Shale Law Weeky Review - April 10, 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.

U.S. Supreme Court Denies DOJ’s Motion to Hold WOTUS Litigation in Abeyance

On April 3, 2017, the Supreme Court of the United States denied the Justice Department’s request to hold in abeyance the litigation over the Waters of the United States (WOTUS) rule (Nat’l Ass’n of Mfrs. v. DOD, 2017 U.S. LEXIS 2322). The WOTUS rule proposes to define the scope of the waters encompassed by the Clean Water Act to include more waterways and water sources. The new administration had hoped to delay the case in order to obtain more time to review the regulation, according to the Washington Examiner.

DOI Intends to Repeal 2017 Oil and Gas Valuation Reform Rule

On April 4, 2017, the United States Department of the Interior (DOI) announced in a press release their intent to repeal the Consolidated Federal Oil & Gas and Federal & Indian Coal Valuation Reform Rule (2017 Valuation Rule). The purpose of the 2017 Valuation Rule was “to offer greater simplicity, certainty, clarity, and consistency…” and “to ensure that Indian mineral lessors received maximum revenues…” In addition, the rule was meant to provide greater certainty that companies were in compliance as well as to decrease costs. The DOI stated that several parts of the rule “warrant reconsideration to meet policy and implementation objectives.”

Federal Judge Denies Exxon Motion for Preliminary Injunction

On March 30, 2017, the United States District Court for the Southern District of New York denied Exxon Mobil Corporation’s Motion for Preliminary Injunction. (Exxon Mobil Corp. v. Healey, 16-cv-00469). The case was brought by Exxon to stop fraud investigations initiated by the attorneys general of Massachusetts and New York. The purpose of the investigations is to determine if statements by Exxon about climate change constitute fraud against the public and its shareholders. In addition, the court denied Maryland’s Motion for Leave to Proceed Without Local Counsel. The court also ordered a status conference to be held April 21, 2017.

Maryland Approves Bill Banning Hydraulic Fracturing

On April 4, 2017, Maryland Governor Larry Hogan signed House Bill 1325 which will ban hydraulic fracturing in the state of Maryland. The bill specifically prohibits persons “from engaging in the hydraulic fracturing of a well for the exploration or production of oil or natural gas in the State…” Maryland currently has no hydraulic fracturing operations, but they do have natural gas reserves in western Maryland, according to the York Dispatch.

Study by PennEnvironment Examines Patterns of Hydraulic Fracturing Violations

On March 28, 2017, PennEnvironment Research and Policy Center released a study examining consequences of hydraulic fracturing regulation violations. The study is entitled “Oil and Gas Industry Environmental Violations in Pennsylvania.” PennEnvironment found that only 17 percent of violations resulted in a fine upon the drilling company. In addition, they found that the median fine paid by the operator was approximately $5,000, and that since 2008, more than 50 companies have been cited for pollution in Pennsylvania.

ShaleLaw HotLinks:

Oil producers can test DNA from rock samples to determine best place to drill - Reuters

"Pa. approves two wells for disposing fracking wastewater" - Philly.com

"Pa. sues two towns that banned frack water wells" - Philly.com

"Mt. Pleasant zoning rules withstand challenge, for now" -ObserverReporter

"Shale Drillers Face an Uncertain 2018 With Most Hedges Expiring" - Bloomberg

CA votes to finalize oil and gas regulations despite lack of federal support - Breaking Energy

"W.Va. Oil, Gas Industry Poised for Boom, Part 2" - WV State Journal

"Judge throws out $4M tainted-water award to Dimock shale-gas families" - Philly Business

"Cheniere Energy exports 100th LNG cargo" - FuelFix

Setting aside Dimock jury award could mean changes in drilling industry - Forbes

"Federal Judge Certifies Three of Five Virginia Royalty Cases as Class Action" - NGI

Hydraulic fracturing ban signed by Maryland Governor -TheHill

"NY Judge Tosses Exxon Challenge to Climate Change Investigations, for Now"  - InsideClimateNews

Drilling prices for oil and gas wells are beginning to stabilize  - BusinessInsider

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See our new blog series: Global Shale Law Compendium: Shale Governance in England

Check out this week’s Shale Law in the SpotLight: Recent Pipeline Developments in Pennsylvania and the Eastern United States (Part 2)

Stay informed with our monthly Agricultural Law Brief located here.

Atlantic offshore leasing opportunities barred from the new 2017-2022 Offshore Oil and Gas Leasing Program

On March 15, 2016, as part of her duty under the Outer Continental Shelf (OCS) Lands Act, Secretary of the Interior Sally Jewel announced the release of a proposed Oil and Gas Leasing program for the 2017-2022 period. As explained within the preamble, this proposed program is the second of three proposals required to develop the 2017-2022 Oil and Gas Leasing program, which will replace the 2012-2017 program. The five-year program aims to provide information as to leasing opportunities for mineral exploration and development of offshore natural gas and oil while balancing the potential environmental impacts on the coastal zone and offshore. The proposed program is available for public comment through June 16, 2016.

The Bureau of Ocean Energy Management (BOEM) determined a potential of thirteen lease sales in six OCS planning areas, including ten potential leases sales in the Gulf of Mexico region and three in the Alaska region. The proposed program offers all available acreages in the central and western Gulf of Mexico planning areas as well as a narrow strip of water acreage at the edge of the eastern Gulf of Mexico “where infrastructure is best-established and there is strong adjacent state support and significant oil and gas resource potential.” A large part of the eastern planning area is under a Congressional moratorium that will expire on June 30, 2022.

In the Alaska region, the proposed program makes available for leasing the Beaufort and Chukchi Sea along the northern coast of Alaska. A 25-mile zone along the Chukchi and Chukchi Sea coasts is subject to a Presidential Moratorium in place since January 27, 2015. The determination of those three potential lease sales is part of a substantial collaborative effort “with North Slope communities to deconflict oil and gas activities from traditional and subsistence activities on the Arctic OCS.”

BOEM also considered the possibility of leasing offshore acreages of the Atlantic region before stepping back for various reasons. BOEM explained that “ocean-dependent tourism, commercial and recreational fishing, and commercial shipping and transportation are established and important economic uses in and along the coast of the Mid- and South Atlantic Program Area . . . [and] could be potentially impacted by oil and gas activity.” Interestingly it also added that “though additional offshore production is arguably always beneficial to the U.S. economy, the current market of increased onshore production and persistently low oil prices reduces the need for oil and gas development in the Atlantic at this time.”

On March 23, 2016, BOEM announced in a Press Release that, under the 2012-2017 Oil and Gas Leasing program, “a total of 30 offshore energy companies submitted 148 bids . . . [and] the sum of all bids received totaled $179,172,819.” It also observed that no bids were submitted for the eastern planning area of the Gulf of Mexico.

Written by Chloe Marie - Research Fellow

US Interior Secretary speaks on federal hydraulic fracturing regulations

In a July 16, 2013 hearing before the US House of Representatives Natural Resources Committee, Interior Secretary Sally Jewell explained the BLM’s proposed rule on hydraulic fracturing on public and tribe lands as a “common sense” update to old regulations. Sec. Jewell said the rule would help increase efficiency in the permitting process, while ensuring the public has full confidence regulations were in place to protect their safety and the environment.

The public comment period on the BLM’s revised proposed rule is open until August 23, 2013.

For more information on the House Committee hearing, please visit the House Natural Resource Committee site; and for more information on the BLM revision proposed rule, visit the BLM site.

Written by: Garrett Lent, Research Assistant

Agricultural Law Resource and Reference Center

July 2013.

BLM Extends Public Comment on Proposed Revisions to “Fracking” Rule

In May, the Bureau of Land Management released proposed revisions to regulations governing the operation of oil and gas wells using the hydraulic fracturing technique for 30 days of public comment. Both industry groups, and environmentalists, stated they needed additional time to review the document. In response, the D.O.I extended the public comment period for 60 days, according to the Federal Register published June 10. The comment period will now end August 23.

For more information on the proposed revisions, visit the DOI’s website.

Written by: Garrett Lent, Research Assistant

Penn State Law, Agricultural Law Center

June 2013