A recent decision from the Seventh District Court of Appeals, Eisenbarth v. Reusser, adds a new wrinkle to the ongoing legal battles concerning the applicability and scope of Ohio’s Dormant Mineral Act (“DMA”). The Seventh District previously ruled in Walker v. Shondrick-Nau that the 1989 DMA applies to current disputes over ownership of severed mineral interests and that a mineral interest which was “dormant” for a twenty-year period merges with the surface of the property. In further applying the 1989 DMA, the Court in Eisenbarth decided that the 1989 DMA only applies to the twenty-year period immediately preceding its enactment and that it does not apply on a “rolling” basis to successive twenty-year periods. Under this ruling, the 1989 DMA would not apply if any statutory savings event occurred after March 22, 1969 (twenty-years preceding the 1989 DMA’s enactment) because the person claiming that the mineral interest was abandoned would have to rely on a period of time occurring outside of the prescribed twenty-year period.
The Court also ruled that a recorded oil and gas lease is a title transaction for purposes of the DMA. This issue is currently the subject of an appeal to the Ohio Supreme Court in Chesapeake Exploration, L.L.C. v. Buell.
On August 25th, Rep. White (D-Allegheny, Beaver and Washington) introduced House Bill 2403 (2014) in order to repeal Section 2318 of Title 58 (Oil and Gas) of the Pennsylvania Consolidated Statutes. Section 2318 provides that upon the imposition of a severance tax on unconventional gas wells in the Commonwealth of Pennsylvania, the Secretary of the Commonwealth shall submit for publication a notice of the imposition of the severance tax and that Chapter 23 (Unconventional Gas Well Fee) shall expire upon the publication of the notice. Repealing Section 2318 would allow a severance tax and the impact fee to co-exist.
As reported by the West Virginia Press Association, the West Virginia Division of Natural Resources (“DNR”) is seeking bids for natural gas drilling on state-owned land under the Ohio River. A legal notice published on Friday, August 22 indicates that the DNR intends to grant leasing rights to drill under the river in Marshall, Wetzel and Pleasants counties. The notice further states that applications to bid on these rights must be submitted by the September 11 deadline.
Thanks in large part to the oil and gas industry, western Pennsylvania is experiencing a boom in job growth which is bringing young and talented individuals to the region. According to the U.S. Bureau of Labor Statistics, Pennsylvania’s oil and natural gas industry employment between 2007 and 2012 increased by 259.3% – accounting for almost 245,000 jobs in Pennsylvania. Of the new hires working in the industry, 96% are from Pennsylvania or an adjacent state. The Young Adults report from PittsburghTODAY notes that roughly 70% of the people moving to Pittsburgh from larger cities are under the age of 35. According to the Department of Labor and Industry, the average wage in the shale industry is nearly $90,000 – almost $41,000 greater than most other industries. A 2014 PNC Financial Services report states that this economic growth can continue to increase in the coming decades.
According to the Tribune Review, Reliance Industries, an Indian conglomerate with ties to the Marcellus Shale, plans to ship 1.5 million tons of ethane annually from the United States. Reliance has invested with Carrizo Oil and Gas Inc. and Chevron in the region, but the company’s spokesperson did not identify which shale sources will provide the ethane for shipment. According to the report, the announcement has sparked interest and potential competition for supplies with plants under consideration in the region.
Veteran attorneys Timothy Miller from Robinson & McElwee, and Christopher ‘Kip” Power, Mychal Schulz and Robert Stonestreet from the Charleston office of Dinsmore & Shohl have joined forces with Babst Calland in providing senior-level legal counsel in key practice areas including environmental, litigation and employment. The addition of the new attorneys and staff will double the size of Babst Calland’s Charleston office which opened in 2011. For more information, please visit the firm’s website.
Pittsburgh Tribune-Review reports that the Kiskiminetas Township supervisors unanimously enacted an ordinance that will allow for oil and natural gas exploration. The ordinance allows for “reasonable development of land for oil and gas drilling while providing adequate health, safety and general welfare protections of the township’s residents.” It includes restrictions for noise, traffic and setbacks, among other things.
As reported in the Pittsburgh Business Times, Pennsylvania’s reported natural gas production in the first six months of 2014 reached 1.9 trillion cubic feet. Production is up from 1.7 trillion cubic feet reported over the second half of 2013 and 1.4 trillion over the first half of 2013. The largest contributors to the gas production increase are wells located in Greene and Washington counties.
The Pennsylvania Public Utility Commission appealed the Commonwealth Court’s July 17, 2014 Opinion and Order in the Act 13 case, which resolved a number of issues remanded by the Supreme Court.
Review Babst Calland’s Administrative Watches for in-depth analyses of the July 17, 2014 Commonwealth Court decision and December 19, 2013 Supreme Court decision.
Two pieces of proposed legislation were introduced to the Pennsylvania Senate on Thursday, July 31. Each has been referred to the Senate Environmental Resources and Energy Committee. Senate Bill 1458, if passed, would amend Title 58 by requiring that steel casings (or other steel safety devices) used in in the drilling of an oil or gas well only use steel products produced in the United States. Senate Bill 1460, provides that products containing both foreign and United States steel shall be determined to be a United States steel product if at least 75% of the cost of the articles, materials and supplies have been mined, produced or manufactured in the United States.
The Ohio Supreme Court will review a key question of state law concerning application of the Dormant Mineral Act (“DMA”). In Corban v. Chesapeake Exploration, LLC, the United States District Court for the Southern District of Ohio certified the following questions to the Ohio Supreme Court for review:
(1) Does the 2006 version or the 1989 version of the DMA apply to claims asserted after 2006 alleging that the rights to oil, gas, and other minerals automatically vested in the surface land holder prior to the 2006 amendments as a result of abandonment?
(2) Is the payment of a delay rental during the primary term of an oil and gas lease a title transaction and “savings event” under the DMA?
The question of whether the 1989 or 2006 version of the DMA applies to current disputes concerning ownership of mineral rights has been the subject of numerous lawsuits throughout eastern Ohio. Trial courts have reached varying conclusions, but the Seventh District Court of Appeals recently ruled that the 1989 version is self-executing and can still be relied upon. A decision from the Ohio Supreme Court will presumably resolve this unsettled issue of law.
In its far-reaching decision in Robinson v. Commonwealth, which was issued on December 19, 2013, the Pennsylvania Supreme Court invalidated several critical provisions of Act 13. Additionally, the Supreme Court remanded to the Commonwealth Court to address whether the remaining sections of Act 13 can be severed and whether several sections of Act 13 were unconstitutional. Yesterday, the Commonwealth Court reached its decision on the remanded issues.
Regarding severability, the Commonwealth Court held that the last sentence of Section 3302 and all of Sections 3305 to 3309 were not severable and, therefore, invalid. The cumulative effect of this invalidation of all substantive portions of Chapter 33 of Act 13 is that local zoning matters relating to oil and gas will “now be determined by the procedures set forth under the [Municipalities Planning Code] and challenges to local ordinances that carry out a municipality’s constitutional environmental obligations,” and that the Pennsylvania Public Utility Commission no longer has the authority to review local ordinances for compliance with Act 13 and withhold well fees where defects were found.
Regarding the other issues, the Commonwealth Court dismissed claims that providing notice only to public drinking water systems following a spill from drilling operations and that prohibiting health professionals from disclosing the identity and amount of hydraulic fracturing additives were unconstitutional special legislation. The Court also dismissed the claim that Act 13 conferred the power of eminent domain to illegally permit taking private property for use by a private enterprise.
Review our recent Administrative Watch for more in-depth analysis.
For more background, review our blog post on the Supreme Court Decision.
Today the U.S. Environmental Protection Agency (USEPA) published proposed amendments to federal air regulations at 40 C.F.R. 60, Subpart OOOO (Standards of Performance for Crude Oil and Natural Gas Production, Transmission and Distribution). Subpart OOOO was first promulgated in 2012 and later revised in 2013. In response to petitions for administrative reconsideration, USEPA is now proposing additional changes to Subpart OOOO and requesting public comment on a limited set of issues, including the management of flowback gases and liquids associated with well completions. Comments are due on August 18, 2014 (or September 2, 2014, if a public hearing is requested).
Natural Gas Intelligence reports that a new truck-to-rail transloading facility owned by Denver-based Concord Energy LLC, has opened in Parkersburg, West Virginia. The facility is capable of handling more than 150,000 bbl of crude oil condensate and natural gas liquids, and is expected to primarily serve E&P companies operating in southeast Ohio and northwest West Virginia. The facility will load light condensates, stabilized condensate, raw natural gas liquids (NGL) and purity NGL products, and includes warehouse space, a lay-down area and its location provides access to highways and the Ohio River. This announcement is the latest in a series of similar facilities that have revived dormant railroads and industrial sites throughout the region.
On July 11, 2014, a New York state trial court dismissed two similar cases in which the plaintiffs sought to compel the State to finalize a Supplemental Generic Environmental Impact Statement (“SGEIS”) pursuant to the State Environmental Quality Review Act (“SEQRA”) (Wallach v. N.Y. State Dep’t of Envtl. Conservation, N.Y. Sup. Ct., No. 6773-2013; Joint Landowners Coal. of New York Inc. v. Cuomo, N.Y. Sup. Ct., No. 843-2014). The court dismissed both suits based on the plaintiffs’ lack of standing after finding that a party raising a SEQRA challenge “must demonstrate that it will suffer an injury that is environmental and not solely economic in nature,” and that in both suits the plaintiffs’ injuries were purely economic. Although a draft version of the SGEIS was first published in September of 2009, a final version has yet to be issued. The delay is due in part to a decision by the New York Department of Environmental Conservation to withhold its release of the SGEIS until the state health commissioner issues his findings on hydraulic fracturing.