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New appeal provides Pennsylvania Supreme Court the opportunity to reverse fracking approach

One of the most highly debated issues facing states recently has been the legality of local fracking bans. In response to this issue, the Pennsylvania legislature opted to amend the state’s Oil and Gas Act by adding Act 13. Act 13 imposed a statewide regulatory scheme for oil and gas operations and prohibited localities from enacting any contradictory drilling ordinances.

In 2013, however, the Pennsylvania Supreme Court issued a split decision in which it held that a number of provisions of Act 13, including the provisions governing oil and gas operations, were unconstitutional. Recent events have sparked hope in some … Continue Reading

Pennsylvania advocates for the continued protection of fracking trade secrets

Pennsylvania permits medical professionals to obtain the chemical composition of fracking fluids used by oil and gas companies if the information is necessary for the treatment or diagnosis of a patient, the patient may have been exposed to a hazardous chemical, and the information may assist in the patient’s treatment. Before receiving the information, however, the doctor must sign a confidentiality agreement. The constitutionality of this statutory scheme is currently before the United States Court of Appeals for the Third Circuit.

In 2012, Dr. Alfonso Rodriguez sued the Attorney General of Pennsylvania and the Pennsylvania Department of Environmental Protection to … Continue Reading

Pennsylvania fracking trade secret rule in jeopardy

The fluids used during hydraulic fracturing are an integral component of the fracking process. Although the fracking fluids are primarily composed of water and sand, manufacturers add varying amounts of chemicals to the fluids. The composition of the chemicals used in fracking fluids are protected by companies as trade secrets. The ability of companies to protect this proprietary information is currently pending before the United States Court of Appeals for the Third Circuit in Rodriguez v. Secretary of the Department of Environmental Protection.

Under Section 3222.1(b)(10) and (11) of Title 58 of the Pennsylvania Consolidated Statutes, companies are required … Continue Reading

US Forest Service issues plan allowing fracking in George Washington National Forest

On Tuesday, November 18, 2014, the United States Forest Service’s (USFS) Southern Regional Forester issued a Revised Land and Resource Management Plan and Record of Decision allowing natural gas drilling to take place on 177,200 acres of the George Washington National Forest located in Virginia and West Virginia. The new plan will go into effect in early 2015.

Notably, the plan does not prohibit operators from utilizing hydraulic fracturing technology to develop the forest lands. This differs from the original draft management plan which would have prohibited horizontal drilling. Prior to beginning operations, however, all development proposals are required to … Continue Reading

According to Pennsylvania, failure to run title search constitutes bad faith in trespass to minerals suit

The Pennsylvania Superior Court upheld an award of US$250,000 in favor of the owner of subsurface rights, who claimed that those rights were drilled on without his permission.

The owner of the subsurface rights properly recorded his interest pursuant to state statute in 1997. Several years later, the defendants improperly leased the mineral rights from the surface owner without conducting a full title search, which would have disclosed the subsurface owner’s interest.

Instead, the defendants only conducted a “bring down” title search which did not disclose plaintiff’s interest. Thereafter, the defendants drilled several producing wells and paid royalties to those … Continue Reading

Pennsylvania Supreme Court considers whether estoppel-by-deed applies to oil and gas lease

An exploration & production company urged the Pennsylvania Supreme Court to uphold a lower court ruling which held that the doctrine of estoppel-by-deed applied to an oil and gas lease. “Parties should not be able to convey, under a covenant of warranty, more than they actually own, only to quiet title when the value or price goes up, and then demand more to resell the same property that was not previously conveyed,” the E&P company argued in its brief filed October 27, 2014.

The dispute stems from a 2006 lease covering a 62-acre property. After signing the lease, a title … Continue Reading

Pennsylvania congressman seeks records from Department of Environmental Protection related to fracking waste disposal

Rep. Matt Cartwright, a Democrat representing Pennsylvania 17th Congressional District, has asked the state’s Department of Environmental Protection (“DEP”) to provide records about its process for monitoring the handling and disposal of wastes from hydraulic fracturing. Rep. Cartwright made the request as the ranking member of the Subcommittee on Economic Growth, Job Creation and Regulatory Affairs, which is part of the House Committee on Oversight and Government Reform.

Waste from hydraulic fracturing is regulated as a non-hazardous waste by state governments under Subtitle D of the Resource Conservation & Recovery Act. “The Subcommittee minority is conducting this oversight to determine … Continue Reading

Pennsylvania bill requiring monthly reporting of natural gas production heads to the Governor

On October 15, 2014, Pennsylvania legislators approved a bill that would require monthly reports of natural gas production from wells in unconventional formations. Operators of such wells are currently required to report natural gas production to the Pennsylvania Department of Environmental Protection on a semi-annual basis.

The legislative impetus to approve the bill may be connected to recent royalty complaints. In particular, one operator has come under increased scrutiny from the Governor, who recently called on the state’s attorney general to investigate allegations of royalty underpayment. Complainants have also filed suit against the operator regarding those allegations.

However, the monthly-reporting … Continue Reading

Middle District of Pennsylvania holds lessor is bound by change of ownership provision, lessee properly extended lease

In a case of first impression in Pennsylvania, Judge Matthew Brann of the United States District Court for the Middle District of Pennsylvania held that an extension payment made by a predecessor-in-interest of the lessee to a predecessor-in-interest of the lessor was sufficient to extend the lease, where the lessee did not have notice of the change in ownership as required by the lease.
In Danko Holdings, LP v. EXCO Resources (PA), LLC, the lease at issue provided that the lessee was not bound by a change in ownership “until furnished with such documentation as Lessee may reasonably require.”  … Continue Reading

Pennsylvania Department of Environmental Protection proposes changes to oil and gas enforcement policies

On October 4, 2014, the Pennsylvania Department of Environmental Protection (“PADEP”) published notice of a draft policy titled “Standards and Guidelines for Identifying, Tracking, and Resolving Oil and Gas Violations” (the “Proposed Policy”).  The Proposed Policy contains new processes and revises existing guidelines and will have an impact on how operators interact with the PADEP.

The Proposed Policy introduces a new, detailed process for how the PADEP will handle water supply contamination complaints.  The Proposed Policy contemplates that an onsite investigation will be conducted within 4 business days of receiving the complaint, and a final determination made within … Continue Reading

Even more studies looking at fracking’s possible environmental effects

The possible environmental effects of hydraulic fracturing are evidently a hot subject for research. Yale University researchers recently released yet another study on the topic, this one assessing the relative rate of residents’ rates of complaints regarding their health in relation to the proximity of those residents’ homes to natural gas wells. The study categorized proximity into three groups: those less than one kilometer from a gas well, those between one and two kilometers from a gas well, and those further than two kilometers from a gas well. The study found that residents living closer to the gas wells … Continue Reading

Pennsylvania Commonwealth Court invalidates Act 13 provisions granting the review of local ordinances

On July 17, 2014, following a December 19, 2013, remand by the Pennsylvania Supreme Court, the Commonwealth Court issued its opinion addressing challenges to several sections of Pennsylvania’s new Oil and Gas Act (known as Act 13).

The Commonwealth Court, in a split decision, held: (i) that the sections granting the Public Utility Commission (“PUC”) and Commonwealth Court jurisdiction to review local ordinances are not severable from the provisions of Act 13 found to be unconstitutional by the Supreme Court in December; (ii) that the Act did not violate equal protection by requiring the Pennsylvania Department of Environmental Protection to … Continue Reading

Third Circuit holds that Shut-In Royalty Provision maintains lease on non-producing wells

On July 17, 2014, the Third Circuit affirmed a grant of a motion to dismiss in connection with a claim that an oil and gas lease had expired (Messner v. SWEPI LP, No. 13-3813, slip op. (3d Cir. July 17, 2014)).
The lessor claimed that vertical wells drilled to the Marcellus Shale formation and then shut-in (but not fraced or producing or, allegedly, not capable of producing without further work) did not qualify for shut-in payments under the lease to perpetuate the lease beyond the primary term. SWEPI LP, the lessee, argued that based on the shut-in language … Continue Reading

New study reports that Pennsylvania fracking wells leak more than traditional counterparts

According to a study of Pennsylvania state inspection reports, newer and unconventional wells leak more often than their older and traditional counterparts. The report, published on June 30, 2014 by the Proceedings of the National Academy of Sciences, suggests that methane leaks could pose a problem for drilling across the nation.

Four scientists analyzed over 75,000 state inspections of Pennsylvania gas wells conducted since 2000. Their results found that the leak rate for hydraulically fractured wells—mainly constructed since 2006– had an approximately 4% higher leak rate than their counterparts.

The report has drawn criticism from the energy industry, with critics … Continue Reading

Pennsylvania waste hauling company faces criminal charges

On June 6, 2014, Pennsylvania Attorney General Kathleen Kale filed criminal charges against a fracking waste hauling company and its owner.The company and its owner face charges for violating Pennsylvania’s SolidWaste Management Act and Clean Streams Law, overbilling customers, and participating in multiple criminal conspiracies to commit insurance fraud.According to a presentment by a statewide grand jury, the company allowed oil, waste, and other pollutants to run into storm drains. The presentment also stated that the company allowed radioactive waste to leak onto the ground at its facility in Harrisburg, Pennsylvania. The company is further accused of storing waste … Continue Reading

Pennsylvania legislators propose statute relating to seismic testing

On May 13, 2014, several members of the Pennsylvania House of Representatives proposed a new statute relating to seismic testing (H.B. 2254).

The bill will make it “a rebuttable presumption of law that a person conducting seismic testing is liable and responsible for all damage within 1,000 feet of where the seismic testing was conducted without proof of fault, negligence or causation.” Any claim under the statute “must arise or be made within 90 days of the completion of seismic testing.”

The statute allows a defense to the presumption only if one of the following is established by … Continue Reading

Pennsylvania legislators propose separate regulations for conventional and unconventional drilling operations

Three Pennsylvania state representatives plan to introduce legislation that would separate regulations for conventional and unconventional drilling operations, asserting that “conventional drilling is, without question, far different than drilling in the Marcellus Shale, and it simply makes no sense to apply the same standards to these operations.”

They argue that conventional drilling has been overlooked in the rush to develop horizontal wells to extract natural gas.

According to the legislators, the proposed substantial re-write of the state’s Oil and Gas Act, Act 13, P.L. ___, 58 Pa. C.S. §§2301-3504, puts small-scale drilling companies that provide “good, family-sustaining jobs” at risk … Continue Reading

EPA reviews states’ solid waste management regulations for oil and gas operations

In an April 1, 2014 memorandum, the U.S. Environmental Protection Agency (EPA) summarized state regulatory programs concerning the management of solid waste from oil and natural gas exploration, development and production (E&P) operations.

In reviewing each state’s regulations, the EPA focused on surface storage and disposal facilities managing produced waters, drilling muds, drilling cuttings, hydraulic fracturing return fluids, and various other waste liquids and materials intrinsically related to oil and gas E&P.

The EPA found that the state regulations were primarily concerned with the “technical requirements associated with the design, construction, operation, maintenance, closure, and reclamation of surface pits, … Continue Reading

Oil and gas companies face shareholder resolutions relating to hydraulic fracturing

Shareholders, including the Sisters of St. Francis of Philadelphia, are calling for Chevron, ExxonMobil, EOG Resources, Occidental Petroleum, and Pioneer Resources to disclose their hydraulic fracturing risk assessments.

In their Proposal No. 6 on Chevron’s 2014 Proxy Statement which was filed with the U.S. Securities and Exchange Commission, the Sisters of St. Francis state that “Chevron does not provide investors with relevant metrics necessary to assess the company’s exposure to risks associated with the impacts of hydraulic fracturing operations and whether the company is effectively mitigating those risks.”

The Sisters propose that the company prepare an annual report containing information … Continue Reading

More briefs filed in Robinson Township v. Commonwealth of Pennsylvania

Briefs continue to be filed in Robinson Township, et al. v. Commonwealth of Pennsylvania, et al., Case No. 284 MD 2012, in the Pennsylvania Commonwealth Court concerning two issues: (1) whether the valid provisions of Act 13, P.L. ___, 58 Pa. C.S. §§2301-3504 (a substantial re-write of the Commonwealth’s Oil and Gas Act) are severable from those provisions found to be unconstitutional and (2) whether a section of the law that exempts drillers from having to inform owners of private water sources in the event of a potentially contaminating spill near their properties is unconstitutional.

In opening briefs filed … Continue Reading

Pennsylvania DCNR releases report on impact of shale gas development on public lands

On April 16, 2014, the Pennsylvania Department of Conservation and Natural Resources (DCNR) issued a long-awaited report concerning shale gas activities in the state’s forests. In late 2010, the Bureau of Forestry initiated a Shale-Gas Monitoring Program to “track, detect, and report on the impacts of” shale gas development and “to provide objective and credible information to the public and inform and improve shale-gas management efforts.”
According to the report, there are approximately 1.5 million acres of state forest located over the Marcellus Shale. Of that acreage, 44% (673,000 acres) is available for gas development. Leases would restrict surface disturbance … Continue Reading

Court upholds Pennsylvania’s forced pooling statute as constitutional

On April 8, 2014, a Pennsylvania Court of Common Pleas judge upheld the state’s controversial forced pooling statute (section 34.1 of the Oil and Gas Lease Act) as constitutional. This pooling statute, which was signed into law on July 9, 2013, gives drillers the ability to pool leased properties into one unit for horizontal wells, as long as the oil and gas contracts in effect do not prohibit these combinations.

In her order, the judge stated that “so long as the lessors’ rights granted by lease and law are not impinged upon, the lessee has broad powers to … Continue Reading

Opening Briefs Filed In the Remand of Robinson Township v. Commonwealth of Pennsylvania

In a decision dated December 19, 2013, the Pennsylvania Supreme Court, Middle District, struck down major portions of Act 13, P.L. ___, 58 Pa. C.S. §§2301-3504 (a substantial re-write of the Commonwealth’s Oil and Gas Act) as unconstitutional. Robinson Township, et al v. Commonwealth of Pennsylvania, et al, No. 284 MD 2012

In the 4-2 decision, the Court held that portions of Act 13 violated the Environmental Rights Amendment of the state’s constitution and denied due process rights by “unconstitutionally, as a matter of substantive due process, usurp[ing] local municipalities’ duty to impose and enforce community planning . . … Continue Reading

Comments on Pennsylvania’s proposed surface operations rules

The comment period for the Pennsylvania’s Department of Environmental Protection’s proposed surface operations rules ended on March 14, 2014. These proposed rules would update Chapter 78 of the Pennsylvania Code relating to the construction and operation of oil and gas wells. The proposals focus on surface activities on and off well sites, such as waste handling, spill prevention, pipelines, pits and the protection of natural resources.

The Marcellus Shale Coalition (MSC), an advocate for the natural gas industry, indicated that compliance with the proposed regulations would cost drillers between $200 million and $300 million annually, much higher than the estimate … Continue Reading

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