Monday, June 24, 2019

Shale Law Weekly Review - June 24, 2019


Written by:
Sara Jenkins - Research Assistant
Jackie Schweichler - Staff Attorney

The following information is an update of recent local, state, national, and international legal developments relevant to shale gas.

Federal Lands: Department of Interior Issues Guidance on the Recalculation of Royalties Following Reinstatement of 2016 Rule
On June 13, 2019, U.S. Department of the Interior’s Office of Natural Resources Revenue (ONRR) issued a letter explaining that all federal oil and gas lessees, along with federal and Indian coal lessees, must recalculate royalty payments from January 1, 2017, to the present. The letter follows a ruling by the U.S. District Court for the Northern District of California, which vacated ONRR’s repeal of a 2016 rule titled, Consolidated Federal Oil & Gas and Federal & Indian Coal Valuation Reform (2016 rule). The District Court’s action reinstated the 2016 rule, creating a need for federal lessees to recalculate royalties under the 2016 rule. ONRR is offering resources including letters, trainings, and royalty valuation guidance to help support lessees with the transition back to the 2016 rule.

Pipelines: Pennsylvania’s Public Utility Commission Seeks Comment on Pipeline Rulemakings
On June 13, 2017, the Pennsylvania Public Utility Commission (PUC) announced that it was seeking comment on rulemaking proposals regarding pipeline safety regulations and pipeline utility financial reporting. PUC is seeking public comments on an Advance Notice of Proposed Rulemaking Order to more “comprehensively regulate the design, construction, operations and maintenance of public utilities transporting petroleum products.” The order states that PUC follows federal minimum pipeline safety requirements but that it may adopt more stringent standards. PUC also is seeking public comments on another Notice of Proposed Rulemaking Order, which seeks to require public utilities providing pipeline transport of oil and gas to file annual reports on depreciation, service life studies, and capital investment plans. Currently, PUC’s reporting requirements apply only to electric, gas, and water service public utilities.

International Development/Pipelines: Canada Announces Approval of Transmountain Pipeline Expansion Project
On June 18, 2019, Canadian Prime Minister Justin Trudeau announced government approval for the Trans Mountain pipeline expansion project (project). The government based its decision on a plan to bridge the gap between present and future energy development as well as a plan to create a strategy for reaching the global market. Trudeau explained that money earned from the project, including tax revenue and possible sale of the pipeline, would be invested into Canada’s clean energy transition. Trudeau also addressed concerns from indigenous groups, stating that the government would be open to input from the groups on how they could benefit from the project, including equity stakes and revenue sharing. The project is expected to cost $7.4 billion CAD and increase the transport capacity of the pipeline from 300,000 barrels of oil per day to 890,000 barrels per day.

From the National Oil & Gas Law Experts:
George Bibikos, At the Well Weekly, (June 14, 2019)


Dena Adler, Jessica Wentz, and Romany Webb, Four Important Points About EPA’s Affordable Clean Energy Rule, (June 20, 2019)

Pennsylvania Legislation:
HB 1557: would amend the Coal Refuse Disposal Control Act, designating areas where coal refuse disposal is prohibited (Re-reported as committed - June 19, 2019)

HB1635: would provide legislative framework specific to conventional oil and gas drillers to assist family owned operations (Referred to Environmental Resources and Energy - June 14, 2019)

HB1649: would require additional reporting requirements for unconventional natural gas well operators (Referred to Environmental Resources and Energy - June 18, 2019)

SB258: would mandate that public utilities transporting natural gas must identify high consequence areas and emergency operating procedures (First consideration - June 19, 2019)

SB284: would require pipeline operators to provide Emergency Response Plans to the Public Utility Commission (First consideration - June 19, 2019)

HB247: would allow well bores to cross multiple units so long as the operator has the right to drill wells on those units (Laid on the table and Removed from table - June 20, 2019)

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This week we published a new Shale Law in the Spotlight article: Shale Law in the Spotlight – Oregon and Washington Enact Hydraulic Fracturing Bans.

Check the May Agricultural Law Brief! Each month we compile the biggest legal developments in agriculture. If you’d like to receive this update via email, check out our website and subscribe!

Wednesday, June 19, 2019

Shale Law in the Spotlight – Oregon and Washington Enact Hydraulic Fracturing Bans


Written by Chloe Marie – Research Specialist

This article will provide an overview of recent legislative developments that have taken place in the states of Oregon and Washington to prohibit the use of hydraulic fracturing for any future oil and gas development projects. According to the most recent production report published by the U.S. Energy Information Administration (EIA), Oregon had 659 MMCF of natural gas production in 2017. With this production level, Oregon ranked 28th out of 34 natural gas-producing states. According to the EIA report, Washington did not have any natural gas production in 2017. Additionally, neither Oregon nor Washington are listed as producing any oil during February 2019, which is the latest data available on the EIA website.  

Washington and Oregon join the states of New York, Maryland, and Vermont which have previously adopted statewide bans on hydraulic fracturing drilling activities. In May 2012, Vermont became the first state to permanently ban the practice of hydraulic fracturing for the drilling of unconventional wells. The states of New York and Maryland subsequently acted to prohibit such activities in June 2015 and April 2017, respectively, due to stated concerns over the potential impacts of such technique on the environment and public health.

Washington state

On May 8, 2019, Governor Jay Inslee signed into law Senate Bill No. 5145, a very brief bill imposing a permanent ban on the use of hydraulic fracturing in the exploration and production of oil and natural gas in the state of Washington. The new legislation clarifies that it “does not prohibit the use of hydraulic fracturing for other purposes.” The definition of hydraulic fracturing in the bill, however, is limited to actions taken “for the purpose of production or recovery of oil or natural gas.” The ban on hydraulic fracturing is set to become effective on July 28, 2019.

Upon signing the bill, Governor Inslee issued a Press Release welcoming the ban and stressing the urgency and the importance of taking action now against climate change and preventing the environmental impact specific to the development of natural gas. In this regard, Governor Inslee declared that “[t]he accelerating threat of climate change and the emerging science on the damaging impacts of natural gas production and distribution mean we must focus our full efforts on developing clean, renewable and fossil-fuel free energy sources. Being committed now to 100 percent clean electricity and signing a bill prohibiting fracking in Washington state, we want to be consistent to that spirit of progress.” Approximately one month earlier, on May 7, 2019, Governor Inslee had signed into law Senate Bill 5116 establishing and supporting a 100 percent clean electricity standard in the state of Washington.

Oregon

Following Washington in close temporal proximity, the Oregon Legislative Assembly passed House Bill No. 2623 on June 10, 2019, to implement a moratorium on the use of hydraulic fracturing in the exploration for, or in the production of, oil and natural gas in Oregon. HB 2623 passed the Oregon House of Representatives on March 18 and included a moratorium on the use of hydraulic fracturing in the state for a total of 10 years. During its consideration of the bill, however, the Senate made amendments to the House proposal, shortening the period of the moratorium from 10 to 5 years. The House accepted those amendments and repassed the bill on June 5, 2019. The House Speaker and the President of the Senate each signed the bill on June 7 and 10, respectively.

The bill provides an exemption from the ban for the drilling of natural gas storage wells, geothermal wells, activities related to exploration for geothermal energy, and coal bed methane extraction wells in existence as of the effective date of the legislation. The State Legislative Assembly passed this bill as “being necessary for the immediate preservation of the public peace, health and safety” and declared it to be an emergency measure. According to Oregon Senator James Manning, “[t]his bill will put a stop to a dangerous and environmentally damaging practice in Oregon … [w]e don’t want oil and gas companies to come in and start wasting our water and damaging our environment to make a buck. It dirties our water and pollutes our planet,” as reported by Kallanish Energy in a media article released on June 5, 2019.

Oregon Governor Kate Brown signed the legislation on June 17, 2019. The temporary ban is set to expire on January 2, 2025.

References:

Washington




Oregon


Additional Resources:






This material is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture.

Monday, June 17, 2019

Shale Law Weekly Review - June 17, 2019

Written by:
Sara Jenkins - Research Assistant
Jackie Schweichler - Staff Attorney

The following information is an update of recent local, state, national, and international legal developments relevant to shale gas.

Municipal Regulation: PA Appeals Court Rules that Grandmother Lacks Standing to Challenge Natural Gas Well Location
On June 6, 2019, the Commonwealth Court of Pennsylvania upheld a trial court ruling that a grandmother concerned over her granddaughter’s health lacked standing to challenge the location of a natural gas well site (Worthington v. Mount Pleasant Township, No. 1149 C.D. 2018). The Plaintiff, Jane Worthington, was denied party status at a Mount Pleasant Township Board of Supervisors (Board) hearing regarding approval of a conditional use permit for the well site. Ms. Worthington requested party status to contest the location of the well site over concerns that wind could carry benzene from the site to her granddaughter’s school nearby, affecting her granddaughter’s already poor health. Ultimately, the Commonwealth Court agreed with the Board and the trial court, finding that Ms. Worthington’s “theoretical concerns” did not amount to the “substantial, direct and immediate interest” required to establish standing.

Surface Owner Rights: WV Supreme Court Rules Surface Landowners Not Substantially Burdened by Horizontal Drilling
On June 10, 2019, the Supreme Court of Appeals of West Virginia ruled that surface landowners were not substantially burdened by the horizontal drilling used to develop the Marcellus shale beneath their properties (Andrews v. Antero Resources Corp., No. 17-0126). Petitioners, consisting of various surface landowners, argued that their use and enjoyment of land was being improperly and substantially burdened by the drilling operations. The Petitioners alleged the drilling activities amounted to nuisance and negligence caused by heavy equipment, truck traffic, vibrations, noise, and dust. Respondents, Antero Resources Corporation and Antero Resources Bluestone, LLC had obtained development leases from severance deeds that retained the mineral rights beneath Petitioners’ properties. The court found that the Respondents were not causing any physical damage to the Petitioners’ properties, and the Respondents were within their surface use rights to conduct the activities in question.

International Development: Norway’s Parliament Votes for Increased Restrictions on Fossil Fuel Investments
On June 12, 2019, Norway’s Parliament voted to increase restrictions on fossil fuel investment within Norway’s sovereign wealth fund. According to Reuters, the vote prohibits investment in companies that “mine more than 20 million tonnes of coal annually or generate more than 10 gigawatts (GW) of power from coal.” Norway’s sovereign wealth fund currently invests in 341 oil and gas companies around the world. Reuters reports that the new rules would mean Norway’s fund would divest its stake in companies such as Glencore and Anglo American.

LNG Exports: Commission Approves New Pier for Natural Gas Transportation in New Jersey
On June 12, 2019, the Philadelphia Inquirer reported the approval of plans to construct a new pier in Greenwich Township, New Jersey for the transport of liquified natural gas (LNG). The Delaware River Basin Commission, made up of representatives from Pennsylvania, New Jersey, Delaware, New York, and the federal government, approved the plans at a meeting on June 12. The pier project, proposed by Delaware River Partners, LLC, would allow large tankers to dock along a 1600-foot pier, increasing the capability to ship several commodities, including LNG produced from Pennsylvania wells. The project is expected to cost $96 million.

LNG Exports: City Council Approves Liquified Natural Gas Facility in Southwest Philadelphia
On June 13, 2019 the Philadelphia City Council approved ordinance 181063, which creates a partnership between Philadelphia Gas Works (PGW) and Passyunk Energy Center, LLC (PEC) to build and operate liquified natural gas (LNG) facilities in the city. According to Whyy.org, the city council approved the ordinance with a 13-4 vote. The project will be funded by PEC, and is expected to generate $4 million per year in revenue for PGW. The new LNG facilities will be located within PGW’s existing Passyunk Plant. No additional pipelines or water supplies will be needed for the project.

From the National Oil & Gas Law Experts:
Charles Sartain, What’s the Bidding on the Green New Deal?, (June 13, 2019)

John McFarland, What Happens to Unclaimed Royalties?, (June 13, 2019)


Pennsylvania Legislation:
SB 305: would allow landowners to receive compensation in certain eminent domain actions by the Delaware River Basin Commission (Re-referred to Appropriations - June 11, 2019)

HB 1392: would create an electric vehicle road use fee in accordance with the oil company franchise tax for highway maintenance and construction (Re-committed to Rules - June 10, 2019)

Follow us on Twitter at PSU Ag & Shale Law (@AgShaleLaw) to receive ShaleLaw HotLinks:

Connect with us on Facebook! Every week we will post the CASL Ledger which details all our publications and activities from the week.

Want to get updates, but prefer to listen? Check out the Shale Law Podcast! We can always be found on our Libsyn page, iTunes, Spotify, or Stitcher.


Check the May Agricultural Law Brief! Each month we compile the biggest legal developments in agriculture. If you’d like to receive this update via email, check out our website and subscribe!