Dimock, Pa. Verdict Overturned

By:  Michael K. Reer

On March 31, 2017, the U.S. District Court for the Middle District of Pennsylvania overturned a $4.24 million verdict related to alleged contamination from unconventional development activities. The Scranton, Pennsylvania jury found in favor of nine plaintiffs who claim that an operator’s drilling activities at two gas wells in Susquehanna County was negligent and caused compensable nuisance injuries by interfering with and damaging access to well water.

Specifically, the Court found that “the weaknesses in the plaintiffs’ case and proof, coupled with serious and troubling irregularities in the testimony and presentation of the plaintiffs’ case – including repeated and regrettable missteps by counsel in the jury’s presence – combined so thoroughly to undermine faith in the jury’s verdict that it must be vacated and a new trial ordered. Moreover, the jury’s award of more than $4 million in damages for private nuisance bore no discernable relationship to the evidence, which was at best limited; and even were the Court to find that the jury’s verdict of liability should stand, the Court can perceive no way in which the jury’s damages award could withstand even passing scrutiny regardless of the applicable standard of review.”

The Court found that the evidence demonstrated “convincingly” that problems with the plaintiffs’ water supply began prior to the development of the wells at issue. “The plaintiffs all acknowledged that they experienced problems with the water in their wells at least a month before Cabot started to drill on the Gesford pads. This manifest problem of ‘cause and effect’ was never adequately explained by the plaintiffs, who time and again either evaded this issue, attempted to impeach their own stipulation, or endeavored to provide some alternative explanation for their own prior representations.”
Thursday, April 13, 2017

EPA Requests Feedback on Expendable Regulations

By: Michael K. Reer

On April 10, 2017, the U.S. Environmental Protection Agency released a request for comment for publication in the Federal Register. The request for comment seeks public comments “on regulations that may be appropriate for repeal, replacement, or modification.” Through comments to EPA, operators may now suggest regulations that they believe inhibit the development of oil and natural gas.

The request for comment is issued pursuant to President Trump’s February 24, 2017 executive order “Enforcing the Regulatory Reform Agenda” – which directed federal agencies to establish a Regulatory Reform Task Force. The Task Force is responsible for evaluating existing regulations and making recommendations to agency heads regarding their repeal, replacement, or modification. Among other items, the executive order directs the Task Force to identify regulations that: eliminate jobs, or inhibit job creation; are outdated, unnecessary, or ineffective; impose costs that exceed benefits; create a serious inconsistency or otherwise interfere with regulatory reform initiatives and policies; or derive from or implement executive orders or other presidential directives that have been subsequently rescinded or substantially modified.

Comments are due 30 days after the request is published in the Federal Register.
Thursday, April 13, 2017

Court Rejects Challenge to DRBC Moratorium

By: Michael K. Reer

On March 24, 2017, The U.S. District Court for the Middle District of Pennsylvania dismissed a landowner challenge to the Delaware River Basin Commission’s de facto moratorium on unconventional development activities in the eastern third of Pennsylvania. In 2010, the DRBC placed a moratorium on shale gas development projects until the Commission could enact new regulations governing the practice – which have yet to be finalized. The landowner group challenging DRBC’s jurisdiction over natural gas development alleged that the DRBC does not have authority to prohibit or regulate shale gas drilling operations in the basin.

The DRBC includes portions of New York, New Jersey, and the eastern third of Pennsylvania. The Delaware River Basin Compact defines “project,” in part, as “any separate facility undertaken or to be undertaken within a specified area, for the conservation, utilization, control, development or management of water resources which can be established and utilized independently . . .” The Court found that “[d]espite the DRBC’s best efforts to side-step this issue, it is apparent from the fact of Plaintiff’s Complaint that its proposed activities which include inter alia, a ‘natural gas well pad, a gas well and related facilities and associated activities,’ constitute a ‘project’ subject to DRBC project review.”

The landowner group is expected to appeal the decision. Wayne Land & Mineral GRP., LLC v. Del. River Basin Comm’n, No 3:16-CV-00897 (M.D. Pa. 2017).
Thursday, April 13, 2017

EPA Requests Extension in Methane Lawsuit

By: Michael K. Reer

On April 7, 2017, the U.S. Environmental Protection Agency requested that the U.S. Court of Appeals for the District of Columbia Circuit temporarily halt a lawsuit brought by the American Petroleum Institute that challenges EPA’s recent new source performance standards for sources in the oil and gas sector. EPA stated in a filing that it will review the challenged regulation in accordance with President Donald Trump’s March 28, 2017 executive order that directs EPA to review the final rulemaking and, “if appropriate . . . suspend, revise, or rescind” the final rulemaking.

Thursday, April 13, 2017

EPA Previews New Electronic Submission Tools

By: Michael K. Reer

On April 5, 2017, the U.S. Environmental Protection Agency previewed new electronic reporting tools at a meeting of the Environmental Council of the States. The electronic reporting tools are intended to streamline certain reports required by EPA, including hazardous waste reporting and air emissions reporting. New electronic tools for hazardous waste reporting will allow permittees to use electronic manifest systems, replacing the carbon-paper manifest systems currently in use. New electronic tools for air emissions data will allow operators to issue a combined submission for the separate reports currently required by EPA’s Toxic Release Inventory, Greenhouse Gas Reporting system, Compliance and Emissions Data Reporting Interface, and the National Emissions Inventory. Allowing operators to combine these separate reports into a single electronic submission may noticeably decrease reporting costs and time commitments.
Friday, April 07, 2017

Oklahoma District Court Dismisses Induced Seismicity Suit

By:  Michael K. Reer

On April 4, 2017, the U.S. District Court for the Western District of Oklahoma dismissed a lawsuit brought by Sierra Club against four oil and natural gas companies. Sierra Club sought injunctions from the District Court requiring: (1) defendants to reduce the amount of wastewater injected into the ground “to levels that seismologists believe will not cause or contribute to increased earthquake frequency and severity;” (2) defendants to reinforce vulnerable structures that “current forecasts indicate could be impacted by large magnitude earthquakes;” and (3) “the establishment of an independent earthquake monitoring and prediction center to determine the amount of [wastewater] which may be injected into a specific well or formation before induced seismicity occurs.”

The District Court dismissed the lawsuit under the Burford abstention and primary jurisdiction doctrines. The District Court defined the Burford doctrine as requiring the dismissal of a lawsuit brought in equity where state court review is available and where “the exercise of federal review of the question in a case and in similar cases would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial public concern.” The Court found that the exercise of federal judicial jurisdiction would inhibit the efforts of the Oklahoma Corporation Commission. The Court also considered the U.S. Court of Appeals for the Tenth Circuit’s five-factor test used to determine whether the primary jurisdiction doctrine applies. After consideration of the factors, the District Court determined that referral of the issues raised in the lawsuit to the Oklahoma Corporation Commission was proper, in part, because the Commission has “more specialized experience, expertise, and insight” on the matter.
Thursday, April 06, 2017

Commonwealth Court Defines Stripper Wells

By:  Michael K. Reer

On March 29, 2017, the Commonwealth Court of Pennsylvania issued a decision interpreting Act 13’s impact fee provisions.  Pennsylvania’s Act 13 requires certain unconventional wells to pay impact fees during the first several years of operation.  “Stripper wells” – defined by Act 13 as an “unconventional gas well incapable of producing more than 90,000 cubic feet of gas per day during any calendar month” are exempt from the impact fee.  The Commonwealth Court determined that Act 13 uses the word “any” to mean “every” and therefore held that an unconventional well is not subject to the impact fee if the well is not capable of producing more than 90,000 cubic feet of gas per day in every calendar month.  The case is Snyder Brothers, Inc. v. Pa. Public Utility Comm’n, No. 1043 C.D. 2015. 

Thursday, April 06, 2017

PADEP Launches eSubmission Public Search

By: Michael K. Reer

On March 21, 2017, the Pennsylvania Department of Environmental Protection announced the launch of eSubmission Public Search, an online tool that allows the public to view and download PADEP documents submitted by oil and natural gas operators. The public may now search for and view documents related to:
  •  Area of Review Summaries;
  •  Borrow Pit Registrations;
  •  Completion Reports;
  •  Due Diligence Extension Requests;
  •  Post-Drilling Restoration Reports and Extension Requests;
  •  Post-Plugging Restoration Reports and Extension Requests;
  •  Alternative Waste Management Requests;
  •  Underground Storage Tank Registrations;
  •  Well Development Impoundment Registration and Transfer Requests;
  •  Well Logs; and
  •  Well Records.
Over 1,000 operator documents are already loaded onto the website. PADEP stated in the press release announcing the website launch that “electronic oil and gas document submission is a critical step in making DEP permitting and monitoring more efficient and transparent.”
Thursday, March 23, 2017

Rusty Patched Bumble Bee Now Protected as Endangered Species

By: Michael K. Reer

On March 21, 2017, the U.S. Fish and Wildlife Service rejected a request by housing developers, pesticide makers, farmers, utilities, and oil and natural gas companies to delay protections for the rusty patched bumble bee. A final rule protecting the species as endangered was published on January 11, 2017, and industry associations requested additional time to ensure compliance with the Endangered Species Act’s prohibition on incidental takes of listed species. Specifically, industry groups expressed concern that incidental takes might occur through the inadvertent destruction of underground nests during construction or through the general use of herbicides or insecticides.

While protections for the rusty patched bumble bee are national in scope, the current range of the species suggests that operators in the Utica and western Marcellus – particularly in Ohio – should be particularly alert for the presence of the bee during development. USFWS has published a map with current occurrences of the species and guidance on the issuance of incidental take permits.

Wednesday, March 22, 2017

BNA Posts HFB Insights on Risk Management Program Changes

By: Michael K. Reer

On March 21, 2017, Bloomberg BNA published “EPA Changes to the Risk Management Program,” an HFB article discussing recent amendments to EPA’s risk management regulations. The amendments to the risk management program have the potential to affect a wide array of industries, including midstream oil and gas facilities, chemical manufacturers and wholesalers, food and beverage manufacturers, petroleum wholesalers, utilities, warehouses, and certain local government entities (such as wastewater treatment plants).

The regulations are scheduled to take effect June 19, 2017.
Tuesday, March 21, 2017

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