Category: Energy

FERC Advances the Ball on Electric Storage, Calls for a Huddle on Distributed Energy Resource Aggregation

Stephen C. Zumbrun

In a move that has excited the renewable energy and electric storage industries, the Federal Energy Regulatory Commission (“FERC”) last month voted to remove barriers to the participation of electric storage resources in the capacity, energy, and ancillary service markets operated by Regional Transmission Organizations (“RTO”) and Independent System Operators (“ISO”). Pursuant to Section 206 of the Federal Power Act, which requires “just and reasonable rates,” FERC amended 18 C.F.R. § 35.28 to require RTOs/ISOs to revise their tariffs to establish market rules that recognize the physical and operational characteristics of electric storage resources and to facilitate their participation in the RTO/ISO markets. In the same order, FERC also punted on a decision for distributed energy resource aggregation reforms and called for a technical conference to further study possible reforms for the RTO/ISO markets. Continue reading “FERC Advances the Ball on Electric Storage, Calls for a Huddle on Distributed Energy Resource Aggregation”

Pipeline Update: Decisions in Pennsylvania and the Fourth Circuit Should Pave Way for Pipeline Development

Frank L. Tamulonis III and Margaret A. Hill

Two recent decisions, one from the Fourth Circuit Court of Appeals and one from Pennsylvania’s Commonwealth Court, rejected arguments from pipeline opponents that, if accepted, would have bolstered local efforts to stymie pipeline development. In Orus Ashby Berkley, et al. v. Mountain Valley Pipeline, LLC, landowners challenged Mountain Valley Pipeline, LLC’s (“MVP”) eminent domain authority for the construction of a Federal Energy Regulatory Commission (“FERC”)-regulated pipeline designed to transport natural gas from West Virginia to Virginia. See 2017 U.S. Dist. LEXIS 202907 (W.D. Va. Dec. 11, 2017). Landowners launched a challenge against MVP and FERC, arguing that Congress’s delegation of eminent domain authority to FERC and pipeline developers under the Natural Gas Act (“NGA”) was overly broad and unconstitutional, and that FERC’s standard to determine whether land is being taken for “public use” does not pass muster under the Fifth Amendment. On December 11, 2017, the District Court ruled that the court lacked jurisdiction to consider the constitutional arguments, reasoning that the NGA makes clear that any challenges to FERC orders must be first reheard by FERC, and then can only be challenged in a federal court of appeals. Id. The plaintiff landowners appealed that decision, which is still pending.

Continue reading “Pipeline Update: Decisions in Pennsylvania and the Fourth Circuit Should Pave Way for Pipeline Development”

Pennsylvania Supreme Court Improperly Expands the Definition of “Commonwealth” in Article I Section 27 of the Constitution to Include Local Governments

Jeremy A. Mercer

The Pennsylvania Supreme Court recently expanded the definition of “Commonwealth” in the Pennsylvania Constitution to include local governments but without any reasoned support. See Pa. Envtl. Def. Found. v. Commw., 161 A.3d 911, 931 n.23 (Pa. 2017) (“PEDF”). In a footnote, which arguably is dicta, the Supreme Court said that the trustee referenced in the “Natural Resources and the Public Estate” provision of Pennsylvania’s Constitution (Article I, Section 27) includes local governments despite the Constitution’s express selection of the “Commonwealth” as the trustee. Continue reading “Pennsylvania Supreme Court Improperly Expands the Definition of “Commonwealth” in Article I Section 27 of the Constitution to Include Local Governments”

The Continued Growth of Drones in the Energy Sector

Sean T. Pribyl

The energy industry continues to see a marked growth in the use of drones as they provide cost efficient and time-saving services. For example, drones are being utilized as a tool to accurately inspect oil and gas pipelines, survey large property sites and power lines, and monitor oil wells. The oil and gas industry is also using drones for inspection and surveillance of drilling rigs in offshore operations. And, drones can also be used to check pipelines to identify pipe failures or detect methane leaks, conduct integrity surveys of power and utility industry cables and towers, or inspect onshore and offshore wind turbine farms. Continue reading “The Continued Growth of Drones in the Energy Sector”

Department of Energy Files NOPR Providing for Guaranteed Profits for Nuclear and Coal Plants—Only.

Michael L. Krancer and Frederick M. Lowther

The Department of Energy (“DOE”) last Friday rolled out a Notice of Proposed Rulemaking (“NOPR”) with the Federal Energy Regulatory Commission (“FERC”) that amounts to requiring subsidies for nuclear plants and coal plants. The NOPR is made under the authority of Section 403 of the Department of Energy Organization Act, which allows the DOE Secretary to propose rules to FERC.

If FERC takes the action requested by DOE it would be a sea change in how competitive electricity markets work. Some would say the proposal scraps competitive wholesale electricity markets. See: www.energy.gov/articles/secretary-perry-urges-ferc-take-swift-action-address-threats-grid-resiliency.   Continue reading “Department of Energy Files NOPR Providing for Guaranteed Profits for Nuclear and Coal Plants—Only.”

FERC Responds Quickly and Decisively to D.C. Circuit Remand in Sabal Trail Matter on Downstream GHG Analysis

Michael L. Krancer, Margaret A. Hill, and Stephen C. Zumbrun

The Federal Energy Regulatory Commission (“FERC”) weighed in rapidly and decisively on the Sabal Trail (a/k/a Southeast Market Pipelines or “SMP Project”) case that the D.C. Circuit remanded to it on August 22, 2017.[1] As previously discussed in greater detail by Frederick M. Lowther and Frank Tamulonis, the D.C. Circuit ruled that, in approving the SMP Project, FERC did not but should have considered potential “downstream” greenhouse gas (“GHG”) emissions from power plants burning natural gas supplied by the pipeline when preparing the final environmental impact statement (“FEIS”) pursuant to the National Environmental Policy Act (“NEPA”). In vacating and remanding to FERC, the D.C. Circuit concluded that “at a minimum, FERC should have estimated the amount of power plant carbon emissions that the pipelines will make possible” or if FERC was unable to quantify this amount, FERC should have “explained more specifically why it could not have done so.” Continue reading “FERC Responds Quickly and Decisively to D.C. Circuit Remand in Sabal Trail Matter on Downstream GHG Analysis”

It’s Catching On—Hydraulic Fracturing Is Not an Abnormally Dangerous Activity in Pennsylvania

Jeremy A. Mercer, Amy L. Barrette, and Elizabeth E. Klingensmith

Yes, a federal court made the determination in 2014 and 2015 that hydraulic fracturing associated with unconventional oil and gas development in Pennsylvania is not an abnormally dangerous activity that is subject to strict liability. See Ely v. Cabot Oil & Gas Corp., 38 F. Supp. 3d 518 (M.D. Pa. 2014) (Report & Recommendation issued in January; adopted in April); see also Kamuck v. Shell Energy Holdings GP, LLC, Civil No. 4:11-CV-1425, 2015 U.S. Dist. LEXIS 37538 (M.D. Pa. March 25, 2015) (concluding hydraulic fracturing is not abnormally dangerous or subject to strict liability). In the Ely decision, the court undertook an extensive review of the factual record developed after years of discovery and concluded that there simply was no support for a view that hydraulic fracturing was an abnormally dangerous activity. Now, a Pennsylvania appellate court has reached the same conclusion—twice. Continue reading “It’s Catching On—Hydraulic Fracturing Is Not an Abnormally Dangerous Activity in Pennsylvania”

FERC Slaps Down State Overreach on Federal Jurisdictional Pipelines—Now Congress Needs to Act, Too

Michael L. Krancer, Frederick M. Lowther, and Margaret Anne Hill

FERC issued a key and very welcome decision on September 15, 2017, when it held that New York, by its passive aggressive handling of a Clean Water Act (“CWA”) §401 certification, had waived its authority to issue the certification. FERC here slaps down on States treating CWA certifications as political footballs to veto pipeline infrastructure projects without regard to law or facts but on politics and pressure by ideological anti-natural gas interest groups. Continue reading “FERC Slaps Down State Overreach on Federal Jurisdictional Pipelines—Now Congress Needs to Act, Too”

Under Scrutiny: PA Superior Court Splits from Own Precedent and Allows Unilateral Oil & Gas Lease Severance in Montgomery

Jeremy A. Mercer

Lessees of oil and gas leases in Pennsylvania who have been assigned or are assigning less than all of the geologic strata under lease should give careful attention to whether those leases have been severed vertically by unilateral actions. A lease may not be held by production if that production is in a geologic strata not included in the assignment of rights. This article explains a recent decision on the issue.

By its 2-to-1 non-precedential decision that an oil and gas lease unilaterally can be severed horizontally and vertically, the Superior Court of Pennsylvania appears to have split from its own published precedent and created new law in Pennsylvania—leaving lessees in limbo, possibly giving unscrupulous lessors a unilateral tool to terminate oil and gas leases, and ultimately harming both lessors and lessees in the process. Continue reading “Under Scrutiny: PA Superior Court Splits from Own Precedent and Allows Unilateral Oil & Gas Lease Severance in Montgomery“

Not So Fast—Your Oil and Gas Lease Primary Term May Be Longer Than You Thought

Jeremy A. Mercer, Amy L. Barrette, and Elizabeth E. Klingensmith

Under Pennsylvania law, a defined primary term of an oil and gas lease may actually be longer than that stated term of year. In a September 12, 2017, unreported decision, the Pennsylvania Superior Court remanded a case to the trial court for consideration of whether a “limitation of forfeiture” provision, which required notice and opportunity to cure, extended the primary term by the length of the cure period. See L.D. Oil & Gas Enters., Inc. v. Loop, No. 1883 WDA 2016, 2017 WL 4001655 (Pa. Super. Ct. Sep. 12, 2017). In overturning the trial court’s grant of judgment on the pleadings to the lessor, the Superior Court returned the case to allow the trial court to take parol evidence of the impact of the “limitation of forfeiture” provision on the length of the primary term. Continue reading “Not So Fast—Your Oil and Gas Lease Primary Term May Be Longer Than You Thought”

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