The Energy Law Blog : Energy Lawyer & Attorney : Liskow & Lewis Law Firm : Gulf Coast, Offshore

By Carlos J. Moreno:

On November 15, 2010, the U.S. Environmental Protection Agency (EPA) issued a memorandum providing States with guidance on how to address ocean acidification in their Clean Water Act 303(d) impairment listings. 

Section 303(d) of the Clean Water Act requires States to list water bodies that will not meet Water Quality Standards, even after technology-based permit requirements are implemented. States must then identify every contributing source, including contributions from air emissions, and make plans to bring the impaired water body into compliance. This process results in the calculation of a Total Maximum Daily Load (TMDL). There is precedent for TMDLs addressing air emission sources, specifically in relation to atmospheric deposition of mercury. 

The EPA Memo is part of an EPA settlement with the Center for Biological Diversity (CBD), which sued EPA over 303(d) listing of coastal waters for ocean acidification. The CBD had argued that ocean acidification (the decrease in ocean pH caused by increasing CO₂ concentration in the atmosphere) required EPA to modify its Recommended Marine pH Criteria and consider ocean acidification in 303(d) list approvals. The Memo encourages States to list coastal waters for ocean acidification, based on existing Marine pH Water Quality Standards, where there is enough data to support it. For example, Puerto Rico’s 2010 303(d) list already includes five coastal water segments impaired by marine pH. At the same time, the agency recognizes that many States do not yet have enough monitoring data to make such a listing. EPA pledges to issue TMDL-specific guidance related to ocean acidification once there is more information on air deposition of carbon in coastal waters.

The EPA memo only addresses ocean acidification from a 303(d) list perspective and does not modify EPA’s Recommended Marine pH Criteria. It is unclear how these developments may affect, if at all, future EPA Ocean Discharge Criteria evaluations under Section 403 of the Clean Water Act.

For more information on the Memorandum, see:

http://water.epa.gov/lawsregs/lawsguidance/cwa/tmdl/oa_memo_nov2010.cfm 

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By Carlos J. Moreno

On November 8, 2010, the U.S. Environmental Protection Agency (EPA) released its final Subpart W rule to cover petroleum and natural gas facilities under the agency’s Greenhouse Gas (GHG) Reporting Program. The original Subpart W rule for petroleum and natural gas facilities was proposed in March 2010. The industry segments covered by the rule are: offshore petroleum and natural gas production; onshore petroleum and natural gas production; onshore natural gas processing; onshore natural gas transmission compression; underground natural gas storage; liquefied natural gas (LNG) storage, import, and export; and natural gas distribution. The rule requires facilities emitting 25,000 metric tons or more of CO2 equivalents per year to report GHG emissions to EPA annually. Under the final rule, facilities are required to begin collecting emissions data on January 1, 2011, and the first annual report is due by March 31, 2012. Data submitted to EPA must be self-certified by facility reporters and is subject to EPA verification.

The final rule excludes gathering lines and boosting stations from the onshore petroleum and natural gas production source category. The rule also gives onshore petroleum and natural gas production facilities the option to use Best Available Monitoring Methods (BAMM) for specific sources during part of the 2011 calendar year. EPA may consider individual petitions to extend the use of BAMM if there are extreme or unusual circumstances.

One of the more controversial requirements in the proposed rule, the “basin-level” definition of an onshore production facility, remains largely unchanged in the final rule. For onshore production sources, the rule defines “facility” as “all petroleum or natural gas equipment on a well pad or associated with a well pad and CO2 E[nhanced] O[il] R[ecovery] operations that are under common ownership or common control including leased, rented, or contracted activities by an onshore petroleum and natural gas production owner or operator and that are located in a single hydrocarbon basin.” By defining the term “facility” this way, individual production wells that are under the reporting threshold may be pulled in if the owner or operator has additional wells in the same basin. In that case, the emissions from the individual wells would be aggregated and treated as one “facility” for reporting purposes. Although this definition departs from how “facility” is defined in other regulatory programs, EPA asserts that the basin-level definition is necessary to ensure appropriate emissions coverage and meet the intent of the GHG Reporting Program. EPA did include language that explicitly limits the basin-level definition to the GHG Reporting Rule.

Offshore petroleum and natural gas production facilities must include emissions from equipment leaks, venting, and flaring. Emissions from portable equipment and drilling operations (unless drilling is conducted from a production platform) are excluded for this industry segment. Reporting for offshore facilities is still based on the BOEM Gulfwide Emissions Inventory process.

For more information on the final rule, see: www.epa.gov/climatechange/emissions/subpart/w.html

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By Stephen Wiegand

In David v. Mosaic Global Operations, (La. App. 3 Cir. 10/27/10), the Louisiana Third Circuit Court of Appeal reversed the dismissal of land contamination claims brought against the manufacturer of a tick-killing agent used on cattle. The plaintiffs were landowners who alleged that the product had contaminated their land and water with arsenic. The trial court dismissed the plaintiffs’ claims on various grounds. Notably, the trial court determined that because the utility of the cattle dip outweighed the danger-in-fact, the cattle dip was not “dangerous per se” under Louisiana products liability law. Additionally, the trial court concluded that the plaintiffs had no standing to bring the action because they did not own the property when the original contamination occurred and because none of the plaintiffs acquired the right to pursue recovery for such damage from the previous landowners.

On appeal, the court reversed the dismissal and remanded the case to the trial court. The appellate court found that genuine issues of fact existed with regard to whether the cattle dip was dangerous per se. For example, there were no instructions for safe disposal of the dip and no instructions on how to decontaminate land saturated by the product. Further, it was improper for the trial court to determine that because the cattle dip effectively eradicated ticks that the utility necessarily outweighed the danger-in-fact. The trial court failed to undertaken a full and proper analysis of the risk utility test for determining whether the product was dangerous per se.

Most notably, the appellate court found that the plaintiffs had standing to assert their claims under Louisiana products liability law based on their allegations that they had been injured as a result of exposure to high levels of arsenic in the groundwater. In reaching this conclusion, the court found that the defendant’s reliance on LeJeune Bros., Inc. v. Goodrich Petroleum Co., LLC, (La. App. 3 Cir. 11/28/07), 981 So.2d 23, for the proposition that the plaintiffs lacked standing was misplaced. The court reasoned that the Lejeune holding was limited to a specific set of circumstance: the potential acquisition of a cause of action under a pre-existing mineral lease. Because the David plaintiffs’ claims, however, were not based on property law but instead on Louisiana products liability law, the Lejeune reasoning was not applicable. Accordingly, the fact that the plaintiffs did not own the property when the contamination occurred and that none of the plaintiffs acquired the right to pursue recovery from the previous landowners did not necessarily preclude their claims.

The full text of the opinion is available here: www.la3circuit.org/opinions/2010/10/1027/09-1237opi.pdf
 

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By Michael A. Mahone, Jr.

On October 19, 2010, the Louisiana Supreme Court issued its opinion in Marin v. Exxon Mobil Corp., a “legacy” lawsuit involving damage to property located in St. Mary Parish caused by historical oil and gas operations. The 4-3 ruling authored by Justice Victory clarified the law applicable to these lawsuits in a number of significant ways.

First, the Supreme Court found that the plaintiffs’ tort claims were prescribed. The courts below had held that, as a result of contra non valentem, prescription did not begin to run until plaintiffs received expert testing data showing contamination existed on their land and/or had full knowledge of the damage at issue. The Supreme Court, however, reaffirmed existing law and held that prescription begins to run when a plaintiff has sufficient information, which, if pursued, would have put him on notice that further inquiry and investigation was necessary, where such inquiry would have led to knowledge that contamination existed. Based on this standard, the Court found that plaintiffs’ knowledge of apparent damage triggered prescription without regard to when expert testing occurred. In addition, the majority rejected the argument that the plaintiffs were “lulled” into inaction by ExxonMobil’s representations. As for the applicability of the continuing tort doctrine, the Court held that prescription began to run on tort claims when the pits at issue were closed. Further, because plaintiffs’ tort claims were prescribed, plaintiffs were not entitled to recover punitive damages.

The Court also found that some claims for cleanup based upon breach of a mineral lease do not expire while the lease is in effect, given that some restoration obligations on lessees arise when a lease expires. As result, the Court held that some of the breach of lease claims, those brought by the Marin plaintiffs, were not prescribed because the surface lease and mineral lease were still in effect. On the other hand, the Breaux plaintiffs’ claims were prescribed because the lease on their land expired before suit was filed. The Breaux plaintiffs were also aware of damage more than 10 years before suit was filed while the Marin plaintiffs arguably would not have discovered damage until 1994, less than 10 years before suit was filed.

Regarding the restoration claims, the Court held that, in circumstances where a lease has excess wear and tear due to contamination, the remedy is clean up to regulatory standards absent an express lease provision requiring additional remediation. In addition, the majority reversed the lower courts and found that a surface lease on one of the pieces of property at issue in the case did not require cleanup to original condition because a 1994 amendment imposing such a requirement was a novation of an earlier lease and therefore the cleanup obligation did not apply to the contamination at issue because it predated 1994.

Lastly, the majority denied the plaintiffs' claim for groundwater remediation and upheld the lower courts’ finding that remediation was not required since useable groundwater was not at issue. The Court further noted that it was illogical to award money to a landowner to remediate unusable groundwater, with no oversight by Louisiana’s Department of Natural Resources, when the Louisiana statute enacted to protect groundwater did not require such a cleanup.

For more information, see www.lasc.org/opinions/2010/09c2368.opn.pdf

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