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.
As reported by the Wilkes Barre Times-Leader, the Pennsylvania Department of Environmental Protection (“DEP”) recently approved a solid waste disposal permit modification to allow Keystone Sanitary Landfill (“Keystone”), located in Lackawanna County, to process water-based drilling fluid waste. Keystone will separate the solids from the incoming fluid waste. According to DEP’s approval letter, the separated liquid will be returned to oil and gas industry operators for reuse, while the solid waste will be processed on site and deposited in the landfill. The approved permit modification does not increase Keystone’s 2,000-ton daily limit on the disposal of drilling-related materials.
In a recent opinion, the Pennsylvania Superior Court addressed whether Pennsylvania’s Landlord and Tenant Act of 1951 (the “Act”), and the applicable statute of frauds contained therein, applies to oil and gas leases. In Nolt v. TS Calkins & Associates, LP, a landowner executed an oil and gas lease to lease the oil and gas rights in a 98-acre parcel of land. The landowner thereafter agreed to sell a portion of his property to the plaintiffs. The plaintiffs subsequently filed a quiet title action arguing that the oil and gas lease is invalid and created a cloud on the title on their property. More specifically, the plaintiffs argued that the oil and gas lease was subject to the Act, and that the statute of frauds contained in the Act requires a lease to be signed by both the lessor and the lessee to be valid. Because the lessee did not sign the lease, the plaintiffs argued that only a year-to-year lease was created and that it had expired. In response, the defendants argued that an oil and gas lease is not a lease governed by the Act, but instead is a transfer of realty subject to the more general statute of frauds, which requires only the signature of the grantor. The Pennsylvania Superior Court agreed with the defendants and held that the transaction did not create a lease, but rather a transfer of a property right in the oil and gas. Accordingly, the conveyance was subject to the general statute of frauds, not the statute of frauds contained in the Act, and the plaintiffs’ argument fails.
The Pittsburgh Business Times reports that Rice Energy Inc. is acquiring 12 wells and 22,000 net acres in Greene County, Pennsylvania from Chesapeake Energy Inc. Seven of the wells are currently producing and the five other wells are being developed, according to a statement by Rice.
Warren Resources has executed a purchase and sale agreement to acquire Marcellus shale assets from Citrus Energy Corporation and two other working interest owners, reports Shale Energy Insider. The acquired assets, located in Wyoming County, Pennsylvania, are all held by production, and provide Warren with a new core area in addition to its oil assets in California and natural gas assets in Wyoming.
Marcellus Drilling News reports that the Pennsylvania House and Senate passed a budget that did not include a Marcellus Shale severance tax. Governor Tom Corbett withheld his signature while he continues to work with lawmakers on pension reform.
Oil and gas production increased by 640% from 2012 to 2013 according to a report published by the Ohio Department of Natural Resources. The one year increase was the largest in Ohio history and is the most natural gas that Ohio has produced since 1982. Much of the increase is due to the production of 352 active horizontal wells in Ohio, which have overtaken the production of over 51,000 vertical wells. To date, Ohio has approved 1,386 permits for horizontal drilling with 470 wells in production or capable of production. Officials project that another 700 wells will be drilled in 2014 and 800 in 2015.
Today the New York Court of Appeals issued an opinion affirming local zoning laws adopted by two upstate towns that prohibited oil and gas-related activities within their borders. Specifically, the Court ruled that there was nothing within the plain language, statutory scheme and legislative history of the New York Oil, Gas and Solution Mining Law (“OGSML”) that manifested an intent by the legislature to preempt a municipality’s home rule authority to regulate land use. The Court expressly stated in the decision that it was not passing judgment on “whether hydrofracking is beneficial or detrimental to the economy, environment or energy needs of New York,” noting that the cases only “concerned the relationship between the State and its local government subdivisions, and their respective exercise of legislative power.” A copy of the Court’s opinion can be found here.
Energy Transfer Partners, L.P.’s board of directors has approved the construction of a new pipeline to transport gas to markets in the United States and Canada. The pipeline’s capacity is proposed to transport 2.2 billion cubic feet per day and may be expanded up to 3.25 billion cubic feet. The pipeline has already received commitments from some of the largest producers in the area and is expected to gain additional commitments in the future.
New York Assembly Speaker Sheldon Silver announced that the Assembly passed a bill on June 16, 2014, that would impose a moratorium on hydraulic fracturing for a period of three years. The legislation, which passed by a vote of 96 to 37, calls for the New York Department of Environmental Conservation to suspend issuing permits for hydraulic fracturing until 2017. The bill’s memo indicates that the delay is necessary to provide the legislature with additional time to review the effects of hydraulic fracturing on public health and the environment, citing several ongoing national studies that are not expected to be finalized within the next three years. “We do not need to rush into this. The natural gas deposits within the Marcellus Shale are not going to go anywhere,” Silver said. The Assembly passed similar legislation in 2013 that would have established a two-year moratorium, but that measure died in the Senate and was returned to the Assembly in January 2014. Observers believe that the Senate is unlikely to act on the bill before the lawmakers adjourn for the summer.
The U.S. Environmental Protection Agency (USEPA) recently extended the public comment deadlines associated with its proposed rulemaking to redefine “waters of the United States” for federal Clean Water Act programs and its request for information regarding a possible rulemaking for the disclosure of hydraulic fracturing chemicals. The new comment deadline for the Clean Water Act rulemaking is October 20, 2014. The new deadline to comment on the advance notice of proposed rulemaking regarding chemical disclosure is September 18, 2014.
On Friday, June 13, 2014, the Pennsylvania Department of Environmental Protection (“DEP”) adopted a final rulemaking that increased well permit fees for unconventional wells in Pennsylvania for the first time since October 24, 2009. The new rule, which took effect on June 14, 2014, fixes the permit fees for non-vertical natural gas wells at $5,000 and for vertical natural gas wells at $4,200. Prior to the new rule, permit fees for unconventional wells were calculated on a sliding scale basis as determined by the length of the wellbore. As reported by PR Newswire, the result of the DEP’s new rule will be to increase the permit fee for an average unconventional well by about $1,800 and $1,300 for horizontal and vertical gas wells, respectively, while the permit fees for conventional wells will remain the same. The DEP projects that this change will result in an additional $4.7 million in annual revenue, which will be used to support new information technology projects related to oil and gas and to hire additional staff for the DEP’s entirely self-funded Office of Oil and Gas Management.