Wednesday, December 12, 2018

Shale Law in the Spotlight – Overview of Recent Legal Actions Relating to the Dakota Access Pipeline (Part 1)


Written by Chloe Marie - Research Specialist

The Dakota Access Pipeline began commercial operation in June 2017 after a number of lengthy legal and regulatory processes. Even after oil began to flow through the pipeline, several legal conflicts continued to move forward. In this article, as well as in two planned articles to be published soon, these ongoing legal proceedings will be addressed.

Olin et al. v. Dakota Access, LLC, U.S. District Court for the District of North Dakota

On January 6, 2017, a group of landowners residing in Morton County brought legal action against Dakota Access Pipeline, LLC (Dakota Access) alleging that the pipeline company deceptively prompted some landowners to move quickly to accept easement offers at a price lower than that offered to other Morton County residents. The landowners stated in their complaint that Dakota Access used “misrepresentations, deception, or other unfair tactics” so that certain landowners could sign easement agreements at a $216 price per rod coupled with a 20% signing bonus while other residents were able to receive up to $2,000 per rod from the company.

The aggrieved landowners also pointed out that Dakota Access pressured them into signing the easement agreements by saying that “$216 per rod was the best price they would ever receive for the easements burdening their lands, that other landowners in Morton County would never receive a better price per rod, that other Morton County Landowners would receive a lower price per rod by not promptly signing the easement agreement, and that the Morton County Landowners would lose their signing bonus if they did not promptly sign an easement with Dakota Access.” In addition, the landowners alleged that Dakota Access wrongly declared that if they did not sign the easement agreement, their lands would be condemned anyway using eminent domain. The landowners thus sought indemnification for damages alleging a violation of the Unfair Tactics Statute codified at N.D.C.C. § 49-22-16.1 and claiming an amount in excess of $4,000,000 from Dakota Access.

Dakota Access filed a motion for judgment on the pleadings on April 6, 2017, calling this lawsuit a “case of sellers’ remorse.” Dakota Access argued that no violation of N.D.C.C. § 49-22-16.1 occurred “because the allegations lack particularity, fail to identify any specific misrepresentations of material fact, and are nothing more than mere puffery or sales talk” that does not constitute fraud. Furthermore, Dakota Access emphasized that there is no proven case of fraudulent representations from Dakota Access because the landowners have failed to specifically identify those who have been perpetrating fraud and those who have been victims.

On October 10, 2017, the U.S. District Court for the District of North Dakota granted Dakota Access’ motion for judgment on the pleadings, holding that the alleged misrepresentations do not constitute fraud because the statements were not representations of past or present material fact. More precisely, the court opined that “the Plaintiffs are upset their neighbors got a better price when the agent predicted prices would never be better. However, the Court finds that opinions and predictions as to what future prices will be are simply not actionable as fraud.”

The group of landowners filed an appeal to the U.S. Court of Appeals for the Eighth Circuit on November 7, 2017. On October 18, 2018, the Court of Appeals, located in Saint Paul, Minnesota, heard oral argument on the fraud allegations.

Further information on the Olin et al. v. Dakota Access, LLC case is available at docket no. 1:17-cv-007.

Stay tuned for further legal developments!

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

Shale Law Weekly Review - December 12, 2018


Written by:
Brennan Weintraub - 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.

Pipelines: State Department to Prepare Supplemental Environmental Impact Statement for Keystone XL Pipeline
On December 3, 2018, the U.S. State Department issued a Notice of Intent to prepare a supplemental Environmental Impact Statement (EIS) for the proposed Keystone XL pipeline. TransCanada resubmitted its 2012 Presidential permit application for the Keystone XL in January 2017.  Shortly thereafter, the Under Secretary of State for Political Affairs issued the pipeline permit to TransCanada, and the Nebraska Public Service Commission approved the Mainline Alternative Route.  Following the Department of State’s (Department) issuance of the draft EIS for the Mainline Alternative route, the U.S. District Court for the District of Montana ordered Department to supplement its analysis.  The court found that Department had not taken a sufficiently “hard look” at the potential environmental impacts of the project (Indigenous Environmental Network v. United States Department of State, CV-17-29-GF-BMM). The pipeline, if completed, will carry crude oil from Canada to terminals in Oklahoma and Texas.

Air Quality: Ohio EPA Considers Expanding Air Pollution Requirements to Existing Unconventional Oil and Gas Facilities
On November 20, 2018, the Ohio Environmental Protection Agency issued a press release asking for comments on proposed changes to oil and gas rules in the state. Specifically, the agency is considering expanding air pollution emission standards.  The new rules would continue to cover all new unconventional oil and gas facilities as well as existing facilities.  According to the press release, the agency is looking for comments from stakeholders before they draft new language for the rules. The agency will be accepting comments through December 14, 2018.

Pipelines: Louisiana Court Orders Bayou Bridge to Pay Fees for Trespass but Allows Expropriation of Properties Along Pipeline Route
On December 6, 2018, the Louisiana 16th Judicial District Court held that Bayou Bridge Pipeline, LLC (Bayou Bridge) trespassed when it built its pipeline on private land in the Atchafalaya Basin (Bayou Bridge Pipeline, LLC v. 38 Acres, More or Less, Located in St. Martin Parish, No. 87011). The court also found that Bayou Bridge, an entity owned by Energy Transfer Partners, had the right to expropriate properties along the pipeline route. The court determined that the Bayou Bridge Pipeline has a public purpose and that expropriation is reasonably necessary to complete the project.  Bayou Bridge obtained “numerous rights of way” from the hundreds of owners who own a portion of the 38 acres at issue in this lawsuit.  The three landowners in this case had interests between 0.00994% and 0.05803%.  The court determined treble damages based on market value to be between $0.91 and $6.64.  The plaintiffs each were awarded a total of $150 in damages and compensation.  The pipeline, once complete, will carry crude oil 163 miles from Lake Charles to St. James, Louisiana, from where it will be distributed to refineries across the Gulf Coast.

Public Lands: BLM Announces Plans to Open Sage Grouse Habitat to Development
On December 6, 2018, the Bureau of Land Management (BLM) detailed its plans to open roughly nine million acres currently protected as sage grouse habitat to mining and drilling operations.  BLM published the proposed resource management plan amendments and final environmental impact statements regarding the Greater Sage-Grouse for Oregon, Colorado, Idaho, Utah, Wyoming, Nevada and Northeastern California.  According to a New York Times article, the proposed changes would limit the species’ protected area to roughly 1.8 million acres.   These changes follow a 2015 decision that placed restrictions on oil and gas drilling within nearly eleven million acres of sage grouse habitat.

From the National Oil & Gas Law Experts:
George Bibikos, At the Well Weekly, (December 10, 2018)

Charles Sartain, Local Taxation of Oil and Gas Activities Fails Again, Energy and the Law (December 11, 2018)  

John McFarland, Miller on Negotiating Oil and Gas Leases, Oil and Gas Lawyer Blog (December 10, 2018)


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.

This week we published a new Shale Law in the Spotlight article: PHMSA Amends Regulatory Requirements for Crude Oil Trains

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 December 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!

Tuesday, December 4, 2018

Shale Law Weekly Review - December 4, 2018


Written by:
Brennan Weintraub - 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.

GHG Emissions: Report Examines Emissions from Drilling on Public Lands
On November 23, 2018, the United States Geological Survey issued a report finding that 24 percent of greenhouse gas emissions in the nation are caused by drilling on federal lands and offshore areas. The agency found that Wyoming, New Mexico, Louisiana, and Colorado contributed the majority of CO2 emissions on federal lands in 2014. Wyoming emissions alone comprised 57 percent of the total emissions from drilling on federal lands. Additionally, the report found that overall greenhouse gas emissions from oil, gas, and coal mining on these lands dropped between 2005 and 2014.  The researchers collected data from the Office of Natural Resources Revenue, the Mine Safety and Health Administration, the Environmental Protection Agency, and the Energy Information Administration.

Pipelines: Army Corps of Engineers Suspends River-Crossing Permit for Atlantic Coast Pipeline
On November 20, 2018, three district offices of the U.S. Army Corps of Engineers in Pittsburgh, Pennsylvania; Norfolk, Virginia; and Wilmington, North Carolina sent letters to Atlantic Coast Pipeline, LLC informing them of the Corps’ decision to suspend the pipeline’s authorization to cross rivers and streams in those states. This decision follows a November 7 order from the U.S. Court of Appeals for the Fourth Circuit that suspended a water crossing permit in West Virginia.  Another recent court order on November 20 from the U.S. District Court for the Eastern District Court of North Carolina prevented Atlantic Coast from accessing a farm in Nash County.  The pipeline, once completed, will run six hundred miles from West Virginia to North Carolina and will carry natural gas from the Marcellus Shale.

Trespass by Fracture: Pennsylvania Supreme Court Agrees to Consider Whether Rule of Capture Applies to Hydraulic Fracturing
On November 20, 2018, the Pennsylvania Supreme Court issued an order granting a petition for allowance of appeal in order to determine whether the rule of capture applies to oil and gas produced by wells that used hydraulic fracturing  (Briggs v. Southwestern Energy Production Company, No. 443 MAL 2018).  In April 2018, the Pennsylvania Superior Court opined that the rule of capture did not apply to prevent trespass liability from hydraulic fracturing operations.  According to the Superior Court, the rule of capture is “[a] fundamental principle of oil and gas law holding that there is no liability for drainage of oil and gas from under the lands of another so long as there has been no trespass and all relevant statutes and regulations have been observed.” That court held that, because the rule of capture typically applies to oil and gas which is able to migrate within the reservoir and across property lines, it should not apply to the non-migratory oil and gas which is found in shale formations.

International Development: Western Australia Announces New Rules for Hydraulic Fracturing
On November 27, 2018, the government of Western Australia announced that it will lift the hydraulic fracturing moratorium for existing petroleum titles, following the finding of low risk by an independent scientific inquiry.  The practice will continue to be banned in roughly 98% of the state and royalties collected will be used to fund new renewable energy projects.  The government will also allow landowners to make the decision to prohibit oil and gas companies from using hydraulic fracturing on their land.  Additionally, the state has agreed to create two-kilometer buffer zones around sources of public drinking water and residential areas in which no development will take place.

Water Quality: Penn State Study Examines Methane Migration Near Shale Gas Wells
On November 19, 2018, the Proceedings for the National Academy of Science published a study considering new methods of detecting methane contamination in wells located near hydraulic fracturing sites.  The study region focused on a portion of the Marcellus Shale located in Hughesville, Pennsylvania.  The researchers were able to identify chemicals that can indicate whether methane migration resulted from shale gas development or was preexisting.  The study found that methane concentrations were higher in nearby wells after gas development had taken place and that contamination increased at points where the shale formation was relatively shallow and had been highly fractured. It also considered several wells that had previously been cited for leaks and found that, seven years later, methane concentrations are still significantly elevated. The title of the study is Detecting and Explaining Why Aquifers Occasionally Become Degraded Near Hydraulically Fractured Shale Gas Wells. The team of researchers included members of Penn State’s Department of Geosciences.

From the National Oil & Gas Law Experts:
George Bibikos, At the Well Weekly, (November 30, 2018)

Charles Sartain, Texas High Court Invokes the Discovery Rule, Energy and the Law (November 27, 2018)  

John McFarland, Murphy v. Adams - What is an "Offset Well"?, Oil and Gas Lawyer Blog (December 3, 2018)

Dena Adler, Climactic Recent Weeks for International Climate Change Litigation, Climate Law Blog (December 3, 2018)

Pennsylvania Notices
Location Change for Public Hearings regarding: Air Quality Plan Approvals for Proposed Compressor Stations in Delaware, Bucks Counties (December 4, 2018)

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.

This week we published a new Shale Law in the Spotlight article: PHMSA Amends Regulatory Requirements for Crude Oil Trains

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 November 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, November 28, 2018

Shale Law in the Spotlight - PHMSA Amends Regulatory Requirements for Crude Oil Trains


Written by Chloe Marie - Research Specialist                

Shale development is dependent upon having a means to transport that oil and gas to market. Using pipelines to transport shale oil and gas is often the most cost-efficient means of doing so. In light of the many impediments to the development of a reliable pipeline infrastructure, the use of trains to transport oil remains a primary means of connecting the oil fields with the refineries and other users. Because of the heavy use of crude oil trains, these trains have been the subject of much regulatory activity within recent years. On September 25, 2018, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published in the Federal Register a Final Rule amending and repealing certain provisions of the Hazardous Materials Regulations relating to the requirement for certain High Hazard Flammable Unit Trains (HHFUT) to operate using electronically controlled pneumatic (ECP) braking systems.

Background

In May 2015, PHMSA issued a Final Rule entitled “Enhanced Tank Car Standard and Operational Controls for High-Hazard Flammable Trains” to regulate speed restrictions, braking systems and routing for trains carrying large quantities of flammable liquids, including crude oil. The drafting of this Final Rule is based on a series of recorded rail accidents in recent years. PHMSA noted that crude oil and ethanol represent approximately 68% of the flammable liquids transported by railroad.
The Final Rule requires HHFUT trains to be equipped with ECP brake systems, as an alternative to conventional air brakes, for the purpose of reducing in-train derailments. ECP brake systems are designed to send an electronic signal to all equipped cars in the train, thus providing the driver with instant control over the entire train and improving speed of car brake operations.

Section 7311 of the Fixing America’s Surface Transportation (FAST) Act - enacted in December 2015 - required the U.S. Department of Transportation (DOT) to conduct tests on ECP brake systems during emergency situations relative to other braking systems. In addition, the Act required DOT to work with the National Academy of Sciences (NAS) to update the original Regulatory Impact Analysis (RIA) of the PHMSA Final Rule regarding the costs and benefits of the applicable ECP brake system requirements.

On October 16, 2017, DOT announced the availability of the updated RIA, which contains “new testing and analysis the National Academy of Sciences (NAS) reviewed, recommendations from two U.S. General Accountability Office (GAO) audits, and updates to the costs and benefits of the provision of the Final Rule based on current economic conditions.” DOT found that the use of ECP braking systems for HHFUT trains is not justified anymore from a cost-benefit perspective based on two major changes that occurred between the 2015 Final Rule and the updated RIA. First, DOT assessed that both safety and business benefits have decreased since 2015 because the number of HHFUT carloads have diminished and also due to the fact that there has been an increased use of dynamic braking on locomotives. Interestingly, DOT suggested that “any future surge in oil prices may have effects on numerous assumptions of this analysis” before adding that “changes in these assumptions would change the number of carloads needed and therefore also affect the estimated safety and business benefits.”

Consequently, DOT announced on December 13, 2017, its intent to repeal the ECP brake requirements contained in PHMSA 2015 Final Rule based on a final determination that the expected benefits of the ECP brake requirements do not exceed the expected costs.

Repeal of PHMSA 2015 Final Rule’s ECP Brake Requirements

The Final Rule entitled “Hazardous Materials: Removal of Electronically Controlled Pneumatic Brake System Requirements for High Hazard Flammable Unit Trains” repeals the requirements in section 174.310 to equip HHFUT with ECP brake systems, to obtain approval of the use of alternative brake systems, and to mandate retrofit status reports on ECP brake system readiness and use. In addition, DOT also removed ECP braking capability requirements in section 179.102-10 for DOT-117 specification tank cars, performance standard requirement in section 179.202-12 for DOT-117P tank cars, retrofit standards in section 179.202-13 for existing non-pressure DOT-117 tank cars.
DOT announced that the Final Rule became effective on the day of its publication i.e. September 25, 2018 and explained that “good cause exists to publish this rulemaking without a notice of proposed rulemaking and opportunity for public comment and to make the regulations effective prior to 30 days after publication” DOT further added that “this rule simply implements the determination of the Department … therefore, PHMSA would be unable to adjust the text of the rule to account for any public comment.”



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