Thursday, June 27, 2013

W.Va. DEP Formally Adopting New EPA Air Regulations

The West Virginia Department of Environmental Protection has scheduled public hearings for its 2014 proposed legislative rules. The state’s natural gas industry should take note of two of the proposed air rules – 45 CSR 16 and 45 CSR 34 – both of which adopt amendments to EPA regulations that became effective October 15, 2012.  Provided are overviews of these rules that have been prepared by Joe Jenkins, an associate at LGCR and a former Senior Counsel at the W.Va. Department of Environmental Protection:

• 45 CSR 16 adopts by reference EPA’s New Source Performance Standards (“NSPS”) (mainly Subpart OOOO to 40 CFR Part 60) for the listed oil and natural gas source category to regulate volatile organic compound (“VOC”) emissions from gas wells, centrifugal compressors, reciprocating compressors, pneumatic controllers and storage vessels (note that EPA is in the process of reconsidering the NSPS for storage vessels after receiving several petitions for reconsideration) and VOC and sulfur dioxide emissions from natural gas processing plants.  WVDEP adopts new EPA standards each year to maintain consistency with current federal regulations and to fulfill the State’s responsibilities under the Clean Air Act in order to continue as the primary enforcement authority for NSPS.  In addition to the standards noted above, this rule adopts other NSPS potentially of interest to those in the oil and gas industry including petroleum refineries and stationary internal combustion engines, as well as NSPS for other industries: Portland cement plants, utility steam generating units and nitric acid plants. 

Many of the NSPS for activities conducted at the natural gas well pads are anticipated to be regulated through a new general permit (G70-A) that is currently in draft form (public comment closed in May but the draft permit is available here on WVDEP’s website).  Although WVDEP is now going through the process of formally adopting EPA’s regulations promulgated last year, WVDEP has already started implementing the standards.  For example, as of October 15, 2012 operators are required to submit notice no later than two days before commencing the well completion operations for the fracturing or refracturing of wells drilled after August 23, 2011 and WVDEP has begun to issue individual permits for well pad sites that incorporate the new NSPS.

• 45 CSR 34 is similar to 45 CSR 16 in that WVDEP also is formally adopting EPA’s National Emissions Standards for Hazardous Air Pollutants (“NESHAP”) for the oil and natural gas production source category and natural gas transmission and storage source category to regulate glycol dehydrators and equipment leaks.  The proposed general permit does not address these sources as they are not typically located at the well pad.

Information about these rules -- and other proposed rules -- is available at this WVDEP webpage: http://www.dep.wv.gov/pio/Pages/Rules.aspx.

The public hearing for the rules noted above will begin at 6 p.m., Monday, July 8 in the Dolly Sods Conference Room in WVDEP's Charleston headquarters, located at 601 57th St., S.E., Charleston, WV, 25304.  The comment period will end at the conclusion of the hearing. Oral and written comments will be limited to the proposed revisions and will be made part of the rulemaking record. Written comments may be submitted to the Public Information Office at the above address. Comments may also be emailed to DEP.Comments@wv.gov.

Questions about these rules should be sent to Joe Jenkins at jjenkins@lgcr.com or by calling him at (304) 345-2000.

Monday, June 24, 2013

Recent State Supreme Court Decision Defines "Surface" In West Virginia

In a June 13, 2013 decision, the Supreme Court of Appeals of West Virginia overruled a 1923 holding that the word “surface,” when used in a deed, is ambiguous on its face and always subject to interpretation with extrinsic evidence, setting forth a more useful and concrete definition and interpretation framework.  The opinion, written by Justice Menis Ketchum, is based on the long held principle in West Virginia that if the intent of the grantor in an instrument is clear and unambiguous, the Court has no right or province to alter it. 

The underlying dispute centered around the oil and gas ownership of a 225-acre parcel of land in Preston County, West Virginia.  A 1907 deed from a sister to a brother conveyed a 1/7 undivided interest in and to the “surface only” of the land and also recited that the coal and mining rights had been previously sold.  The Circuit Court of Preston County followed the old rule and found that “surface only” was ambiguous and subject to modern day interpretation.  In finding that the deed did not convey the oil and gas, the Circuit Court cited evidence that the oil and gas interest was not taxed or entered into the Land Books and that the grantor did not lease or later convey the interest.  The Circuit Court held that this showed intent to transfer everything the grantor owned to her brother and keep nothing for herself.

The Supreme Court of Appeals of West Virginia overruled this decision and found that the term “surface only” is clear and unambiguous, stating that parties are bound by general and ordinary meanings of words used in deeds.  In the Court’s view, the old rule violated two public policy principles.  First, courts and practitioners need terms with a definite meaning when drafting instruments; and second, courts want to reach the intended result of the parties and therefore confine themselves to the four corners of the document.

The new definition of the word “surface” when used in a conveyance “generally means the exposed area of land, improvements on the land, and any part of the underground actually used by a surface owner as an adjunct to surface use [.]”  The Court gave several examples of “adjunct to surface use,” including use as a medium for the roots of growing plants, groundwater, water wells, roads, basements, and construction footings. 

While the Court’s decision should make such determinations easier for those in the mineral title field, the effect of the new definition on the oil and natural gas production industry remains to be seen.

For the full opinion, click on the link below:
http://www.courtswv.gov/supreme-court/docs/spring2013/12-0080.pdf

Monday, June 10, 2013

LGCR Assists Client in Navigating Doddridge County’s New Floodplain Ordinance

In December of 2012, Doddridge County’s floodplain ordinance was declared unconstitutional by the Circuit Court.  As a result, the Doddridge County Commission issued a moratorium on all floodplain permits.  Jay-Bee Oil & Gas had already begun drilling two horizontal wells when the Doddridge County Floodplain Administrator issued a stop work order.  Due to the moratorium, Jay-Bee could not comply with the order’s requirement to obtain a floodplain permit.  To address this legal catch-22 and to get its operations back on track, Jay-Bee challenged the stop work order in Circuit Court.
In an attempt to resolve its challenge, Jay-Bee agreed with the County to proceed with the permit application process under the new floodplain ordinance enacted on May 21, 2013.  As part of this agreement, LGCR is helping Jay-Bee navigate through the numerous requirements found in the new ordinance to ensure compliance therewith and to ultimately obtain the necessary permit so Jay-Bee can proceed with its operations.  A brief article on the matter can be found at: http://www.statejournal.com/story/22511347/doddridge-ends-ban-on-flood-plain-drilling-permits.  

The new ordinance greatly expanded the number of people entitled to notice and the types of notice to be given, including certified mail, personal service and publication of a legal ad.  These notice provisions were included to directly address the Circuit Court’s decision that found the previous ordinance unconstitutional.  However, the new ordinance also expanded the public’s participation in the permit process, including the ability to comment on permit applications and to appeal the granting of a permit and left unanswered questions regarding fees and costs associated with the permit process.  There are many more requirements, some old and some new, that are too numerous to mention in one article. 

Additionally, obtaining a floodplain permit is not limited to Doddridge County.  Although Doddridge County has been front and center with recent developments regarding floodplain permits, most counties, and some municipalities, have a floodplain ordinance, many of which are similar to the ordinance struck down by the Circuit Court as unconstitutional.  As such, it is possible some counties may amend their ordinance to address the constitutional infirmities and potentially use the new Doddridge County ordinance as a template.  Furthermore, one does not even need to be in the floodplain to fall under the jurisdiction of a floodplain ordinance.  Many ordinances, including Doddridge County’s new ordinance, require those undertaking any type of development, or substantial improvements or repairs, regardless of whether or not the development is in the floodplain, to still seek a determination from the County that the development is not within the floodplain prior to beginning any work. 

The requirement to obtain a floodplain permit not only entails more work on the part of the operator but the regulatory process can now take longer to complete.  Therefore, it is important oil and gas operators take into account these requirements when planning future operations to ensure the proper floodplain permits are obtained in a timely fashion.  Having been at the forefront of this issue, LGCR can assist operators and developers in navigating the numerous and varied floodplain ordinances found within the state. 

For more information, please contact Richard Gottlieb at rgottlieb@lgcr.com or Joseph Jenkins at jjenkins@lgcr.com.

Monday, June 3, 2013

Richard Gottlieb To Be Presenter At AAPL's 59th Annual Meeting

Richard Gottlieb will be among the presenters at this week's 59th Annual Meeting of the American Association of Professional Landmen.  Gottlieb heads the natural gas practice at Lewis Glasser Casey & Rollins PLLC.  The conference, which is being held in Washington, D.C., brings together professional landmen from across the nation. Gottlieb will be part of a panel discussion on "Comparative Oil & Gas Law Review." The panel will be held from 1:15 p.m. to 4:45 p.m. on Wednesday, June 5.  For more information, please go to" http://www.landman.org/events/annual-meeting