The Ohio Environmental Protection Agency (Ohio EPA) still wants Rover Pipeline LLC to submit a stormwater permit application and pay $2.3 million in fines, and the regulator has asked the state attorney general (AG) to assist in enforcement, Director Craig Butler said Wednesday.
Butler said during a conference call with media that he sent a letter Wednesday to Ohio AG Mike DeWine asking for help in pursuing a stormwater permit from Rover. But with Rover and Ohio EPA at an impasse in negotiations, the dispute could end up in court, he said.
While Rover has completed Ohio EPA’s clean-up requirements following a drilling fluids spill earlier this year, the state regulator still wants the pipeline to apply for a National Pollutant Discharge Elimination System (NPDES) stormwater permit, part of a series of unilateral orders issued in July.
Ohio EPA took the "unfortunate, unprecedented step" to issue those unilateral orders after the agency and Rover could not agree on a consent order to resolve numerous alleged environmental violations occurring during the project's construction, which began earlier this year.
As for the proposed $2.3 million fine, that total includes about $2 million in civil penalties, with the rest covering Ohio EPA's monitoring, oversight and emergency response costs, Butler said.
FERC recently authorized Rover to resume horizontal directional drilling (HDD) at nine sites along the project route where work had been stopped following a 2 million gallon drilling fluids spill near the Tuscarawas River in Stark County, OH. Butler admitted Wednesday that this weakens Ohio EPA's negotiating leverage as it seeks additional concessions from Rover.
Butler said he believes the Federal Energy Regulatory Commission took his concerns seriously before allowing Rover to resume the HDDs.
"We're happy with the requirements that FERC placed in front of them. I'm not overly happy that they're allowing them to resume operations" while some of Ohio EPA's conditions have not been met.
Butler said he expects some minor inadvertent returns to occur as Rover moves forward with HDD work but added that he's "hopeful...we have stopped this pattern of significant and substantial violations that seemed to happen on a daily basis" with Rover. The director said he's confident enforcement actions from Ohio EPA and FERC have "got their attention" and that further construction activities will be monitored closely.
Aside from the stormwater permit requirement, Rover has complied with Ohio EPA's unilateral orders, according to the agency. Butler highlighted Rover's environmental restoration following the Tuscarawas incident.
Rover has removed all disposed material from two quarries, per Ohio EPA (and FERC) requirements, Butler noted. The company has also been following the agency's requirements for groundwater monitoring and has developed a restoration plan for wetlands impacted by the Tuscarawas spill.
For the company’s part, Rover General Counsel Kevin Erwin in a letter to FERC this month accused Butler of misrepresenting the developer's "extensive compliance activities" in Ohio. Erwin called the proposed financial penalty "unreasonable and unwarranted."
As for the stormwater permit issue, Erwin wrote, "Although Ohio EPA now claims that Rover failed to submit the construction stormwater permit application, Ohio EPA agreed that it was not necessary to submit such an application, as long as Rover voluntarily submitted a stormwater pollution prevention plan (SWP3) to address the substantive requirements of the storm water protection plan."
Asked Wednesday to explain the distinction between the SWP3 plan -- submitted by Rover and approved by Ohio EPA -- versus the NPDES stormwater permit, Butler called it "as much a legal question as it is an environmental permitting question," adding that the SWP3 is "not exactly the same as what they would need under this other coverage, under the general permit."
The legal question hinges on an exemption included in the Energy Policy Act of 2005 that allows for pipelines to bypass the NPDES permit requirement, according to Butler. But he said that exemption doesn't apply in Rover's case due to water quality violations occurring during project construction.
The broader issue, and one that could see the dispute between Ohio EPA and Rover head to court, is whether Ohio EPA has enforcement authority over the FERC-approved, 3.25 Bcf/d, 713-mile pipeline, according to Butler.
"The umbrella argument, which I think is part of the reason they haven't" submitted the stormwater permit application "is federal preemption. Because they have the FERC certificate to put the pipeline in, Rover believes that they are protected, if you will, and the state of Ohio is preempted from citing violations because they have the FERC certificate. We disagree on both fronts."
Butler said he expects the two sides to continue to negotiate but that "if we don't get a resolution on the issue of money, I'm sure, at some point, we may end up in federal court on the exemption, whether that still applies...That's a very important issue to Rover and to us, and we may end up in federal court litigating that."
Rover is designed to deliver Marcellus and Utica shale gas to markets in the Midwest, Gulf Coast and Canada. The project, which started initial service this month and has been flowing around 700 MMcf/d east-to-west, is one of the most anticipated pipeline projects currently under development.
Sponsor Energy Transfer Partners LP said this week that it expects the remainder of the project's Phase 1 to the Midwest Hub in Defiance, OH, to be completed by the fourth quarter, with the project's Phase 2 on track for completion by the end of 1Q2018.
Rover spokeswoman Alexis Daniel told Shale Daily Wednesday the operator was looking forward “to continuing to work with the FERC to adhere to the requirements outlined in its approval."