Wednesday, October 17, 2018

Shale Law in the Spotlight – Overview of Litigation Challenging the Delaware River Basin Commission’s Moratorium on Shale Gas Development

Written by Chloe Marie – Research Specialist

The Delaware River Basin Commission (Commission) is a federal interstate agency established in 1961 by the Delaware River Basin Compact and is comprised of the states of Delaware, New Jersey, New York, Pennsylvania and the U.S. Army Corps of Engineers working together on the management of water resources in the Basin. The Commission has been working for a long time on the consideration of regulations addressing the impacts of natural gas development on waters within the Basin. Eventually, on November 30, 2017, the Commission proposed to prohibit hydraulic fracturing within the Basin.

On May 17, 2016, Wayne Land and Mineral Group (WLMG), LLC, filed a lawsuit against the Delaware River Basin Commission challenging the Commission’s jurisdiction to review and approve natural gas projects located in the Delaware River Basin – and indirectly the proposed ban on hydraulic fracturing projects in the Basin. The WLMG is a group of landowners whose properties overlay shale gas resources in the Basin. The landowners allege that natural gas well pads and related facilities targeting shale formation in the Basin are not projects that are to be reviewed by the Commission under Section 3.8 of the Compact.

WLMG also complains that the Commission infringes upon their rights to develop shale gas resources on their properties after the agency announced in 2010 that it would not review applications for natural gas projects until it adopted specific natural gas development regulations.

On July 8, 2016, the Commission filed a motion to dismiss WLMG’s complaint for failure to state a claim. In its motion, the Commission asserted that, besides its regulatory authority, the Commission has planning and project review authority for any activity or facility undertaken for the purpose of managing, developing and using water resources of the Delaware River Basin, and that all projects in the Basin must be reviewed and approved by the Commission pursuant to Section 3.8 of the Compact. In this case, however, the Commission alleged that the records do not show that WLMG submitted any application to the agency for a project in the Basin, despite arguing that the Commission “has already decided that it has project review jurisdiction over WLMG’s activities” based on a discretionary basis. The Commission stated that WLMG made “conclusory allegations” regarding its actions, stating that “the Complaint offers no detail on when this decision was purportedly made or by whom.”

As to WLMG’s claim that the Commission used discretionary powers in declaring that all natural gas well pads and related facilities targeting shale formation in the Basin are projects to be reviewed under Section 3.8 of the Compact, the Commission alleged that those are mere declarations made in the Executive Director Determinations (EDD) – respectively dated May 2009, June 2010, and July 2010 – and are not binding regulations. The Commission stated that these declarations are interpretive of Section 3.8 of the Compact as well as “administratively appealable, non-final decisions that remain subject to challenge during an individual project review proceeding, and were not subject to notice and comment.”

The U.S. District Court for the Middle District of Pennsylvania granted the Commission’s motion to dismiss on March 23, 2017, and found that “on the face of Plaintiff’s Complaint … it is apparent that its proposed activities within the Delaware River Basin constitute a ‘project’ within the meaning of that term as defined in Sections 1.2(g) and 1.2(i) of the Compact.” WLMG appealed this decision to the United States Court of Appeals for the Third Circuit (docket no. 17-1800) on April 7, 2017.

On July 3, 2018, the U.S. Court of Appeals for the Third Circuit vacated the U.S. District Court’s decision and remanded the case for further proceedings. The U.S. Court of Appeals concluded that the meaning of the word “project” in the Compact is “ambiguous” and needs further interpretation.

On September 17, 2018, three Pennsylvania state senators – Joseph B. Scarnati, Lisa Baker, and Gene Yaw – filed a motion to intervene as Parties Plaintiffs in the court proceedings. The Senators declared that they have a “substantial protective interest” in the process of interpreting the Compact. The Senators argued in their motion that the Compact is a “quintessential creature of the legislature,” and that they “are in privity of contract under the Compact and, thus, must be permitted to participate in this action to the same extent as any contracting party is permitted in an ordinary contractual dispute.”

In addition, the Senators pointed out that they must be allowed to intervene in the proceedings because they have fiduciary duties as trustees of the natural resources of Pennsylvania. In their brief in support of the motion to intervene, the Senators explained that they have a “cognizable property interest” in the issue, before adding that “the Commission’s moratorium is not confined to private property, but also extends to Commonwealth-owned property that is part of the Trust, over which the Senators and other elected officials have trustee obligations.”

The U.S. District Court granted the Senators’ motion to intervene on the same day of its filing; however, the Court has yet to issue a written opinion supporting its order.

Interestingly, in October 2016, the three Senators filed a motion to intervene in this proceeding, but such motion was denied in January 2017. At that time, the court declared that “once legislation is enacted, legislators such as the three Senators seeking to intervene in this litigation, do not have a significantly protectable interest in its implementation to entitle them to intervene as of right.”

More information concerning the case Wayne Land and Mineral Group, LLC v. Delaware River Basin Commission is available at docket no. 3:16-cv-00897.

Stay tuned for further legal developments!

This material is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture. 

No comments:

Post a Comment