Yesterday, 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.
On May 21, 2020, the Federal Energy Regulatory Commission (“Commission”) issued a Policy Statement on Determining Return on Equity for Natural Gas and Oil Pipelines in Docket No. PL19-4-000, that revises its policy for analyzing the return on equity (“ROE”) for interstate natural gas and oil pipelines based on the methodology established for analyzing electric utility ROEs in Opinion Nos. 569 and 569-A, with certain exceptions to account for the “statutory, operational, organizational and competitive differences among the industries.” Specifically, the Commission stated that it will: (i) determine just and reasonable natural gas and oil pipeline ROEs by averaging the results of the Discounted Cash Flow (“DCF”) model and the Capital Asset Pricing Model (“CAPM”) analyses, giving equal weight to both models; (ii) retain the existing two-thirds/one-third weighting for the short-term and long-term growth projections in the DCF model; (iii) exclude the Risk Premium model as modified in Opinion No. 569-A; (iv) consider using Value Line data as the source of the short-term growth projection in the CAPM; (v) consider proposals to include Canadian companies in pipeline proxy groups while continuing to address outliers in pipeline proxy groups on a case-by-case basis, refraining from applying specific outlier tests; and (vi) encourage, or perhaps require, oil pipelines to file updated FERC Form No. 6, page 700 data for 2019 to reflect the revised ROE policy established in the Policy Statement. Importantly, parties are not permitted to seek rehearing of the Policy Statement because it is only a statement issued to provide guidance and regulatory certainty.
Yesterday, the Railroad Commission of Texas 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.
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 delayed a vote on oil production cuts at an open meeting held yesterday. Although no decision on proration was made, the establishment of a Blue Ribbon Task Force for Oil Economic Recovery 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. 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.
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 to consider curtailing oil production, an extraordinary remedy that has not been employed since the 1970s. 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. 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.
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.
Even as COVID-19 is altering daily routines and operations within the federal agencies, all indications are that natural resource agencies continue to work on agency priorities and to advance the regulatory agenda. Agencies including the Environmental Protection Agency (EPA), US Army Corps of Engineers (Corps), US Fish & Wildlife Service (FWS), Natural Marine Fisheries Service (NMFS), and Council on Environmental Quality (CEQ) have not indicated any plans, at this point, to delay their efforts on the Administration’s key initiatives. Public interest groups and organizations representing state and local officials have asked the White House to freeze rulemakings that are not directly related to the COVID-19 response effort. EPA has responded to these requests by noting that it continues to be open for business and is fully functioning.
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.
On March 20, 2020, the Pipeline and Hazardous Materials Safety Administration (PHMSA) Office of Pipeline Safety issued a Notice to gas and hazardous liquid pipeline, underground natural gas storage and liquefied natural gas (LNG) facility operators, as well as PHMSA state partners, explaining that it will stay enforcement of certain PHMSA pipeline safety requirements in light of the President’s March 13, 2020, Declaration of National Emergency relating to COVID-19. The Notice acknowledges that operators may have limited personnel resources in light of the COVID-19 National Emergency and may need to take actions to meet ongoing operational and maintenance needs in a manner that “may not fully meet federal operator qualification (OQ), control room management (CRM), and employment drug testing requirements.”
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.