Shale Gas Law Weekly Review – May 12, 2016

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

USGS shows evidence of water contamination in WV from wastewater injection wells

On May 9, 2016, scientists from the U.S. Geological Survey (USGS), Duke University, and the University of Missouri released two studies, respectively entitled “Wastewater disposal from unconventional oil and gas development degrades stream quality at a West Virginia injection facility” and “Endocrine disrupting activities of surface water associated with a West Virginia oil and gas industry wastewater disposal site.” The studies address the impacts of deep disposal wells on water quality in West Virginia. The USGS declared that the studies’ results show “evidence indicating the presence of wastewaters from unconventional oil and gas production was found in surface waters and sediments near an underground injection well near Fayetteville, West Virginia.”

PHMSA releases preliminary findings concerning pipeline explosion in Pennsylvania

On May 3, 2016, the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a corrective action order concerning the Texas Eastern Transmission (TETco) pipeline’s explosion on April 29, in Westmoreland County, Pennsylvania. In its preliminary findings, PHMSA “identified evidence of corrosion along two of the circumferential welds” even though it declared that “the cause of the Failure is unknown at this time, and the investigation is ongoing.” PHMSA also ordered Texas Eastern Transmission, LP, to comply with corrective action requirements, such as proposing re-start plans including exposure and testing procedures.

Colorado Supreme Court issues opinions on local fracking bans

On May 2, 2016, the Supreme Court of the State of Colorado issued two distinct opinions responding to the question whether home-rule cities are preempted from promulgating local land use regulations that prohibit the use of hydraulic fracturing in oil and gas operations and the storage of such waste within city limits. In the case City of Longmont v. Colo. Oil and Gas Ass’n, Justice Gabriel concluded that “the inalienable rights provision of the Colorado Constitution does not save the fracking ban from preemption by state law.” As for the case City of Fort Collins v. Colo. Oil and Gas Ass’n, Justice Gabriel, similarly, opined that “Fort Collins’s five-year moratorium on fracking . . . is a matter of mixed state and local concern and, therefore, is subject to preemption by state law.”

UK study shows that hydraulic fracturing is unlikely to pollute groundwater unless hydrogeologically connected to aquifers

On April 27, 2016, Professor Paul L. Younger, Rankine Chair of Engineering at the University of Glasgow, UK, released a study entitled “How can we be sure fracking will not pollute aquifers? Lessons from a major longwall coal mining analogue (Selby, Yorkshire, UK)” published in the journal Earth and Environmental Science Transactions of the Royal Society of Edinburgh. The study addressed the potential of groundwater contamination from hydraulic fracturing for shale gas production by drawing an analogy with the hydrogeological history of underground coal mining in the UK. Professor Paul L. Younger reached the conclusion that “there are no prima facie geochemical, hydrogeological or geochemical reasons why unconventional gas resources in northern England and Scotland could not be developed without causing aquifer pollution.”

Pennsylvania IFO addresses Governor Wolf’s severance tax proposal as part of its revenue estimates

On April 20, 2016, the Pennsylvania Independent Fiscal Office (IFO) released a report entitled “Analysis of Revenue Proposals FY 2016-17 Executive Budget” addressing all tax and revenue proposals submitted by Governor Tom Wolf in the state fiscal year 2016-2017. As part of the report, IFO examined Governor Wolf’s severance tax proposal for unconventional natural gas and alleged that “the total lifetime [effective tax rate] for Pennsylvania is the highest among comparison states: 6.5 percent based on market value at the hub, or 8.5 percent based on value at the wellhead.”

Written by Chloe Marie - Research Fellow