Drilling Permit Upheld by Commonwealth Court

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By: Michael K. Reer

On June 12, 2017, the Pennsylvania Commonwealth Court affirmed an Environmental Hearing Board decision that upheld the issuance of a drilling permit to an operator in Warren, Pennsylvania. The operator received a drilling permit for an unconventional slant well that would bottom-hole underneath a petroleum refinery. The refinery expressed concern that hydraulic fracturing activities could impact a 3.6 million gallon gasoline tank on the surface. In response, the operator agreed to not fracture into certain formations near the tank, to utilize conductivity and video logs when drilling, to avoid the vicinity of zones indicated by logs as having excessive water, and to cease operations if pressure gauges indicated communication with another well. Nonetheless, the refinery appealed the Pennsylvania Department of Environmental Protection’s grant of a permit.

In upholding the EHB’s confirmation of the permit, the Commonwealth Court expressly rejected the refinery’s argument that PADEP may not grant drilling permits that conflict with the “purposes” of the Commonwealth’s Oil and Gas Act. Rather, the Commonwealth Court found that the Department may only reject a drilling permit for one of the six enumerated reasons in the Act and that “if none of the six statutory reasons for denial exist, then the Department is required to issue the permit within 45 days.” The Commonwealth Court also rejected the refinery’s assertion that the Department is required to apply “strict scrutiny” to permit applications with “unique characteristics” that make fracturing an “abnormally dangerous activity.” Notably, the Commonwealth Court found that “while not binding on this Court, the United States District Court for the Middle District of Pennsylvania has held that hydraulic fracturing is not an abnormally dangerous activity under Pennsylvania law.”

The case is United Refining Co. v. Dep’t of Envtl. Prot., No. 1321 C.D. 2016 (Pa. Commw. Ct. June 12, 2016).

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