Wednesday, September 20, 2017

Shale Law in the Spotlight: UPDATE - The Delaware River Basin Commission’s Regulatory Actions on Natural Gas Development

Written by Chloe Marie – Research Fellow

In this article, the Center for Agricultural and Shale law presents an update of an initial article published on August 23, 2017, addressing the Delaware River Basin Commission’s regulatory action and inaction on natural gas development. Based upon action taken by DRBC on September 13, 2017, an update of our prior article was necessary.

The Delaware River Basin Commission (DRBC) is a federal interstate agency comprised of the states of Delaware, New Jersey, New York, Pennsylvania and the U.S. Army Corps of Engineers working together on the management of water resources in the Delaware River Basin. In the past decade, DRBC has proposed regulatory actions to address the impacts of natural gas development using hydraulic fracturing on waters within the Basin. To date, however, DRBC has not finalized any regulations. Without regulation in place, no shale development has taken place within the Basin. Based on recent actions, DRBC appears to be moving towards formalizing this ban on shale development within the Basin. This article will address the actions proposed and undertaken by DRBC to regulate natural gas development projects in the Basin as well as litigation challenging DRBC action and inaction on this topic.

In June 2008, DRBC imposed upon energy companies the obligation to apply for and receive approval from the Commission for any projects requiring water withdrawals, well drilling, construction of water impoundment, and waste disposal into the waters of the Basin. The Commission later issued a determination, dated May 2009, mandating that all natural gas extraction projects located in shale formations within the drainage area of the Basin’s Special Protection Waters must obtain approval from the Commission.

In May 2010, DRBC commissioners passed a resolution directing DRBC staff to develop new natural gas development regulations prior to considering any applications for natural gas wells. DRBC staff published the draft regulations (Article 7 of Part III) for public review on December 9, 2010. In a Press Release of the same date, former DRBC Executive Director Carol R. Collier declared that “the purpose of the proposed regulations is to protect the water resources of the Delaware River Basin during the construction and operation of natural gas development projects. The draft regulations establish requirements to prevent, reduce, or mitigate depletion and degradation of surface and groundwater resources and to promote sound practices of watershed management.”

On May 31, 2011, New York Attorney General Eric Schneiderman filed a lawsuit in the U.S. District Court for the Eastern District of New York against the U.S. Army Corps of Engineers and other federal agencies for failing to conduct a full environmental review of the draft regulation pursuant to the requirements of the National Environmental Policy Act (NEPA). The New York Attorney General stated that “the welfare of those living near the Delaware River Basin, as well as the millions of New Yorkers who rely on its pure drinking water each day, will not be ignored.” A coalition of non-profit environmental groups filed a similar lawsuit in the same court on August 4, 2011 alleging that “absent [an environmental] review, there is no assurance that the regulations the DRBC is poised to finalize will be adequate to control a risky industrial activity that has already caused documented environmental and human health impacts in other states, including Pennsylvania.” The U.S. District Court dismissed both lawsuits contending that “this dispute [was] not currently fit for judicial review.”

The public comment period for the draft regulations ended on April 25, 2011 and after further discussions, DRBC staff published revised draft regulations on November 8, 2011. The draft regulations were to apply to “all natural gas development projects as defined in Section 7.2 including the construction or use of production, exploratory or other natural gas wells in the Basin regardless of the target geologic formation, and to water withdrawals, well pads and related activities, and wastewater management activities comprising part of, associated with or serving such projects.” DRBC staff was to provide the commissioners with an administrative and operational assessment of the regulations within 18 months following the date on which those regulations entered into force. The commissioners would in turn review this assessment within 6 months of its receipt and would recommend some regulatory adjustments if needed. These draft regulations would allow the impacts of such projects on the water.

A special meeting was scheduled originally on November 21, 2011, for the five Commission members, including the governors of the states of Delaware, New Jersey, New York, and Pennsylvania, and the federal representative of the U.S. Army Corps of Engineers, to vote on passing the draft regulations. The meeting, however, was cancelled until the Commission members could complete further review of the regulations, which had not been rescheduled. As a result, no natural gas development projects have taken place within the Delaware River Basin.

Interestingly, in May 2016, Wayne Land and Mineral Group, LLC (WLMG) brought an action before the U.S. District Court for the Middle District of Pennsylvania against DRBC challenging the Commission’s jurisdiction to review and approve natural gas projects located in the Delaware River Basin (see Wayne Land and Mineral Group, LL v. Delaware River Basin Commission, docket no. 3:16-cv-00897). Owners of land overlaying shale gas resources located in the Basin, WLMG claimed that its rights to develop such resources were infringed upon by the Commission and alleged that “natural gas well pads and related facilities targeting shale formations” in the Basin are not “projects” to reviewed by the Commission under Section 3.8 of the Delaware River Basin Compact. WLMG also explained that the Commission is blocking any prospect of development as it announced in 2010 that it would not review applications for natural gas projects until it adopts specific natural gas development regulations.

In early July 2016, the Commission filed a motion to dismiss the complaint, which was granted by the court on March 23, 2017. The court concluded that “on the face of Plaintiff’s Complaint, it is apparent that its proposed activities within the Delaware River Basin constitute a ‘project’ within the meaning of that term as defined in Sections 1.2(g) and 1.2(i) of the Delaware River Basin Compact.” On April 11, 2017, WLMG filed an appeal in the U.S. Court of Appeals for the Third Circuit (docket no. 17-1800), which is still pending at the time of this article.

Six years after cancelling the November 2011 meeting to consider the draft regulations, DRBC approved a procedural resolution on September 13, 2017, to prepare and publish revised draft regulations addressing natural gas development by November 30, 2017. The revised draft regulations will pursue a different regulatory approach than the draft regulations as DRBC now proposes to implement a ban on hydraulic fracturing. In the resolution, DRBC stated that “the revised draft rules to be published … will include prohibitions related to the production of natural gas utilizing horizontal drilling and hydraulic fracturing within the Delaware River Basin” before adding that “the revised draft regulations will also include provisions to ensure the safe and protective storage, treatment, disposal or discharge of hydraulic fracturing-related wastewater where permitted and provide for the regulation of inter-basin transfers of water and wastewater for purposes of natural gas development where permitted.”

Stay tuned for additional legal developments as DRBC moves forward in the regulatory process!

Monday, September 18, 2017

Shale Law Weekly Review - September 18, 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.

Public Lands: Penn Hills Changes Vote to Allow For Seismic Testing
On September 11, 2017, the Penn Hills Council (Council) voted to allow for seismic testing on municipal property. According to TribLive, Council voted against allowing Geokinetics USA to perform the seismic testing in July.  Geokinetics USA, a seismic testing service, was to perform testing on over 30 different Penn Hills properties. The article states that Council only changed their vote after an energy law firm sent a letter explaining that refusal to allow for testing would result in a lawsuit that Council would likely lose.

Public Lands: Environmental Organizations File Lawsuit Against Bureau of Land Management
On September 11, 2017, the Center for Biological Diversity (CBD) and the Sierra Club filed a lawsuit against the Bureau of Land Management (BLM). According to a CBD press release, the lawsuit challenges BLM’s action in June that opened almost 200,000 acres of public land to fossil fuel development. CBD argues that leasing these public lands in Nevada “risks polluting the region’s air, water and soil with toxic chemicals while fueling the global climate crisis.”

Air Quality: House Passes Amendment to Bill Prohibiting Funds for Methane Emissions Rule
On September 13, 2017, the U.S. House voted in favor of an amendment to H.R. 3354 which will prohibit the use of funds to enforce the methane emissions rule. The amendment was passed by a vote of 218 to 195.  The methane emissions rule, or Emissions Standards for New, Reconstructed, and Modified Sources, was published in June 2016. The methane emissions rule set standards for greenhouse gases and volatile organic compound emissions.

Water Quality: Delaware River Basin Commission Resolves to Prepare New Regulations
On September 13, 2017, the Delaware River Basin Commission (DRBC) adopted a resolution to prepare a set of draft regulations to address natural gas development activities within the Delaware River Basin. The draft regulations will include prohibitions on the production of natural gas by use of hydraulic fracturing. In addition, the new regulations will include “provisions for ensuring the safe and protective storage, treatment, disposal and/or discharge of wastewater within the Basin associated with horizontal drilling and hydraulic fracturing for the production of natural gas where permitted.” According to the DRBC press release, there will be opportunities for public input, including hearings and written comments. The governors of Pennsylvania, Delaware, and New York have voted in favor of the new resolution.

Pipelines: West Virginia Revokes Water Quality Certification for Mountain Valley Pipeline
On September 7, 2017, the Division of Water and Waste Management for the West Virginia Department of Environmental Protection (Department) revoked the Water Quality Certification issued to Mountain Valley Pipeline, LLC. Department explained in their letter that application is being revoked in order to “allow the agency to reevaluate the complete application to determine whether the State’s certification is in compliance with Section 401 of the federal Clean Water Act.” The Mountain Valley Pipeline project will carry natural gas from northwest West Virginia to Virginia.

Pipelines: Minnesota Recommends Against Enbridge Line 3 Pipeline Project
On September 11, 2017, the Minnesota Commerce Department (Department) issued a press release announcing their recommendation against the Enbridge Line 3 pipeline project. Department stated that Enbridge has not yet “established a need for the proposed project.” In addition, Department stated that the environmental and socioeconomic risks would outweigh the potential benefits to Minnesota. The Line 3 project will replace an existing 1,097 mile long pipeline that extends from Alberta, Canada to Wisconsin.

Air Quality: Utah Releases Draft Rules On Oil and Gas Emissions
On September 6, 2017, the Utah Air and Quality Board released draft rules for public comment on oil and gas emissions. The rule, Amend R307-403, Permits: New and Modified Sources in Nonattainment Areas and Maintenance Areas, supplements but does not replace current permitting requirements. The purpose of the change is to “improve the permitting, compliance, and emission inventory processes for oil and gas sources.”

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See our Global Shale Law Compendium and this week’s article, Shale Governance in Brazil.

Check out this week’s Shale Law in the Spotlight: Overview of Legal Developments on the Atlantic Sunrise Pipeline Project.

Stay informed with our monthly Agricultural Law Brief located here.

Friday, September 15, 2017

Global Shale Law Compendium: Shale Law Governance in Brazil

Written by Chloe Marie – Research Fellow

The Global Shale Law Compendium series addresses legal development 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 the Federative Republic of Brazil.

Brazil possesses promising shale gas acreage, particularly in the Paraná Basin, the Solimões Basin and the Amazonas Basin. The U.S. EIA has estimated the three basins’ technically recoverable shale gas resources to be approximately 245 Tcf. Other basins, including the Parnaiba, Parecis, Recôncavo, Potiguar, São Francisco, Sergipe-Alagoas, Taubaté, and Chaco- Paraná basins, may hold potential shale gas resources, but these resources have yet to be proven.

In June 2014, the Brazilian National Agency of Petroleum, Natural Gas and Biofuels (ANP) granted several exploratory licenses in areas with high potential of unconventional natural gas during the 12th Bidding Round. On March 17, 2016, however, the first Federal Court of the Judicial Section in Sergipe suspended the effects of licenses granted during the 12th Bidding Round for shale gas exploration in the Sergipe-Alagoas basin until further studies on the environmental, economical and public health impacts of hydraulic fracturing have been made.

The existing legislative and regulatory hydrocarbon framework in Brazil did not specifically address shale gas development using the hydraulic fracturing technique, and to that effect, on April 11, 2014, the ANP issued Resolution No. 21/2014 governing hydraulic fracturing operations in unconventional natural gas formations. The Resolution provides for ANP’s approval prior to any hydraulic fracturing activity, requires operators to conduct preliminary studies in relation to the hydraulic fracturing project, and requires operators to obtain the appropriate environmental permits to perform hydraulic fracturing activities. The Resolution also requires operators to adopt an environmental management system, including an effluent control, treatment and disposal plan and to prepare an emergency response plan in order to mitigate the potential environmental impacts coming from hydraulic fracturing activities. In addition, operators must comply with specific standards in relation to hydraulic fracturing activities.

Shale gas activities have been recorded in Brazil only recently. Indeed, on November 24, 2016, Rosneft Brasil – a Rosneft subsidiary owned by the Russian government – entered into an agreement with Queiroz Galvão Óleo e Gás in order to start exploratory drilling in the Solimões Basin as part of Rosneft Brasil’s exploration program in the Amazon region. The drilling of the first exploratory well began in February 2017. According to a media report, “Rosneft Brasil is planning to drill at least four wells within the upcoming exploration drilling campaign, with the scope of obtaining valuable geological information to determine the hydrocarbon resource potential of the Solimoes basin.”