Colorado Secretary of State Certifies Initiatives 97 and 108 for November Ballot
On August 29, 2018, the Colorado Secretary of State (the “Secretary”) certified that Initiative 97, which would increase oil and gas development setback distances to 2,500 feet from “occupied structures” and “vulnerable areas,” had gathered a sufficient number of valid signatures to appear on the ballot this November. The certification of Initiative 97 comes the day after the Secretary similarly announced that industry-backed Initiative 108 will also appear on the November ballot. A direct response to Initiative 97, Initiative 108 would provide property owners with just compensation when a state or local government takes action diminishing the “fair market value” of their properties. Initiative 108 appears designed to provide a compensation mechanism for oil and gas interests on private property that would no longer be exploitable because of setback distances such as those made effective and enforced as a result of Initiative 97, among other things.
The certification of both Initiatives 97 and 108 sets the stage for a showdown on the November ballot which is sure to be preceded by 9 plus weeks of intense campaigning given the significant effects these measures would have on Colorado’s oil and gas industry as well as the state economy more broadly. For example the Colorado Oil and Gas Conservation Commission has estimated that Initiative 97 would foreclose oil and gas development on 54% of Colorado’s total land surface, including 85% of the non-federal lands in the state. Although both of Colorado’s gubernatorial candidates—Democrat Jared Polis and Republican Walker Stapleton—have announced publicly that they do not support Initiative 97, the fates of both Initiatives 97 and 108 will lie solely with the voters on November 6.
Read more about the potential consequences of these ballot initiatives on the Colorado oil and gas industry on the Vinson & Elkins Environmental Blog here.
Supporters of Colorado Initiative 97 Submit Signatures to Secretary of State
On August 6, 2018, supporters of Initiative 97 in Colorado, which would increase oil and gas development setback distances to 2,500 feet from “occupied structures” and “vulnerable areas,” submitted approximately 171,000 signatures to Colorado Secretary of State Wayne Williams. In order to appear on the November ballot, Initiative 97 requires 98,492 valid signatures.
Secretary Williams now has thirty days to determine if the 171,000 signatures submitted include 98,492 valid signatures. Although similar initiatives in 2016 initially submitted more than the required 98,492 signatures to the Secretary of State, about 25-28% of those signatures were deemed invalid, keeping those measures off the ballot. However, supporters of Initiative 97 have submitted over 60,000 more supporting signatures compared to the similar measures in 2016. It remains to be seen whether the 171,000 signatures submitted will include enough valid signatures for Initiative 97 to appear on the November ballot.
Read more about the potential effects of Initiative 97 on the available land for oil and gas development in Colorado on the Vinson & Elkins Environmental Blog here.
Pennsylvania Issues Revised General Permits Regulating Methane Emissions from Unconventional Natural Gas Wells
On June 9, 2018, the Pennsylvania Department of Environmental Protection (“DEP”) released revised versions of General Plan Approval and/or General Operating Permits GP-5 and GP-5A (together, the “Revised General Permits”), applicable to “Natural Gas Compression Stations, Processing Plants, and Transmission Stations” and “Unconventional Natural Gas Well Site Operations and Remote Pigging Stations,” respectively. The Revised General Permits are aimed principally at regulating methane emissions from unconventional natural gas wells and midstream facilities, consistent with Governor Tom Wolf’s four point plan for reducing methane emissions announced in January 2016. The Revised General Permits are available to facilities with actual emissions less than 100 tons per year (“tpy”) of criteria pollutants (NOx, CO, SO2, PM10, and PM2.5), less than 50 tpy of VOCs, less than 10 tpy of any single hazardous air pollutant (“HAP”), and less than 25 tpy of total HAPs (use of the Revised General Permits is further restricted in Philadelphia, Bucks, Chester, Montgomery, or Delaware Counties to facilities with less than 25 tpy each of NOx and VOC emissions).
The Revised General Permits, which will apply to new and modified sources constructed on or after August 8, 2018, require compliance with federal New Source Performance Standards (such as 40 C.F.R. Part 63 Subparts OOOO and OOOOa, although EPA has proposed a temporary stay of some of the OOOOa requirements but also include more stringent requirements as well. Specifically, the Revised General Permits contain “Best Available Technology” (“BAT”) standards that apply in addition to federal New Source Performance Standards. Of the thirteen BAT determinations in the GP-5 permit, nine impose requirements more stringent than the federal New Source Performance Standards; eight of the eleven BAT determinations in the GP-5A permit are more stringent than federal New Source Performance Standards.
Most notably, the Revised General Permits include a 200 tpy limit on methane emissions above which a BAT requirement for methane control applies--the first such numeric threshold applicable to methane emissions from unconventional natural gas wells and midstream facilities. While methane control techniques vary by emissions source, DEP considered “a closed vent system routed to a process or control” the primary control technique for emissions attributable to venting or process emissions, and a leak detection and repair (“LDAR”) program as the primary control technique for fugitive emissions. For fugitive emissions components, the Revised General Permits require LDAR within 60 days of startup and quarterly thereafter to comply with the BAT standard. Additional BAT requirements apply to storage vessels, tanker truck load-out operations, controllers, pumps, enclosed flares, well completion, combustion units, centrifugal natural gas compressors, fractionation process units, and sweetening units, among other sources addressed by GP-5 or GP-5A.
It remains to be seen whether the Revised General Permits requiring control of methane emissions will have any impact on drilling activity in Pennsylvania, where operators drilled 809 new unconventional natural gas wells in 2017. Industry groups may also choose to bring litigation challenging the issuance of the Revised General Permits; an industry challenge to DEP’s Chapter 78a regulations also applicable to the unconventional industry has resulted in a stay that has put many of the Chapter 78a requirements on hold for over twenty months and counting. In the meantime, Governor Wolf’s efforts to reduce methane emissions continue. The remaining items of his four point plan call for promulgation of a regulation aimed at reducing methane emissions from leaks at existing oil and natural gas facilities and the development of best management practices (including LDAR programs) applicable to production, gathering, transmission and distribution lines.