Written by:
Sara Jenkins – Research
Assistant
Jackie Schweichler –
Staff Attorney
Kaela Gray – Research
Assistant
The following information is an update of recent local, state,
national and international legal developments relevant to shale gas.
Pipelines: Court of
Appeals Denies Stay of Court Order in Pipeline Permit Case
On May 28, 2020, the U.S.
Court of Appeals for the Ninth Circuit declined to stay a district court order that enjoined the use of
Nationwide Permit 12 (NWP 12) for the construction of new oil and gas
pipelines. (Northern Plains Resource Council v. U.S. Army Corps of Engineers,
No. 20-35412). The U.S. Army Corps of
Engineers (Corps) filed its Motion for Stay Pending Appeal on May 13, 2020. The Corps argued that the district court order
was “improper” because it granted relief that was not requested by the
Plaintiffs. Plaintiffs,
the Northern Plains Resource Council, had requested an injunction for the
Keystone XL pipeline project. Rather than granting an injunction that
would halt the Keystone XL pipeline, the district court enjoined use of the NWP
12 for all new pipeline construction. In its recent decision, the Court of Appeals
denied the Corps’ request for a stay pending appeal stating that the Corps did
“not demonstrate[] a sufficient likelihood of success on the merits and
probability of irreparable harm.”
Water Quality: EPA
Issues Final Rule Regarding Clean Water Act Certification
On June 1, 2020, the
Environmental Protection Agency (EPA) announced the issuance of a final rule (Rule) regarding Clean Water Act section 401 certification. Section 401 of the Clean Water Act is used to
evaluate impacts that infrastructure, including oil and gas pipelines and
facilities, may have on water sources. According to EPA’s news release, the Rule was
issued based on Executive Order 13868, which required updating and reviewing current
federal policies to reflect the promotion of energy infrastructure. EPA Administrator Andrew Wheeler made a
statement that the Rule was meant to prevent “abuses of the Clean Water Act”
that delay infrastructure projects indefinitely and to create “clear
guidelines” that give the projects “a path forward.”
Landowner Royalties: Pennsylvania
Court Denies Release of Third Party Sales in Royalty Calculation Case
On May 18, 2020, the U.S.
District Court for the Middle District of Pennsylvania denied the release of third-party sales information in a case disputing
royalty calculation methods. (Elbow Energy, LLC v. Equinor USA Onshore
Properties, Inc., No. 4:19-CV-01873). Plaintiff Elbow Energy brought an action
against Defendant Equinor USA Onshore Properties for breach of contract after
Equinor failed to use an alternate royalty calculation method provided for in
the lease. For the
alternative royalty calculation method to be triggered, the lease terms require
Elbow to "notif[y] and provide[] to [Equinor] three bona fide, arms length
transactions documenting . . . gas prices” paid by other purchasers in the
area. Elbow previously sent
Equinor documentation on royalty payments to co-owner, Alta Marcellus
Development LLC, that Elbow claimed was sufficient to trigger the alternate
calculation method. Elbow moved to compel the production of
documents relating to Equinor’s sales to unaffiliated third parties. The court denied Elbow’s Motion to
Compel stating that the sales documents were “unlikely to contain the
information needed to address Equinor's objection to the Alta statements.”
Landowner Royalties: Pennsylvania
Court Approves Class Certification for Class Action Claim of Underpaid
Royalties
On May 18, 2020, the U.S.
District Court for the Middle District of Pennsylvania, granted a class certification for a class action lawsuit regarding
underpaid royalties. (Slamon v. Carrizo (Marcellus), LLC, No.
3:16-CV-2187). Landowners brought suit
against Carrizo (Marcellus), LLC, Reliance Marcellus II, LLC and Reliance
Holdings USA, Inc. (collectively “Reliance”) alleging breach of contract
related to royalty terms in their oil and gas leases. Plaintiff
James Slamon alleged Defendants underpaid royalties “to him and a class
exceeding one hundred members.” Plaintiff
then moved to certify the class of Plaintiffs. The court granted Plaintiff’s motion in part
and denied it in part. More
specifically, the court granted certification of the No Deductions and Highest
Price Classes while denying certification of the Implied Duty Class and
certification of all Classes.
National Energy Policy:
Executive Office Accepts EPA Final Rule Relating to Oil and Gas Sector for
Internal Review
On June 2, 2020, the
U.S. Office of Management and Budget accepted an oil-and-gas-related final rule filed by the Environmental
Protection Agency (EPA) for internal review. The rule was proposed in October 2018, and it amended the new source performance
standards for the oil and natural gas sector. The amended standards included changes to
monitoring emissions at wells sites and compressor stations and requirements
for pneumatic pumps at well sites. The rule is classified as “economically
significant” and will affect oil and gas extraction and pipeline transportation
sectors. (OMB website). After internal
review, the amended standards in the final rule will be finalized.
From the National Oil & Gas Law Experts:
George Bibikos, Federal Court in PA OK’s Royalty Owners’ Class
Action (May 29, 2020)
Charles Sartain, Texas Supreme Court Puts Perpetuities in Limbo
in Anti Washout Clauses
(June 5, 2020).
John McFarland, Bush v. Lone Oak Club – Texas Supreme Court Once Again Dives
Into the Arcane Law of Water Boundaries (May 26, 2020)
Romany Webb, Doe Proposal to Categorically Exclude Natural
Gas Exports is Fatally Flawed (June 1, 2020)
AGENCY PRESS RELEASES—STATE/FEDERAL
Pennsylvania
Department of Energy Press Releases:
No new releases May
29–June 8, 2020.
U.S.
Department of Energy
Secretary Brouillette and Minister Taylor Sign
Historic U.S.-Australia SPR Lease Agreement (June 3, 2020).
No significant actions
May 29-June 8, 2020.
STATE ACTIONS—EXECUTIVE/LEGISLATIVE
Pennsylvania
Executive Agencies—Actions and Notices:
No actions June 5,
2020.
Pennsylvania
Legislature:
SB 790 “An Act relating to
conventional wells and the development of oil, gas and coal; imposing powers
and duties on the Department of Environmental Protection” Referred to Rules
and Executive Nominations (May 28, 2020).
HB 2555 “An Act amending Title 66 (Public Utilities) of the Pennsylvania Consolidated Statutes, in natural gas competition, further providing for duties of natural gas distribution companies and for consumer protections and customer service; and, in restructuring of electric utility industry, further providing for definitions, for standards for restructuring of electric industry and for duties of electric distribution companies” Referred to Consumer Affairs (May 28, 2020).
FEDERAL
ACTIONS—EXECUTIVE/LEGISLATIVE
Federal Executive Agencies—Actions and Notices:
Bureau of Safety and
Environmental Enforcement
85 FR 33704 “Agency Information Collection Activities; Proposals,
Submissions, and Approvals: Oil and Gas Drilling Operations” Notice
(June 2, 2020).
Environmental Protection
Agency
85 FR 34524 “Air Quality State Implementation Plans; Approvals and
Promulgations: New Hampshire; Negative Declaration for the Oil and Gas Industry;
Withdrawal” Rule (June 5, 2020).
Federal Energy
Regulatory Commission
85 FR 34548 “Prohibition of Energy Market Manipulation Rule” Proposed Rule
(June 5, 2020).
House
Energy and Commerce Committee Actions:
No significant actions
May 29-June 8, 2020.
Senate
Energy and Natural Resources Committee Actions:
EC4198 “A communication from the Acting Chief of the Regulations and
Standards Branch, Bureau of Safety and Environmental Enforcement, Department of
the Interior, transmitting, pursuant to law, the report of a rule entitled ‘Oil
and Gas and Sulfur Operations on the Outer Continental Shelf - Civil Penalty
Inflation Adjustment’” Received in the Office of the President of the
Senate; to the Committee on Energy and Natural Resources (June 5, 2020)
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