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Grass-roots suits against gas project developers expected to ramp up

The oil and gas midstream sector should be prepared to handle an uptick in citizen suits based on environmental and safety laws in the coming years, industry attorneys predicted at a recent conference in Pittsburgh.

The attorneys, speaking on a Jan. 25 legal panel at Hart Energy's Marcellus-Utica Midstream Conference, said project developers might have the federal administration on their side, but that will encourage environmental groups to step up their legal challenges.

"One area of litigation that we're fully expecting to see more of is in the realm of environmental citizen suits," said Scott Janoe, a partner with Baker Botts LLP who advises energy, mining and manufacturing clients on environmental, safety and transportation matters. "These are basically instances in which private citizens or private groups can enforce the environmental regulations on the books" after they meet certain statutory requirements.

"We've seen a lot of saber rattling from the organizations the day after the election that, to the extent that they feel the EPA and other agencies are not stepping up and enforcing in a way that is appropriate, they will be willing to take on those kinds of cases," Janoe said.

The groups have traction with the amount of money they are raising and the messages they are sending to their supporters. "They are gearing up for a litigation strategy that is not just what we see in the classic challenge to those types of permitting operations or rulemaking," Janoe said, "but also flat out challenging companies directly on enforcement-related matters."

Developers and operators of pipelines and other energy infrastructure must submit extensive environmental, safety and operational data to regulatory agencies, Janoe observed. "That makes for some pretty straightforward cases," he said.

Keith Coyle, an attorney with Babst Calland who specializes in pipeline safety, said the Pipeline Safety Act also has a citizen suit provision. "It hasn't been often used, clearly not as often as the citizen suit provision in the EPA statutes," he said, "but we have seen greater interest from people trying to use that provision for new construction projects but also after significant transmission line failures," such as the 2010 rupture of a Pacific Gas and Electric Co. gas line in San Bruno.

"I do expect to see environmental and public safety groups start to look at that citizen suit provision as a mechanism for alleging violations of codes and standards," Coyle said, "and then trying to either get [the U.S. Pipeline and Hazardous Materials Safety Administration] or a state regulator to step in on the enforcement side, or taking those cases to court."

Industry can try to prepare for these types of suits by working with federal and state regulators to remove their liability, Janoe said. He also said industry should continue working with landowners and other interested parties to try to reduce misunderstandings and resolve issues, although this will not guarantee there will be no lawsuits.

"We are experiencing a much more polarized world," Janoe said, "and unfortunately, I think it's going to be even more so as we go forward."

Kurt Krieger, a principal with Steptoe & Johnson, is familiar with such battles after years practicing before FERC. With Sierra Club, Earthjustice and similar groups, "it is not about building a pipe in an environmentally sound way," he said. "It's about not building the pipeline and keeping the gas in the ground."

The large number of comments that come into FERC and other federal agencies can provide sources of litigation. In the last eight years, this sometimes worked to the industry's advantage, Janoe said, as it found areas where agencies did not resolve problems in a final rule or regulation and it launched a legal challenge. "With the new administration, we fully expect the shoe is going to be on the other foot," Janoe said.

Janoe said, "We live in a time when you might as well expect that, for whoever is out of power, their tool to address permitting, rulemaking and the like is going to be setting it up for a comment-based challenge at some point in the future."