Monday, November 6, 2017

Shale Law Weekly Review - November 6, 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.
Landowner Royalties: DOJ Concludes Royalty Payment Investigation of Chesapeake Energy
On November 2, 2017, Chesapeake Energy announced in their Securities and Exchange Commission (SEC) report that the Department of Justice (DOJ) is no longer investigating Chesapeake’s royalty payment practices. According to the report, Chesapeake has received informational subpoenas from the DOJ, the U.S. Postal Service, and U.S. states. Chesapeake is still responding to demands from the Postal Service and state agencies.
Landowner Royalties: Ohio Court Determines that Lease Applies “At the Well” Rule
On October 25, 2017, the U.S. District Court for the Northern District of Ohio granted Chesapeake Appalachia’s motion for summary judgment in a case regarding post-production royalties (Lutz v. Chesapeake Appalachia, L.L.C., N.D. Ohio No. 4:09-cv-2256). The case is a class action lawsuit brought by several landowners who argued that Chesapeake was underpaying their royalties by deducting post production costs from payments. The question of whether Ohio follows the “at the well” rule or the “marketable product” rule was certified to the Ohio Supreme Court. The Ohio Supreme Court declined to answer the question and ruled that the rights and remedies of the parties in an oil and gas contract are controlled by the lease. Following this ruling, the district court held that the language in the lease was clear and ambiguous and that the “at the well” rule should be applied in this case.
National Energy Policy: EPA Announces Public Hearing on Proposed Repeal of Clean Power Plan
On November 2, 2017, the Environmental Protection Agency (EPA) announced they will hold a public hearing on the proposed repeal of the Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units, more commonly known as the Clean Power Plan. After the Clean Power Plan was issued, many states and associations challenged the regulation, and the Supreme Court issued a stay, halting implementation. In March, the EPA announced their intent to review the Clean Power Plan in compliance with executive order 13783, promoting streamlining in energy regulation. The hearing will be held November 28-29 in Charleston, WV.
National Energy Policy: Department of Energy Releases Final Report on Regulatory Review
On October 25, 2017, the U.S. Department of Energy (DOE) released their Final Report on Regulatory Review under Executive Order 13783. The DOE reviewed current energy regulations and issued the report to offer recommendations to reduce regulatory burdens on energy development in response to an executive order issued in March. One recommendation is to streamline exports of Liquefied Natural Gas (LNG). The DOE has already announced a proposed rule which will expedite the review of small-scale LNG exports. According to the report, the DOE also will consider whether larger scale LNG exports should be expedited.
National Energy Policy: U.S. Withdraws from Global Resource Extraction Anti-Corruption Initiative
On November 2, 2017, the U.S. Department of the Interior (DOI) announced the United States’ withdrawal from the Extractive Industries Transparency Initiative (EITI). EITI is a global standard used to promote accountability in resource extraction to prevent corruption in revenue management. The DOI stated that the EITI standard does not fit the U.S. legal framework and that they intend to mainstream government reporting of energy production.
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