Shale Law Weekly Review - May 7, 2019

Written by:

Brennan Weintraub - Research Assistant

Jackie Schweichler - Staff Attorney

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

GHG Emissions: Pennsylvania Joins U.S. Climate Alliance and Releases PA Climate Action Plan

On April 29, 2019, Governor Wolf released the Pennsylvania Climate Action Plan and announced that Pennsylvania will join the U.S. Climate Alliance.  Pennsylvania’s Climate Action Plan is a report and climate solution assessment prepared by the Pennsylvania Department of Environmental Protection. It establishes the Green Government Council and recommends 100 actions to reduce emissions.  The Plan includes the creation of an efficiency program for natural gas, as well as new policies and practices to reduce emissions from oil and gas operations.  In addition, policies under the Plan will encourage the use of domestically produced natural gas through regulation, the impact fee, and local ordinances.  To reduce emissions from electricity generation, the Plan suggests meeting these goals by shifting from coal-fired generation to natural gas electricity generation.  By joining the U.S. Climate Alliance (Alliance), Governor Wolf joins a bipartisan coalition of 24 governors working to develop climate solutions in each state.  The Alliance was formed to advance the goals of the Paris Agreement and reduce greenhouse gas emissions by 26-28 percent by 2025.  The Alliance promotes clean energy policies and boasts the creation of over 1.7 million renewable energy jobs.

LNG Exports: Department of Energy Grants Approval for Two Natural Gas Export Terminals

On May 2, 2019, the U.S. Department of Energy (DOE) granted approval for two liquefied natural gas (LNG) export terminals, the Driftwood LNG LLC export facility (Driftwood) and the Port Arthur LNG, LLC export facility (Port Arthur).  Driftwood will be constructed in Calcasieu Parish, Louisiana and will be operated by Tellurian Inc.  The latest DOE approval will allow Driftwood to export 1,415.3 Bcf of natural gas per year (3.88 Bcf/d) for 20 years to non-FTA countries.  Port Arthur will be constructed in Port Arthur, Texas and operated by Sempra Energy.  The DOE approval grants Port Arthur an increase from its previous application for 517 Bcf of natural gas per year and will now allow the export of 689 Bcf/yr (1.91 Bcf/d).  According to the DOE press release, the U.S. has been a net exporter of natural gas for the past three years, in part due to the export of domestic LNG.

GHG Emissions: Canadian Appeals Court Holds in Favor of National Carbon Tax

On May 3, 2019, the Court of Appeals for Saskatchewan held that the Greenhouse Gas Pollution Pricing Act (Act) is not unconstitutional and falls within the legislative authority of Parliament (In the matter of the Greenhouse Gas Pollution Pricing Act, 2019 SKCA 40). The Act will require fuel distributors to pay a charge to the government, depending on the type of fuel and the province. The Act provides exemptions for farmers, fishermen, air carriers, and marine carriers.  The purpose of the Act is to create a national price on greenhouse gas emissions in order to minimize the effects of emissions on climate change.

Wastewater Treatment/Disposal: Study Examines the Impact of Fluid Injection on Aseismic Slip

On May 3, 2019, a study examining the occurrence of earthquakes resulting from fluid injection was published in Science.  The study looks at potential seismic activity occurring as a result of fluid injection relating to geothermal or oil and gas operations.  The study is titled Fluid-Induced Aseismic Fault Slip Outpaces Pour-Fluid Migration and was produced from a collaboration of researchers from Tufts University and the Indian Institute of Technology.  The researchers observed controlled fluid injection to study whether injection could cause perceptible surface displacement, or aseismic slip. According to the researchers, aseismic slip could be observed more quickly and at a greater distance than the injection fluid.

From the National Oil & Gas Law Experts:

Charles Sartain, Oil Field Technology . . . and a Texas Bill Aimed at Royalty Owners, (May 2, 2019)

Pennsylvania Legislation:

HB954: would require public notice to be given to communities where a natural gas drilling permit has been submitted (Referred to Environmental Resources and Energy - April 29, 2019)

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

“Trump drive to boost fossil fuels hits a wall in federal court” - Bloomberg

“NY Senate to hold hearing on fossil fuel divestment” - Associated Press

“Fastest-growing U.S. city scrambles to survive shale boom” - Energywire

“Oil companies’ profits fall on geopolitics and declining prices” - Wall Street Journal

“House committee to target Trump energy policies” - E&E Daily

“Pa. legislation looks to help fracking industry” - 69 News

“Drilling down: Boom times in Texas’ least populated county” - My San Antonio

“Sinkhole forms in Delaware County, Pa. on Mariner East 2 route” - Shale Gas Reporter

“It’s hard to know how much oil Earth has left, but this is our best guess” - Popular Science

“U.S. Interior Department disbands royalty panel amid scrutiny” - Reuters

Connect with us on Facebook! Every week we will post the CASL Ledger which details all our publications and activities from the week.

Want to get updates, but prefer to listen? Check out the Shale Law Podcast! We can always be found on our Libsyn page, iTunes, Spotify, or Stitcher.

This week we published two new Shale Law in the Spotlight articles: Shale Law in the Spotlight – President Trump’s Executive Order on Promoting Energy Infrastructure and Economic Growth and Shale Law in the Spotlight – President Trump’s Executive Order on the Issuance of Permits for Cross-Border Infrastructure Projects.

Check the April Agricultural Law Brief! Each month we compile the biggest legal developments in agriculture. If you’d like to receive this update via email, check out our website and subscribe!

Shale Law Weekly Review - March 12, 2018

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.

Pipelines: PennEast Pipeline Sues County of Northampton in Eminent Domain Proceeding

On March 5, 2018, the County of Northampton issued a press release announcing that they will be involved in an eminent domain lawsuit with PennEast Pipeline Company, LLC (PennEast). PennEast is suing Northampton County to obtain the right of way for the 36-inch PennEast Pipeline that will carry natural gas from Luzerne County, PA to Mercer County, NJ. The Federal Energy Regulatory Commission approved construction for the PennEast project in January 2018. The parcels of land at issue were preserved under the Open Space program and Northampton County argues that they have the duty to protect the land. Northampton County also disputes that PennEast is offering fair market value for the properties and has requested a jury trial in this lawsuit.

Wastewater Treatment/Disposal: EPA Issues Permit for Injection Well in Plum Borough

On March 7, 2018, the U.S. Environmental Protection Agency (EPA) issued a permit to Penneco Environmental Solutions, LLC for an underground injection well in Plum Borough, Pennsylvania. EPA issued public notice and requested comment on the permit in June 2017. EPA subsequently held a hearing in June 2017 which was attended by 200 people. Over 120 people submitted 400 comments on the proposed issuance of the permit.

Landowner Royalties: West Virginia Senate Passes Bill to Allow Drilling When Majority of Royalty Owners Consent

On March 3, 2018, the West Virginia Senate passed bill 4268 which allows oil and gas companies to drill on property where at least three fourths of the royalty interest owners have consented to development. The law would apply only where there are seven or more royalty owners and the drilling operator has made reasonable efforts to negotiate with all owners. Nonconsenting owners may receive a pro rata share of production royalties while profits for unknown or unlocatable owners will be deposited in a fund in the State Treasury.  The bill was passed in the Senate by a vote of 23 to 11 and the bill now goes to Governor Jim Justice.

Pipelines: Public Utility Commission Orders Halt for Mariner East 1 Pipeline

On March 7, 2018, the Pennsylvania Public Utility Commission (PUC) issued an emergency order against Sunoco Pipeline L.P., ordering a temporary shutdown for the Mariner East 1 pipeline (ME1). PUC issued this order after several sinkholes were discovered along the path of the ME1. The order requires Sunoco to suspend hazardous liquids transportation and run a line inspection through the pipeline. Sunoco must keep operations suspended for 10-14 days in order to conduct geophysical testing and analysis. Once corrective actions have been completed, the PUC will determine whether operation of the pipeline may continue.

LNG Exports: Cove Point Facility Exports First Shipment of LNG

On March 1, 2018, the first shipment of liquefied natural gas (LNG) produced at the Dominion Energy Cove Point LNG terminal was exported from the facility. The Cove Point facility is located on the Chesapeake Bay in Maryland and will operate 24/7 under a 20-year contract. The facility receives natural gas from the Marcellus and Utica shale plays and has a production capacity of 8.3 million gallons of LNG per day. The project began in October 2014, cost $4 billion, and involved more than 10,000 craft workers in construction. The Cove Point facility is one of two large LNG export terminals in the United States, including Cheniere Energy’s Sabine Pass terminal in Louisiana, according to Reuters. On March 5, 2018, the Federal Energy Regulatory Commission (FERC) authorized Dominion Energy to commence service for the Cove Point facility. FERC stated that the project has been satisfactorily stabilized and is in compliance with their prior authorization order.

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

"Quarterly comparisonshows increase of more than 9% in Pa. natural gas production" - TribLive

"More lawsuits flowagainst Mariner East construction"  - Pittsburgh PG

"Shale oil growth to overwhelm U.S. refiners, fuel exports: study" - Reuters

"IEA sings a new tune on U.S. shale's strength" - EENews

"Trump's Steel Tariff Threatens His Goal Of Oil And Natural Gas Dominance" - Forbes

"Methane A Potential Blind Spot For Canadian Oil And Gas Industry, Says Investor" - Breaking Energy

"The Next Entrant in the Shale Revolution? OPEC's Saudi Arabia"  - Rigzone

"Energy executives says tariff gambit could hit shale, LNG project costs" - Reuters

"US Oil Pipelines Pivot South As Shale Surges" - Oil and Gas Investor

"U.S. natural gas production to surpass domestic consumption" -Shale Gas Reporter

"IEA credits Beaver County cracker as part of new wave of domestic petrochemical dominance" - Pittsburgh Business Times

"Energy executives says tariff gambit could hit shale, LNG project costs" - Reuters

"The Battery Will Kill Fossil Fuels—It's Only a Matter of Time" - Bloomberg

Connect with us on Facebook! Every week we will post the CASL Ledger which details all our publications and activities from the week.

See our Global Shale Law Compendium and this week’s article, Shale Governance in Michigan

Check out this week’s Shale Law in the Spotlight: Overview of the U.S. EIA

Annual Report on U.S. Crude Oil and Natural Gas Proved Reserves in 2016.

Stay informed with our monthly Agricultural Law Brief located here.

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Shale Law in the Spotlight: Recent Litigation Relating to Wastewater Injection Well Prohibition in Grant Township

Written by Chloe Marie – Research Fellow

In March 2017, Pennsylvania DEP approved permits for Class II Oil and Gas Related Injection Wells in Highland Township, Elk County, and Grant Township, Indiana County, Pennsylvania. The grant of these permits followed many years of legal proceedings resulting from opposition to the application filed by Seneca Resources Corporation in Highland Township and the application filed by Pennsylvania General Energy in Grant Township. In both instances, local ordinances were enacted to prohibit the wastewater injection wells.

This article will address the litigation pertaining to the Grant Township’s Community Bill of Rights Ordinance. In a prior article, we focused on the litigation relating to the Highland Township’s Ordinance.

The lawsuit timeline (Pennsylvania General Energy Company, LLC v. Grant Township, docket no. 1:14-cv-00209)

On May 2, 2013, Pennsylvania General Energy (PGE) submitted a UIC permit application to the U.S. Environmental Protection Agency (EPA) for conversion of a production well – the Yanity Well – into a Class II-D brine disposal injection well in Grant Township, Indiana County, Pennsylvania. The public comment period was open through October 28, 2013. EPA issued the UIC permit to PGE on March 19, 2014.

On April 7, 2014, several residents of the township filed three petitions seeking review of the UIC permit with the EPA Environmental Appeals Board (EAB) alleging that “the [U.S. Environmental Protection Agency Region 3] failed to respond adequately to public comments submitted regarding the permit and question whether the permit conditions are adequate to protect the groundwater aquifer.” These cases were consolidated, and on August 21, 2014, EAB issued an order denying all three petitions for review finding that the Region provided sufficient answers to the questions and concerns set forth by the petitioners. EPA Region 3 then issued a favorable final permit decision regarding the UIC permit on September 11, 2014.

In the midst of all these developments at the federal level, Grant Township adopted a Community Bill of Rights Ordinance on June 3, 2014, prohibiting any corporation or government from engaging in projects and activities that would violate the Ordinance, including waste disposal generated by oil and gas activities within the township’s boundaries. As a result, PGE initiated legal action on August 8, 2014, against Grant Township in the U.S. District Court for the Western District of Pennsylvania challenging certain provisions of the Ordinance. In its complaint, PGE declared that “as a direct and proximate cause of Grant Township’s adoption of the Community Bill of Rights Ordinance, PGE will be precluded from operating the Yanity Well for legally permissible injection purposes and will have to seek more costly alternatives for managing produced fluids.” PGE asked the U.S. District Court to enjoin Grant Township from enforcing the Community Bill of Rights Ordinance and declare that the Ordinance is preempted by state law as well as unconstitutional under federal laws.

On October 10, 2014, PGE also filed a Motion for Preliminary Injunction against Grant Township outlining that Grant Township exceeded its authority in adopting the Community Bill of Rights Ordinance given the fact that Grant Township is a Second Class Township and thus is not allowed to regulate injection activities pursuant to the Second Class Township Code, 53 P.S. §§ 65101 et seq.

On December 15, 2014, both PGE and Grant Township filed cross motions for judgments on the pleadings. PGE argued that “the Community Bill of Rights Ordinance impermissibly regulates the development of oil and natural gas, which is exclusively and comprehensively regulated by [state law]” while Grant Township asserted that it was “entitled to judgment on the pleadings because the people of Grant Township possess the inherent and constitutional right of local, community self-government and legal doctrines asserted by PGE in this action violate this right.”

On March 19, 2015, Grant Township filed a motion to dismiss for lack of standing and mootness because PGE had yet to receive a DEP permit necessary for the construction and operation of an injection well. On the same day, Grant Township also filed a motion to stay pending the issuance of a well permit from DEP. On October 14, 2015, the U.S. District Court denied Grant Township’s motion to dismiss and granted, in part, PGE’s motion for judgment on the pleadings enjoining Grant Township from enforcing portions of the Community Bill of Rights Ordinance.

On October 26, 2015, Grant Township filed a motion for reconsideration of the U.S. District Court’s judgment issued on October 14, 2015. Grant Township alleged that the court “erred … in failing to expressly rule on whether the people of Grant Township have an inalienable and constitutional right of local community self-government, and … by omitting consideration of the Pennsylvania Constitution’s Environmental Rights Amendment as an independent legal basis for the Community Bill of Rights Ordinance.”

Interestingly, on November 3, 2015, Grant Township enacted a Home Rule Charter Ordinance replacing the Community Bill of Rights Ordinance. Consequently, on December 28, 2015, Grant Township filed a motion to dismiss the case for lack of jurisdiction claiming that  “in light of the passage of the Home Rule Charter repealing the Ordinance … PGE no longer has a basis to seek injunctive relief and its claims in this regard are moot and this Court no longer possesses subject matter jurisdiction over it.” On January 20, 2016, PGE filed a motion to strike in response to Grant Township’s above motion. On February 5, 2016, the U.S. District Court denied Grant Township’s motion for reconsideration contending that this motion is “nothing more than an attempt to relitigate its motion for judgment on the pleadings.” In addition, the Court granted PGE’s motion to strike Grant Township’s motion to dismiss for lack of jurisdiction.

Since February 5, 2016, activity on the case has continued – to include discovery proceedings and actions involving intervenors. The case remains pending.

Pennsylvania DEP timeline

On April 22, 2014, PGE filed a first well permit application with the Pennsylvania DEP (DEP) to change the use of the Yanity Well from a production well to a disposal well; DEP discovered procedural and substantive deficiencies in PGE’s application, and thus PGE withdrew its application.

PGE filed a second well permit application, and DEP granted such permit on October 22, 2014, but revoked it on March 13, 2015, stating that PGE did not meet all applicable legal requirements under Pennsylvania Clean Streams Law.

On March 31, 2015, PGE filed its third well permit application, and on June 1, 2015, DEP held a public hearing seeking input to the permit application. DEP approved the well permit application on March 27, 2017. On the same date, Pennsylvania DEP initiated a lawsuit against Grant Township seeking to invalidate the new Home Rule Charter Ordinance (Pennsylvania DEP v. Grant Township of Indiana County, Commonwealth Court of Pennsylvania, docket no. 126 MD 2017).

Shale Law in the Spotlight: Recent Litigation Relating to Wastewater Injection Well Prohibition in Highland Township

Written by Chloe Marie – Research Fellow

In March 2017, Pennsylvania DEP approved permits for Class II Oil and Gas Related Injection Wells in Highland Township, Elk County, and Grant Township, Indiana County, Pennsylvania. The grant of these permits followed many years of legal proceedings resulting from opposition to the application filed by Seneca Resources Corporation in Highland Township and the application filed by Pennsylvania General Energy in Grant Township. In both instances, local ordinances were enacted to prohibit the wastewater injection wells.

This article will address the litigation pertaining to the Highland Township ordinance while a future article will discuss the litigation relating to the Grant Township ordinance.

First lawsuit timeline (Seneca Resources Corp. v. Highland Township, et al., docket no. 1:15-cv-00060)

On January 9, 2013, Highland Township adopted a Home Rule Charter Ordinance No. 1-9 prohibiting the permanent disposal of waste from oil and gas extraction within the Township’s boundaries.  This Ordinance was enacted nearly seven months after Seneca Resources Corporation (“Seneca’) filed a UIC permit application on June 15, 2012, with the U.S. EPA Region 3 Office to convert an existing natural gas well into a Class II injection well.

The Ordinance took effect on January 14, 2013, and expressly stated that “it shall be unlawful for any individual or corporation, or any director, officer, owner, or manager of a corporation to use a corporation, to deposit, store, ‘treat,’ inject or process waste water, ‘produced’ water, ‘frack’ water, brine or other materials, chemicals or by-products that have been used in the extraction of shale gas onto or into the land, air, or waters within Highland Township.” The Ordinance also stipulated specifically that it applied to disposal injection wells.

On January 28, 2014, EPA Region 3 Office granted said UIC permit allowing Seneca to construct and operate the Class II injection well. Quickly thereafter, the Environmental Appeals Board (EAB) received three petitions for review of the UIC permit (UIC Appeal No. 14-01; 14-02; 14-03), which EAB denied on May 29, 2014, based on procedural grounds. Pursuant to 40 C.F.R. § 124.19(1)(2)(i), EPA Region 3 Office then issued a favorable final permit decision regarding the UIC permit on June 17, 2014.

Seneca initiated a lawsuit on February 18, 2015, against Highland Township and its Board of Supervisors before the U.S. District Court for the Western District of Pennsylvania challenging the Ordinance. Seneca sought a court order preventing the Township from enforcing portions of the Ordinance relating to the prohibition of brine-injection wells within the Township’s boundaries. The complaint stated that “the Ordinance is unduly oppressive, arbitrarily interferes with private business, and imposes unnecessary restrictions upon lawful business activities based on the mere allegation and speculation that all disposal and storage of brine adversely affects the health, safety, and welfare of the residents of the Township.” Seneca requested the U.S. District Court to declare that the Ordinance was preempted by the Federal Safe Drinking Water Act and the Pennsylvania Oil and Gas Act and that the Ordinance adoption reflected an impermissible exercise of police power.

On March 24, 2015, Highland Township amended and revised Ordinance No. 1-9 in response to Seneca’s Motion for Preliminary Injunction filed twelve days before. Seneca then filed an Amended Complaint on April 6, 2015, declaring that “rather than eliminating the patently objectionable deprivations of Seneca’s constitutional rights, the Amended Ordinance merely masks those deprivations by not referring specifically to certain Constitutional Amendments” before adding that “the Amended Ordinance continues to ban the disposal and storage of Brines within the Township and purports to invalidate state and federal permits which authorize the disposal and storage of Brines within the Township.”

On April 21, 2015, Highland Township filed a motion to dismiss the lawsuit alleging a lack of standing. Highland Township pointed out that Seneca had not yet received the required DEP permit to pursue its project and also had failed to perform the mechanical integrity test for UIC wells set forth in the EPA permit. Furthermore, the motion stated that the Amended Ordinance “solely affects Seneca’s ability to create and operate an injection well within Highland Township, and does not affect any other aspect of Seneca’s operations within Highland Township.” The U.S. District Court denied said motion on March 29, 2016.

On April 21, 2016, Seneca filed a motion for judgment on the pleadings highlighting that “there is no question that Seneca is entitled to judgment on the pleadings as the Amended Ordinance preempts various Pennsylvania statutes and impermissibly divests Seneca of fundamental rights under the Supremacy Clause and the First, Fifth and Fourteenth Amendments of the United States Constitution.”

On August 11, 2016, Highland Township and Seneca entered into a Consent Decree and agreed to resolve Seneca’s claims that portions of the Amended Ordinance were unconstitutional under both the U.S. and Pennsylvania Constitutions and constituted an impermissible exercise of Highland Township’s legislative authority. The Consent Decree clarified that “nothing … shall preclude Seneca from challenging any future ordinance or charter by Highland, whether adopted by a new Board of Supervisors again seeking to assert those powers claimed in the [Amended] Ordinance … or otherwise.” On the next day, the U.S. District Court approved and adopted said Consent Decree as constituting a final judgment of the court.

Second lawsuit timeline (Seneca Resources Corp. v. Highland Township et al., docket no. 1:16-cv-00289)

On November 8, 2016, Highland Township adopted a new Home Rule Charter Ordinance, which again permanently banned the deposition of waste associated with oil and gas extraction activities. The new Ordinance also specified that “no permit, license, privilege, charter, or other authorization, issued by any state or federal government entity, that would enable any corporation or person to violate the rights or prohibitions of this Charter, shall be lawful within Highland Township.”

As a result, Seneca filed another lawsuit on November 30, 2016, against Highland Township challenging the new Ordinance before the U.S. District Court for the Western District of Pennsylvania. Seneca asserted that portions of the new Ordinance are “substantially identical” to the prior Amended Ordinance, which was found to be unconstitutional in an earlier ruling.

On February 9, 2017, Seneca requested the U.S. District Court to enter a judgment on the pleadings, again alleging that the new Ordinance was unconstitutional pursuant to the First, Fifth and Fourteenth Amendments and the Supremacy Clause of the U.S. Constitution. Recently, on September 29, 2017, the U.S. District Court granted such motion in part and invalidated several provisions of the new Ordinance. 

DEP process timeline

During the pendency of the litigation described above, the Pennsylvania Department of Environmental Protection (DEP) review process was underway. In a letter dated January 2015, the Highland Township Board of Supervisors advised DEP that the UIC permit delivered to Seneca by U.S. EPA was invalid based on the Amended Ordinance and thus future permits issued by DEP also would be considered as invalid. In the meantime, Seneca notified Pennsylvania DEP of the pending litigation between the company and Highland Township.

On August 12, 2015, Pennsylvania DEP decided to suspend its review of the UIC permit pending a court decision and emphasized its “obligation to consider applicable local ordinance related to environmental protection and the Commonwealth’s public natural resources” even though it expressed doubts about the validity of the Township Ordinance.

Following the Consent Decree approved by the court on August 12, 2016, Pennsylvania DEP approved the UIC permit application filed by Seneca on March 27, 2017. Interestingly, on the same date, Pennsylvania DEP also initiated a lawsuit against Highland Township seeking to invalidate the provisions set out in the new Ordinance (Pennsylvania DEP v. Highland Township of Elk County, Commonwealth Court of Pennsylvania, docket no. 123 MD 2017).