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Sixth Circuit Holds Environmental Groups Lack Standing to Challenge Air Permits for NEXUS Pipeline Compressor Stations

Posted in Energy, Environment

On February 21, 2019, the Sixth Circuit Court of Appeals dismissed a petition for review of air permits issued by Ohio EPA for two compressor stations to be constructed along the NEXUS pipeline in Ohio. The Court dismissed the petition for review for lack of jurisdiction, holding the environmental groups that filed the petition for review failed to establish standing. In reaching its decision, the Court highlighted that “petitioners bore the burden of establishing the irreducible constitutional minimum of standing” which requires petitioners demonstrate that they (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision. The Court also noted that a citizen group can establish standing on behalf of their members, but such “representational standing” requires the group to show that “its members would otherwise have standing to sue in their own right.”

The Court held that petitioners failed to demonstrate the first element of standing – i.e. injury in fact. To demonstrate injury-in-fact, petitioners were required to “make specific allegations establishing that at least one identified member had suffered or would suffer harm.” The Court highlighted that petitioners could not rest on bare allegations to establish a concrete injury. Rather, petitioners were required to “present specific facts through citations to the administrative record or affidavits or other evidence” that at least one member of each petitioner group would suffer a concrete particularized harm from the compressor stations’ emissions.

As an aside – the procedural history of the case is worth mentioning. The environmental groups first appealed Ohio EPA’s issuance of the air permits to the Environmental Review Appeals Commission (ERAC). However, ERAC, which has exclusive jurisdiction over appeals from final actions of Ohio EPA and ordinarily would hear appeals of air permits issued by Ohio EPA, dismissed the groups’ appeal for lack of jurisdiction. Notably, ERAC held that the federal Natural Gas Act vested original and exclusive jurisdiction of the appeal in the federal Courts of Appeals (see 15 U.S.C. 717r(d)(1)).

Court of Appeals Signals Ohio’s Marketable Title Act Applies to Fee Mineral Interests

Posted in Energy

Ohio’s Seventh District Court of Appeals was recently asked to analyze whether a fee oil and gas reservation can be extinguished under Ohio’s Marketable Title Act (the “MTA”). In Miller v. Mellott,  2019-Ohio-504,  two different groups claimed ownership over the oil and gas. The surface owners claimed title under the MTA. The mineral owners claimed title through a reservation included in a 1947 deed. The trial court granted summary judgment in favor of the mineral owners.  It held Ohio’s Dormant Mineral Act, “not the MTA, is the remedy available to a surface owner attempting to quiet title to a severed mineral interest.” On appeal, the appellate court found that the trial court “erred in refusing to apply the MTA.” Thus, it signaled that the MTA can be used to extinguish fee oil and gas reservations. However, the appellate court concluded that this error did not require reversal. After reviewing the chain of title, the appellate court found that the surface owners did not have a “root of title.” Thus, they could not extinguish the severed oil and gas interest under the MTA.

 

 

U.S. EPA Issues Comprehensive PFAS Action Plan

Posted in Environment

On February 14, 2019, U.S. EPA issued a comprehensive Action Plan for addressing Per- and Polyfluoroalkyl Substances (PFAS) in environmental media. The Action Plan, which was developed in response to significant public input received by EPA over the past year, describes EPA’s short- and long-term multi-media and multi-program approach for addressing PFAS. Notable activities that EPA will implement under the Action Plan include: establishing a maximum contaminant level for PFOA and PFOS under the Safe Drinking Water Act; strengthening the Agency’s enforcement authorities and clarifying cleanup strategies by designating PFOA and PFOS as hazardous substances; proposing nationwide drinking water monitoring for PFAS to inform regulatory action; adding PFAS to to the Toxics Release Inventory; conducting scientific research to better understand and manage PFAS risks; and developing a risk communication plan to disseminate PFAS information to the public.

Per the Action Plan, activities that EPA anticipates implementing in 2019 include proposing a national drinking water regulatory determination for PFOA and PFOS, and developing interim cleanup recommendations to address groundwater contaminated with PFOA and PFAS. The Action Plan notes that EPA will continue to engage other federal agencies, states, industry groups and associations, and the public in its implementation of the Action Plan.

Sixth Circuit Affirms Constitutionality of Ohio’s Statutory Unitization Procedures

Posted in Energy

Last week, the Sixth Circuit Court of Appeals affirmed a lower court decision upholding the constitutionality of Ohio’s statutory unitization procedures. See Kerns v. Chesapeake Exploration, L.L.C., 6th Cir. No. 18-3636 (Feb. 4, 2019).  Read more about that decision in our Client Alert.

Supreme Court of Ohio Clarifies Ohio Marketable Title Act

Posted in Energy

On December 13, 2018, the Supreme Court of Ohio clarified the preservation of interests under the Ohio Marketable Title Act (OMTA). See Blackstone v. Moore, Slip Opinion No. 2018-Ohio-4959. In its decision, the Court held that under the OMTA, a deed reference to a previously reserved royalty interest is sufficiently-specific to preserve that royalty interest where the reference identifies the type of interest created and the person to whom the interest was granted.

Check out the decision here and learn more by reading our Client Alert.

USEPA and Army Corps Propose New WOTUS Rule

Posted in Energy, Environment

On December 11, 2018, USEPA and the Army Corps of Engineers proposed a new rule defining “water of the United States” (WOTUS) subject to USEPA/Army Corps jurisdiction under the Clean Water Act. The proposed rule would replace the 2015 WOTUS rule, which has been the subject of litigation across the country, with a more narrow WOTUS definition. Specifically, the new proposed rules defines 6 categories of waters subject to USEPA/Army Corps jurisdiction:

• Traditional navigable waters
• Tributaries to those navigable waters, meaning perennial or intermittent rivers and streams that contribute flow to a traditional navigable water in a typical year
• Certain ditches, such as those used for navigation or those affected by the tide
• Certain lakes and ponds that are similar to traditional navigable waters or that provide perennial or intermittent flow in a typical year to a traditional navigable water
• Impoundments such as check dams and perennial rivers that form lakes or ponds behind them
• Wetlands that abut or have a direct hydrologic surface connection to another water in the U.S.

Notably, the proposed rule clarifies that WOTUS does not include water features that flow only in response to precipitation, several types of ditches, and stormwater control features, among others.

A pre-publication version of the proposed WOTUS rule can be accessed here. The agencies will take comment on the proposal for 60 days after publication in the Federal Register.

Court of Appeals Addresses the Amount of Diligence Required under the 2006 DMA

Posted in Energy

Earlier this week, Ohio’s 7th District Court of Appeals again addressed the amount of diligence required to identify the holders of severed mineral interests under the 2006 version of Ohio’s Dormant Mineral Act (2006 DMA). In Sharp v. Miller, 2018-Ohio-4740, the Court reaffirmed its earlier ruling in Shilts v. Beardmore that the 2006 DMA only requires a surface owner to exercise reasonable due diligence to ascertain the names and addresses of mineral holders prior to serving its notice of abandonment by publication. Further, the Court held that whether a surface owner’s actions constitute “reasonable due diligence” will depend on the facts and circumstances of each individual case. Thus, there is no right-line rule or definition of “reasonable due diligence.”  Actions that may be reasonable in one case may not be reasonable in another case.

In Sharp, the surface owners searched the local probate records and deed records, but their search failed to reveal the names of any heirs of the record mineral owners. Moreover, the only address the surface owners found in their search was a post office box that formerly belonged to one of the record mineral owners. Their search did produce a Release of Estate from Administration for one of the record mineral owners. However, that Release did not reference the subject mineral interest. A title report ordered by the surface owners also failed to reveal any potential heirs. 

The surface owners did conduct an in-depth, 80-hour internet search for the heirs of the record mineral owners. However, that search occurred after the surface owners had already served their notice of abandonment by publication. Notwithstanding the lack of a prior internet search, the Court held that the surface owners exercised reasonable due diligence under the circumstances of this case. The Court found that a prior internet search would likely not have been helpful to the surface owners because the only names they had for such a search were the names of the record mineral owners. Further, the Court found that there is no evidence that a simple internet search could have revealed the names of the actual heirs of the record mineral owners. In making this finding, the Court was likely influenced by the fact that the surface owners were only able to create a partial list of heirs from their extensive internet search.

USEPA Proposes Revision to Policy on Ambient Air Exclusion

Posted in Energy, Environment

U.S EPA recently issued a draft guidance document titled Revised Policy on Exclusions from “Ambient Air” (Draft Guidance) in which the Agency revises its 1980 policy on the exclusion of certain areas from the scope of “ambient air” under the Clean Air Act. Under the National Ambient Air Quality Standards (NAAQS) program, “ambient air” is defined as “that portion of the atmosphere, external to buildings, to which the general public has access.” 40 CFR 50.1(e). Longstanding EPA policy provides that the regulatory definition of “ambient air” excludes the atmosphere “over land owned or controlled by the source and to which public access is precluded by a fence or other physical barriers.” The Agency’s policy is based on three core conceptual elements in the regulatory definition of ambient air: (1) access, (2) general public, and (3) external to buildings.

Most EPA determinations regarding the applicability of the exclusion have focused on the access element. Notably, EPA has explained that the access element of the ambient air policy encompasses two concepts – physical or practical access, and legal access. In response to stakeholder requests that EPA consider revising the policy to provide for more flexibility, and after considering past case-specific decisions, the Agency determined that physical barriers are not the only means of satisfying the access element of the exclusion from ambient air.

EPA’s revised ambient air policy replaces “a fence or other physical barriers” with “measures, which may include physical barriers, that are effective in deterring or precluding access to the land by the general public.” The Draft Guidance instructs air agencies to evaluate the effectiveness of a “measure” in precluding public access based on the relevant, specific circumstances, and notes that video surveillance, monitoring, clear signage (with or without fencing), routine security patrols, drones, swamps or large tracts of undeveloped land surrounding a facility may adequately preclude public access.

EPA is accepting comments on the Draft Guidance through December 21, 2018.

USEPA Concludes Reconsideration of 2009 NSR Project Aggregation Interpretation

Posted in Environment

On November 7, 2018, USEPA concluded its reconsideration (“2018 Reconsideration Action”) of a January 15, 2009 interpretation regarding NSR project aggregation (the “2009 NSR Aggregation Action”).  See 74 Fed.Reg. 2376 et seq.  The 2009 Aggregation Action never became effective in 2009, because the NRDC filed a petition for reconsideration that resulted in USEPA indefinitely staying the effectiveness of the 2009 Aggregation Action and USEPA accepting comments on the same.  USEPA received a number of comments, but did not take any action to either implement or revoke the 2009 Aggregation Action, which has remained stayed until now.  USEPA has now determined to retain “the interpretation set forth in the 2009 NSR Aggregation Action, while not adopting any changes to the relevant rule text.”  2018 Reconsideration Action at 1.

In the 2009 Aggregation Action, USEPA stated that “Activities at a source should be aggregated when they are substantially related. To be ‘‘substantially related,’’ there should be an apparent interconnection—either technically or economically—between the physical and/or operational changes, or a complementary relationship whereby a change at a plant may exist and operate independently, however its benefit is significantly reduced without the other activity.”  74 Fed.Reg. 2378.  USEPA went on to note that “When there is no technical or economic relationship between activities or where the relationship is not substantial, their emissions need not be aggregated for NSR purposes” and that “The test of a substantial relationship centers around the interrelationship and interdependence of the activities, such that substantially related activities are likely to be jointly planned (i.e., part of the same capital improvement project or engineering study), and occur close in time and at components that are functionally interconnected.”  Id.  That said, “timing, in and of itself, is not determinative in a decision to aggregate activities. We do not believe that timing alone should be a basis for aggregation because it is inconsistent with our policy discussed earlier in this notice that the appropriate basis for aggregation should be a substantial technical and economic relationship.”  Id. at 2379.

In addition to establishing the “substantially related” test, the 2009 Aggregation Action also established a rebuttable presumption that “if a previous physical or operational change has operated for a period of three or more years, permitting authorities may presume that a newly constructed change is not substantially related to the earlier change.”  74 Fed.Reg. 2380.  “In order to rebut the presumption of nonaggregation, there should be evidence that demonstrates a substantial relationship between the activities.”  Id.  Furthermore, “in applying this presumption, the time period separating physical or operational changes should be calculated based on time of approval (i.e., minor NSR permit issuance).”  74 Fed.Reg. 2381.  Although the 2009 Aggregation Action establishes a rebuttable presumption for non-aggregation, there is no presumption that activities separated by less than three years should be aggregated.  74 Fed.Reg. 2380 (“we are setting forth our view that activities separated by less than three years have no presumption.”)

Finally, both the 2009 Aggregation Action and the 2018 Reconsideration Action acknowledge that “Permitting authorities, as they have long done, will continue to exercise their best judgment in determining the technical and economic relationship of activities.”  74 Fed.Reg. 2379; 2018 Reconsideration Action at 33-34.

The 2018 Reconsideration Action, and through it, the 2009 Aggregation Action, will become effective when the 2018 Reconsideration Action is published in the Federal Register.  Petitions for judicial review of the 2018 Reconsideration Action can be filed with the D.C. Circuit Court of Appeals up to sixty days after its publication in the Federal Register.

U.S. EPA Proposes Amendments to Performance Standards for Oil and Natural Gas Sector

Posted in Energy, Environment

On October 15, 2018, USEPA proposed amendments to the new source performance standards (NSPS) for the oil and natural gas sector at 40 CFR Part 60, Subpart OOOOa (“Subpart OOOOa”). The proposed amendments to Subpart OOOOa are a result of USEPA’s reconsideration of certain aspects of Subpart OOOOa in 2017. Specifically, the proposed amendments address the Subpart OOOOa provisions governing fugitive emissions requirements, well site pneumatic standards, and professional engineer certification requirements.

With respect to the fugitive emissions requirements, EPA is proposing to revise the monitoring frequencies depending on the type of well site and to eliminate monitoring requirements when all major production and processing equipment is removed from a well site. Several amendments to definitions related to fugitive emissions are also proposed.

With respect to pneumatic pumps, EPA is proposing to expand the technical infeasibility provision to all well sites. EPA is also proposing to amend the certification requirements for closed vent system design and technical infeasibility for pneumatic pumps by allowing certification by either a professional engineer or an in-house engineer with relevant expertise.

Other proposed amendments are intended to clarify the requirements for requesting alternative means of emission limitation, the location of a separator during flowback operations, whether screenouts and coil tubing cleanouts are regulated as part of flowback operations. Finally, EPA proposed amendments to clarify several issues regarding the implementation of Subpart OOOOa including alternative work practice standards for reciprocating compressors, calculating potential emissions from storage vessels, exempting equipment at onshore processing plants that is used only during emergencies, and streamlining reporting and recordkeeping requirements.

Comments on the proposed amendments to Subpart OOOOa are due by December 17, 2018.