Posted on May 11, 2012 by Joel Bolstein

Comment Period Closing on PADEP's Proposed Spill Policy for Oil and Gas Operations

The comment period on PADEP's proposed policy entitled "Addressing Spills and Releases from Oil and Gas Wells and Related Operations" closes on May 14.   The proposed policy provides a set of procedures for oil and gas companies to follow in remediating spills at well pad sites.  

Of particular interest is the allowance to enter those sites in the Act 2 process.  Act 2 provides cleanup standards for the remediation of "regulated substances."  When Act 2 was enacted in 1995, it defined "regulated substances" as contaminants regulated under HSCA, the Clean Streams Law, the Air Pollution Control Act, the Solid Waste Management Act, the Chemotherapeutic Waste Law, and the Storage Tank Act.   It didn't include substances regulated under the Oil and Gas Act.  Moreover, when the EQB promulgated the Act 2 regulations in 1997 (Chapter 250), it provided a similar list of statutes that constituted the "Environmental Protection Acts" .  That list likewise left off the Oil & Gas Act.   Thus, the dilemma in using Act 2 to deal with spills and releases of substances at sites governed by the Oil and Gas Act.   

Although not coming out and saying it, presumably the Department is allowing remediators of spills at oil and gas sites to enter them into the Act 2 program and receive liability protection, based on the fact that a spill of frack fluids would be a spill of residual waste, governed by the SWMA, which is one of the statutes covered under Act 2.  Moreover, a spill that could impact the waters of the Commonwealth would be regulated under the Clean Streams Law, which is also covered under Act 2.  No matter, this draft spill policy provides a mechanism for remediators of spills at oil and gas sites to file an NIR and obtain a release of liability under Act 2 upon demonstrating attainment of an Act 2 standard.

But, it is a little more complicated than that.  First, if you want to enter the site in the Act 2 program, you have to notify PADEP within 15 days of the spill or release.  That timeframe is not proscribed by Act 2.  Second, under the proposed policy, no NIR or public notice is required if the remediator addresses the spill or release at the well site using the background or statewide health standards and submits an Act 2 Final report within 90 days.    That allowance is the same as the one provided in Section 302 and 303 of Act 2.  The proposed policy also provides an alternative procedure for a remediator to use if they don't want to go through the Act 2 process.  Here, the remediator would submit an initial report within 15 days of the spill, followed by a site characterization report within 180 days, followed by a remedial action plan within 45 days, followed by a remedial action completion report demonstrating that the remedy has attained an Act 2 standard.  If you ask me, it would seem like the easier route would be to just enter the site in the Act 2 program.  Plus, if you use the alternative process, you don't get a release of liability.  Perhaps the only benefit of going through the alternative process is that there doesn't appear to be any notice requirement.  If that is important to the remediator, because the neighbors are unfriendly or the local government is unfriendly, then using the alternative process may avoid any additional headaches.

There are a couple aspects of the proposed policy where the Department has reached considerably beyond what I would consider to be its statutory and regulatory authority.  First, as everyone knows, PA has very limited reporting obligations for spills or releases.  There is a regulatory obligation to report a spill or release under 25 PA Code Section 91.33 and 91.34 if the release presents the potential for contaminating the waters of the Commonwealth.  There is also an obligation to report a release from an underground storage tank.   So, if you have a minor spill or release to the ground and it does not present a threat to the waters of the Commonwealth, because it is just a surface spill that is quickly remediated or because it is a spill onto a concrete pad or into a containment system, it is not reportable under PA law.  The proposed policy, however, states that due to "the difficulty in ascertaining the exact quantity of a spill or release and the danger such a spill or release poses to the environment, the Responsible Party should report a spill or release of any polluting substance to the Department regardless of the quantity spilled."  As I noted, that requirement would appear to go well beyond what is now required under PA law.  It is also inconsistent with the view I know many environmental practitioners have taken over the 23 years I have been practicing environmental law in Pennsylvania.   There has always been an allowance in the law for judgment in determining whether notification was required.  If this proposed policy is finalized, in the form it is written, there'd no longer be any room for judgment as it relates to notifying DEP of spills at oil and gas sites.  Whether or not DEP wants to be notified of every little drop of brine, I don't know.  It just seems to me that it is an over-reach on the part of the Department, taking this policy far beyond what is currently understood to be the law relating to reporting surface spills or releases in the Commonwealth. 

In addition, the proposed policy goes still further in stretching the law on spill notification.  The proposed policy would require notification to PADEP when there is a release of 42 gallons or more even if the spill is entirely contained within a secondary containment structure.  Again, if the secondary containment structure is working as designed, then there is no risk to the waters of the Commonwealth.  Why then would that spill be reportable?  I could understand that the Department might want an operator to maintain records of releases into the containment structure and keep those on site for inspection, but I don't see the need to immediately notify the Department if there has been no release outside the containment structure.     

There are a few other interesting nuances in the proposed spill policy.  One of them is how it deals with chlorides and Act 2.  Act 2 has a chloride standard for groundwater that is an SMCL.  There is no statewide health standard for chloride in soil.  What does that mean?  It means that there is no cleanup standard chloride that gets released onto the ground.  Why isn't there a chloride standard?  Probably because chloride is a substance that every spreads on their food -- it's salt.  It is also spread freely on every highway, road and parking lot in PA when it snows or you have freezing rain.  If you required chloride to be remediated if it got onto the soil you'd be requiring every roadside ditch to be remediated after the PennDOT salt truck drove by with the spreader going full blast.  So if we don't require PennDot to remediate the soil along the road where it spreads salt or uses brine water as a de-icer, why should we require oil and gas companies to clean up spills of salt brines at well sites?  I suppose it's because in the case of PennDOT, the salt being spread is a product, not a waste, and it is being used as intended and as allowed by law.  The salt brine released at a gas site is technically residual waste, and if it is an unpermitted waste site, the remedy is removal, unless the Department allows it to remain in place.  Under the proposed policy, the Department says that areas impacted by a spill or release must "be restored in a timely manner".  That requires restoration and revegetation within 9 months of completion of the well.  That requirement seems like a fair compromise and it doesn't appear too onerous.  With that said, one would hope it would not lead to a reconsideration of what needs to be done by PennDOT at those roadside ditches.      

 

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Posted on April 27, 2012 by Joel Bolstein

MFS Decision Upheld by Third Circuit

You will remember the MFS, Inc. jury verdict that found 4 PADEP employees in the NE Regional office liable for $6.5 million dollars for allegedly discriminating against MFS, Inc. and violating their civil rights.  That jury verdict was subsequently thrown out by the Federal District Court judge hearing the case in a lengthy opinion, which I wrote about in an earlier posting.  Yesterday, the U.S. Court of Appeals for the Third Circuit issued a ruling upholding the judge's decision to vacate the jury verdict.   Absent a successful appeal to the US Supreme Court, this episode is over and the Department can continue to issue permits and take enforcement actions without this cloud hanging over their heads. 

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Posted on March 30, 2012 by Joel Bolstein

Bad Actor Provision in Act 13 only applies to PADEP "Final Actions"

Some people may have overlooked the fact that the General Assembly put a "Bad Actor" provision in Act 13 that gives PADEP the right to deny a drilling permit if the permit applicant has outstanding violations.  It's in Section 3211 and it reads as follows:

(e.1) Denial of permit. -- The department may deny a permit for any of the following reasons:  . . .

(5) The department finds that the applicant, or any parent or subsidiary corporation of the applicant, is in continuing violation of this chapter, any other statute administered by the department, any regulation promulgated under this chapter or a statute administered by the department or any plan approval, permit or order of the department, unless the violation is being corrected to the satisfaction of the department.  The right of the department to deny a permit under this paragraph shall not take effect until the department has taken a final action on the violations and:

(i) the applicant has not appealed the final action in accordance with the act of July 13, 1988 (P.L. 530, No. 94), known as the Environmental hearing Board Act; or

(ii) if an appeal has been filed, no supersedeas has been issued.

Denying a permit application based on an applicant's compliance history is a power given to PADEP in many of the environmental laws it administers.  Based on my experience, however, the Department uses that power very infrequently.  How likely is it that it will use this "Bad Actor" provision to deny drilling permits?  That's difficult to predict.  Could a third party appellant use this "Bad Actor" provision to force PADEP to deny a permit application based on continuing violations?  I think that is impossible, given the language in Section 3211.  Let me highlight several things in the "Bad Actor" provision of Act 13: 

First, the statute says that PADEP "may" deny the permit as a result of ongoing violations, but denial is not mandated.  Thus, the power is entirely in PADEP's discretion and can't be invoked by a third party challenging the issuance of a permit.

Second, the statute says that the Department won't deny the permit application based on continuing violations if "the violation is being corrected to the satisfaction of the department."   Thus, if the party is cooperating, PADEP has the discretion to overlook the violation in the context of reviewing a drilling application.

Third, the Department's right to deny a permit application for continuing violations is only triggered when the violation has resulted in a "final action".  This is the most interesting part of the "Bad Actor" provision, in that those of us who regularly practice before the PA Environmental Hearing Board know that "final action" is a term of art.   The term distinguishes between actions taken by the Department that are appealable (i.e., a "final action") and those that are unappealable (i.e., something other than a final action).  The EHB has discussed that distinction on numerous occasions.  In the Langeloth Mettallurgical Company decision written by Judge Labuskes, here is what he said about the line between what is an appealable "final action" and what is not:  

[T]his case highlights that it is impossible to draw a bright line between appealable and nonappealable actions, and such a determination must be made on a case-by-case basis. Borough of Kutztown v. DEP, 2001 EHB 1115, 1121; Ford City v. DER, 1991 EHB 169, 172. As we recently pointed out in Redbank Valley Municipal Authority v. DEP, 2006 EHB 813, 819, not all Department communications fall neatly into appealable and non-appealable categories. We discussed the many factors to consider in determining whether a Department action is appealable in Borough of Kutztown v. DEP.  In deciding whether a Departmental letter constitutes a final “action” or “adjudication,” we consider such factors as the wording of the letter, the substance, meaning, purpose, and intent of the letter, the practical impact of the letter (with an eye to what actions a reasonably prudent recipient of the letter would take in response to the letter), the regulatory and statutory context of the letter, the apparent finality of the letter, what relief the Board can offer (i.e., the practical value of immediate Board review), and any other indicia of a letter’s impact upon its recipient’s personal or property rights.  2001 EHB at 1121. 

In terms of administering the Bad Actor provision in Act 13, what type of enforcement action would constitute a "final action"?  Based on my knowledge of EHB case law, inspection reports that identify violations, Notices of Violation, and proposed penalty assessments are not generally considered "final actions" that are appealable to the Board.  Thus, they generally would not trigger the Bad Actor provision (although you'd be smart to look at the language as Judge Labuskes instructed).   That significantly limits the universe of "continuing violations" the Department can use to invoke the Bad Actor provision in Act 13.   Some enforcement actions taken by the Department are clearly final actions that are appealable to the Board, such as orders and the issuance of a civil penalty assessment.    So those things would be fair game in terms of invoking the Bad Actor provision.  But even in the situation where the Department has issued an order, the invocation of the Bad Actor provision to deny a permit can be prevented if the recipient of the order files an appeal to the EHB and the Board issues a supersedeas (i.e., an injunction). 

So what should everyone take from all this?  First, there is a Bad Actor provision in the new Marcellus Shale law, known as Act 13.  Second, the use of the Bad Actor provision is entirely in the Department's discretion, so it's use can't be forced by a third party.  Third, the invocation of the Bad Actor provision is limited in that the only kind of "continuing violations" that can be used against an applicant are those constituting "final actions"of the Department, which would, in all likelihood,  exclude violations noted in inspection reports, NOVs, and proposed penalty assessments.  Fourth, even with regards to "final actions", the Department has discretion to overlook the continuing violations if "the violation is being corrected to the satisfaction of the department."

The bottom line is stay in compliance and you won't have to worry about the Bad Actor provision in Section 3211 of Act 13.  If you do fall out of compliance, take prompt action to fix it and cooperate with the Department and avoid having the Department issue an appealable order.  If all else fails and the Department hits you with an order that would constitute a final action, be aware that only the issuance of a supercedeas from the EHB will eliminate the possibility that the Department could use that order to deny a permit application filed under Act 13.    

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Posted on March 22, 2012 by Joel Bolstein

US Supreme Court Gives Property Owners Right to Obtain Pre-Enforcement Judicial Review of EPA CWA Compliance Orders

In a unanimous decision issued yesterday, the US Supreme Court for the first time gave property owners the right to pursue immediate judicial review of a compliance order issued by EPA under the Clean Water Act.  Up until now, it had been universally understood and accepted that the Clean Water Act precluded pre-enforcement judicial review of EPA compliance orders.  After Sackett v. EPA, that is no longer the case.

The case involved Chantall and Mike Sackett who bought a vacant lot near Priest Lake, Idaho.  The lot was zoned residential and was located in a subdivision with municipal water and sewer.  The Sacketts obtained municipal building permits and began laying gravel for the foundation, when EPA hit them with a compliance order, alleging that the property contained federally regulated  wetlands and that they were building without a wetlands permit in violation of the Clean Water Act.  The compliance order subjected the Sacketts to civil penalties of $37,500 per day.  When they tried to challenge the compliance order in federal court, seeking a declaratory judgment and an injunction under the Administrative Procedure Act, both the district court in Idaho and the Ninth Circuit ruled against them.

When the case was argued in January before the US Supreme Court, many observers detected that the justices were leaning towards the Sacketts' side.  Justice Alito remarked that "most ordinary homeowners would say this kind of thing can't happen in the United States."  Maybe that should have been a signal to the rest of us as to where the Court would be going with its decision.

The Supreme Court decision was written by Justice Scalia.  I'll give you the highlights. 

Justice Scalia found that "nothing in the Clean Water Act expressly precludes judicial review under the APA or otherwise."  He said that the APA created a "presumption favoring judicial review of administrative action" and that the issuance of a compliance order to the Sacketts had to be seen as a final agency action.  He rejected EPA's assertion that the compliance order wasn't final because the recipient could choose to voluntarily comply.  Justice Scalia wrote:  "[I]t is hard for the Government to defend its claim that the issuance of the compliance order was just 'a step in the deliberative process' when the agency rejected the Sacketts' attempt to obtain a hearing and when the next step will either be taken by the Sacketts (if they comply with the order) or will involve judicial, not administrative, deliberation (if the EPA brings an enforcement action)."   Justice Scalia also rejected EPA's argument that its compliance orders issued under the Clean Water Act needed to be insulated from judicial review because Congress passed the Act in response to the inefficiency of then-existing remedies for water pollution and compliance orders resulted in "quick remediation through voluntary compliance."  In response, Justice Scalia wrote: 

The Government warns that EPA is less likely to use the orders if they are subject to judicial review.  That may be true -- but it will be true for all agency actions subjected to judicial review.  The APA's presumption of judicial review is a repudiation of the principle that efficiency of regulation conquers all.  And there is no reason to think that the Clean Water Act was uniquely designed to enable the strong-arming of regulated parties into 'voluntary compliance' without the opportunity for judicial review -- even judicial review of the question of whether the regulated party is within the EPA's jurisdiction.  Compliance orders will remain an effective means of securing prompt voluntary compliance in those many cases where there is no substantial basis to question their validity.

I put those words in bold because I thought it thought was particularly interesting that Justice Scalia referred to EPA's action in this case as "strong-arming", which is a term that I hear business owners frequently use in describing government regulatory over-reach in many other contexts.

Remember that I mentioned earlier that Justice Alito seemed particularly sympathetic to the Sacketts' plight.  Well, he felt so strongly about their predicament that he wrote his own concurring decision, in which his first words were as follows:  "The position taken in this case by the Federal Government--a position that the Court now squarely rejects--would have put the property rights of ordinary Americans entirely at the mercy of Environmental Protection Agency (EPA) employees."    He added:  "In a nation that values due process, not to mention private property, such treatment is unthinkable."   Those are welcome words to many business owners who often find themselves under the government's thumb, feeling powerless, and with little will to fight back.  

But Justice Alito also got to the larger point, specifically, that EPA was led to over-reach in this case because of Congress' failure to "provide a reasonably clear rule regarding the reach of the Clean Water Act."   He said short of that Congressional clarification, giving aggrieved property owners the explicit right to sue EPA under the Administrative Procedure Act in these circumstances is "better than nothing."  Maybe, but it only helps those aggrieved property owners who can afford to bring an action for declaratory and injunctive relief in federal court, which no doubt would still be an expensive proposition. 

So what does this all mean?  Presumably, it means that property owners now have a right to seek judicial review to challenge compliance orders issued by EPA under the Clean Water Act on jurisdictional grounds.  Remember, at the root of their case, the Sackett's were arguing that their property wasn't subject to the Clean Water Act  because, they said, their were no federally regulated wetlands present.  It would appear that the Sacketts will now "get their day in court" and they will be able to make their arguments on the merits to the US District Court.  The Supreme Court has now opened that door for them and other similarly situated potential future litigants who receive similar compliance orders from EPA.   Can Sackett be read to go beyond these specific facts and to get at cases that don't just involve wetlands?  I'm not sure at this point.  But it certainly invites speculation as to whether there may be other compliance orders that EPA issues that might now be open to pre-enforcement judicial review.       

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Posted on March 16, 2012 by Joel Bolstein

EPA well testing in Dimock finds No Contamination

In an article appearing this morning, it was reported that EPA's first round of samples failed to identify any contamination in 11 residential wells in Dimock.   Why am I not shocked by that?  Probably because I actually believe PADEP and Cabot when they say that they've analyzed prior sampling and it showed that the well water was not contaminated by nearby drilling.   Here's a question for you.  If the remainder of the sampling being done by EPA also comes back showing no contamination, will the federal government then see the light and realize that PADEP is perfectly capable of protecting the citizens of the Commonwealth?   I've worked with both agencies and I think I can say that the chemists, geologists, biologists, engineers and other scientists working at PADEP are just as diligent and professional as the ones working at EPA.   Many of those PADEP staffers have put in just as many hours, days and years working for the public good, at an agency whose mission elevates protecting human health and the environment above all else.   So why are there still people who look to EPA for a second opinion in instances like Dimock?  What happens when that second opinion comes back and it proves that PADEP was right?  I can tell you  it wouldn't be the first time that happened.  I'm wondering when we will get to the point when  EPA stops offering second opinions and flat out tells people that they can rely on PADEP.       

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Posted on March 7, 2012 by Joel Bolstein

"We are One DEP"

In his recent testimony before the Senate Appropriations budget hearing, Pennsylvania DEP Secretary Mike Krancer told the committee members that one of his central themes, from the outset of his tenure as Secretary, has been to emphasize that the Department is "one DEP".   While others have focused their attention on his remarks regarding the Department's oversight of Marcellus Shale development, I'd like to focus on his statement that "we are one DEP, not seven".

For those who are not familiar with PADEP, it is comprised of a Central Office in Harrisburg and six regional offices, including Wilkes-Barre, Norristown, Williamsport, Harrisburg, Meadville and Pittsburgh.   Central Office is responsible for policy and program development and the regional offices are responsible for the day-to-day implementation of those programs, including permit issuance, inspections and enforcement .  That's a real over-simplification of what goes on at the Department, because there are so many more tasks that the Department performs, but that overview can help sharpen the focus on what it means to be "one DEP."  

The Department is responsible for administering a host of environmental laws and regulations.  In that regard, Secretary Krancer has repeatedly emphasized the need for the Department's administration of those laws and regulations to be more consistent.  What does that mean?  At the most basic level, it means that once the Central Office has created a regulatory program and  provided guidance for its implementation, there needs to be uniformity in the implementation of that program.  That's not to say that there is no place for using discretion, because many of the Department's regulations allow for the use of discretion.  I think what it means is that, all else being equal, consistency in program implementation provides the regulated community with a degree of certainty that they need to guide their behavior.  Inconsistent application of rules and regulations, on the other hand, may cause regulated entities to question the fairness of regulatory programs and the reliability of regulatory decision-makers.  When a regulatory Department or agency develops a reputation for inconsistent application of its programs and policies, regulated entities may decide to do business elsewhere, in states where the regulatory climate is more predictable.   Regulatory consistency equals greater predictability in terms of decisions relating to permitting, enforcement, and remediation, all of which are essential for regulated entities to make choices for budgeting, allocating scarce resources, and targeting areas for growth and expansion.   With that said, consistency for consistency's sake, may lose sight of why consistency is important to begin with.  It is important in terms of increasing predictability and allowing regulated entities to be able to rely on a set of rules that they know will be enforced equally and fairly.  It accords regulated entities a level playing field, so winners and losers are determined by the free marketplace.  Occasionally, the Department still needs to exercise the discretion given to it by the General Assembly.  That discretion is necessary to deal with situations where the regulations and policies are vague or ambiguous, or where the uniform enforcement would lead to decisions that ignore the underlying scientific facts or lack common sense.  Regulations and policies, no matter how much time and effort was put into their development, are not perfect, and discretion allows the Department to address those imperfections.

So what does it mean to be "one DEP".  Beyond achieving consistency, I believe it means that the Secretary wants each and every person working for the Department to see themselves as a meaningful part of a single enterprise, where everyone is working toward a common goal, whether they are in Central Office or in one of the regional offices.   I believe it means that even though the Department's work is done by different programs, such as air, water, and waste, and in different regional offices, that everyone working in the Department recognizes the importance of all other programs and offices and works together, in a collaborative effort, to solve problems, as part of the same team.    

In Secretary Krancer's testimony, he stated : "Our theme from the start has been "we are one DEP, not seven" and this is aimed at assuring more consistency of decision making within DEP. "   The words "We are one DEP"  have a lot of significance.  Probably more than what most people might recognize.  The fact that Secretary Krancer felt strongly enough about the words "We are One DEP" to put them in his written testimony is a very powerful statement about his vision for the Department.    That vision is one that many of us on the outside applaud and will be happy to work with the Secretary, in any way possible, to help bring about.  

              

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Posted on February 16, 2012 by Joel Bolstein

PA Marcellus Legislation Brings Several Hammers Down on Local Ordinances

A lot has been said about the preemption of local ordinances contained in the amendments to the PA Oil and Gas Act (HB 1950) recently signed into law by Governor Corbett.  But not much has been said about the multiple hammers given to the oil and gas companies for invalidating those ordinances, including private rights of action, and the ability to collect attorneys fees from the local governments. 

Under Section 3302 of the new law, all local ordinances purporting to regulate oil and gas operations regulated by the new Chapter 32 of the Oil and Gas Act are "superceded".    The law states that "no local ordinance adopted pursuant to the Municipalities Planning Act or the Flood Plain Management Act shall contain provisions which impose conditions, requirements or limitations on the same features of oil and gas operations regulated by Chapter 32 or that accomplish the same purposes as set forth in Chapter 32."   Let there be no mistake.  The state has preempted the local regulation of oil and gas operations.   If that isn't clear enough, the law includes several hammers that oil and gas operators can use against municipalities that might be tempted to pass ordinances to test what statutory authority they may have left to impose roadblocks on oil and gas development.

First, an owner or operator of an oil and gas operation who is aggrieved by the enactment or enforcement of a local ordinance is given the right to request that the PUC review the local ordinance to determine if it is subject to the preemption set forth in the new law.  

Second, that same owner or operator of an oil and gas operation can jump over the PUC and immediately bring a private action in Commonwealth Court to invalidate or enjoin the local ordinance.  If the PUC reviewed and found the ordinance invalid, that finding becomes part of the record before the court.   Since this is a civil action, the municipality has to incur legal fees to defend its ordinance before the Commonwealth Court.   

Now here's a big hammer.  If the court determines that the local government enacted or enforced the ordinance "with willful or reckless disregard", it can order the local government to pay the successful plaintiff "reasonable attorneys fees and other reasonable costs incurred . . .  in connection with the action."    So, hypothetically, say the municipal solicitor is asked for his or her legal opinion of a proposed local ordinance to be voted on by the supervisors which regulates oil and gas operations.  The solicitor reviews the proposed ordinance and opines that it is preempted, but the supervisors, giving in to public pressure, go ahead and vote for the ordinance anyway.  (It wouldn't be the first time something like that happened).  The oil and gas operator then brings an action in Commonwealth Court to invalidate the ordinance.  To me, it wouldn't be that much of a stretch for the court, in that situation, to find that the municipality acted with "willful or reckless disregard" and hold the municipality responsible for paying the oil and gas company's  attorneys fees.  I assume that hammer may get some municipalities thinking that it may be best just to steer clear of the entire issue.

But if that hammer isn't enough, the law requires that municipalities that already enacted local ordinances before the passage of the latest amendments to review and amend those ordinances within 120 days, so they are in compliance with the preemption limitations.   If they don't go back and amend those offending local ordinances, the same procedures apply (PUC or Commonwealth Court review) and the oil and gas operators have the power to collect attorneys fees if they are successful in showing willful or reckless disregard.  Funny thing is that when those ordinances were being passed, I don't think any supervisors worried about that.  They may even have made statements in the newspaper, like, "we just don't want any of that here."  It may make sense for some of them to go back and read their own clippings.  Those statements could be costly if the ordinances aren't amended or revoked.     

The law does say that if the municipality wins, it can collect attorneys fees from the oil and gas operator who brought the action to invalidate the ordinance if the court determines that the action was "frivolous or brought without substantial justification."   But in order to receive reimbursement of its attorneys fees, the municipality would have to take the case all the way to a judgment and then get a determination from the court that the action was frivolous.   That could be expensive and it's not clear if municipalities with limited budgets will be willing to hang in there that long defending these ordinances.

Here's the final hammer.  if the PUC, the Commonwealth Court, or for good measure, the Supreme Court, issues an order that a local ordinances is preempted, the law states that "the municipality enacting or enforcing the local ordinance shall be immediately ineligible to receive" Marcellus impact fee money "until the local government amends or repeals its ordinance or the determination that the local ordinance is unlawful is reversed on appeal." Ouch.  So, if you are the only municipality that passed an ordinance prohibiting the development of Marcellus wells, you run the risk that all your neighboring communities can receive the impact fee money while you are left out.  

There's a lot in the new legislation that hasn't been addressed yet in most reporting.  These hammers are just one example.

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Posted on January 12, 2012 by Joel Bolstein

SAB Process Subcommittee Begins Year Long Project to Help DEP Revise the Act 2 Technical Guidance Manual

Yesterday I chaired a meeting in Harrisburg of the Process Subcommittee of the Cleanup Standards Scientific Advisory Board (SAB), which has been tasked with helping provide advice to the Department on revising the Act 2 Technical Guidance Manual (TGM).   The subcommittee is made up of SAB members, Department staff, and several outside environmental consultants who have been working with the SAB on vapor intrusion issues. 

During the meeting, the Department said that its goal was to have a revised draft of the TGM available for public comment within 12 months.  We talked about how the TGM is used most often, where it is most helpful and where it is deficient.  We developed a long list of issue areas that will be examined by subcommittee members in greater detail to determine how best to update the Manual as it relates to those issues.  We also talked about the need to integrate the Act 2 Q&A from the Department's website into the next version of the TGM, being mindful that some answers might be obsolete or no longer relevant.  The goal, however, is to integrate everything that is still relevant and good policy from the Q&A into the next version of the TGM and then wipe out all the current Q&A and start fresh as new questions come into the Department.  

Some of the issue areas that will be addressed include those that have arisen subsequent to the development of the first TGM, such as providing more information on the One Cleanup Program and integrating separate UECA and vapor intrusion guidance into the TGM.   We also talked about the need for the Subcommittee to provide recommendations on updating the information presented in the TGM on the various Act 2 interface issues, including the interfaces between Act 2 and the Solid Waste Management Act,  Clean Fill, Storage Tanks, E&S, Air, Surface Water, and Marcellus Shale (which the Department is in the process of addressing).              

One critical component of the subcommittee's work will be outreach to others who work with the Act 2 program to ensure that we've considered all of the possible areas where the TGM needs updating.  The PADEP members of the Subcommittee will be reaching out to the regional ECP program personnel and regional counsel that work with those ECP programs to obtain their views.  The engineers and geologists on the Subcommittee will reach out to the PA trade associations that represent those groups, and the environmental attorneys will do the same. 

I thought the first meeting was very productive.  If anyone reading this posting has any thoughts on revising the Act 2 TGM, feel free to send me a comment.  If you'd like it posted, please also let me know and I'll share those comments more broadly.  I intend to keep everyone posted on the important work being done by the subcommittee.

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Posted on November 21, 2011 by Joel Bolstein

Secretary Krancer Lays Down the Law Before Congress

In testimony delivered last week before a Congressional Subcommittee in Washington, D.C., PADEP Secretary Michael Krancer did what a thoughtful judge should do.  He set forth both the facts and the law on the subject of Pennsylvania's regulation of the Marcellus Shale. 

In 19 single-spaced pages, Secretary Krancer systematically debunks every myth about fracing, frac fluids, water usage and water impacts arising from natural gas development.   Unlike the emotional appeals of drilling opponents, his testimony relies on unbiased real facts based on actual evidence gathered in the field.  His review of Pennsylvania's laws governing oil and gas well operations is detailed and thorough.  Anyone reading his testimony will surely agree that  Pennsylvania possesses all of the tools that it needs to protect its citizens and the natural resources of the Commonwealth from the risks associated with Marcellus shale exploration and development.   His summation, addressed to those that think EPA can do a better job regulating the Marcellus shale than PADEP, is eloquent and to the point.  He stated:  "Simply put, because of our long history of oil and gas development and comprehensive regulatory structure, Pennsylvania does not need federal intervention to ensure an appropriate balance between resource development and environmental protection is struck."   Well said Secretary Krancer. 

I would urge everyone active in the development of the Marcellus shale to read Secretary' Krancer's testimony.  It presents as compelling a defense as you will read for Pennsylvania being able to control its own economic destiny.        

 

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Posted on November 18, 2011 by Joel Bolstein

DRBC Postpones Vote on Marcellus Regulations

In a press release issued earlier today, the DRBC announced that it is postponing the special meeting it had scheduled for November 21 to vote on its proposed Marcellus regulations.  No new date was provided. 

At this point, the uncertainty created by DRBC, and the continued de-facto moratorium resulting from the inability of drillers to obtain permits, has made it very unlikely that any drilling will occur anywhere in the basin even after DRBC issues its regulations.  The word on the street is that the leasing agents for the oil and gas companies have been told to stay away from the few counties within the Delaware River basin (mostly Wayne and Pike) that overlie the Marcellus formation and not sign any more leases.  In all likelihood, leases previously signed in those counties will be allowed to expire, and the landowners who thought they would be benefiting from development of their shale gas rights in those counties will be out of luck, no matter what the DRBC's final regulations look like.   With that said, if you take the few counties that are within the DRBC's jurisdiction off the table for drilling, there still remains a very large untapped area within  the central and western parts of the Commonwealth where the regulatory climate is much more welcoming to the shale gas industry.  As they said during the gold rush -- Go West Young Man.     

 

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Posted on October 30, 2011 by Joel Bolstein

CSSAB to Provide Input on Revising Act 2 Technical Guidance Manual

On October 28, I was asked to chair the newly reconstituted Process Subcommittee of the PA Cleanup Standards Scientific Advisory Board (SAB), for the express purpose of helping the Department revise the Act 2 Technical Guidance Manual (TGM).  I was participating in the SAB meeting as one of its newest members, having been appointed earlier this year by PADEP Secretary Michael Krancer.   Back in the period between 1995 and 1997, when the Department was working on the Act 2 regulations and creating the Act 2 TGM, I attended all of the SAB's meetings in my capacity as PADEP Deputy Secretary.  Now I've come full circle, participating as an SAB member, private citizen and environmental attorney, hoping to contribute some ideas for improving what is already recognized as one of the best brownfield programs in the country.     

There were two matters discussed at the SAB meeting -- revising the Act 2 TGM and providing further guidance on vapor intrusion. 

On revising the Act 2 TGM, as noted above, the SAB decided to reconstitute its Process Subcommittee to provide advice to the Department on this very important project.   I agreed to chair the Process Subcommittee after being asked by Ron Buchanan, the chair of the SAB.  I expect that the Subcommittee will be looking to form a larger group that includes SAB members, as well as people outside the SAB, including brownfield developers, environmental consultants, and representatives from economic development agencies that work with Act 2.  In addition, we discussed having regional office ECP staff and counsel who work with the ECP program included as members of the subcommittee.

The idea is to help the Department identify technical and scientific areas of the Act 2 TGM that could use clarification or revision.  Part of that work will be reviewing the Act 2 Q&A on the Department's website to see which of those answers should be integrated into the revised TGM.  The SAB Process Subcommittee will prepare a list of recommendations for the people now in charge of the Act 2 program, Denise Brinley and Troy Conrad.   I expect the Subcommittee may want to hold several stakeholder meetings to gather input.  Troy Conrad said the Department's goal is to have a draft revision of the Act 2 TGM within 12 months.  That draft revision would then be put out for public comment.  

I am very excited to be helping the Department with this project.  I was part of the team within the Department that put together the first version of the Act 2 TGM.  We poured our hearts into that to make sure we had the best possible guidance document to go along with the statute and the regulations.  Many of the people who worked on the initial TGM are long gone, including, among others, Karen Bassett, Ken Bowman, Joe Chnupa, Tom Fidler, Ken O'Korn and Jim Snyder.  Sam Fang was the person who worked on all the statistical analysis, and it was nice to see him sitting with the PADEP folks at the SAB meeting.  We still have many Act 2 veterans within the Department working on this, including Jim Shaw and Dave Crownover, along with Denise and Troy, who have both helped manage the program for many years.  A number of SAB members have also been around from the very beginning and their participation on the Subcommittee will be invaluable.    As I observed during the meeting, we have so much Act 2 talent around the table that  I am very confident that the SAB will be able to make a meaningful contribution to the work of revising the Act 2 TGM. 

Anyone with any thoughts or comments on areas of the Act 2 TGM that should be looked at by the SAB Process Subcommittee, should feel free to send me an email or post a comment.  

The other matter discussed by the SAB at the October meeting was vapor intrusion.  The SAB has a subcommittee chaired by Annette Guiseppi-Eli.  She presented the subcommittee's report, which included a 3 page paper with issues for further discussion.  Those issues included: (1) the proper place within the Act 2 TGM for the vapor intrusion guidance; (2) the difficulty using soil screening tables based on the new J&E model; (3) dealing with occupied structures and potential future structures; (4) addressing vapors on neighboring properties: (5) avoiding vapor sampling by moving directly to installation of a VI abatement system; (6) sampling guidance; (7) petroleum cases; and (8) clarification regarding the use of the term "background" in the context of dealing with vapor intrusion. 

The subject of vapor intrusion is very complex and highly technical.   Regardless of whether anyone thinks the risks posed by vapor intrusion are overblown, it is clear that the federal government is taking vapor intrusion very seriously and it expects the states to follow suit.  There's talk of new Superfund sites being added to the NPL solely on the basis of vapor intrusion.  Pennsylvania has marched to the beat of its own drummer for many years on vapor intrusion, generally having screening levels that are more lenient than EPA and many other states.  That is what the SAB is wrestling with -- how does one change those screening levels without causing every Act 2 project to have to perform costly soil vapor sampling?  After all, at many sites, the vapor sampling can be much more expensive than the eventual vapor remedy, which often involves installing a relatively inexpensive radon-like mitigation system.  As we engaged in the discussion of sampling and screening tables, I continually brought up the question how any of this will effect sites that have already gone through the Act 2 process and received releases of liability.  For example, if the screening levels are reduced significantly, will that mean reopening past liability releases to address vapor intrusion?  Will Act 2 liability releases become less valuable because those sites will now require vapor sampling when the property is sold?  Will banks require vapor sampling at sites being acquired, even if that site has an Act 2 release that runs with the property? 

The discussion of vapor intrusion at the SAB meeting was very thoughtful and practical.  Everyone is motivated to come up with solutions that will not adversely impact the program.  With that said, these are not easy issues.  The most practical recommendation made by the Subcommittee was that a remediator should have the option to avoid the time, effort and costs associated with implementing any of the vapor sampling and vapor screening to proceed directly to the mitigation option at any point in the process.   I see that as keeping with Act 2's mandate to take cost into consideration in developing remedies that are protective of human health and the environment.    Why should someone have to spend $25,000 on vapor sampling when the remedy is installing a $5,000 radon-like mitigation system?  That is the kind of common sense that Pennsylvania's brownfield program has been known for and it's nice to see the SAB members applying that common sense as it works its way through these very complex issues.

Again, I'm excited to be a new member of the SAB and I am very much looking forward to chairing the Process Subcommittee and helping Denise and Troy with the important task of revising the Act 2 TGM.

   

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Posted on October 20, 2011 by Joel Bolstein

How Many Bats Does It Take to Stop a Windmill?

We've got many different kinds of bats in Pennsylvania but only one can stop a windmill.  We've got big brown bats, little brown bats, tri-colored bats, hoary bats, small-footed bats, silver-haired bats, northern long ear bats, red bats, evening bats, and an occasional seminole bat.  But none of those bats can stop a windmill.

The only bat in Pennsylvania capable of stopping a windmill is this little guy

It is the rarely seen Indiana bat (Myotis sodalis).   It's a whopping 3 inches long and weighs in at less than half an ounce.  It likes to hibernate in clusters of 250 bats per square foot on the ceilings and side walls of caves.  Although 97 percent of Indiana bats are found in Missouri, Kentucky, Indiana and Illinois, Pennsylvania is on the edge of its habitat range. 

The thing that distinguishes the Indiana bat from all other bats is that this little guy is the only bat in Pennsylvania that is on the federal endangered species list.  That means, when you are siting a wind farm in western Pennsylvania, the US Fish & Wildlife Service will want a pre-construction impact assessment of wind development on bats.  Depending on the project, they can ask the project developer to conduct mist-net and cave and mine opening surveys for the Indiana bat.  The Pennsylvania Game Commission gets developers to sign Wind Energy Voluntary Cooperation Agreements that include monitoring of post-construction bat mortality.  And if dead bats are found, and they turn out to be Indiana bats, you can expect both the US Fish & Wildlife Service and the PA Game Commission will be looking to the project developer to mitigate adverse impacts on the bats.

And this is not a hypothetical situation.  It just happened at a 35 turbine wind farm in Cambria and Blair Counties.  According to a news report , a bat carcass was discovered by a technician on September 26 and was brought into the office as per standard monitoring protocol.  When it was determined to be an Indiana bat (sometimes Indiana bats are mistaken for little brown or northern long ear bats), the power company operating the wind farm immediately curtailed nighttime operations of the turbines and reported the incident to the PA Game Commission and the US Fish & Wildlife Service.  At this time, the wind turbines are being turned off 30 minutes before dusk until 30 minutes after dawn every night.  The expectation is that the wind farm will be able to be put back into full operation in mid-November, when the migratory season for bats ends and they begin their winter hibernation.

So, how many bats does it take to stop a windmill?  Just one.  If it's a dead Indiana bat .  

 

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Posted on October 12, 2011 by Joel Bolstein

Three Counties Tops in Marcellus Gas Production

An article appearing in Directions Magazine notes that Bradford, Susquehanna and Greene Counties have the highest producing Marcellus Shale gas wells in the Commonwealth of Pennsylvania, according to the most recent data.   The same article notes that as of June 30, 2011, there were 1,655 wells reporting gas production, which was a 37% increase over the prior six months.  

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Posted on October 10, 2011 by Joel Bolstein

DRBC Should Use Extra Time to Give Full Consideration to PA's Objections to the Proposed Marcellus Regulations

Natural gas drillers looking to engage in Marcellus Shale exploration and development in northeastern Pennsylvania (mostly Wayne and Pike counties) are going to have to wait a little longer before they can start putting in their applications with the Delaware River Basin Commission.  That's because the DRBC announced in a press release that it is rescheduling its previously announced special meeting to consider the Commission's draft Marcellus regulations.  The meeting had been scheduled for October 21, 2011 but will now take place on November 21, 2011.  The Commission's press release says the additional time is needed to complete the ongoing process and allow for an opportunity to publish the modified draft regulations on the DRBC website two weeks in advance of the expected vote by the commissioners.  The web posting is planned for November 7 and will be for informational purposes only, since comments will not be accepted.   

What's really going on here?  Behind the scenes there is a significant states' rights issue that directly impacts the Commonwealth's sovereignty and its authority to authorize and regulate natural gas drilling.  Fifty years ago, the Commonwealth entered into a Compact with other states and the federal government to protect the water resources of the Delaware River Basin.  Since that time there has been a division of authority in which the DRBC regulates water withdrawals and the Commonwealth regulates just about everything else, including environmental and local land use decisions.  The adoption of the DRBC's proposed regulations could move the Commission into enter areas traditionally left to Pennsylvania, such as regulating well pad site development.   The big question for everyone to ponder is whether that's the appropriate role for DRBC.  Do we really need a second agency of government stepping into areas that have traditionally been handled by the state?   

In his written comments on the draft regulations, PADEP Secretary Krancer asserted that Pennsylvania has the regulatory capacity to protect Pennsylvania's surface waters and groundwater from the risks posed by Marcellus drilling and that the DRBC needs to avoid adopting duplicative and unnecessary regulations.   The problem Pennsylvania faces is it clearly does not control its own economic destiny at DRBC.  Other states that have no Marcellus Shale gas to develop have an equal voice and can vote to place regulatory roadblocks in front of natural gas companies whose activities are limited to Pennsylvania, even if Pennsylvania is firmly opposed to that.  Is that fair?  Landowners in Wayne and Pike County may not think so.  Gas companies paid Pennsylvania landowners over $1.5 billion in 2009 for leasing rights and gas royalties.  Many landowners in Wayne and Pike County have already entered into leases, but DRBC's lack of regulations has effectively placed a moratorium on their ability to derive any benefits from those leases.

Marcellus Shale development represents the most significant economic opportunity in Pennsylvania in decades.  It has created tens of thousands of new jobs during a time of economic recession.  If the regulations that DRBC adopts prevent or hinder that development, there will continue to be controversy, and possibly litigation brought by those who are adversely impacted.   

And where does it stop?  If the effect of the DRBC's regulations is to place restrictions on natural gas development in Pennsylvania, does that mean that Pennsylvania should be able to propose, through DRBC, restrictions on new housing developments in NJ or Delaware?   Is it okay for DRBC to regulate local land use decisions in Pennsylvania but not okay to do so in these other states that don't have any Marcellus Shale gas, but whose land use decisions also impact the basin?   

One would hope that the states would work cooperatively to ensure that the water resources of the basin are protected, doing so mindful of the regulatory capabilities of each state.  If Pennsylvania was incapable of protecting the waters of the basin, then I could understand the need for a second layer of regulatory oversight.  That does not appear to be the case.  Pennsylvania has acted responsibly to development new regulations, including well-casing regulations.  It has anti-degradation regulations to protect  special protection waters.  It has adopted new well fees that have allowed it to hire more well inspectors.  Rather than being driven by emotion, Pennsylvania has approached Marcellus Shale regulation in a thoughtful manner, based on sound science, which balances the rights of landowners and the gas industry against the right that each citizen has to clean air and clean water.   

The Governor, his cabinet, and the members of the General Assembly have to answer to the citizens of the Commonwealth every election.   For Marcellus Shale development and for every other matter that impacts the environment in Pennsylvania, those people are the ones who swear an oath to protect and defend the Pennsylvania Constitution, which includes the right to clean air and clean water, and they are the ones whose decisions are judged by the voters every election.  When those people act to regulate the development of Marcellus Shale, they do so mindful of that oath and that the actions they take must protect the health and environment of Pennsylvania's citizens.  That is the essential states' rights issue here.  I challenge anyone who thinks that Pennsylvania is incapable of protecting its own citizens and its water resources to spend a day at the Rachel Carson Building in Harrisburg and then travel to each of PADEP's regional offices.  The Department's staff is well trained, highly capable and professional.  They spend each and every day protecting Pennsylvania's environment, and they are fully capable of regulating Marcellus Shale development. 

That's not to say that the DRBC's staff isn't equally capable, professional and diligent.   I know many DRBC personnel from having worked with them when I was at PADEP.  There's no question they are equal to PADEP in terms of training, knowledge and their desire to protect the environment.  My point is that the DRBC's staff has traditionally regulated water withdrawals.  They have not, up until now, been looked to for expertise in the area of local land use.  There is no reason why DRBC and PADEP can't work together to protect the citizens of Pennsylvania and the entire basin.  There shouldn't be any friction between the two entities.  One would hope that they'd  work together to ensure that there are no gaps in regulatory coverage.  One would also hope that DRBC is taking this additional time to try to work things out with Pennsylvania, since it is the state in the Compact that is impacted the greatest by DRBC's proposed regulations. 

No disrespect to the other states in the Compact, but at the moment, the center of the universe for Marcellus Shale exploration and development is Pennsylvania.  It is imperative, therefore, that DRBC and its member states work with Pennsylvania as the Commission moves toward finalizing this important regulatory package.   Maybe the best strategy would be to seize any and all common ground and postpone action in areas where full consensus is lacking.   That would be a major step toward fairness and greater regulatory certainty for everyone. 

   

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Posted on October 6, 2011 by Joel Bolstein

Governor Corbett's Proposed Marcellus Shale Impact Fee

I worked closely with Dave Hess when he was Executive Deputy Secretary and I was Special Deputy Secretary under Jim Seif and Governor Ridge.  Dave was responsible for PADEP's environmental digest that provided fresh news about activities at the Department and around the state that concerned environmental protection.  These days, I get into my office and each morning, I log onto Dave's website to read all of the latest articles on environmental topics that effect the Commonwealth.  This morning, Dave provides his own personal and very thoughtful analysis of the Governor's proposed Marcellus Shale Impact fee in an opinion piece entitled "Will we get a Chevy or a Pinto out of the Upcoming Marcellus Shale Debate."    In his analysis, Dave asks and answers the most important questions facing the General Assembly as it reviews and assesses the Governor's proposal.   I'm very much with Dave in spirit on this.  In my mind, in a perfect world, the fee/tax imposed on Marcellus Shale gas extraction would provide a dedicated funding stream for HSCA that is sorely needed.   In addition to addressing local impacts, it would also provide some amount of funding for Growing Greener, Environmental Stewardship and other funds that support brownfield redevelopment, land conservation, stream protection, and other important environmental projects throughout the Commonwealth.   Again, I thank Dave for his thoughtful  analysis and I urge everyone to read it.   

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