Monday, January 30, 2017

Shale Law Weekly Review - January 30, 2017

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

PA Senate Committee Approves Bills to Protect Royalty Interest Owners
On January 25, 2017, two bills that would amend the Oil and Gas Lease Act were once again considered by a Pennsylvania Senate committee. Senate Bill SB138 would allow royalty interest owners to inspect the records of drilling companies to verify payments. The second bill, Senate Bill 139,  would prohibit retaliation from a gas company against a royalty interest owner who inquires about the accuracy of their payments. The primary sponsor of the bills is Senator Gene Yaw who reintroduced the bills on December 20, 2016.

Proposed Coal Mine Pillar Study Rejected by DEP
On January 19, 2017, a statement released by the Pennsylvania Department of Environmental Protection announced the rejection of proposed revised coal mine pillar standards. The John T. Boyd engineering firm conducted field tests and presented an industry-agency study which was reviewed by the Pennsylvania Department of Environmental Protection (DEP), the Pennsylvania Coal Alliance, the Marcellus Sale Coalition, and the federal Mine Safety and Health Administration. The DEP determined that the recommendations in the new study could not be implemented and the 1957 Coal Pillar Study will not be changed.

PA Independent Fiscal Office Projects Increase in Revenue, Decrease in Impact Fee for 2017
On January 25, 2017, the Pennsylvania Independent Fiscal Office (IFO) released its mid-year update for fiscal year 2016-2017.  The IFO has revised its estimate to $32.060 billion for 2016. This estimate is $450 million lower than the beginning of the year estimate and $250 million lower than the estimate in November. For the 2017 to 2018 fiscal year, the IFO projects a revenue of $32.637 billion. In addition, on January 23, 2017, the IFO released their annual estimate of the impact fee collected from unconventional natural gas wells drilled or operated in Pennsylvania. For 2016, the IFO expects the impact fee to be $174.6 million, a decrease of more than $13 million from 2015. The reasons for the impact fee decrease have been attributed to a lack of new wells, and more wells have become exempt from the fee as production falls below the 90 mcf threshold.  

PHMSA Publishes Final Rule on Pipeline Safety in Federal Register
On January 23, the Pipeline and Hazardous Safety Administration (PHMSA) published in the Federal Register their final rule called “Operator Qualification, Cost Recovery, Accident and Incident Notification, and Other Pipeline Safety Changes.” The final rule adds a time frame requiring faster notification of natural gas accidents or incidents. In addition, PHMSA is “adding provisions for cost recovery for design reviews of certain new projects… and setting out the process for requesting protection of confidential commercial information.” The new rule also amends the drug and alcohol testing requirements and adds standards for in-line inspection.

New Energy Plan Released by White House
On January 20, 2017, the White House released an energy plan entitled “An America First Energy Plan.” The plan outlines an intent to remove current environmental regulations and allow for more oil and gas drilling. In addition, the administration intends to promote coal and focus on domestic energy development.

White House Memoranda Direct Expedited Review of Keystone and Dakota Access Pipeline
On January 24, 2017, the White House Office of the Press Secretary released a statement on a new series of Executive Orders and Memoranda for the Keystone Pipeline and Dakota Access Pipeline. The first memorandum directs TransCanada Keystone Pipeline, L.P. to re-submit its pipeline application for a construction permit. The memorandum also directs the Secretary of State and Department of the Army to “take all actions necessary and appropriate to facilitate its expeditious review.” The Dakota Access Pipeline memorandum directs the Secretary of the Army to encourage the Assistant Secretary of the Army for Civil Works and the U.S. Army Corps of Engineers (USACE) expedite review of the pipeline permits.

White House Releases Memorandum Stopping Pending Regulations
On January 20, 2017, the White House, Office of the Press Secretary released a memorandum for department executives entitled “Regulatory Freeze Pending Review.” The memorandum directs department and agency heads to send no regulation to the Office of the Federal Register (OFR) until a newly appointed agency head has approved the regulation. In addition, the memorandum requires regulations that have already been sent to the OFR to be withdrawn and subject to approval by the new agency head.

Canadian Study Shows Effects of Hydraulic Fracturing Fluids on Trout
A study published in Environmental Science & Technology on December 14, 2016, shows how hydraulic fracturing fluid affects Rainbow Trout. The study was done in Alberta, Canada and received hydraulic fracturing fluid samples from Encana Services Company, Ltd. The study suggested that flowback and produced water from hydraulic fracturing operations “could cause significant adverse effects on fish, and the organic contents might play the major role in its toxicity. The paper is called “Effects on Biotransformation, Oxidative Stress, and Endocrine Disruption in Rainbow Trout (Oncorhynchus mykiss) Exposed to Hydraulic Fracturing Flowback and Produced Water.”

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Written by Jacqueline Schweichler - Education Programs Coordinator

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