Pa. Indep. Oil & Gas Ass'n v. Dep't of Envtl. Prot. of the Commonwealth

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Pennsylvania Independent Oil & Gas Association, Pennsylvania Grade Crude Oil Coalition, and Pennsylvania Independent Petroleum Producers Association, Petitioners v. Department of Environmental Protection of the Commonwealth of Pennsylvania and Environmental Quality Board of the Commonwealth of Pennsylvania, Respondents

No. 574 M.D. 2022

Commonwealth Court of Pennsylvania

April 16, 2024

OPINION NOT REPORTED

Submitted: December 6, 2023

BEFORE: HONORABLE RENÉE COHN JUBELIRER, President Judge HONORABLE PATRICIA A. McCULLOUGH, Judge HONORABLE ANNE E. COVEY, Judge HONORABLE MICHAEL H. WOJCIK, Judge HONORABLE ELLEN CEISLER, Judge HONORABLE LORI A. DUMAS, Judge HONORABLE STACY WALLACE, Judge

MEMORANDUM OPINION

MICHAEL H. WOJCIK, Judge

Before this Court, in our original jurisdiction, are the Preliminary Objections (POs) of the Commonwealth of Pennsylvania Department of Environmental Protection (DEP), and Environmental Quality Board (EQB) (collectively, the Agencies) to the Pennsylvania Independent Oil & Gas Association, Pennsylvania Grade Crude Oil Coalition, and Pennsylvania Independent Petroleum Producers Association's (collectively, Petitioners) Petition for Review in the Nature of a Complaint for Declaratory Relief (PFR) challenging the promulgation of the emergency-certified final-omitted "Control of VOC^[1] Emissions from Conventional Oil and Natural Gas Sources" (Conventional VOC Regulation). For the reasons that follow, we overrule the Agencies' POs.

I. Background

Petitioners, which are trade organizations representing conventional oil and natural gas producers, filed this action pursuant to the Declaratory Judgments Act (DJA), 42 Pa. C.S. §§7531-7541, seeking a determination of legal rights and obligations with regard to the Agencies' rulemaking and the adoption of the emergency-certified final-omitted Conventional VOC Regulation, which went into effect on December 2, 2022. The Agencies promulgated the Conventional VOC Regulation pursuant to their authority under the Air Pollution Control Act^[2] to implement standards set forth in the federal Clean Air Act.^[3] The Clean Air Act required States to establish "reasonably available control technology" (RACT) to control VOC emissions, which contribute to ozone formation, from the oil and natural gas industry emission sources by December 16, 2022, or face sanctions. To facilitate compliance, on October 16, 2016, the United States (U.S.) Environmental Protection Agency (EPA) issued the "Control Techniques Guidelines for the Oil and Natural Gas Industry" (Federal Guidelines), which provided information to assist States in determining what constitutes RACT for VOC emissions. The Federal Guidelines make no distinction between unconventional and conventional oil and gas operations. PFR, ¶¶1-7, 9, 16-18.

Guided by the Federal Guidelines, the Agencies engaged in five rulemaking actions over the course of six years pursuant to the Regulatory Review Act^[4] (RRA) and Commonwealth Documents Law^[5] (CDL) to comply with the federal mandate. Rulemaking is the process by which agencies adopt regulations.^[6] The Agencies' first and second rulemaking proceedings proposed a regulation implementing RACT requirements to reduce VOC emissions for both unconventional and conventional oil and natural gas sources in a combined VOC rulemaking proceeding (combined rulemaking). PFR, Exhibit No. 2; see 50 Pa. B. 2633 (2020). After notice and comment, on March 15, 2022, the EQB submitted the final-form "Control of VOC Emissions from Oil and Natural Gas Sources" (Combined VOC Rule) to the Independent Regulatory Review Commission (IRRC)^[7]and the legislative committees for consideration. PFR, ¶¶39-40.

The Pennsylvania House of Representatives Environmental Resources and Energy Committee (House ERE Committee) disapproved the final-form Combined VOC Rule. On April 26, 2022, the House ERE Committee sent a letter to the IRRC expressing its disapproval on the basis that the EQB was required to submit two rulemaking packages-one that applied to unconventional oil and natural gas sources and one that applied to conventional oil and natural gas sources -- based on its interpretation of the Pennsylvania Grade Crude Development Act (CDA).^[8]The letter initiated the concurrent resolution process under Section 7(d) of the RRA, 71 P.S. §745.7(d), which allows the General Assembly to adopt a resolution that disapproves and permanently bars a final regulation from taking effect. In response, by letter dated May 4, 2022, the EQB notified the IRRC that it was withdrawing the final-form Combined VOC Rule from consideration.^[9] PFR, ¶¶53-55; see id., Exhibit No. 2.

Given the concerns expressed by the House ERE Committee and other commentators regarding the combined rulemaking, the Agencies engaged in a third rulemaking action limited to emissions from unconventional oil and natural gas wells (unconventional rulemaking). The DEP modified the withdrawn Combined VOC Rule by removing all applicable requirements related to the conventional oil and natural sources of VOC emissions. The DEP then resubmitted the final-form "Control of VOC Emissions from Unconventional Oil and Natural Gas Sources" (Unconventional VOC Regulation) to the EQB for consideration. Following the EQB's adoption, the final-form Unconventional VOC Regulation was submitted to, and approved by, the IRRC on July 21, 2022. Petitioners allege that at no point during the development of the Combined VOC Rule or Unconventional VOC Regulation did the Agencies solicit input from the Petitioners concerning the development of provisions applicable to VOC emission sources at conventional oil and natural gas wells and well sites. PFR, ¶¶56-62.

In both the fourth and fifth rulemaking proceedings, the Agencies proposed RACT requirements for VOC emissions for conventional oil and natural gas wells (conventional rulemaking). Regarding the fourth rulemaking, on October 12, 2022, the EQB adopted the final-omitted Conventional VOC Regulation, No. 7-579. The preamble to the final-omitted Conventional VOC Regulation stated that the DEP developed the Conventional VOC Regulation to address concerns expressed by the House ERE Committee and other commentators during the regulatory process for the combined rulemaking. The preamble further stated that "[p]ublic notice and solicitation of public comments are impracticable, unnecessary, and contrary to the public interest" because the "rulemaking was already subject to a notice and comment process" in the combined rulemaking and would delay implementation of the VOC RACT requirements. PFR, Exhibit No. 5 at 2; 52 Pa. B. 7635, 7636 (2022). The Regulatory Analysis Form (RAF) that accompanied the final-omitted Conventional VOC Regulation described DEP meetings with advisory committees for the Combined VOC Rule only. The Comment and Response Document similarly addressed comments solicited on the proposed Combined VOC Rule only. The RAF for the final-omitted Conventional VOC Regulation stated that the DEP did not have data on how many gathering and boosting stations and natural gas processing plants are used in the conventional industry and, thus, could not estimate the VOC and methane emissions reductions from these sources. PFR, ¶¶64-67 and Exhibit Nos. 2-4.

On November 14, 2022, the House ERE Committee disapproved the final-omitted Conventional VOC Regulation, which triggered a 14-day legislative review period. The 14-day period began after the IRRC approved the final-omitted Conventional VOC Regulation on November 17, 2022. During that 14-day period, the regulation could not be published in the Pennsylvania Bulletin. Because the 2022 legislative session ended on November 30, 2022, the regulation could not be published by the December 16, 2022 federal sanction deadline. See Section 5.1(j.3) of the RRA, 71 P.S. §745.5a(j.3). This prompted the Agencies to take emergency action. PFR, Exhibit No. 3.

The fifth and final rulemaking resulted in the emergency-certified final-omitted Conventional VOC Regulation, No. 7-580, which is at issue. On November 22, 2022, the DEP announced the EQB would consider adopting an emergency-certified final-omitted Conventional VOC Regulation at a meeting scheduled for November 30, 2022. The emergency-certification was based upon the Governor's certification that an immediate amendment to the regulations was necessary to prevent sanctions, namely, the loss of approximately $800,000,000.00 in federal highway funding. The emergency-certified final-omitted Conventional VOC Regulation, No. 7-580, is identical to final-omitted Conventional VOC Regulation, No. 7-579, except for the emergency certification. The preamble and documents offered in support mirrored those presented with the final-omitted Conventional VOC Regulation, No. 7-579. On November 30, 2022, EQB adopted the emergency-certified final-omitted Conventional VOC Regulation, without notice or comment pursuant to Section 204(3) of the CDL, 45 P.S. §1204(3). See 25 Pa. Code §§129.131-129.140. The emergency-certified final-omitted Conventional VOC Regulation went into effect on December 2, 2022, just short of the federal deadline, and was published in the Pennsylvania Bulletin on December 10, 2022. PFR, ¶¶78-84 and Exhibit Nos. 1-4; 25 Pa. Code §129.131; see also 45 Pa. C.S. §903 (relating to effective date of documents), 1 Pa. Code §13.74 (permitting effective date prior to publication if deferral is "impractical or contrary to the public interest").

Petitioners allege that the Agencies failed to comply with express statutory provisions regarding the promulgation of the Conventional VOC Regulation without good cause. Petitioners' PFR sets forth two counts. In Count I Petitioners contend that the Agencies violated the CDL by failing to...