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

By Stephen Wiegand

EPA recently announced its position regarding the timing of the regulation of greenhouse gases under the Clean Air Act’s Prevention of Significant Deterioration (PSD) Program.

A PSD permit is required before a new industrial facility can be built or an existing facility can be modified in a way that significantly increases pollutant emissions. In Massachusetts v. EPA, 549 U.S. 497 (2007), the Supreme Court held that greenhouse gases are “pollutants” under the Clean Air Act but left open the specific question of whether greenhouse gases could be regulated under the PSD Program. In December 2008, then-EPA Administrator Stephen Johnson issued a memorandum indicating that the PSD Program applies to pollutants that are subject to either an actual provision in the Clean Air Act or a regulation adopted by the EPA under the Act which requires actual control of emissions of that pollutant. However, pollutants such as carbon dioxide, for which EPA regulations only require monitoring and reporting, are not subject to PSD permitting.

In October 2009, new EPA Administrator Lisa Jackson announced that EPA would reconsider and accept public comment on the Johnson memorandum. On March 29, 2010, EPA announced its final decision regarding the reconsideration. Specifically, EPA determined that PSD permitting is not triggered for pollutants such as greenhouse gases until a final nationwide rule requires actual control of emissions of the pollutant. Thus, in the case of greenhouse gases, EPA announced that the PSD requirements will likely not be triggered until January 2, 2011, the date upon which EPA’s rule limiting the greenhouse gas emissions for cars and light trucks is expected to take effect.

For more information on the announcement, see the EPA New Source Review.
 

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By Stepehen Wiegand

In October 2009, EPA promulgated the Mandatory Reporting of Greenhouse Gases Rule. This rule required reporting of greenhouse gas emissions from a number of large sources including suppliers of fossil fuels or industrial greenhouse gases, manufacturers of vehicles and engines, and certain facilities that emit 25,000 metric tons or more per year of greenhouse gas emissions.

On March 22, 2010, EPA announced proposed rules to amend the Mandatory Reporting of Greenhouse Gases Rule to cover additional sources including petroleum and natural gas facilities emitting 25,000 metric tons or more of greenhouse gas emissions. Covered facilities would include onshore petroleum and natural gas production, offshore petroleum and natural gas production, onshore natural gas processing, natural gas transmission, underground natural gas storage, liquefied natural gas storage, liquefied natural gas import and export facilities, and natural gas distribution facilities. The proposed rules would require the reporting of fugitive and vented methane and carbon dioxide emissions, including carbon dioxide, methane, and nitrous oxide combustion emissions from flares.

In addition to the oil and natural gas sector, EPA is also proposing to collect emissions data from industries that emit fluorinated gases and from facilities that inject and store carbon dioxide underground for the purpose of geological sequestration or enhanced oil and natural gas recovery.

Under the proposed rules, the newly covered sources are required to begin collecting emissions data on January 1, 2011 and are required to submit the first annual reports to EPA on March 31, 2012.

The public comment period on the proposed rules will extend for 60 days after EPA’s publication of the proposed rules in the Federal Register. Additionally, two public hearings are currently scheduled on the proposed rules – April 19, 2010 in Arlington, Va. and April 20, 2010 in Washington, D.C.

For more information on the proposed rules, see:www.epa.gov/climatechange/emissions/proposedrule.html

 

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In early 2010, the Louisiana Office of Conservation published in the Louisiana Register a Notice of Intent to amend Statewide Order 29-B, the regulation governing the storage, treatment, and disposal of exploration and production waste at oilfield sites. The proposed amendments provide specific procedures for the evaluation and remediation of groundwater conditions and potential sources that may have contributed to those conditions at oil and gas exploration and production sites. Specifically, the amendments provide that agency submissions made pursuant to Statewide Order 29-B must demonstrate compliance with the conditions set forth in the Louisiana Department of Natural Resources Exploration and Production Site Evaluation and Remediation Procedures Manual (SERP Manual). The SERP Manual, which will become effective upon final promulgation of the amendments, will include site evaluation and remediation protocol and procedures established in conformance with the latest revision of the Louisiana Department of Environmental Quality’s Risk Evaluation/Corrective Action Program (RECAP) document.

The public hearing for the proposed amendments will take place on April 5, 2010 at 9:00 a.m. in Baton Rouge, Louisiana. Written comments will be accepted until 4:30 p.m. on April 12, 2010.

To view the proposed amendments, go to:
http://www.doa.louisiana.gov/osr/reg/1002/1002.pdf
 

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By Stephen Wiegand

On December 15, 2009, EPA published in the Federal Register its final endangerment findings with respect to greenhouse gases. See 74 Fed. Reg. 66496 (Dec. 15, 2009) [http://www.epa.gov/climatechange/endangerment/downloads/Federal_Register-EPA-HQ-OAR-2009-0171-Dec.15-09.pdf]. This rulemaking is a response to Massachusetts v. EPA, 549 U.S. 497 (2007), in which the Supreme Court held that greenhouse gases were “pollutants” under the Clean Air Act and ordered EPA to determine whether greenhouse gases “may reasonably be anticipated to endanger public health or welfare” under Section 202 of the Act.
In its findings published on December 15, EPA concluded that six greenhouse gases taken in combination may reasonably be anticipated to endanger public health and public welfare. These gases include carbon dioxide, methane, nitrous oxide, hydroflourocarbons, perflourocarbons, and sulfur hexafluoride. In reaching these conclusions, EPA considered the extent to which elevated concentrations of greenhouse gases may cause changes in air quality, increases in temperature, changes in extreme weather events, increases in food- and water-borne pathogens, and changes in aeroallergens. EPA relied on assessments by the U.S. Global Climate Research Program, the Intergovernmental Panel on Climate Change, and the National Research Council.
While these findings do not in themselves impose any requirements on regulated entities, they are a prerequisite to future regulation of greenhouse gases under existing Clean Air Act authority. Many view the existing Clean Air Act as ill-suited to the regulation of greenhouse gases. This endangerment finding, along with EPA’s proposal to regulate greenhouse gases under existing Clean Air Act authority, see EPA Proposed PSD and Title V Greenhouse Gas Tailoring Rule [http://www.hss.energy.gov/nuclearsafety/env/rules/74/74fr55292.pdf], is being used as a forcing function to accelerate the passage of stand-alone greenhouse gas legislation by Congress.

 

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By Matt Simone

In Broussard v. Hilcorp Energy Co., the Louisiana Supreme Court held that a plaintiff is not required, pursuant to Article 136 of the Louisiana Mineral Code, to provide a defendant with pre-suit written notice and an opportunity to perform prior to a judicial demand for property restoration related to oil and gas production contamination. Article 136 mandates these requirements for claims “arising from drainage of the property leased or from any other claim that the lessee has failed to develop and operate the property leased as a prudent operator….” The defendants argued that Article 136’s requirements should apply to any claim alleging that a lessee failed to act as a prudent operator. The court rejected the defendants’ position noting that the plain language of Article 136 is limited to claims regarding drainage of property or failure to develop and operate leased property. Since this case essentially involved a remediation/restoration claim, the court found that Article 136’s pre-suit requirements were inapplicable.

To read the case, go to http://www.lasc.org/news_releases/2009/2009-064.asp
 

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By April Rolen-Ogden

In Comer v. Murphy Oil, the Fifth Circuit left open the possibility that the oil and gas industry may be privately sued for alleged contributions to global warming. In this putative class action lawsuit, Plaintiffs claimed that the defendants’ operation of energy, fossil fuels, and chemical industries in the United States contributed to global warming. Plaintiffs further claimed that those contributions caused a rise in sea levels and added to the devastation wreaked by Hurricane Katrina, which destroyed Plaintiffs’ property and some public property. The Fifth Circuit concluded that Plaintiffs had standing for their nuisance, trespass and negligence claims, which were premised on the alleged causal link between global warming and Hurricane Katrina’s destruction of Plaintiffs’ property. The Fifth Circuit also held these claims were justiciable and thus ripe for determination by a court. Based on these findings, the Fifth Circuit reversed the District Court, which had dismissed Plaintiffs’ claims, and remanded for further proceedings.

To read further, please go to http://www.ca5.uscourts.gov/opinions/pub/07/07-60756-CV0.wpd.pdf
 

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By Stephen Weigand

The Shreveport Times reports that federal authorities have added additional permit requirements for companies who pump water from the Red River for hydraulic fracturing of the Haynesville Shale. The requirements were added after the U.S. Fish and Wildlife Service raised concerns that the pumping process could be disturbing the habitat of three federally endangered and threatened Red River species. These species include the pallid sturgeon as well as a bird known as the interior least tern and a plant known as earth fruit. According to the Times, one of the new requirements is that a pump not be placed within 600 feet of an active least tern colony. This requirement effectively forces companies to survey the area before submitting a permit application. Additionally, the Times reports that the Fish and Wildlife Service is also requesting the use of smaller pipes and a diffuser to eliminate the possibility of sucking in fish during the pumping process.
 

For the full story, see http://www.shreveporttimes.com/article/20090921/NEWS01/909200332
 

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By Jessica Gladney

In Thomas v. Mobil Oil Corp., No. 2008-0541 (La. App. 4 Cir. 3/31/09), the Fourth Circuit affirmed the trial court’s denial of class certification against the defendants, Exxon Mobil Corporation and Chalmette Refining, L.L.C. The proposed class consisted of approximately 7,000 claimants from Algiers and St. Bernard, and the plaintiffs alleged personal injury and property damages from emissions of petrochemical facilities operated by the defendants over a fourteen-year period. The claims forms submitted did not specify dates that claimants allegedly suffered from any of the alleged damages, and the trial court concluded that the claims among the purported class members varied so greatly that the putative class representatives could not adequately represent the class. The Fourth Circuit recognized that the Louisiana Supreme Court’s holding in Ford v. Murphy Oil, U.S.A., Inc., 1996-2913 (La. 9/9/97), 703 So. 2d 542 was controlling and affirmed the trial court’s holding denying class certification. The court noted that the wide variances in geographic location, claimed exposure, and types and degree of damages claimed by the putative class members demonstrated that the claims were too individualized and the certification of the class should therefore be denied.

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The Environmental Protection Agency announced several updates to its Audit Policy this month that promise to make the system more convenient for users and more forgiving for new owners of regulated facilities. 

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           In 1997, DuPont and ConocoPhillips sued the United States pursuant to the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), alleging entitlement to reimbursement of costs expended cleaning up hazardous waste from fifteen sites previously owned by the government during World Wars I and II, and the Korean War.  E.I. DuPont, et al v. USA, et al, United States District Court for the District of New Jersey, Docket No. 2:97-CV-00487-WJM-MF.  The decade-long dispute finally ended in a compromise wherein the government agreed to pay DuPont $51M and ConocoPhillips $1M for past and future clean-up costs.

 

            The settlement comes one year after the Supreme Court decision in U.S. v. Atlantic Research Corp. in which the Court established that a potentially responsible party can sue other responsible parties under Section 107 of CERCLA to recover voluntary clean-up costs.  The Third Circuit had previously held that DuPont could not recover under CERCLA.  Following the High Court’s decision in Atlantic Research, however, the Third Circuit remanded the case to the district court for reconsideration.  This settlement agreement was promoted by the Atlantic Research decision. 

 

            Under the terms of the settlement agreement, DuPont agreed to indemnify the United States up to $51M against any claims, past and future, arising from fourteen of the sites, and ConocoPhillips agreed to indemnity up to $1M for the remaining site.  The government, DuPont, and ConocoPhillips have admitted no liability in connection with the settlement. 

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By Clare Bienvenu

Pursuant to Act 547, passed by the Louisiana Legislature in the 2008 Regular Session and recently signed into law by the Governor, the Louisiana Department of Environmental Quality (LDEQ) may now require Louisiana facilities exempt from air permitting requirements to maintain records showing that the actual or potential emissions of the facility meet the exemption.  Under existing Louisiana law, a facility is exempt from air permitting requirements if its potential emissions are: (1) less than 5 tpy (tons per year) for each regulated air pollutant; (2) less than 15 tpy for all regulated pollutants combined; and (3) less than the minimum emission rate for each toxic air pollutant listed in LAC 33:III.5112, Table 51.1.  See La. R.S. 30:2054(B)(2)(b)(ix) (as enacted by Act 918 in 2003).  The original exemption did not authorize LDEQ to mandate the maintenance of emissions records for exempt sources.  Act 547 additionally defines “potential emissions” as “the emissions the facility is capable of emitting considering all control measures in place, utilized and properly maintained and historical practices, including hours of operation and number of employees at the facility.”  Act 547 itself does not require exempt facilities to maintain records, but allows LDEQ to promulgate standards or regulations to create such a requirement.  As such, exempt facilities in Louisiana should be on the lookout for the implementing rule from LDEQ. 

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By Claire Bienvenu

On May 23, 2008, the Ninth Circuit vacated EPA’s rule exempting discharges of sediment resulting from oil and gas construction activities from National Pollutant Discharge Elimination System (NPDES) permit requirements. NRDC v. EPA, No. 06-73217 (9th Cir. 5/23/08).  The Ninth Circuit found EPA’s rule, which was a codification of a recent exemption added to the Clean Water Act (CWA or the Act), to be an impermissible interpretation of the Act. Unless overturned, the court’s decision to vacate the regulation imposes an unexpected obligation on the oil and gas industry to obtain NPDES permits for all construction activities disturbing land area greater than or equal to one acre in size. 

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 In Germany v. ConocoPhillips Co., 2007-1145 (La. App. 3 Cir. 3/5/08), -- So. 2d --,  the Third Circuit upheld the trial court’s ruling that under Act 312 a single trial of all issues should be held prior to referring a case to the Louisiana Department of Natural Resources (“LDNR”) for the development of a remediation plan. 

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By Kindall James

The issue of whether an individual employee is personally liable for oilfield environmental damages was recently addressed in Kling Realty Co., Inc. v. Texaco, Inc, 2007 WL 81665 (W.D. La. 2007).  The plaintiff mineral lessors claimed that their property had been damaged by oilfield operations, and sued not only the operator, but also a production supervisor.  The plaintiffs argued that the supervisor was individually liable because in his supervisory capacity he had the duty to prevent or limit hazardous pollution affecting the property.  Finding that the plaintiff failed to present any evidence that the supervisor’s responsibilities entailed more than general administrative responsibilities or that the supervisor knew or should have known of any ongoing activities hazardous to the property, the court held that the plaintiffs could not possibly establish that the supervisor was personally liable for their damages, and dismissed the plaintiffs’ claims against him. 

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In Duplantier v. BP Amoco, et al., the Louisiana Fourth Circuit Court of Appeal held that under Act 312 of 2006 (La. R.S. 30:29), there should be a single trial of both the regulatory remediation covered by the statute and the plaintiffs' separate damages claims (if any).  The Louisiana Supreme Court has now denied a writ application with respect to that opinion.  To view the Fourth Circuit's decision, click here.  Act 312, which became effective June 8, 2006, requires involvement of the Louisiana Department of Natural Resources (DNR) in litigation alleging environmental contamination, including submission of any remediation plan to DNR for approval and the deposit of remediation funds into the registry of the court to be spent on remediation, rather than payment of those funds to the plaintiffs.  However, the statute also preserves the plaintiffs' right to pursue any private cause of action - for example, a right under an express lease provision to a higher standard of clean-up.  Under the Duplantier decision, both the statutory remediation and any private claims will be addressed in a single trial before any plan is submitted to DNR.

 

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By Joe Giarrusso: 

In Louisiana, a lawsuit is generally deemed abandoned when the parties fail to take any step in its prosecution for three years.  This rule is operative without any formal order.  La. Code Civ. P. art 561.  However, Act 361 of 2007 extended the period for abandonment to five years where (1) the action was initiated prior to August 26, 2005, and was not previously declared abandoned under the general three year period, and (2) the party proves that the failure to take a step in the prosecution or defense of the suit was caused by or was a direct result of Hurricanes Katrina or Rita.  The revision became effective July 9, 2007.   Click here to read the Act.

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By Drew Spaniol

The Eastern District of Louisiana recently held that the Oil Pollution Liability and Compensation Act (OPA), 33 U.S.C. § 2701 et seq., does not preclude a plaintiff from bringing state law claims for additional liability or compensation.  Isla Corp. v. Sundown Energy, LP, 2007 WL 1240212 (E.D. La. 4/27/07).  The case concerned oil tanks on a drill site owned and operated by Sundown, which were ruptured in Hurricane Katrina. The plaintiffs asserted claims under both OPA and state law.  Seeking to avoid the additional liability of the state law claims, Sundown argued in a motion to dismiss that OPA provided plaintiffs’ exclusive remedy. The court held, however, that while OPA provides the sole federal remedy for oil pollution claims, OPA expressly allows states to provide for "any additional liability or requirements with respect to the discharge of oil or other pollution by oil within such state."  Because of this provision, the court denied Sundown's motion to dismiss and allowed plaintiff's state law claims to go forward. 

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By Robert E. Holden and Monica Derbes Gibson

 

The Environmental Protection Agency (EPA) and U.S. Army Corps of Engineers have released long-awaited guidance addressing jurisdictional determinations under the Clean Water Act (CWA) in the wake of Rapanos v. United States, 126 S. Ct. 2208 (2006).  There is general agreement that Rapanos limited the reach of the CWA, but the Court did not articulate a clear standard for determining whether or not a wetland or body of water is covered by the CWA.  In the guidance, EPA and the Corps explain how they will approach jurisdictional determinations in light of the Rapanos decision.  Click here to view the guidance.  The agencies will take public comments on implementation of the guidance until December 5, 2007.  Comments may be submitted online at  www.regulations.gov, to Docket No. EPA-HQ-OW-2007-0282, or by email to OW-Docket@epa.gov, with the docket number in the “subject” line. 

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In Duplantier v. BP Amoco, et al., the Louisiana Fourth Circuit court of appeal recently issued a ruling on trial court procedure under Act 312 of 2006, La. R.S. 30:29.  Click here to view the opinion.  Act 312, which became effective June 8, 2006, requires involvement of the Louisiana Department of Natural Resources (DNR) in litigation alleging environmental contamination, including submission of any remediation plan to DNR for approval, and the deposit of remediation funds into the registry of the court for expenditure on actual remediation rather than payment of those funds to the plaintiffs.  For more on Act 312, click on this blog's "Environmental" archive.

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By Dana M. Douglas

On April 20, 2007, the Louisiana Department of Natural Resources (“DNR”) issued regulations establishing procedures for agency hearings and the submission and approval of remediation plans under Act 312 of 2006.  Act 312, which enacted La. R.S. 30:29, made sweeping changes to the procedures for litigation involving potential environmental damage to oilfield sites, in order to ensure that remediation awards are actually expended on remediation.  To view the new regulations, which are codified at La. Admin. Code tit. 43, § XIX, Ch. 6, click here.  Most significantly, the regulations establish that Statewide Order 29-B is the basis upon which the agency will evaluate such remediation plans.

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As previously reported, the trial court in M. J . Farms v. ExxonMobil held Act 312 of 2006, governing remediation of oilfield sites, to be unconstitutional.  The Louisiana Supreme Court has now held that the plaintiff did not properly raise the issue of constitutionality at the trial court level, and remanded to allow the plaintiff to specifically plead the unconstitutionality of the act.  M. J. Farms, Ltd. v ExxonMobil Corp.,  No. 07-CA-0450 (La. 4/27/07).  The Court noted that appellate jurisdiction was not invoked because the issue was first raised in a memorandum rather than a pleading.

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By:  Clare Bienvenu

On January 3, 2007, EPA promulgated a final rule amending 40 C.F.R. part 63, Subpart HH, “NESHAP (National Emission Standards for Hazardous Air Pollutants) for Source Categories from Oil and Natural Gas Production Facilities” to include the regulation of area sources. See 72 Fed.Reg. 26 (January 3, 2007).  The final rule is posted here.  Subpart HH has historically regulated various emissions points for major sources of air toxics in the oil and natural gas production industry. This amendment adds the regulation of benzene emissions from tetraethylene glycol (TEG) dehydration units at minor sources. The significance of this new rule is that all TEG dehydration units in the oil and gas production industry are now subject to Subpart HH unless they meet the exemption criteria provided in the regulations.  While the amendment adds the regulation of area sources, it does not alter any of the major source standards. Accordingly, any TEG dehydration unit already regulated under Subpart HH’s major source standards must continue to comply with those requirements. 

This article will first discuss control requirements for area source TEG dehydration units, which vary based on whether the unit is located within a high population density area, referred to as an “UA plus offset or UC.” The article will next discuss applicable compliance dates, which vary based on the date the TEG dehydration unit was constructed or modified and whether the unit is located in an “Urban 1 County” and/or a high population density area. Notably, this rule is immediately effective for any source constructed or modified on or after July 8, 2005 and for certain sources constructed or modified on or after February 6, 1998.

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On January 30, 2007, a class action settlement was approved in Turner v. Murphy Oil U.S.A., Inc., 05-4206 (E.D. La).  The Turner case asserted claims for property damage resulting from a release of oil from tanks located at Murphy's Meraux, Louisiana refinery after Hurricane Katrina.  The $330 million settlement includes a $55 million buyout program, a $120 million compensation program, a credit for $83 million in compensation already paid, and a $71 million remediation program (including credit for $51 million already expended for remediation).  In addition, Murphy agreed to pay plaintiffs' attorneys fees, which the court set at $33.7 million.  The Governor of Louisiana, Kathleen Blanco, testified in favor of the settlment at the Fairness Hearing.  To view the Court's order approving the settlement, click here. Continue Reading...

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The Louisiana Department of Natural Resources has issued a proposed amendment to Statewide Order 29-B that details the procedures the Department will follow in implementing oilfield clean-up plans referred to the Department under Act 312 of 2006.  The Legislature passed Act 312 in 2006 to address the problem that damages awards in oilfield remediation litigation were not required to be expended on remediation.  Under the Act, the Department is involved in formulating a remediation plan, and the remediation funds are to be deposited in the registry of the court and actually spent on remediation.  The Commissioner of Conservation will conduct a hearing on the proposed regulations on Wednesday February 28, 2007.  Comments may be submitted at the hearing, or may be submitted in writing up to March 7, 2007.  To view the proposed regulations, click here.  Most notably, the draft regulations state that remediation plans must comport with the standards set forth in Order 29-B. 

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On January 8, 2007, a Louisiana trial judge held Act 312 of 2006 to be unconstitutional.  The Louisiana Attorney General's office immediately filed notice that it will take a suspensive appeal directly to the Louisiana Supreme Court.  M.J. Farms, Ltd v. ExxonMobil Corporation 24,055 (La. 7th J.D.C. Jan. 8, 2007).  Act 312, which became effective June 8, 2006, requires involvement of the Louisiana Department of Natural Resources (DNR) in litigation alleging environmental contamination, including submission of any remediation plan to DNR for approval, and the deposit of remediation funds into the registry of the court for expenditure on actual remediation rather than payment of those funds to the plaintiffs.  For further information on Act 312, click here. 

The plaintiff in M.J. Farms argued that retroactive application of the Act to a suit pending at the time the statute was promulgated unconstitutionally divests the plaintiff of a property right, that is, the cause of action to recover money damages for environmental contamination.  The Louisiana Attorney General opposed that motion, asserting that the statute only concerns remediation of public harm, and does not deprive landowners of claims for redress of private harm.  The January 8, 2007 ruling by Judge Johnson of the Louisiana Seventh Judicial District Court held Act 312 to be unconstitutional and unenforceable.  The opinion is available here.

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In Barasich v. Columbia Gulf Transmission, et al., Judge Sarah Vance of the Eastern District of Louisiana dismissed a suit in which plaintiffs claimed that oil and gas production and pipeline companies’ activities in South Louisiana marshes contributed to the destruction wreaked by hurricanes Katrina and Rita. The plaintiffs alleged that dredging of pipeline canals and wellsite locations damaged the marshland, thereby weakening a protective barrier against storm surge and increasing the storm damage suffered by citizens of South Louisiana. Judge Vance held that the complaint failed to state a claim under the Louisiana obligations of neighborhood or Louisiana tort law, finding plaintiffs’ claims to be too “attenuated because they are suing for hurricane damage from storm surge allegedly magnified by coastal erosion caused by the canals, not for a direct loss of acreage due to erosion.” 

 

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