Drilling Permit Upheld by Commonwealth Court

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).
Tuesday, June 13, 2017

Commonwealth Court Limits Clean Streams Law Penalties

On January 11, 2017, the Pennsylvania Commonwealth Court issued a significant decision granting declaratory relief with respect to the proper interpretation of Section 301 of the Clean Streams Law. Specifically, the Commonwealth Court held that Section 301 of the Clean Stream Law does not authorize the Pennsylvania Department of Environmental Protection to impose ongoing penalties for the continuing presence of an industrial waste in a waterway of the Commonwealth following the initial entry of the pollutants.

The case arose from a dispute between a natural gas operator and PADEP concerning the appropriate penalty amount for an impoundment leak that occurred in 2012. Following the discovery of a leak in the impoundment, the natural gas operator notified PADEP, emptied the impoundment, patched the liner, installed sumps and trenches at five downgradient locations to collect and intercept affected groundwater, and removed all affected soil.

PADEP subsequently proposed a Consent Assessment of Civil Penalty for the leak in the amount of $1,270,871, based, in part, on “new, continuing, and ongoing impacts to the multiple waters of the Commonwealth.”  PADEP interpreted the Clean Streams Law as authorizing a penalty under a continuing violation theory for every day that industrial waste remains in a water of the Commonwealth. The operator disagreed with PADEP’s interpretation, urging the Commonwealth Court to rule that a violation occurs only on the days that the pollution is discharged from an area outside of the waters of the Commonwealth.

In agreeing with the operator’s interpretation, the Commonwealth Court noted that to “rule otherwise would be tantamount to punishing a polluter indefinitely, or at least for as long as the initially-released industrial waste remains in the waters of the Commonwealth, for the same violation—i.e., the initial release.”
Thursday, January 26, 2017

Commonwealth Court to Again Hear Oral Argument on Impact Fees

In December 2016, the Pennsylvania Commonwealth Court agreed to hear additional oral argument in Snyder Brothers, Inc. v. Pa. Public Utility Comm’n. The case concerns the proper interpretation of Pennsylvania’s Act 13 of 2012, which exempts from the Commonwealth’s impact fee those unconventional gas wells “incapable of producing more than 90,000 cubic feet of gas per day during any calendar month . . .” Snyder Brothers argues that Act 13 exempts those marginal wells that are incapable of producing more than 90,000 cubic feet of gas per day during one or more months of the year. The Pennsylvania Public Utility Commission interprets the provision as requiring operators to pay the impact fee on each unconventional well that is capable to producing 90,000 cubic feet of gas per day in one or more months of the year. The PUC has ordered Snyder Brothers to pay $500,000 in impact fees on wells that have produced 90,000 cubic feet of gas per day in some, but not all, calendar months.
Tuesday, January 24, 2017

Recent Posts



    The Oil & Gas Law Blog is made available for educational purposes only and to give you general information as well as a general understanding of the law, not to provide specific legal advice. Use of this blog does not create an attorney-client relationship between you and any of the blog contributors or Harris Finley & Bogle. The Oil & Gas Law Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.