakeholder engagement process that began in 2018 (“Final Report”) [1].

The largest market for CO₂ captured from industrial sources through carbon capture utilization and storage (CCUS) is enhanced oil recovery (EOR), using the CO₂ to produce oil.  Captured CO₂ can be used for cement, algae production, and other uses, but EOR has vast potential.  Moreover, it has a nearly 50-year track record in the US, where it was pioneered.  Carbon dioxide injected into oil formations becomes permanently stored as part of the process.

Yesterday, the Railroad Commission of Texas (“RRC”) voted by a 2-1 margin to dismiss the request that had been filed in late March of this year by two producers to determine reasonable market demand for oil and the need for curtailment of oil production in Texas.[i]

In the midst of an oil market experiencing an extraordinary downturn but citing a need for further review and coordination with other states and the federal government, the Railroad Commission of Texas (RRC) delayed a vote on oil production cuts at an open meeting held yesterday.[i] As previously reported, the RRC held a ten-hour long meeting on the issue of production cuts last week, hearing from more than 50 witnesses with wide-ranging opinions on the merits of moving forward with proration, a remedy that has not been employed since the 1970s.

Although no decision on proration was made, the establishment of a Blue Ribbon Task Force for Oil Economic Recovery (Task Force) was announced. The Task Force will be comprised of various Texas oil and gas trade associations charged with expeditiously exploring options that can be undertaken at the state level to assist operators and save jobs.[ii] During the meeting, a number of initiatives undertaken to date that provide relief to oil and gas operators were also highlighted, including those involving extensions of deadlines for various requirements and the consideration of enforcement discretion under certain circumstances. While discussing whether to prorate production, each of the three commissioners placed emphasis on different aspects of the overall issue.

When I was a kid, Californians, particularly those from SoCal, would be teased for their standard way of saying goodbye to people in person or on the phone – “Have a nice day!” Even in today’s text message society, texts often close with the yellow “smiley face” emoji. There’s been significant debate too about whether this phrase is “rude” by commanding someone to have a nice day rather than as it is largely intended, to wish someone a nice day.

In a COVID-19 world, I’ve found that “have a nice day” has been supplanted by “stay safe.” In just a few weeks, our focus has shifted from a desire for a pleasant experience to a safe one, which recognizes that something many people simply have taken for granted, our health and safety, is not a given in our current world.

With oil prices plummeting and markets battered by the disruptions caused by the COVID-19 pandemic, two oil and gas producers filed a joint motion late last month for the Railroad Commission of Texas (“RRC”) to consider curtailing oil production (“Joint Motion”), an extraordinary remedy that has not been employed since the 1970’s.[1] In response, the RRC convened an initial public meeting yesterday to consider the request and comments filed by more than 50 stakeholders with, not surprisingly, wide-ranging views on the subject.[2] The RRC took care to include in the notice of meeting a statement that the initial meeting would not be “a meeting to conduct a hearing under the Administrative Procedure Act” signaling that no determinations would be made at the initial meeting.[3] Nevertheless, due to the significance of the issues under discussion and the potential impact on not only oil and gas producers, but also the midstream and downstream sector, the ten-hour long meeting drew a substantial audience across the country and the globe.[4]

Following months of development and building on a host of previous renewable and alternative energy portfolio programs intended to incrementally decarbonize the electric sector, Massachusetts is poised to codify a Clean Energy Peak Standard (CPS) in the summer of 2020. In contrast to the existing Massachusetts programs, which have incentivized renewable and alternative energy sources simply to “show-up,” the CPS takes aim at incentivizing new and existing generation resources to “show-up at the right time” in order to further reduce greenhouse gas (“GHG”) emissions. Electricity generators and commercial, industrial and residential energy consumers alike should understand this new incentive program.

Facing growing criticism that they impede sustainable development goals, investment protections afforded by traditional international investment agreements (IIAs) are steadily eroding. Increasingly, the trend is toward provisions allowing host states greater flexibility to regulate environmental, transparency, human rights and other social impacts. At the same time, enhanced corporate social responsibility (CSR) obligations have become more common in recent IIAs.

Following Governor Abbott’s recent proclamation of a state of disaster in Texas due to the COVID-19 pandemic, both the Texas Commission on Environmental Quality (TCEQ) and the Railroad Commission of Texas (RRC) have issued guidance for regulated entities relating to environmental compliance concerns as well as other useful information relative to agency operations during these uncertain times.

Key Questions Answered on the Bay Area “Shelter-in-Place” and California-Wide “Stay-at-Home” Orders for Energy Industry and Manufacturing Facilities

On the morning of March 16, 2020, we first caught wind of impending Shelter-in-Place orders in Northern California, which began taking effect in several counties, encompassing much of the San Francisco Bay Area, on Tuesday.  Next, California Governor Gavin Newsom issued his March 19, 2020 “stay-at-home” order to try to slow COVID-19’s spread throughout the state.

The Novel Coronavirus Disease (COVID-19) outbreak is affecting virtually every sector of society and the economy. The healthcare sector and government agencies are on the front lines of the response. Providing support to these critical response activities as well as striving to maintain the strength of the overall economy by continuing regular business operations is vitally important. The private sector has important roles to play. The purpose of this blog post is to briefly outline some practical and legal tools available to help provide both direct support and maintain broader economic activities while ensuring environmental protection and compliance with natural resource laws.

This blog post will be updated as new or relevant information becomes available.

All three branches of the federal government are currently considering the question of whether the Migratory Bird Treaty Act (MBTA) prohibits the take of protected birds that is incidental to some otherwise lawful activity. The latest development is a proposal by US Fish and Wildlife Service (USFWS or Service) to issue a regulation expressly defining the scope of the MBTA to exclude take “that results from, but is not the purpose of, an action (i.e., incidental taking or killing).” 85 Fed. Reg. 5915 (Feb. 3, 2020). This proposal is the latest effort by the USFWS to bring clarity and certainty to a question that has been the subject of dispute for years and is currently both the subject of pending lawsuits and proposed legislation before Congress. If adopted, the rule should bolster the current administration’s effort to defend its interpretation of the statute, but the question is likely to be litigated further, assuming Congress does not intervene (seemingly unlikely for now).

Hunton Andrews Kurth lawyers Aaron Flynn and David McSweeney discuss corporate management of external stakeholder interests in environmental social and governance issues, including climate change concerns and associated legal risks that can become presented.

In June 2019, the Supreme Court issued its decision in Kisor v. Wilkie, 139 S. Ct. 2400 (2019), which addressed the question of whether the Court should overrule the Auer doctrine, named after the 1997 Supreme Court case Auer v. Robbins. The Auer doctrine rests on the premise that agencies are in a better position than courts to interpret their own regulations. Under the doctrine, courts generally defer to an agency’s reasonable readings of its own “genuinely ambiguous” regulations. In a 5-4 decision, the Court declined to abandon the Auer doctrine on grounds of stare decisis but outlined important restrictions on the scope and applicability of the doctrine. See, e.g., Devon Energy Prod. Co., L.P. v. Gould, No. 16-CV-00161-ABJ, 2019 WL 6257793 (D. Wyo. Sept. 11, 2019) (“The Court [in Kisor] chose to restrict the Auer doctrine rather than abolish it.”); Johnson v. Starbucks Corp., No. 2:18-cv-02956, 2019 U.S. Dist. LEXIS 145900, *8 (E.D. Cal. Aug. 26, 2019) (“Kisor did not overrule Auer,” but “limited the deference afforded to an agency’s interpretation”).

On March 2, 2020, the Environmental Protection Agency (EPA) proposed its new Multi-Sector General National Pollutant Discharge Elimination System Permit (MSGP), which authorizes the discharge of stormwater associated with industrial activity. 85 Feb. Reg. 12,288 (March 2, 2020). The 2015 MSGP expires on June 4, 2020. The MSGP authorizes stormwater discharges associated with a wide range of facilities and activities, including oil and gas, mining and mineral processing and manufacturing, among other operations.

The MSGP authorizes discharges in only those states where EPA is still the NPDES permitting authority (Idaho, Massachusetts, New Hampshire and New Mexico), Indian country, US Territories and other select jurisdictions. However, most states model their state-specific industrial stormwater permits on the EPA’s MSGP, which makes this permit important as the trendsetter.

Federal environmental reviews are high on the list of project time, costs and risk drivers. National Environmental Policy Act (NEPA) analysis and Endangered Species Act (ESA) Section 7 consultation are often chief among those drivers. The impact of preparing an Environmental Impact Statement or Biological Opinion (such as scheduling; consultant, mitigation and market opportunity costs; and litigation risks) often turns on the scope of analysis, which in turn depends on determining which effects will be caused by the action. In August 2019, the US Fish and Wildlife Service (FWS) and National Marine Fisheries Service (NMFS) established, for the first time, a regulatory causation standard governing ESA section 7 consultations, and, in January 2020, the Council on Environmental Quality (CEQ) proposed a new rule clarifying the causation standard and scope of review under NEPA.

On January 22, 2020, the Texas Senate Committees on Natural Resources and Economic Development and Water and Rural Affairs (Senate Committees) held a joint hearing to consider Lt. Governor Dan Patrick’s 2019 interim legislative charge related to one of the most pressing matters facing the state—future water supply issues. This interim charge requires that these legislative committees make recommendations to promote the state’s water supply, including the development of new sources. The recommendations made will be the subject of consideration when the Texas Legislature reconvenes in 2021 and will inform future legislative initiatives. While a broad range of water supply topics was discussed during the hearing, notably, the subject of produced water, including opportunities for reuse within and outside the oil field, continues to be a focal point under review by state policymakers.

How can sitting still in the Northeast potentially land you in a world of trouble under the Federal Clean Air Act (CAA) and corresponding state laws? Quite easily, if you happen to be in or leave a vehicle with its engine on and the vehicle itself is not in motion for more than a few minutes. That is the definition of “unnecessary vehicle idling” in many jurisdictions.

Across the Northeast and elsewhere, unnecessary vehicle idling is, subject to certain nuances and exceptions, generally prohibited. Recently, violators have come under attack by non-governmental organizations. State penalties vary, but the potential exposure can be severe, especially when the statutory maximum available penalties are calculated pursuant to the Federal CAA and compounded on a per-violation/per-day basis. Accordingly, owners and operators of all forms of trucking and transit companies should not sit still and should take proactive measures to educate or reeducate vehicle schedulers and operators alike on these anti-idling requirements.

Since the first Gulf of Mexico rig was installed in 1947, over 12,000 offshore oil and gas platforms have been installed globally. A 2016 study forecasts 600 will require decommissioning by 2021 and 2,000 more by 2040 at a cost of US$210 billion. Many newer platforms are sited in deeper waters, facing higher decommissioning costs and complexity.

The 1958 UN Convention on the Continental Shelf and 1972 London Convention broadly prohibited ocean “dumping.” Subsequent frameworks recognize exceptions permitting in situ offshore structure decommissioning consistent with internationally recognized standards. The 1982 UN Convention on the Law of the Sea (UNCLOS), for example, requires member states adopt rules no less stringent than the London Protocol, amending the original Convention to allow deliberate placement of subsea structures in defined circumstances. Thus, in situ offshore platform decommissioning has been recognized as conforming with governing treaties and legal frameworks.

An independent panel of academics, engineers and other experts, in November 2019, released a draft set of international standards for tailings storage facilities (TSF). During mining operations, ore is reduced into sand-sized particles and mixed with water before the valuable minerals are removed and the remaining milled rock slurry—called tailings—flows to the TSF, an engineered impoundment. It is estimated there are over 3,500 TSFs globally.

The driver for these draft international standards is two recent catastrophic failures of TSFs in Brazil. In January, a TSF owned and operated by Vale in the state of Minas Gerais, near Brumadinho, collapsed, sending a tidal wave of mid and other debris downstream that killed over 250 people. Another TSF owned and operated by Samarco failed in Minas Gerais at Mariana in November 2015, killing 19 people and spreading pollutants over 400 miles of surface waters, eventually reaching the Atlantic Ocean.

On January 9, 2020, the Council on Environmental Quality (CEQ) released its highly anticipated proposed rule to improve its National Environmental Policy Act (NEPA) regulations. The proposed changes would be the first comprehensive amendment of the NEPA regulations since their original publication in 1978. CEQ’s proposed changes are designed to streamline and speed the NEPA review process, clarify important NEPA concepts, and codify key guidance and case law. CEQ’s Proposal is informed by comments it received on last year’s Advanced Notice of Proposed Rulemaking.

NEPA requires that federal agencies analyze the environmental effects of their proposed federal actions. This means that virtually any project that requires a federal permit or authorization could be required to undergo a NEPA review. Development of broadband infrastructure, roads, bridges, oil and gas pipelines, and renewable energy facilities are just a few examples of the types of activities that could trigger NEPA. A NEPA review can take significant agency and applicant resources, can substantially delay permits and can provide a basis for a federal court challenge to the project.

In his annual letter to CEOs, Larry Fink, CEO of BlackRock expressed his belief that climate change and sustainability were important considerations in investment risk assessments. Investment based on these concepts is often captured under Environmental, Social and Governance Criteria, commonly called ESG. In his letter, Mr. Fink emphasized that he believes “we are on the edge of a fundamental reshaping of finance.”

BlackRock’s letter builds on the ever-advancing trend in corporate institutional investing over the past decade regarding the examination of corporate valuation and investment risk within the context of ESG issues, otherwise referred to as sustainable investing.

On January 9, 2020, WildEarth Guardians and Physicians for Social Responsibility filed suit in the DC District Court challenging the Bureau of Land Management’s (BLM) approval of over 2,000 oil and gas leases. The leases were sold through 23 different lease sales, spanning from December 8, 2016, to March 20, 2019, and they cover over two million acres of public lands across five western states—Colorado, Montana, New Mexico, Utah and Wyoming. The conservation groups contend that BLM continually fails to fully account for climate change impacts associated with oil and gas leasing.

Last week, Annie Kuster (D-NH) along with four other Democratic members of Congress introduced a proposed Natural Gas Act (NGA) amendment aimed at banning the use of eminent domain for construction or expansion of interstate natural gas pipeline infrastructure through lands subject to conservation restrictions in favor of, or owned by, non-profit entities or local governments. The proposed legislation is “The Protecting Our Conserved Lands Act of 2019.”

Over the past few years, certain states have relied on ambiguities in the Clean Water Act (CWA) Section 401 water quality certification process to block the construction of significant energy infrastructure projects (e.g., oil and gas pipelines, coal export facilities, and liquid natural gas [LNG] terminals) determined by federal agencies to be in the public interest of individual states, regions, and the nation as a whole. Consistent with the cooperative federalism structure of the CWA—and the important role of states in protecting water quality within their borders—Section 401 requires applicants for a federal license or permit anticipated to result in discharges to navigable waters to obtain a certification from the relevant state that the discharge will comply with applicable state water quality standards. States can waive this requirement, and if they do not act within “a reasonable period of time (which shall not exceed one year) after receipt” of the request for the certification, waiver is automatic. 33 U.S.C. § 1341(a).

Recent headlines underscore the security challenges faced by public-facing businesses. From physical threats to cyber attacks targeting a wide range of critical infrastructure, companies in diverse sectors, such as the financial, retail, entertainment, energy, transportation, real estate, communications and other areas, face a challenging landscape of risks and potential liabilities. Join us on October 28, 2019, at 12:00 p.m. EST, for a webinar to discuss these issues, including why companies should consider SAFETY Act protection and how to obtain it.

In August 2018, the US Environmental Protection Agency announced it was rebranding its National Enforcement Initiatives as National Compliance Initiatives, and specifically stated it was no longer targeting oil and gas sources as deserving of extra scrutiny. In addition, since taking office in January 2017, the Trump administration has aggressively rolled back many environmental regulations promulgated under the Obama administration. Despite what some may perceive as a kinder, gentler EPA and the Trump administration’s “deregulatory” agenda, however, the EPA has continued to pursue enforcement cases against many of the same businesses believed to benefit the most from the administration’s policies. Notably, this includes midstream oil and gas sources, as recently evidenced by EPA’s September 2019 Enforcement Alert (EA) titled, “EPA Observed Air Emissions from Natural Gas Gathering Operations in Violation of the Clean Air Act.”

On August 27, 2019, the Federal Energy Regulatory Commission (FERC) and North American Electric Reliability Corporation (NERC) issued a White Paper proposing to disclose the names of entities that violate Critical Infrastructure Protection (CIP) standards, while continuing to withhold other details of those violations. This significant change in policy reflects broader issues in FERC’s handling of security information.

Energy industry: is your insurance sufficient to handle a major cyber event? Larry Bracken, Mike Levine and I, Andrea DeField, address this question and more in our recent article for Electric Light & Power, found here.  In the article, we identify three major gaps in cyber insurance that we routinely see when analyzing coverage for energy industry clients. The first major gap is coverage for bodily injury or property damage caused by a cyber event. Most cyber insurance policies exclude coverage for both bodily injury and property damage, even if caused by a cyber event. Meanwhile ...

Which Waters of the US (WOTUS) rule applies to my project? For four years, that has been a recurring question with a complicated, ever-changing answer. The 2015 WOTUS Rule promulgated by the Obama administration was challenged almost immediately, and, because of various district court injunctions, only 22 states are operating under the 2015 WOTUS Rule, while 27 states are subject to the pre-2015 Rule regime; the status of the rule in New Mexico is unclear. Yesterday, EPA and the US Army Corps of Engineers (together, the Agencies) signed a pre-publication version of the highly anticipated repeal of the 2015 WOTUS Rule, which will place the entire country under the pre-2015 Rule regime while the Trump administration works to complete its replacement WOTUS definition.

The Texas Commission on Environmental Quality (TCEQ) is moving forward with steps necessary to seek delegation of the federal National Pollutant Discharge Elimination System (NPDES) permitting program for produced water discharges. In doing so, Texas will be joining similar efforts underway or under consideration in the neighboring states of Oklahoma and New Mexico. Should EPA delegate such NPDES authority and separately take action to address the restrictive federal regulatory framework now in effect for onshore produced water discharges, this would result in streamlined and expanded beneficial reuse options for produced water in the key oil and gas producing states in the country.

Over the last year or so, anti-pipeline forces have increasingly used “tree sitting” to obstruct natural gas infrastructure projects. The tactic involves individuals who climb trees slated for removal in a proposed pipeline project and stay there—sometimes for months and often aided by family, friends or others—forcing project developers to take various countermeasures.

Earlier this month a Virginia federal district judge rejected a novel effort by Mountain Valley Pipeline, LLC (MVP) to join certain unnamed tree sitters (“Tree Sitter 1” and “Tree Sitter 2”) as defendants in a pending Natural Gas Act (NGA) eminent domain action to condemn easements over land in southwestern Virginia for construction of the Mountain Valley Pipeline. In addition to interfering with its use of the easements being condemned, MVP alleged that the “tree sitters” or their supporters had assaulted a security officer who was part of a tree clearing crew on the project. Notably, though it declined to join the “tree sitters” as parties, the court observed that MVP still had other available remedies against them.

On June 26, 2019, the Supreme Court issued its decision in Kisor v. Wilkie, 139 S. Ct. 2400 (2019), which presented the question of whether the Court should overrule the Auer doctrine, named after the 1997 Supreme Court case Auer v. Robbins. The Auer doctrine rests on the premise that agencies have more expertise on their own regulations and are therefore in a better position than courts to interpret them. Under the doctrine, courts generally defer to an agency’s reasonable readings of its own “genuinely ambiguous” regulations. In a 5-4 decision, the Court declined to abandon the Auer doctrine on grounds of stare decisis but outlined important limitations on the scope and applicability of that doctrine.

On June 24, 2019, the Equator Principles Association announced the release of the draft text of the fourth revision of the Equator Principles. Known as EP4, this document includes a number of changes intended to address perceived shortcomings regarding the manner in which the current framework is applied to different countries and to enhance the focus on issues such as climate change. These changes reflect the evolving nature of transactional diligence with respect to environment, social and governance (ESG) issues.

Twenty Democratic candidates took the stage in Miami on June 26-27, with the hopes of winning over voters in the first 2020 Democratic presidential debate. During the four-hour event, top Democratic candidates contentiously debated hot button issues, such as immigration, gun control and healthcare. When it came to the topic of climate change, however, the debate left some viewers wanting more.

Although climate change has been deemed one of the most important issues for Democratic voters ahead of the 2020 presidential election, only about 15 minutes in total between the two nights were dedicated to the issue. Given the sheer number of participants and the debate format, it was difficult for the candidates, including those with fully formulated climate change platforms, to articulate any detailed substantive policy. Nevertheless, there were still some key takeaways from the first debate’s limited discussion on climate change.

Since retaking control of the House following the 2018 midterm elections, Democrats have introduced a flurry of climate change-related legislation. While the ambitious Green New Deal resolution grabbed much of the headlines earlier this year, Democrats have continued to roll out various other measures aimed at addressing climate change.

On May 15, 2019, EPA released its draft Study of Oil and Gas Extraction Wastewater Management under the Clean Water Act (Draft Study). The Draft Study addresses the results of an extensive review initiated last year to evaluate the management of oil and gas wastewaters generated at onshore facilities and to assess the need for additional discharge options for onshore oil and gas wastewater under the Clean Water Act (CWA).^[1] Although EPA has not yet adopted any recommendations for regulatory action, it is evident that EPA is continuing to take a hard look at the merits of authorizing broader discharges of produced water to surface waters than those currently allowed for onshore discharges under the CWA effluent guidelines (and generally referred to as the zero discharge standard).^[2] See 40 CFR Part 435, Subpart C. EPA is now requesting additional public comment on the Draft Study by July 1 of this year with the goal of finalizing it and determining next steps this summer.

The US Environmental Protection Agency (EPA) has recently determined that no revisions to existing RCRA Subtitle D regulations for the management of oil and gas wastes are necessary. This conclusion follows EPA’s completion of an extensive review to fulfill the requirements of a Consent Decree entered by the US District Court for the District of Columbia that settled litigation filed by certain environmental organizations over EPA’s alleged failure to update its rules for management of oil and gas wastes. EPA’s findings, released on April 23, 2019, are set forth in a report titled, Management of Oil and Gas Exploration, Development and Production Wastes: Factors Informing a Decision on the Need for Regulatory Action (Report). This means that, at least for now, EPA’s longstanding position on regulation of oil and gas wastes remains unchanged.

On April 12, 2019, the US District Court for the Northern District of California entered an order vacating the Department of the Interior’s (DOI) repeal of the 2016 Valuation Rule due to violations of the Administrative Procedures Act (APA). The 2016 Valuation Rule made changes to the government’s methods for valuing oil, gas and coal produced on Federal and Indian lands. The court’s ruling on the APA claims may impact the Trump administration’s repeal and replace rulemakings that are scheduled to be finalized in the near future.

The Department of Treasury and Internal Revenue Service have released Notice 2019-32 seeking comment on key issues to be interpreted in the Section 45Q carbon oxide sequestration tax credit. Congress significantly enhanced the Section 45Q tax credit in the Bipartisan Budget Act of 2018, increasing the credit from $10/ton for CO2 used as a tertiary injectant (i.e., to produce oil or gas) to $35/ton; and increasing the credit for CO2 geologically stored but not used as a tertiary injectant from $20/ton to $50/ton. See our previous blog post here for additional details on the applicable credit amounts for projects before and after enactment of the Bipartisan Budget Act and other credit amount details.

Last week, the Fifth Circuit found that Lloyd’s syndicates may not subrogate against an additional insured and may not force that additional insured to arbitration. Lloyd’s Syndicate 457 v. FloaTEC, LLC, No. 17-20550 (5th Cir. Apr. 17, 2019).

The case arose out of an oil platform in the Gulf of Mexico called Big Foot, owned and operated by Chevron. Chevron contracted with FloaTEC to engineer steel tendons to moor Big Foot to the ocean floor. The contract between Chevron and FloaTEC contained an arbitration provision.

For the full report, visit our sister site, Hunton Insurance ...

Over the past several decades, significant tension has developed between the federal role in overseeing and authorizing certain types of energy infrastructure projects and states' roles in regulating water quality under the cooperative federalism structure of the Clean Water Act (CWA or the Act). This tension has played itself out in various contexts, but the most pronounced in recent years has been the battle over CWA Section 401 water quality certifications for energy infrastructure projects, in particular interstate natural gas pipelines.

Click here to read the full ...

On Wednesday, April 10, President Trump signed an Executive Order (EO), titled Promoting Energy Infrastructure and Economic Growth, that requires the US Environmental Protection Agency (EPA) and other federal agencies to undertake a series of regulatory actions to clarify the Clean Water Act (CWA) § 401 water quality certification (WQC) process. CWA § 401 provides states with the opportunity to evaluate the potential water quality impacts from discharges of proposed projects by certifying whether the discharge will comply with applicable water quality standards. States can waive this requirement, and if they do not act within “a reasonable period of time (which shall not exceed one year) after receipt” of a request for certification, waiver is automatic. 33 U.S.C. § 1341(a). A handful of states have relied on this process to thwart the development of energy infrastructure projects, either by denying certification due to concerns unrelated to water quality (such as opposition to hydraulic fracturing, climate change concerns, etc.) or by ignoring the statutory time period to reach a determination.

• Electric Transmission Incentives Policy (Docket No. PL19-4-000)
  • The Commission issued a Notice of Inquiry (NOI) seeking comments on the scope and implementation of its electric transmission incentives regulation and policy.
  • Section 219 of the Federal Power Act directs the Commission to use transmission incentives to help ensure reliability and reduce the cost of delivered power by reducing transmission congestion. The Commission issued Order No. 679 in 2006 to establish its approach to transmission incentives and set forth a series of potential incentives that it would consider. The Commission subsequently refined its approach in a 2012 policy statement.
  • The NOI seeks comments in response to questions addressing many matters, including several that have not previously been addressed by the Commission’s transmission incentive policy, including:

While coming from opposite ends of the political spectrum, the administrations of US President Donald Trump and Mexico’s recently elected chief executive, Andrés Manuel López Obrador (commonly referred to as “AMLO”), have each heralded significant policy shifts with potential to affect bilateral relations as well as international energy markets.

An interesting confluence of issues may facilitate the creation of an improved regulatory framework for the beneficial use of produced water from oil and gas operations. Water supply and produced water management have the attention of many oil and gas companies for a variety of reasons. Concern over water supply and severe drought has lead a number of states and municipalities to look for sources of water outside the traditional sources of groundwater and surface water. At the same time, environmental groups are concerned over drought impacts to surface water and wildlife. Given the abundance of produced water in some formations, it may be possible to reuse produced water within oil and gas operations and beneficially use produced water outside of oil and gas operations. What are the issues surrounding produced water and how are they impacting the development of regulatory programs governing the use of produced water?

On Wednesday, February 7, Congressman Alexandria Ocasio-Cortez (D-NY) introduced a federal resolution to recognize a “duty” of the federal government to create a Green New Deal (GND). This blog discussed the GND in a post on the Select Committee on the Climate Crisis on January 31.

Addressing climate change may be a primary focus of the resolution, but “green” is perhaps a misnomer, as the resolution calls for action on issues well beyond climate or the environment generally.

“According to FERC, it is now commonplace for states to use Section 401 to hold federal licensing hostage.”

These are the words the DC Circuit used in Hoopa Valley Tribe v. Federal Energy Regulatory Commission, No. 14-1271, p. 10 (D.C. Cir., Jan. 25, 2019), to describe the state of play on § 401 certifications affecting hydroelectric facility licensing or re-licensing applications. CWA § 401(a)(1) requires, as a prerequisite for federal permits for activities that may result in a discharge into the navigable waters, that affected states certify that any such discharge will comply with applicable, enumerated provisions of the Clean Water Act. But, if a state fails or refuses to act on a request for certification within “a reasonable period of time (which shall not exceed one year) after receipt of such request,” the statute deems the certification requirements waived.

Reversing a Texas Court of Appeals decision that allowed Anadarko’s Lloyd’s of London excess insurers to escape coverage for more than $100 million in defense costs incurred in connection with claims from the Deepwater Horizon well blowout, the Supreme Court of Texas held that the insurers’ obligations to pay defense costs under an “energy package” liability policy are not capped by a joint venture coverage limit for “liability” insured.  Anadarko Petroleum Corp. et al. v. Houston Casualty Co. et al., No. 16-1013 (Tex. Jan. 25, 2019).

One of the first orders of business for Speaker of the House Nancy Pelosi (D-CA) was to reinstate the Select Committee on the Climate Crisis. This committee previously existed from 2007-2011 as the House Select Committee on Energy Independence and Global Warming but was not renewed by Republicans when they gained control of the House in the 112th Congress. The new Select Committee will be chaired by Congresswoman Kathy Castor (D-FL).

On January 17, 2019, the Federal Energy Regulatory Commission (Commission) held its monthly open meeting. The first half of the meeting was dedicated to remembrances of Commissioner McIntyre, who passed away earlier this month. The Commission elected to name the Commission meeting room in his honor.

Highlights of the second half of the meeting included:

• Investigation on Rates Charged by Three Interstate Pipeline Companies: Chairman Chatterjee highlighted the Commission’s initiation on January 16 of investigations pursuant to Section 5 of the Natural Gas Act of three ...

In September 2018, the US Interior Department issued a final rule rescinding the 2016 Venting and Flaring Rule, which took effect November 2018. The old rule, which never went into effect, would have required oil and gas companies to capture leaked methane gas, repair and prevent leaks, and devise new plans to reduce the flaring and venting of natural gas. Following the effectiveness of the new rule, the applicable policies setting limits on releases of methane gas will mostly be left to individual states.

2018 was a banner year for M&A activity in the energy space, with numerous high dollar value transactions in the upstream, midstream, downstream and oil field services (OFS) segments. As investors in the public securities markets have shown a significantly decreased appetite for new issuances of equity by energy companies, the preferred exit or growth strategy for 2018 has been through strategic mergers, acquisitions or divestitures. These transactions have manifested themselves in various forms: asset acquisitions and divestitures, private equity investment into “drillcos” with strategic oil and gas companies, public-public mergers between OFS companies and upstream shale drillers, and simplification transactions by master limited partnerships (MLPs) in the midstream space. In addition to all this M&A activity, one element has become significantly more prevalent in the oil and gas industry throughout 2018 and shows no signs of letting down for 2019: water.

On December 20, 2018, the Federal Energy Regulatory Commission (Commission) held its December 2018 open meeting. This was the first meeting for Commissioner Bernard McNamee, who was confirmed by the Senate on December 6, 2018. Given his recent confirmation, Commissioner McNamee voted present on the consent agenda. Commissioner McIntyre was absent due to continuing health issues and did not vote on the consent agenda.

On November 15, 2018, the Federal Energy Regulatory Commission (Commission) held its monthly open meeting (November Meeting). This was the first meeting chaired by Chairman Chatterjee since replacing Commissioner McIntyre as chairman. Commissioner McIntyre was absent for his third consecutive open meeting due to continuing health issues and did not vote on the consent agenda.

With produced water volumes on the rise as a result of the growth in oil and natural gas production and various areas of the country experiencing water scarcity, states and stakeholders are increasingly looking for ways to reuse, recycle and beneficially use waters originating from the oil and gas industry. Two recent initiatives are likely to significantly advance policy decisions related to produced water management.

On October 18, 2018, the Federal Energy Regulatory Commission (Commission) held its October 2018 open meeting. Commissioner Chatterjee again assumed the gavel on behalf of Chairman McIntrye, who was absent for the second consecutive open meeting. McIntyre subsequently announced that he would step down from the chairmanship due to continuing health issues.

Highlights of the meeting follow:

On September 20, 2018, the Federal Energy Regulatory Commission (FERC or Commission) held its September 2018 open meeting. This meeting did not include Chairman McIntyre, who is recovering from surgery. Commissioner Chatterjee assumed the gavel on his behalf for the meeting.

The New Source Review (NSR) program of the Clean Air Act requires major stationary sources to go through an extensive, time-consuming, and expensive review and permitting process prior to construction. Among other requirements, such sources are required to install the best available control technologies (BACT) to reduce levels of specific regulated pollutants. The NSR program also applies to existing facilities if they are modified in ways that result in significantly increased emissions.

The pace of enforcement actions has decreased in recent years, but more than a ...

The US Court of Appeals for the Third Circuit recently issued two decisions concerning the relationship between the Natural Gas Act (NGA) exclusive jurisdiction provision at 15 U.S.C. § 717r(d)(1) and the administrative review process for state-issued environmental permits for interstate natural gas pipeline projects. These decisions are briefly described as follows:

• In Delaware Riverkeeper et al. v. Sec PA Dept. Env. Protection, et al. (Sept. 4, 2018), the court held that only “final” state agency actions are reviewable under the NGA’s exclusive jurisdiction ...

On July 19, 2018, the Federal Energy Regulatory Commission (FERC or Commission) held its July 2018 open meeting. This meeting was Commissioner Powelson’s last, following his announcement on June 28, 2018, that he would be leaving the agency.

Highlights of the meeting include the following:

The successful completion of major infrastructure construction projects often depends on the amount of time required for federal agencies to process environmental reviews and make authorization decisions. This is particularly true where multiple federal agencies are involved in the process and the decisions or timeliness of one can influence the decisions or timeliness of another. While numerous administrations have attempted to address multi-agency federal permitting processes in an effort to gain efficiencies, the Trump administration has taken significant steps to ensure that federal agencies work together in ways that will reduce the amount of time required to complete all environmental reviews and issue all required authorizations.

The US District Court for the Middle District of Louisiana ordered the $750 million Bayou Bridge pipeline to halt construction within the Atchafalaya Basin when it concluded that the US Army Corps of Engineers’ environmental analysis likely violated the National Environmental Policy Act and the Clean Water Act due to the following deficiencies:

• The Corps did not provide sufficient explanation for how the proposed off-site mitigation would compensate for the loss of wetlands impacted by construction; and
• The Corps failed to sufficiently consider and address historical ...

On July 10, 2018, a panel of the United States Court of Appeals for the DC Circuit rejected an environmental group’s claim that FERC’s funding mechanism results in unconstitutional bias in favor of the pipeline industry. The court also rebuffed a due process attack on the Commission’s use of “tolling orders” to avoid automatic denial of rehearing requests after 30 days. The decision is noteworthy as it represents the latest rejection of similar constitutional challenges to FERC’s operations and practices that pipeline opponents have been raising with increasing ...

As the Trump administration is pushing forward on its deregulatory agenda and, in particular, its efforts to improve the Endangered Species Act (ESA) and its implementation by the US Fish and Wildlife Service (FWS) and National Marine Fisheries Service (NMFS) (together, the Services), the Supreme Court is poised to hear a landmark case on designation of critical habitat under the ESA that could provide some guideposts for the Services’ new regulations.

In a decision issued on April 12, 2018, a Fourth Circuit panel held (2-1) that (1) even though a pipeline leak has been repaired and remediation is ongoing under the supervision of the state environmental agency, environmental groups have standing to sue the pipeline owner, and (2) plaintiffs’ allegation that groundwater continues to carry discharged pollutants to jurisdictional waters through a “direct hydrological connection” supports liability under the Clean Water Act.

Read the full report on PipelineLaw.com.

Two notable developments in the past few weeks signal potential changes ahead to the policies and timeframes for pipeline approvals, particularly natural gas pipelines under Federal Energy Regulatory Commission oversight. These developments reflect both the increased public scrutiny of the pipeline approval process seen in recent years and the emphasis placed by the current administration on expediting review and approval of major infrastructure projects, two factors that are in some tension with each other.

See the full report on PipelineLaw.com.