Sidley Shale and Hydraulic Fracturing Report

Vol. 6, No. 30

Topics discussed in this week’s Report include:

  • Industry seeks rehearing en banc of decision vacating 90-day stay of methane rule.
  • Senate confirmations will restore FERC quorum.
  • Assistant Attorney General for Environment and Natural Resources Division advances.
  • Landowners challenge FERC power of eminent domain.
  • UK authorizes first commercial shale gas well.

Industry seeks rehearing en banc of decision vacating 90-day stay of methane rule. Industry groups petitioned the full D.C. Circuit to rehear a panel decision vacating the U.S. Environmental Protection Agency’s (EPA) 90-day stay of methane emission regulations for new oil and gas sources. The petition argued that EPA’s stay was not a final agency action subject to judicial review, the reasoning adopted in a dissenting opinion from the July 3 D.C. Circuit’s 2-1 decision vacating the stay. The majority opinion found that the stay was reviewable and implemented without proper legal authority. Environmental groups and several states filed a brief in response, opposing the petition for rehearing. Although EPA successfully petitioned the court to delay issuing the mandate until July 31, it declined to file its own petition for rehearing.

Senate confirmations will restore FERC quorum. The Senate confirmed Neil Chatterjee and Robert Powelson as Commissioners for the Federal Energy Regulatory Commission (FERC). The five-member commission requires three members for a quorum but its third Commissioner, Norman Bay, stepped down in February. Prior to his departure, FERC issued an order delegating some authority to its staff to continue operations, but major decisions can be made only by the commission itself. Commissioner Colette Honorable left in June. Chatterjee and Powelson now join sitting Commissioner Cheryl LeFleur to restore a quorum, allowing FERC to rule on a lengthy backlog of applications for natural gas pipeline projects. The President also nominated Kevin McIntyre and Richard Click to fill the remaining two positions. The Senate Committee on Energy and Natural Resources is scheduled to hold confirmation hearings on Sept. 7.

Assistant Attorney General for Environment and Natural Resources Division advances. The Senate Judiciary Committee voted in favor of the nomination of Jeffrey Clark to serve as the Assistant Attorney General for the Department of Justice’s Environment and Natural Resources Division (ENRD) on an 11-9 party line vote. The nomination now goes to the full Senate, although no vote has been scheduled. The Assistant Attorney General represents EPA and the Department of the Interior in litigation and supervises federal enforcement of environmental laws. Clark spurred opposition based on criticisms of greenhouse gas regulations and his representation of BP PLC during the Deepwater Horizon litigation. He previously served as the Deputy Assistant Attorney General for ENRD during the George W. Bush administration.

Landowners challenge FERC power of eminent domain. A group of West Virginia landowners filed a constitutional challenge to FERC’s authority to grant interstate pipeline companies the power of eminent domain. The landowners claim their property is in the path of the Mountain Valley pipeline, which is designed to transport natural gas from northern West Virginia into southern Virginia. Their suit seeks a preliminary injunction blocking FERC from granting eminent domain authority to pipeline projects that received a certificate of public convenience and necessity, arguing that FERC never considers whether the pipelines serve a public use. They also claim that Congress never established any intelligible principles to guide FERC in how it grants the power. A similar case is pending in Ohio where landowners claim that a pipeline transporting natural gas for export cannot serve a public use.

UK authorizes first commercial shale gas well. The UK government has cleared Cuadrilla Resources to begin drilling the first commercial shale gas well in the United Kingdom near Blackpool on the Irish Sea. The UK estimates that it holds over 1,300 trillion cubic feet of gas, concentrated in northern England and the Midlands. However, testing by Cuadrilla in 2011 led to a minor earthquake, shutting down operations and invigorating protestors opposed to the use of hydraulic fracturing to develop the resource. Since then, the UK government established a permitting system with significant leeway for regulation by local governments. Scotland and Wales banned hydraulic fracturing and many counties in England oppose it. Several protestors congregated at the Blackpool drilling site attempting to block the entrance. Third Energy was also granted a permit to develop a site in North Yorkshire in the near future, and Ineos and IGas Energy were authorized to begin exploration activities.