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Large Natural Gas Producer to Pay West Virginia Plaintiffs $53.5 Million to Settle Royalty Dispute

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An EQT Corp. natural gas production facility. Photo: Raymond Thompson, special to ProPublica

This article was produced in partnership with the Charleston Gazette-Mail, which is a member of the ProPublica Local Reporting Network.

As ProPublica’s investigation detailed, EQT Corp. had been accused of deducting a variety of unacceptable charges from natural gas royalty checks. The company says it wants to “turn over a new leaf” in its relationship with the state’s residents.

The second-largest natural gas producer in West Virginia will pay $53.5 million to settle a lawsuit that alleged the company was cheating thousands of state residents and businesses by shorting them on gas royalty payments, according to terms of the deal unsealed in court this week.

Pittsburgh-based EQT Corp. agreed to pay the money to end a federal class-action lawsuit, brought on behalf of about 9,000 people, which alleged that EQT wrongly deducted a variety of unacceptable charges from peoples’ royalty checks.

The deal is the latest in a series of settlements in cases that accused natural gas companies of engaging in such maneuvers to pocket a larger share of the profits from the boom in natural gas production in West Virginia.

This lawsuit was among the royalty cases highlighted last year in a joint examination by the Charleston Gazette-Mail and ProPublica that showed how West Virginia’s natural gas producers avoid paying royalties promised to thousands of residents and businesses. The plaintiffs said EQT was improperly deducting transporting and processing costs from their royalty payments. EQT said its royalty payment calculations were correct and fair.

A trial was scheduled to begin in November but was canceled after the parties reached the tentative settlement. Details of the settlement were unsealed Wednesday.

Under the settlement agreement, EQT Production Co. will pay the $53.5 million into a settlement fund. The company will also stop deducting those post-production costs from royalty payments.

“This was an opportunity to turn over a new leaf in our relationship with our West Virginia leaseholders and this mutually beneficial agreement demonstrates our renewed commitment to the state of West Virginia,” EQT’s CEO, Robert McNally, said in a prepared statement.

EQT is working to earn the trust of West Virginians and community leaders, he said.

Marvin Masters, the lead lawyer for the plaintiffs, called the settlement “encouraging” after six years of litigation. (Masters is among a group of investors who bought the Charleston Gazette-Mail last year.)

Funds will be distributed to people who leased the rights to natural gas beneath their land in West Virginia to EQT between Dec. 8, 2009, and Dec. 31, 2017. EQT will also pay up to $2 million in administrative fees to distribute the settlement.

Settlement payments will be calculated based on such factors as the amount of gas produced and sold from each well, as well as how much was deducted from royalty payments. The number of people who submit claims could also affect settlement payments. Each member of the class that submits a claim will receive a minimum payment of at least $200. The settlement allows lawyers to collect up to one-third of the settlement, or roughly $18 million, subject to approval from the court.

The settlement is pending before U.S. District Judge John Preston Bailey in the Northern District of West Virginia. The judge gave it preliminary approval on Monday, which begins a process for public notice of the terms and a fairness hearing July 11 in Wheeling, West Virginia. Payments would not be made until that process is complete.

The Charleston Gazette-Mail and ProPublica want to tell the story of the changing landscape in West Virginia, and how coal and natural gas are impacting it. West Virginians: Tell us how your community is changing. Call or text us at 347-244-2134, or email us: changingwv@wvgazettemail.com.

Kate Mishkin and Ken Ward Jr. cover the environment, workplace safety and energy, with a focus on coal and natural gas for the Charleston Gazette-Mail. Email Kate at kate.mishkin@wvgazettemail.com and follow her on Twitter at @katemishkin; email Ken at kward@wvgazettemail.com and follow him on Twitter at @kenwardjr.

This article was originally published by ProPublica.

Environment

House Dems Looking to Restore Obama-era Policies on Public Land Oil & Gas Leases

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Rep. Alan Lowenthal of California chairing an earlier meeting of the House Subcommittee on Energy and Mineral Resources. Photo: Courtesy House Committee on Natural Resources

The Democratically controlled House of Representatives is continuing its push to essentially reverse the Trump administration’s rollback of environmental regulations, this time focusing on a policy that has largely impacted rural and native populations in the U.S.

The House Subcommittee on Energy and Mineral Resources held its third hearing last week on a bill to change the policies that govern leasing for oil and gas development on public lands through a bill to restore community input in the leasing process. H.R 3225, Restoring Community Input and Public Protections in Oil and Gas Leasing Act of 2019, is sponsored by Democratic Rep. Mike Levin of California.

The process of granting leases for development on public lands falls under the purview of the Bureau of Land Management (BLM) in the federal Department of Interior (DOI). In a January 2018 policy, the BLM shortened the protest period for lease sales from 30 to 10 days, removed the requirement for the public to be involved during the lease nominations, and removed the 30-day review and comment period for environmental reviews. H.R. 3225 would reverse the shortened time periods to previous standards and also increase royalty and rental rates for leases on public lands.

Subcommittee chairman Rep. Alan Lowenthal of California opened Thursday’s hearing by saying that the government’s responsibility to balance access to natural resources on public lands with protective measures to secure it for future generations cannot be accomplished without input from local public and tribal communities. He accused the BLM of instead prioritizing the size and frequency of lease sales in the last couple years.

But the BLM’s Deputy Director of Operations Michael Nedd defended the current policy and reminded the committee nearly half of the generated revenue goes back to the lease host states. Nedd said that in 2018 the federal lands produced over $3 billion in federal revenue and added 2018 was a record year for lease sales revenue.

He was supported by a number of GOP members of the committee who pointed to the National Environmental Policy Act as already providing a space for community input on such leases. The NEPA is administered by the Environmental Protection Agency, requiring the EPA to review and comment on the environmental impact statements of all other federal agencies under the Clean Air Act.  

The 2018 policy changes were also meant to remove redundancy in oversight of these leases and reduce the unnecessary burden on businesses created by the previous presidential administration, according to ranking minority member Paul Gosar. 

Gosar pointed to a number of Obama-era policies he said are the reason the U.S. had seen drastic declines in the number of leases managed by the BLM. According to Gosar, by the end of Obama’s administration, the number was the lowest since 1985. 

The current policy, however, has led to a score of ongoing lawsuits attempting to block the leases, which Lowenthal said were a direct result of excluding tribal and other communities from the consultation process. Among them are proposed lease sales in Nevada’s Ruby Mountain, Chaco Canyon in New Mexico, Bears Ears National Monument in Utah and efforts to hold a lease sale in the Arctic National Wildlife Refuge in Alaska.

And during previous subcommittee hearings, members were presented with evidence that despite increasing revenues, there have been negative impacts to the health of both the people and the environment of the communities experiencing what Gosar called an “energy renaissance.” 

Emily Collins, who testified at a subcommittee meeting earlier this year, represents rural residents in the Pittsburgh and Akron areas through the non-profit Fair Shake Environmental Legal Services. Since 2014, Collins testified, 33 to 42 percent of the cases she’s taken on have involved oil and gas extraction, and 45 individual cases related specifically to water contamination.

Collins said the vast majority of her clients’ environmental problems were caused by a “lack of governmental investigation of the site-specific geological characteristics of the areas being developed and under resourced local jurisdictions.”

Len Necefer, a professor of both American Indian Studies and Public Policy at the  University of Arizona, recalled a long and personal history of health impacts among his Navajo community from unchecked, or under-regulated energy development during his testimony last week. 

The bill was introduced on June 12 and is now on course for a full committee hearing before it can make its way to the House chamber. The date for the full House Natural Resources Committee hearing hasn’t been set yet.

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Trump Administration Replaces Obama-Era Climate Change Rule on Power Plants

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Mt. Storm Power Plant in West Virginia. Photo: Cecilia Mason/West Virginia Public Broadcasting

This article was originally published by the Ohio Valley ReSource.

The U.S. Environmental Protection Agency Wednesday released its long-awaited final replacement for the Obama administration’s signature climate change regulation, which sought to limit greenhouse gas emissions from power plants by one-third by 2025.

The Trump administration’s Affordable Clean Energy rule, or ACE, tasks states with developing plans that rely on the use of efficiency technologies to reduce carbon emissions at existing power plants.

That stands in contrast to its predecessor, the Clean Power Plan, which was never fully-implemented. The controversial rule, which was challenged in court by 27 states including West Virginia, Ohio, and Kentucky, took a broad approach to reducing emissions throughout the power sector.

At a press conference, EPA Administrator Andrew Wheeler said the final ACE rule ensures a future for coal-fired power plants.

“ACE will continue our nation’s environmental progress and it will do so legally and with proper respect to our states,” he said. “We are leveling the playing field and encouraging innovation and technology across the sector.”

Many of the Ohio Valley’s Republican lawmakers attended the EPA press conference and expressed gratitude toward the agency for the ACE rule.

“I am so excited about what it will do for West Virginia and our surrounding states,” said Rep. Carol Miller, a Republican representing West Virginia’s third district. “The Affordable Clean Energy rule takes great steps in ensuring that mines will stay open by giving the power back to the states, restoring the rule of law and supporting America’s energy diversity and affordability.”

Bill Bissett, president and CEO of the Huntington Regional Chamber of Commerce told the crowd the ACE rule provides optimism to coal-producing regions.

“It provides the security that we’re going to power West Virginia and power this country with coal and natural gas,” he said.

However, industry analysts and experts have said the replacement regulation has very little chance of bringing the coal industry back across the Ohio Valley. They say the new rule does not change the larger economic trends affecting the power industry. Low natural gas prices and the rapidly falling costs for renewable energy generation are the primary challenges for coal.

ACE Analysis

The rule also does not address the challenges associated with mining thermal coal in the region: it costs more to extract coal in Appalachia, partly because the region’s coal seams have been mined for generations.

A 2018 report by West Virginia University’s Bureau of Business and Economic Research  predicted the recent uptick in West Virginia coal production — about 27 percent since mid-2016 driven largely by exports of metallurgical coal — will level out in the next two years.

In the agency’s own in-depth analysis of the final ACE rule, EPA predicts the amount of coal produced in the U.S. is expected to decrease across the board. In Appalachia, coal mines would produce at least 80 percent less coal in 2035 than they did in 2017.

Some utilities in the region said they do not expect to keep their coal plants running longer because of the ACE rule.

Melissa McHenry, a spokesperson for American Electric Power, which operates in 11 states including Kentucky, Ohio, and West Virginia, said it will be several years before the impact of the ACE rule can be determined. In an email, she said AEP continues to diversify its fuel mix and invest in cleaner forms of energy, including renewables, and the company expects that the proportion of coal in its fuel mix will continue to decline.

“We don’t expect to keep our coal plants running longer due to this rule,” she stated. “The coal plants will run as long as the overall economics make sense. Ultimately, we have to continue to make the case to state utility commissions that continuing to operate these plants is in the best interest of our customers.”

A spokesperson for FirstEnergy Corp.’s Fort Martin and Harrison coal-fired power plants in West Virginia said it is “not making any immediate changes” to operations as a result of the new rule.

Chris Perry, president and CEO of Kentucky Electric Cooperatives was more optimistic about the rule’s impact. In a statement, he said the ACE rule “provides a more flexible path forward, which will minimize the cost to members and preserve the reliability of the electric grid as our co-ops work to promote a healthy environment and vibrant rural communities.”

Legal Challenge

Hours after EPA announced it had finalized the rule, some environmental groups and the New York Attorney General announced they intend to sue the agency for failing to protect both public health and the climate under the Clean Air Act.

David Doniger, a lawyer and senior strategic director of the Natural Resources Defense Council’s climate and clean energy program, said in the intervening years since the Clean Power Plan was announced, the energy sector has achieved emissions reductions in line with that rule, despite it never being fully implemented, solely because of market forces.

“The right thing to do would be to strengthen the Clean Power Plan and not kill it,” he said. “The right thing to do would be to take care of coal miners and coal communities in the transition to a clean energy economy. This administration isn’t do either of those things.”

West Virginia Sierra Club Conservation Committee Chair Jim Kotcon said the final ACE rule is a step backward for both the climate and for those who live near the region’s many coal-fired power plants.

“We will have a disproportionate impact of those health risks from this rule change,” he said.

He added that if EPA wanted to extend a lifeline to the coal industry, the agency should seriously invest and incentivize the use of carbon capture and sequestration technology.

“But they have not done that, and without that, I don’t believe that the current market trends for coal will get much better,” Kotcon said. “So, we’re not really saving coal-fired power plants. We’re not using this technology. We are impacting the health of our residents, and we are increasing the overall greenhouse gas emissions that would otherwise have been eliminated.”

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Environment

As Appalachia Ponders Plastics Growth, Report Warns Of Threat to Climate

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Photo: Courtesy PTTGCA

This article was originally published by the Ohio Valley ReSource.

As a new plastics industry emerges in the Ohio Valley, a report by environmental groups warns that the expansion of plastics threatens the world’s ability to keep climate change at bay.

The report released Wednesday by the Center for International Environmental Law, Environmental Integrity Project, FracTracker Alliance, and others used publicly available emissions data and original research to measure greenhouse gas emissions throughout the entire life cycle of plastics. That includes the extraction of natural gas, used as a feedstock for plastic production, to the incineration of plastic products or their final resting place in the world’s oceans.

“Ninety-nine percent of what goes into plastics is fossil fuels and their climate impacts actually start at the wellhead and the drill pad,” said Carroll Muffett, president of the nonprofit Center for International Environmental Law and one of the authors of the report. “In light of the fact that the build-out of plastics infrastructure is ongoing and accelerating, we wanted to better understand the implications of that massive new build out of plastics infrastructure for the global climate.”

Fossil-Fueled Plastics

The report estimates production and incineration of plastic this year will add more than 850 million metric tons of greenhouse gases to the atmosphere, or equal to the pollution of building 189 new coal-fired power plants.

That figure will rise substantially over the next few decades as the demand for single-use plastic continues to grow, the report finds. By 2050, emissions from the entire plastics life cycle could account for as much as 14 percent of the earth’s entire remaining carbon budget.

Plastics manufacturers are investing millions into new petrochemical plants, including in the Ohio Valley, driven by demand and cheap natural gas from the fracking boom.

For example, the report cites Shell’s Monaca ethane cracker plant currently under construction in Beaver County, Pennsylvania. It’s permitted to release up to 2.25 million tons of greenhouse gas pollution annually. Similarly, Thailand-based PTT Global Chemical is seeking permits for a cracker plant in Belmont County, Ohio, across the Ohio River from West Virginia.

A cracker plant converts natural gas constituents into manufacturing products. Graphic: Alexandra Kanik/Ohio Valley ReSource

The plant would be permitted to release the equivalent carbon dioxide emissions of putting about 365,000 cars on the road. Muffett said that sort of increased investment in plastics manufacturing was one of the main reasons the groups decided to highlight the climate implications associated with plastics.

“This petrochemical build-out is a key driver of plastics contribution to climate impacts now and in the future,” he said. “This build-out is going to lead to the production of massive quantities of new plastics. It’s also going to lead to the incineration and disposal of massive amounts of new plastics.”

Industry Response

In a statement, the trade group the American Chemistry Council said the report missed the mark because it failed to take into account that plastics are increasingly replacing heavier, more energy-intensive materials, which can reduce emissions during both the manufacturing process and during transportation.

“Because plastics are strong and lightweight, they help us do more with less,” stated Steve Russell, vice president of the group’s plastics division. “Plastics help us ship more product with less packaging, which means fewer trucks on the road; plastics help make our vehicles lighter and more fuel efficient, so we go further on a gallon of gas; and plastic insulation and sealants help make our homes and buildings significantly more energy efficient by sealing off outdoor temperatures.”

The report also outlined a gap in emissions data for the plastics life cycle, particularly in its infancy, when natural gas is being extracted and transported to refineries and other manufacturing facilities.

“Throughout that process, there are significant emissions, and many of them remain unquantified,” Muffett said. “Even many of the sources of emissions, like compressor stations, or the miles of pipelines involved, official estimates of how many compressor stations there are can vary by an order of magnitude, and that means that there are really fundamental senses in which the data for understanding the scale of this problem just isn’t there. And it needs to be there.”

The report also called for additional research into the impacts of microplastic pollution in the world’s oceans, including more study of the ways in which microplastics may be negatively impacting the ability of oceans to take up carbon emissions.

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