On September 9, the U.S. House of Representatives voted to pass a bill introduced in response to the ‘Waters of the United States’ Proposed Rule that was prepared jointly by the U.S. Army Corps of Engineers (USACE) and U.S. Environmental Protection Agency (USEPA) and published in April 2014. The bill, known as the “Waters of the United States Regulatory Overreach Protection Act of 2014” (H.R. 5078), would prohibit USEPA and USACE from “developing, finalizing, adopting, implementing, applying, administering, or enforcing” the proposed rule. On September 8, the White House announced its objections to the bill, including concerns that H.R. 5078 would “derail” efforts to clarify the scope of the Clean Water Act. The announcement also noted that if the President were presented with H.R. 5078, his senior advisors would recommend that he veto the bill. Notwithstanding H.R. 5078, the public comment deadline for the proposed rule is fast-approaching. Comments are due to USEPA/USACE by Monday, October 20, 2014.
Natural Gas Intelligence reports that the Marcellus Shale Coalition has awarded Pennsylvania-based consulting firm Environmental Standards Inc. with a contract to manage a study that will analyze the presence of methane in groundwater samples. Specifically, the study will seek to establish a consensus standard for analyzing light gases in groundwater, both before and after the drilling process. Although there are several published procedures for analyzing methane in water sources, none are widely adopted, nor has the U.S. Environmental Protection Agency published any particular one. The goal is to establish uniform standards that will provide more reliable test results. The study will examine the practices of the Pennsylvania Department of Environmental Protection’s laboratory, as well as 10-15 other private laboratories across the country. The final report is expected by the end of the first quarter of 2015.
The Pittsburgh Business Times reported that Shell has drilled two producing wells in the Utica Shale formation in Tioga County, Pennsylvania. Shell credited its success to “solid technical work in [its] onshore business.” The two wells are many miles away from the majority of existing Utica wells and illustrate the potential of the Appalachian basin. The wells have demonstrated flowback rates of 11.2 million cubic feet per day and 26.5 million cubic feet per day. Shell is currently awaiting production results on four more recently drilled wells in Tioga County.
The federal Bureau of Land Management (BLM) has taken another step towards finalizing updated regulations for hydraulic fracturing on federal and Indian lands, by sending a revised final rule to the White House Office of Management and Budget (OMB) for review. The revised rule was published in the Federal Register in May 2013. During the subsequent public comment period, BLM received a large number of comments on the rule from both public interest organizations and industry groups. Any revisions will not become public until OMB completes its review and the final rule is published, perhaps by late fall of this year. The rule would apply to hydraulic fracturing operations conducted on the approximately 700 million acres of federal mineral estate and 56 million acres of Indian mineral estate overseen by BLM.
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.