Shale Law Weekly Review - August 21, 2018

Written by:

Jackie 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: Pennsylvania Landowners and Chesapeake Propose Settlement in Royalty Dispute

On August 9, 2018, landowners, Chesapeake Energy Inc. (Chesapeake), and Access Midstream Partners (Access) filed a proposed settlement in the U.S. District Court for the Middle District of Pennsylvania (Suessenbach v. Access Midstream, No. 3:14-cv-001197, and Brown v. Access Midstream, No. 3:14-cv-00591).  The landowners filed this class action lawsuit alleging that Chesapeake and Access conspired to deduct artificially inflated rates for post-production costs from royalties owed to the landowners.  The plaintiffs alleged violations of the Racketeer Influenced and Corrupt Organizations Act, conspiracy, civil conspiracy, unjust enrichment, and conversion.  The proposed settlement states that Chesapeake will create a fund of $7.75 million to compensate class members.

Pipelines: Court Orders Government to Analyze Environmental Impacts of Alternative Keystone XL Route

On August 15, 2018, the U.S. District Court for the District of Montana Great Falls Division issued an order requiring the U.S. Department of State to supplement the environmental impact statement for the Keystone XL Mainline Alternative route (Indigenous Environmental Network, et al., v. U.S. Department of State, et al.).  Several environmental groups brought this suit alleging that the State Department had violated the Administrative Procedure Act, the National Environmental Policy Act, and the Endangered Species Act when it issued the Presidential Permit to allow for TransCanada’s Keystone XL pipeline.  In November 2017, the Nebraska Public Service Commission denied TransCanada’s application for their preferred route but approved their Mainline Alternative route.  In the recent order, the court agreed with the plaintiffs that the State Department must analyze the potential environmental impacts of the Mainline Alternative route.

Water Quality: Federal District Court Overturns Delay of WOTUS

On August 16, 2018, the U.S. District Court for the District of South Carolina, Charleston Division issued a ruling overturning the delay of the Waters of the United States (WOTUS) rule (South Carolina Coastal Conservation League, et al. v. U.S. Environmental Protection Agency, et al., 2018 WL 2933811).  In light of several U.S. Supreme Court decisions, the Environmental Protection Agency (EPA) issued a final rule redefining WOTUS in 2015.  The 2015 final rule prompted a series of lawsuits which led to a 2017 Presidential Executive Order directing EPA to review and then rescind or revise WOTUS.  On February 8, 2018, EPA published a new final rule delaying enforcement of the 2015 final rule.  The current court order suspends this rule, stating that by not allowing meaningful opportunity for public comment, EPA’s2015 final rule was arbitrary and capricious.

Pipelines: Delaware Riverkeeper Network Files Lawsuit Against PennEast Pipeline Approval

On August 13, 2018, the Delaware Riverkeeper Network (Riverkeeper) filed a lawsuit in the U.S. District Court of Appeals for the District of Columbia against the Federal Energy Regulatory Commission (FERC) for denying rehearing requests regarding the PennEast Pipeline.  FERC issued a certificate of public convenience and necessity to allow construction for the PennEast Pipeline in January 2018. FERC concluded that the pipeline project would not adversely impact landowners, communities, existing customers, or other pipelines.  On August 10, 2018, FERC denied several requests for rehearing. Riverkeeper brought the present suit arguing that the pipeline would adversely affect the Delaware River Basin.

Pipelines: FERC Approves Request for Transcontinental Pipeline’s Certificate of Convenience and Necessity

On August 10, 2018, the Federal Energy Regulatory Commission (FERC) approved Transcontinental Gas Pipe Line Company, LLC’s (Transco) request for a certificate of public convenience and necessity authorizing the Rivervale South to Market project (Docket No. CP17-490).  The Rivervale South to Market project will provide 190,000 Dth/day from Bergen County to Hudson and Mercer Counties, New Jersey.  Transco will be uprating the pipeline to increase the allowable operating pressure for approximately 10 miles of pipeline and adding a 0.61-mile loop. According to Transco, construction is expected to begin in early 2019.

Pipelines: Appeals Court Declines to Review Approval for Algonquin Pipeline

On July 27, 2018, the U.S. Court of Appeals for the District of Columbia declined to review the Federal Energy Regulatory Commission’s (FERC) approval of the Algonquin Gas Transmission, LLC’s pipeline application (City of Boston Delegation v. Federal Energy Regulatory Commission, No. 16-1081).  Several environmental groups brought this case following FERC’s approval of the Algonquin Incremental Market Project which will include the replacement of 29.2 miles of existing pipeline, 5 miles of new pipeline, and other modifications.  The plaintiffs allege that FERC failed to give adequate consideration to safety risks within their environmental impact statements for the project.  In the latest order, the court rejects these arguments and denies the petition for review.

Pipelines: FERC Approves Spire Pipeline Application

On August 3, 2018, the U.S. Federal Energy Regulatory Commission granted an order approving Spire STL Pipeline LLC’s (Spire) application to construct and operate a new natural gas pipeline system.  The pipeline will consist of 65 miles of pipeline beginning in Illinois and ending in Missouri.  In addition, the 24-inch diameter pipeline is designed to provide 400,000 Dth/day of natural gas.  FERC also approved Spire’s request to construct and operate three meter and regulation stations.  Spire expects the new pipeline to be in service by 2019.

Pipelines: Court Declines to Halt All Construction Activities for the Atlantic Coast Pipeline

On August 15, 2018, the U.S. Court of Appeals for the Fourth Circuit issued an order denying a motion by environmental organizations to enjoin construction activities for the Atlantic Coast Pipeline (Sierra Club, et al. v. U.S. Dept. of the Interior, No. 18-1082).  Previously, on August 6, 2018, the court revoked the right-of-way that had been granted to the Atlantic Coast Pipeline to build under the Blue Ridge Parkway in North Carolina.  In that case, the court found that the Incidental Take Statement issued by the U.S. Fish and Wildlife Service was arbitrary and capricious.  In the present opinion, the court states that Atlantic Coast Pipeline has ceased all activities that may adversely affect protected species and that an injunction is not necessary at this time.

Water Use: Study Examines Increase in Water Usage for Hydraulic Fracturing

On August 15, 2018, researchers from Duke University published an article on the use of water in hydraulic fracturing operations.  The researchers found that from 2011 to 2016 the wastewater from several shale regions increased up to 770%. During the first year of production, flowback and produced water volumes increased 1440% for these areas.  Of the six regions examined, the Marcellus Shale region had the lowest increase in water use and the Permian Basin had the largest increase in water use.  The authors suggest that this trend indicates there will be greater amounts of produced wastewater from hydraulic fracturing operations in the future.  The study is titled The Intensification of the Water Footprint of Hydraulic Fracturing and can be found in the journal Science Advances.

Pennsylvania Notices

News Release: Pennsylvania Department of Environmental Protection accepts permit modification requests for Mariner East 2 pipeline in Chester County (August 16, 2018)

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"FERC Approves Transco Expansion Project" - Hart Energy

"US shale growth will offset global production problems over the coming months, analysts say" - CNBC

"FERC Deadlocked After Powelson Departure, Pipeline Approvals Likely to Slow"  - Inside Sources

“Gas pipeline industry moves toward methane reductions"  - EENews Update

"Groups urge Cuomo to scuttle gas plant near Cayuga Lake" - TimesUnion

"CEO says Dakota Access Pipeline expansion to be announced soon" - GF Herald

"Water Use in Fracking Soars — Exceeding Rise in Fossil Fuels Produced, Study Says" - Inside Climate

"Barge transport should benefit from new Ohio River petrochemical plant" - Work Boat

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This week we published one Shale Law in the Spotlight article: Bankruptcy Filing Reveals Settlement of Water Pollution Claims in Butler County, Pennsylvania

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