Shale Law Weekly Review - September 4, 2018

Written by:

Brennan Weintraub - Research Assistant

Jackie Schweichler - Education Programs Coordinator

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

State Regulation: Pennsylvania Commonwealth Court Invalidates Some Definitions within Unconventional Permit Regulations

On August 23, 2018, the Commonwealth Court of Pennsylvania declared various definitions in Pennsylvania’s unconventional well permit regulations to be void (Marcellus Shale Coalition v. Department of Environmental Protection, No. 573 M.D. 2016).  The Marcellus Shale Coalition (MSC) brought this case against the Pennsylvania Department of Environmental Protection (DEP) after the Environmental Quality Board published regulations on unconventional wells (Chapter 78a).  MSC challenged DEP’s definitions for “other critical communities,” “common areas of a school’s property,” “playground,” and “public resource agency.”  The opinion rejected DEP’s definition of “critical” plant and animal communities in the state as they included species which, according the court, do not merit “heightened conservation measures.”  The court found DEP’s definition of those terms was vague and overly broad and would cause permit compliance to be unduly burdensome.

Municipal Regulation: Federal Court Rules that West Virginia County Cannot Zone to Prevent Compressor Station

On August 29, 2018, the United States District Court for the Southern District of West Virginia issued an opinion granting a permanent injunction preventing Fayette County, West Virginia from enforcing their zoning code against Mountain Valley Pipeline, LLC’s  (MVP) construction activities (Mountain Valley Pipeline, LLC. v. Fayette County, No. 2:17-cv-04377).  MVP was granted a certificate of public convenience and necessity by the Federal Energy Regulatory Commission (FERC) to construct the Mountain Valley Pipeline through West Virginia and Virginia.  The certificate also granted MVP the authority to construct a compressor station in Fayette County. Fayette County denied MVP’s request to re-zone the compressor station property, thereby halting construction of the facility.  The court determined that Fayette County’s zoning code is preempted by the FERC certificate and that the code conflicts with congressional purposes under the Natural Gas Act.

Municipal Regulation: Court Rules in Favor of South Portland Ordinance Prohibiting Crude Oil Infrastructure

On August 24, 2018, the U.S. District Court for the District of Maine ruled in favor of a local ordinance prohibiting structures that could be used to load crude oil onto marine tank vessels (Portland Pipeline Corporation, et al., v. City of South Portland, et al., 2:15-cv-00054-JAW).  In 2014, the City of South Portland passed the Clear Skies Ordinance which prohibits the loading of crude oil onto any marine tank vessel.  In addition, the ordinance prohibits the installation or construction of any structure for the purpose of loading crude oil onto marine tank vessels with the potential to emit air pollutants.  Portland Pipe Line Corporation filed a complaint against South Portland arguing that the ordinance violates the dormant Commerce Clause or the Foreign Commerce Clause of the U.S. Constitution.  Portland Pipe Line Corporation operates a crude oil pipeline that begins in South Portland, Maine and ends in Montreal, Canada.  The court held that South Portland was legally permitted to enact the ordinance.

Federal Lands: BLM Approves Application for Natural Gas Drilling in Wyoming

On August 27, 2018, the Bureau of Land Management (BLM) approved an application for full-field development of natural gas and condensate resources in Sublette County, Wyoming. The project, Normally Pressured Lance Natural Gas Development Project (NPL Project), was proposed by Jonah Energy LLC. The area for the NPL project consists of 140,859 acres located on BLM and state lands. Jonah Energy plans to drill up to 3,500 directional natural gas wells over a period of 40 years.  BLM determined that the NPL Final Environmental Impact Statement is adequate and Jonah Energy is now approved to submit site-specific applications for drilling.

State Regulation: Colorado Ballot Initiative Would Require 2,500 Foot Oil and Gas Development Setback

On August 29, 2018, the Colorado Secretary of State announced the approval of a ballot initiative seeking to impose new setback requirements for oil and gas development.  If approved by voters, Initiative 97 would require new oil and gas development to be located at least 2,500 feet away from occupied structures or vulnerable areas.  Vulnerable areas include playgrounds, sports fields, parks, drinking water sources, lakes, and rivers.  According to language in the initiative, the setback requirements are intended to mitigate the negative effects of oil and gas development on health, safety, and the environment.  The organization behind the initiative, Colorado Rising, submitted over 172,000 signatures on August 6, 2018.

International Development: Canadian Court Nullifies Certificate for Trans Mountain Pipeline

On August 30, 2018, the Canadian Federal Court of Appeals quashed the certificate of public convenience and necessity for the Trans Mountain pipeline system (Tsleil-Waututh Nation, et al., v. Attorney General of Canada, et al., A-78-17).  This suit was brought by various Indigenous peoples and First Nations who argue that the Governor could not reasonably rely on the National Energy Board’s (Board) report and that Canada failed to consult Indigenous people regarding the project. The court agreed, stating that Board failed to assess the effects of project-related marine shipping under the Canadian Environmental Assessment Act, 2012. In addition, the court agreed that Canada failed to adequately engage in meaningful dialogue and discuss possible accommodations for the concerns of Indigenous peoples.

From the National Oil & Gas Law Experts:

Charles Sartain, Texas Accommodation Doctrine Claim Repudiated, Gray Reed (August 28, 2018)

 Pennsylvania Notices

News Release: DEP Appoints Executive Director for Citizens Advisory Council (September 4, 2018)

News Release: DEP is Offering Rebates for PA Residents Buying Alternative Fuel Vehicles (August 28, 2018)

Follow us on Twitter at PSU Ag & Shale Law (@AgShaleLaw) to receive ShaleLaw HotLinks:

“In America’s hottest drilling spot, gas is going up in smoke” - Wall Street Journal

“Ohio reports sharp uptick in unconventional oil production” - NGI

“Wyoming oil deals rise as companies look beyond Permian” - Hart

“In Virginia, governor and appointees at odds over gas pipelines” - Washington Post

“PennEnergy offers $600M for bankrupt shale driller Rex Energy” - Pittsburgh Post-Gazette

“Cowboy Up: Wyoming’s oil and gas proposal helps state lead on air quality” - Breaking Energy

“New pipelines to boost U.S. natural gas exports to Mexico” - Houston Chronicle

“Chinese state-owned company advances $84B U.S. shale gas deal” - Nikkei Asian Review

“Big oil calls proposed NAFTA agreement with Mexico encouraging” - The Hill

“Toomey: Shell project could be delayed because of tariff exemption delays” - Beaver County Times

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