Monday, November 14, 2016

Shale Law Weekly Review - November 14, 2016

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

Commonwealth Court Stays New Pennsylvania Drilling Regulations
On November 8, 2016, the Pennsylvania Commonwealth Court imposed a stay on the new Pennsylvania drilling regulations, as reported by PowerSource. The regulations were intended to “set performance standards for surface activities associated with the development of unconventional wells and to prevent and minimize spills…” In response to the new rules, the Marcellus Shale Coalition filed suit on October 13, 2016. (Marcellus Shale Coalition v. DEP, 573 MD 2016).  

10th Circuit to Hear Appeal on Hydraulic Fracturing Rules in January
On November 10, 2016 the 10th Circuit Court of Appeals scheduled a hearing for January 17th to determine whether to reinstate the Bureau of Land Management's (BLM) hydraulic fracturing rules. The rules would address development on federal lands by requiring public disclosure of chemicals used in hydraulic fracturing, imposing stricter well integrity requirements, and adding containment requirements for flowback fluid. In June, the U.S. District Court in Wyoming found the BLM lacked the authority to promulgate the new regulations (State of Wyoming v. U.S. Department of the Interior, 2:15-cv-00043-SWS).

Wyoming Department of Environmental Quality Releases Final Pavillion Report
On November 7, 2016, the Wyoming Department of Environmental Quality released their final report on the water well study in Pavillion, Wyoming. The report did not find sufficient evidence to indicate hydraulic fracturing fluid rose to the depths of water-supply wells. In addition, they determined any gas discovered in water wells was caused by natural gas migration. Overall, the report found “it is unlikely that hydraulic fracturing has caused any impacts to the water-supply wells.”

Oklahoma Corporation Commission Continues to Close Injection Wells
On November 8, 2016, the Oklahoma Corporation Commission released their official advisory for Cushing after a 5.0 magnitude earthquake struck the area November 6th. The advisory covers 58 wells and any wells within six miles of the earthquake’s original location have been ordered to shut down. The advisory notes that this is only an initial response plan and that “work is underway on a broader plan that will encompass a greater area and more Arbuckle disposal wells.” The deadlines for shut-in and volume limit compliance are November 14th and 21st, respectively. In addition, Oklahoma Governor Mary Fallin has declared a state of emergency for Payne County.

U.S. Fish and Wildlife Service Issues Final Rule on Management of Oil and Gas Rights
On November 10, 2016 the Fish and Wildlife Service promulgated oil and gas regulations which will go into effect December 14, 2016 (50 CFR Parts 28 and 29). The new rules will govern non-Federal oil and gas rights outside of Alaska. The regulations are intended to provide regulatory guidance to oil and gas companies and “ensure that non-Federal oil and gas operations are conducted in a manner that avoids or minimizes impacts to refuge resources.”

National Park Service Updates Regulations for Private and State Owned Oil and Gas Rights
The National Park Service on November 3, 2016 issued a press release announcing updated oil and gas regulations. The regulations, specifically known as 9B regulations, have not been updated since their implementation 37 years ago. The changes will eliminate provisions exempting the majority of oil and gas operations from the 9B regulations. In addition, the changes will eliminate the bonding cap and give authority to law enforcement staff to issue citations. Lastly, the National Park Service is now authorized to require compensation when oil and gas operators access land outside their boundary rights.

Southern Ute Indian Tribe Settles with Government on Hydraulic Fracturing Rules
On November 4, 2016, a settlement agreement was struck between the Southern Ute Indian Tribe, the Department of Justice, and the Bureau of Land Management (BLM). In 2015, the Southern Ute Indian Tribe sued to challenge the BLM’s new hydraulic fracturing rules, arguing that their own rules supersede the BLM’s rules. The settlement allows the Southern Ute Indian Tribe, while still working with the BLM, to act as the primary oil and gas regulatory authority.

U.S. Chamber of Commerce Releases Report on the Economics of Hydraulic Fracturing
On November 4, 2016, the U.S. Chamber of Commerce released a report entitled “What if… Hydraulic Fracturing was Banned?” The report is part of the Energy Accountability Series which examines political stances from campaigning politicians by taking “a substantive look at what might have happened in the past - or could happen in the future…”

Canadian Court Overturns Approval for Gas Corporation Takeover
On November 4, 2016, the Court of Appeal of Yukon reversed the Supreme Court of Yukon’s decision, holding the agreement between ExxonMobil Corporation and InterOil Corporation was not shown to be “fair and reasonable.” (InterOil Corporation v. Mulacek, 2016 YKCA 14) The agreement involved the takeover of InterOil by ExonMobil. ExxonMobil had offered $45/share and both the boards of the companies had unanimously agreed to the arrangement. Phil Mulacek, previously the chief executive officer of InterOil, brought this case as a shareholder, arguing that the offer is “vastly inadequate.”

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Written by Jacqueline Schweichler - Education Programs Coordinator

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