Wednesday, October 18, 2017

Shale Law in the Spotlight: Recent Litigation Relating to Wastewater Injection Well Prohibition in Highland Township

Written by Chloe Marie – Research Fellow

In March 2017, Pennsylvania DEP approved permits for Class II Oil and Gas Related Injection Wells in Highland Township, Elk County, and Grant Township, Indiana County, Pennsylvania. The grant of these permits followed many years of legal proceedings resulting from opposition to the application filed by Seneca Resources Corporation in Highland Township and the application filed by Pennsylvania General Energy in Grant Township. In both instances, local ordinances were enacted to prohibit the wastewater injection wells.

This article will address the litigation pertaining to the Highland Township ordinance while a future article will discuss the litigation relating to the Grant Township ordinance.

First lawsuit timeline (Seneca Resources Corp. v. Highland Township, et al., docket no. 1:15-cv-00060)

On January 9, 2013, Highland Township adopted a Home Rule Charter Ordinance No. 1-9 prohibiting the permanent disposal of waste from oil and gas extraction within the Township’s boundaries.  This Ordinance was enacted nearly seven months after Seneca Resources Corporation (“Seneca’) filed a UIC permit application on June 15, 2012, with the U.S. EPA Region 3 Office to convert an existing natural gas well into a Class II injection well.

The Ordinance took effect on January 14, 2013, and expressly stated that “it shall be unlawful for any individual or corporation, or any director, officer, owner, or manager of a corporation to use a corporation, to deposit, store, ‘treat,’ inject or process waste water, ‘produced’ water, ‘frack’ water, brine or other materials, chemicals or by-products that have been used in the extraction of shale gas onto or into the land, air, or waters within Highland Township.” The Ordinance also stipulated specifically that it applied to disposal injection wells.

On January 28, 2014, EPA Region 3 Office granted said UIC permit allowing Seneca to construct and operate the Class II injection well. Quickly thereafter, the Environmental Appeals Board (EAB) received three petitions for review of the UIC permit (UIC Appeal No. 14-01; 14-02; 14-03), which EAB denied on May 29, 2014, based on procedural grounds. Pursuant to 40 C.F.R. § 124.19(1)(2)(i), EPA Region 3 Office then issued a favorable final permit decision regarding the UIC permit on June 17, 2014.

Seneca initiated a lawsuit on February 18, 2015, against Highland Township and its Board of Supervisors before the U.S. District Court for the Western District of Pennsylvania challenging the Ordinance. Seneca sought a court order preventing the Township from enforcing portions of the Ordinance relating to the prohibition of brine-injection wells within the Township’s boundaries. The complaint stated that “the Ordinance is unduly oppressive, arbitrarily interferes with private business, and imposes unnecessary restrictions upon lawful business activities based on the mere allegation and speculation that all disposal and storage of brine adversely affects the health, safety, and welfare of the residents of the Township.” Seneca requested the U.S. District Court to declare that the Ordinance was preempted by the Federal Safe Drinking Water Act and the Pennsylvania Oil and Gas Act and that the Ordinance adoption reflected an impermissible exercise of police power.

On March 24, 2015, Highland Township amended and revised Ordinance No. 1-9 in response to Seneca’s Motion for Preliminary Injunction filed twelve days before. Seneca then filed an Amended Complaint on April 6, 2015, declaring that “rather than eliminating the patently objectionable deprivations of Seneca’s constitutional rights, the Amended Ordinance merely masks those deprivations by not referring specifically to certain Constitutional Amendments” before adding that “the Amended Ordinance continues to ban the disposal and storage of Brines within the Township and purports to invalidate state and federal permits which authorize the disposal and storage of Brines within the Township.”

On April 21, 2015, Highland Township filed a motion to dismiss the lawsuit alleging a lack of standing. Highland Township pointed out that Seneca had not yet received the required DEP permit to pursue its project and also had failed to perform the mechanical integrity test for UIC wells set forth in the EPA permit. Furthermore, the motion stated that the Amended Ordinance “solely affects Seneca’s ability to create and operate an injection well within Highland Township, and does not affect any other aspect of Seneca’s operations within Highland Township.” The U.S. District Court denied said motion on March 29, 2016.

On April 21, 2016, Seneca filed a motion for judgment on the pleadings highlighting that “there is no question that Seneca is entitled to judgment on the pleadings as the Amended Ordinance preempts various Pennsylvania statutes and impermissibly divests Seneca of fundamental rights under the Supremacy Clause and the First, Fifth and Fourteenth Amendments of the United States Constitution.”

On August 11, 2016, Highland Township and Seneca entered into a Consent Decree and agreed to resolve Seneca’s claims that portions of the Amended Ordinance were unconstitutional under both the U.S. and Pennsylvania Constitutions and constituted an impermissible exercise of Highland Township’s legislative authority. The Consent Decree clarified that “nothing … shall preclude Seneca from challenging any future ordinance or charter by Highland, whether adopted by a new Board of Supervisors again seeking to assert those powers claimed in the [Amended] Ordinance … or otherwise.” On the next day, the U.S. District Court approved and adopted said Consent Decree as constituting a final judgment of the court.

Second lawsuit timeline (Seneca Resources Corp. v. Highland Township et al., docket no. 1:16-cv-00289)

On November 8, 2016, Highland Township adopted a new Home Rule Charter Ordinance, which again permanently banned the deposition of waste associated with oil and gas extraction activities. The new Ordinance also specified that “no permit, license, privilege, charter, or other authorization, issued by any state or federal government entity, that would enable any corporation or person to violate the rights or prohibitions of this Charter, shall be lawful within Highland Township.”

As a result, Seneca filed another lawsuit on November 30, 2016, against Highland Township challenging the new Ordinance before the U.S. District Court for the Western District of Pennsylvania. Seneca asserted that portions of the new Ordinance are “substantially identical” to the prior Amended Ordinance, which was found to be unconstitutional in an earlier ruling.

On February 9, 2017, Seneca requested the U.S. District Court to enter a judgment on the pleadings, again alleging that the new Ordinance was unconstitutional pursuant to the First, Fifth and Fourteenth Amendments and the Supremacy Clause of the U.S. Constitution. Recently, on September 29, 2017, the U.S. District Court granted such motion in part and invalidated several provisions of the new Ordinance. 

DEP process timeline

During the pendency of the litigation described above, the Pennsylvania Department of Environmental Protection (DEP) review process was underway. In a letter dated January 2015, the Highland Township Board of Supervisors advised DEP that the UIC permit delivered to Seneca by U.S. EPA was invalid based on the Amended Ordinance and thus future permits issued by DEP also would be considered as invalid. In the meantime, Seneca notified Pennsylvania DEP of the pending litigation between the company and Highland Township.

On August 12, 2015, Pennsylvania DEP decided to suspend its review of the UIC permit pending a court decision and emphasized its “obligation to consider applicable local ordinance related to environmental protection and the Commonwealth’s public natural resources” even though it expressed doubts about the validity of the Township Ordinance.

Following the Consent Decree approved by the court on August 12, 2016, Pennsylvania DEP approved the UIC permit application filed by Seneca on March 27, 2017. Interestingly, on the same date, Pennsylvania DEP also initiated a lawsuit against Highland Township seeking to invalidate the provisions set out in the new Ordinance (Pennsylvania DEP v. Highland Township of Elk County, Commonwealth Court of Pennsylvania, docket no. 123 MD 2017).

Monday, October 16, 2017

Shale Law Weekly Review - October 16, 2017

Written by Jacqueline Schweichler - Education Programs Coordinator

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

National Energy Policy: EPA Proposes to Repeal Clean Power Plan
On October 10, 2017, the U.S. Environmental Protection Agency (EPA) issued a Notice of Proposed Rulemaking to repeal the Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units, better known as the Clean Power Plan. The EPA proposes that the regulations exceeded the agency’s statutory authority and that repeal of the regulations will “facilitate the development of U.S. energy resources.” The purpose of the Clean Power Plan was to establish guidelines for states to reduce greenhouse gas emissions from existing fossil-fuel electric generating units.

Pipelines: FERC Grants NEXUS Pipeline Permission to Begin Construction
On October 11, 2017, the Federal Energy Regulatory Commission (FERC) granted NEXUS Gas Transmission, LLC’s request to proceed with the construction of the NEXUS pipeline project. The grant omits several locations and activities from the approval. To obtain approval for the omitted activities, NEXUS must file information required by various Environmental Conditions issued by FERC. The NEXUS pipeline is a 255-mile interstate pipeline that will deliver 1.5 Bcf/d of natural gas from eastern Ohio to Michigan.

Local Regulation: Ohio Supreme Court Declines to Compel Certification of Ballot Proposal that Would Prohibit Drilling
On October 6, 2017, the Supreme Court of Ohio declined to compel the Mahoning County Board of Elections (Board) to certify petitions for inclusion on the election ballot (The State ex rel. Flak et al. v. Betras et al., Slip Opinion, No. 2017-Ohio-8109). One of the proposed amendments to the ballot, The Water Amendment, would declare that the people within the city of Youngstown have the right to clean air and water. This amendment would prohibit actions violating that right, including oil and gas drilling and extraction. The Board had determined that the proposed amendments contained provisions exceeding the scope of the city’s authority. The court held that the Board may refuse to certify proposed ballot amendments if the matter is beyond their authority to enact.

Pipelines: Court Refuses to Vacate Dakota Access Pipeline Easement While New EIS is Prepared
On October 11, 2017, the U.S. District Court for the District of Columbia refused to vacate the easement granted to the Dakota Access pipeline (Standing Rock v. Army Corps, No. 16-1534). This decision follows a court ruling from June where the judge ruled that the Army Corps of Engineers’ Environmental Impact Statement (EIS) was inadequate. The court here held that the inadequacies in the EIS were not “fundamental or incurable flaws,” and therefore, halting the use of the pipeline would be an inappropriate remedy.

Pipelines: National Academies of Science Report Examines Natural Gas Pipeline Transportation
On October 11, 2017, the National Academies of Science introduced a new report, Safely Transporting Hazardous Liquids and Gases in a Changing U.S. Energy Landscape which analyzes the transportation of hazardous materials like oil, ethanol, and natural gas by pipeline, barge, and railroad. The report found that pipeline unintentional releases, or spills, have not increased and most year-to-year fluctuations are the result of major incidents. The research indicates that the increase of pipeline mileage and traffic will result in more pipeline spills in the future. In addition, release mechanisms like corrosion and cracking or excavation damage will add to the amount of spills over time. Advanced pipeline construction methods could limit spills, but pipeline maintenance, integrity management and leak monitoring are vital to suppressing future spills.

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See our Global Shale Law Compendium and this week’s article, Shale Governance in Australia. (Western Australia, South Australia, and Queensland)

Check out this week’s Shale Law in the Spotlight: Status and Overview of BLM Hydraulic Fracturing Rule

Stay informed with our monthly Agricultural Law Brief located here.

Friday, October 13, 2017

Global Shale Law Compendium – Shale Law Governance in Australia (Western Australia, South Australia, and Queensland)

Written by Chloe Marie – Research Fellow

The Global Shale Law Compendium series addresses legal developments and other issues related to the governance of shale oil and gas activities in various countries and regions of the world. In this article, we will highlight governance actions taken by some of the states in Australia to develop policies specific to shale gas development. In a previous article, we addressed shale gas development in the states of New South Wales, Victoria, and Tasmania, as well as the Federal Northern Territory.

Western Australia

The Government of Western Australia (WA) estimates that there are around 280 Tcf of potential shale gas resources located in the Canning and Perth Basins. It also identifies potential resources in the Carnarvon and Officer Basins, but those remain “still underexplored.” The Government declared that 17 exploration wells were drilled in Western Australia from 2005 to 2012, of which 13 were hydraulically fractured.

Recognizing this great potential, the WA Department of Mines and Petroleum released new draft regulations on May 30, 2014, with the purpose of strengthening its existing regulatory framework for onshore oil and gas activities in Western Australia as well as addressing issues specific to shale gas development. Those regulations were adopted on July 1, 2015.

In the meantime, on August 7, 2013, the WA Standing Committee on Environment and Public Affairs proposed to investigate the implications for Western Australia of hydraulic fracturing for unconventional gas in order to answer multiple concerns raised among the WA community. The WA Standing Committee released said report in November 2015 and stated that “the purpose of this inquiry has been to provide a comprehensive body of factual information and findings to assist the Parliament of Western Australia, future decision makers and the public in their contemplation of this industry.”

As part of its findings and recommendations on several key areas, the Committee found that “many of the concerns expressed by the community in relation to the impact of hydraulic fracturing for unconventional gas can be addressed through robust regulation and ongoing monitoring.” The Commission also recommended that the “Government establish a working group, including land owner representatives and community leaders, to draft legislation for a statutory framework for land access agreements between land owners and resource companies.”

In its response to the inquiry, the Western Australian State Government supported most of the recommendations expressed by the Committee and agreed to further work on the current regulations. It did not agree, however, on establishing a statutory body to act as an independent arbiter for land owners and resource companies in land access negotiations involving shale gas development. The Government stated that “mechanisms for negotiating access agreements with landholders have developed significantly since the Committee report.”

The discussion relating to shale gas development in Western Australia, however, took a new turn with the appointment of a new Premier in March 2017. Indeed, during the state election campaigns, Premier Mark McGowan clearly stated his intention to stand against the use of hydraulic fracturing in Western Australia. Subsequently, on September 6, 2017, a ban on hydraulic fracturing was implemented for unconventional gas covering all existing and future petroleum titles in the South-West, Peel and Perth metropolitan regions in Western Australia until further review has been performed on the potential impacts of hydraulic fracturing.

South Australia

The South Australia State Government has indicated that “early indications show that the Cooper Basin could potentially produce more than 200 Tcf [of shale gas resources]” and that “several unconventional reservoir plays are being actively explore for gas/oil by more than 20 companies in South Australia.” Originally, shale gas exploration in South Australia started in October 2012, but the developmental phase has not yet begun.

The South Australian State Government was the first state to publish a comprehensive plan for the development of its shale gas resources.  This plan, published in December 2012 and entitled Roadmap for Unconventional Gas Projects in South Australia, contains a great number of recommendations to maximize the developmental potential while minimizing impacts.

As in Western Australia, the South Australian Parliament’s Natural Resources Committee initiated in November 2014 an investigation relating to the impacts of hydraulic fracturing activities in the South East of South Australia. The Committee released a Final Report on November 29, 2016, and made a total of 5 recommendations and 10 findings. The Committee found that “the natural gas industry does not currently have social licence to operate in the South East, and in the committee’s opinion unconventional gas exploration and development should not proceed without it.” The South Australian State Government provided responses to the recommendations on March 30, 2017, and confirmed that those recommendations would be taken into consideration in any future review of the State Petroleum and Geothermal Energy Act of 2000.


According to the Queensland State Government, shale gas exploration and development is still at a very early stage in Queensland despite having some promising potential in the Isa Superbasin, Maryborough, Georgina, Cooper and Eromanga basins. Until now, just over 20 exploration wells have been drilled in Queensland to evaluate the shale gas reserves.

Interestingly, on August 24, 2008, the Government of Queensland introduced a 20-year moratorium on developing the McFarlane oil shale deposit located in the Whitsunday Region of Queensland pending review of the potential risks associated with shale oil development on the environment. On February 13, 2013, the Government continued the 2008 moratorium, which is scheduled to end in 2028.