Wednesday, August 23, 2017

Shale Law in the Spotlight – The Delaware River Basin Commission’s Regulatory Action and Inaction on Natural Gas Development

Written by Chloe Marie – Research Fellow

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. As a result, no shale development has taken place 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 “these regulations are both inadequate and illegal, and I will continue to use the full authority of my office to require that the federal government meet its clear legal obligation to full study the environmental impacts of fracking in the Basin.” 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 DRBC to manage the full natural gas development project cycle instead of merely regulating 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 further review of the regulations could be completed by the commission members. A rescheduled meeting has yet to be held. 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, LLC 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 be 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.

Stay tuned for additional legal developments!

Tuesday, August 22, 2017

Shale Law Weekly Review - August 22, 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.

Pipelines: Pennsylvania DEP Holds Final Hearing on Atlantic Sunrise Project
On August 14, 2017, the Pennsylvania Department of Environmental Protection (DEP) held the fourth and final public hearing on the permit applications under review for the Atlantic Sunrise Pipeline Project. The proposed pipeline will carry natural gas from northeastern Pennsylvania to the Mid-Atlantic and southeastern states. According to Penn Live, several dozen supporters and opponents attended the meeting. Those supporting the pipeline discussed energy self-sufficiency and job growth, whereas opponents discussed the potential environmental and health impacts.  The 30-day public comment period opened July 22nd and will close August 21st.

Pipelines: PHMSA Sends Report to Congress on State Pipeline Repair Policies
On August 2, 2017, the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) sent a report to Congress entitled State-level Policies that Encourage or Present Barriers to the Repair and Replacement of Leaking Natural Gas Pipelines. The report reviewed state policies and determined which policies created barriers to pipeline replacement and repair. According to the report, “44 percent of the states responding to the NAPSR query recommended accelerating repair or replacement of leaking natural gas pipelines to improve safety.”

Air Quality: Federal Court Rejects Appeal to Reconsider EPA Methane Emissions Case
On August 10, 2017, the U.S. Court of Appeals for the District of Columbia rejected an appeal to reconsider its decision in the case against the Environmental Protection Agency (EPA) over the methane emissions rule, according to Law 360. In June, EPA issued a stay of the rule, “Oil and Natural gas Sector: Emission Standards for New, Reconstructed, and Modified Sources” which set new standards for greenhouse gases and volatile organic compounds released from oil and gas development. Several environmental groups sued as a result and the court held that EPA lacked the authority to stay the rule (Clean Air Council v. Pruitt, No. 17-1145). EPA has agreed to comply with the court’s mandate and their statement can be found here.

LNG: Court of Appeals Upholds Department of Energy’s Approval of Texas LNG Export Facility
On August 15, 2017, the U.S Court of Appeals for the District of Columbia denied the Sierra Club’s petition for review of the Department of Energy’s (DOE) approval of a liquefied natural gas (LNG) export application in Brazoria County, Texas (Sierra Club v. United States DOE, No. 15-1489). In 2016, the court upheld the Federal Energy Regulatory Commission’s approval of the construction of the LNG facility, known as the Freeport Terminal. After construction, DOE approved the export of LNG out of the Freeport Terminal. The Sierra Club argued that DOE did not “sufficiently examine the indirect effects of LNG exports.”

National Energy Policy: White House Issues Executive Order on the Environmental Review of Infrastructure
On August 15, 2017, the White House Office of the Press Secretary released the Presidential Executive Order on Establishing Discipline and Accountability in the Environmental Review and Permitting Process for Infrastructure.  The order states that it is the policy of the federal government to “make timely decisions with the goal of completing all Federal environmental reviews and authorization decisions for major infrastructure projects within 2 years.” Among other public and private assets, the definition for “Infrastructure project” includes energy from fossil fuels and pipelines. According to the Washington Examiner, this executive order will expedite the pipeline review and permit process.

LNG: Energy Trade Group Requests Moratorium on LNG Export Approvals
On August 16, 2017, the Industrial Energy Consumers of America (IECA) sent a letter to the U.S. Department of Energy (DOE) urging DOE to place a moratorium on liquefied natural gas export approvals to non-free trade agreement (NFTA) countries. IECA argues that at the current approval rate, the U.S. will consume 71% of its technically recoverable natural gas resources by 2050. In addition, IECA argues that shipping LNG to NFTA countries “is inconsistent with President Trump’s fair-trade and “America First” policies.”

Pipelines: Federal Court Vacates PHMSA Final Order Against Exxon Mobil
On August 14, 2017, the U.S. Court of Appeals for the Fifth Circuit vacated part of a Pipeline and Hazardous Materials Safety Administration (PHMSA) order that concluded Exxon Mobil had not properly considered the appropriate factors when developing its integrity assessment of the Pegasus pipeline (Exxon Mobil Pipeline Co. v. U.S. Department of Transportation, et al., 16-60448). This case follows the 2013 spill of over 3,000 barrels of crude oil from the Pegasus pipeline in Mayflower, Arkansas. The Court of Appeals found that PHMSA’s final order was arbitrary and capricious and that Exxon did comply with regulations by considering risk factors in a “careful, informed decision-making process.”

Pipelines: Final Environmental Impact Statement Released for Enbridge Energy Line 3 Pipeline Project
On August 17, 2017, the Minnesota Commerce Department released the Final Environmental Impact Statement for the Line 3 Pipeline Project. The purpose of the impact statement is to provide information to the Minnesota Public Utilities Commission on the potential human and environmental effects of the project, to provide considerations of reasonable alternatives, and to consider methods for mitigating negative effects. The new Line 3 pipeline is to be constructed by Enbridge Energy and will be replacing the existing pipeline to carry oil from North Dakota to Minnesota. According to the Minnesota Commerce Department, Enbridge also proposed for part of the pipeline to be constructed in a new right-of-way.

Energy Policy: Netherlands Advertising Standards Board to Formally Censure Exxon and Shell
On August 14, 2017, The Guardian reported that the Netherlands Advertising Standards Board (the Board) plans to censure Exxon and Shell “for claiming that natural gas was “the cleanest of all fossil fuels” in an advert[isement] earlier this year.” The Guardian also reports that the Board censured Statoil earlier this summer when they referred to gas as “clean energy” and “low emissions fuel.”

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Check out this week’s Shale Law in the Spotlight: Endangered Species Act - Impacts on Shale Gas Development

Stay informed with our monthly Agricultural Law Brief located here.

Monday, August 14, 2017

Shale Law Weekly Review - August 14, 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.

Water Quality: Cabot Oil Files Suit Against Dimock Township Resident for Harassment
On August 7, 2017, Cabot Oil & Gas Corporation (Cabot) filed suit against Dimock, Pennsylvania resident, Ray Kemble and his legal team (Cabot Oil & Gas Corporation v. Charles Speer et al.). Cabot claims the defendants abused the legal process and lacked probable cause in their April 2017 complaint against Cabot. Cabot also claims that the defendant’s complaint breached their settlement agreement and now seeks to recover 5 million in punitive damages. Lawsuits against Cabot were initially brought in 2009 by Dimock residents who claimed their water was contaminated by nearby hydraulic fracturing operations.

Pipelines: Sunoco and Environmental Groups File Settlement Agreement for Mariner East 2
On  August 8, 2017, the Clean Air Council and the Commonwealth of Pennsylvania filed a proposed settlement agreement regarding Sunoco Pipeline L.P.’s Mariner East 2 Pipeline. The settlement follows a court order prohibiting construction activities by Sunoco. Under the settlement agreement, Sunoco must perform several evaluations by re-examining geology at sites where spills or “inadvertent returns” occur. In addition, Sunoco must consider additional data, conduct geotechnical evaluations, including sampling, surveys, radar and tomography.

Pipelines: Hearings Begin for Keystone XL Pipeline in Nebraska
On August 7, 2017, the Nebraska Public Service Commission commenced an evidentiary hearing on TransCanada’s application for the Keystone XL Pipeline. The Keystone XL Pipeline is a “36-inch diameter crude oil pipeline, beginning in Hardisty, Alberta and extending south to Steele City, Nebraska.” The hearing continued for five days and included witness testimony, exhibits, and cross examination. According to the Lincoln Journal Star, attorneys for landowners primarily questioned how TransCanada plans to avoid damaging land and natural resources. Recordings of the hearing can be found on Nebraska’s PBS & NPR Station.

Public Lands: Repeal of Oil and Gas Valuation Rule for Federal Leases
On August 8, 2017, the Office of Natural Resources Revenue published in the Federal Register their intent to repeal the Consolidated Federal Oil & Gas and Federal Indian Coal Valuation Reform Final Rule. The rule amended regulations governing oil and gas royalty valuation for Federal and Indian leases. According to the U.S. Department of the Interior press release, the rule “created confusion and uncertainty regarding how companies report and pay royalties…” The repeal will go into effect on September 6, 2017, and previous valuation regulations will be reinstated.

Public Lands: BLM Requests Comment On Oil and Gas Leasing in Alaska
On August 7, 2017, the Bureau of Land Management (BLM) published in the Federal Register a Call for Nominations and Comments for the National Petroleum Reserve in Alaska Oil and Gas Lease Sale. The call for nominations affects 22.8 million acres of the National Petroleum Reserve in Alaska as well as all tracks under the NPR-A Oil and Gas Lease Sale. Nominations and comments are due by September 6, 2017. The BLM press release can be found here.  

Induced Seismicity: Oklahoma Governor Creates Task Force to Evaluate Oklahoma Corporation Commission
On August 7, 2017, Mary Fallin, Governor of Oklahoma issued an executive order creating a Task Force to conduct an organizational analysis of the Oklahoma Corporation Commission (OCC) for the purpose of improving agency operations. The OCC regulates oil and gas drilling as well as enforces federal regulations for underground injection of water and chemicals. The Task Force will conduct a performance assessment, assess the OCC’s mission, examine funding, and evaluate the OCC’s structure. The final report  is due to the governor by November 15, 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.

Check out this week’s Shale Law in the Spotlight: Endangered Species Act - Impacts on Shale Gas Development

Stay informed with our monthly Agricultural Law Brief located here.