Showing posts with label Pennsylvania. Show all posts
Showing posts with label Pennsylvania. Show all posts

Federal court in Pennsylvania grants summary judgment in favor of exploration and production company on claims of strict liability, nuisance, and negligence

On March 25, 2015, the United States District Court for the Middle District of Pennsylvania entered summary judgment in favor of an exploration and production company on claims of strict liability, nuisance, and negligence, by a Tioga County landowner related to drilling activity near his property.  Chief Magistrate Judge Carlson found that the uncontroverted evidence offered by the E&P company demonstrated that “defendants are entitled to summary judgment in their favor on the merits.”  The case is Kamuck v. Shell Energy Holdings GP, LLC, No. 4:11-CV-1425, 2015 U.S. Dist. LEXIS 37538 (M.D. Pa. Mar. 25, 2015).

A crucial factor in the Court’s decision was that the plaintiff failed to produce any evidence to support many of the factual allegations made in his complaint. 

For example, [plaintiff] has never identified the time, date, location, or extent [of] any toxic chemical release that he alleges took place on any part of the [plaintiff’s] Property or adjoining properties.  Neither has [plaintiff] identified any toxic substances that were allegedly released on his property.  [Plaintiff] has also failed to produce any evidence identifying specific environmental contamination, fire, explosion or any other hydro-carbon production mishap that affected his well-being or property.  Nor has he presented any competent proof supporting his nuisance claims relating to vehicle traffic and the alleged spraying of toxic chemicals on the roadway adjoining his land.

Turning to the merits of the individual causes of action, the Court first addressed plaintiff’s strict liability claim.  The Court accepted the E&P company’s uncontroverted “evidence and argument that support [its] position that natural gas drilling activities, including hydraulic fracturing, do not constitute abnormally dangerous activities under Pennsylvania law giving rise to strict liability.”  The Court noted that its decision “is in line with precedent in this field within Pennsylvania,” “with legal authority in other jurisdictions,” and “follows the prior precedent of this Court.”

With respect to plaintiff’s private nuisance claim, the Court found that the lack of evidence compelled entry of summary judgment.  Plaintiff “presented nothing to support this private nuisance claim beyond his subjective upset at the volume of road traffic he has experienced periodically outside his home on a public thoroughfare.”  Under Pennsylvania law, “mere roadside noise and dust do not constitute private nuisance.” 

Finally, the Court addressed plaintiff’s failure to support his negligence claim.  “[D]ue to [plaintiff’s] inaction, and a complete failure of competent proof, we are unable to identify any duty breached by the defendants; any causal relationship between that duty and injuries to the plaintiff; and any ascertainable damages resulting from that injury” and, consequently, “this claim also now fails as a matter of law.”

In addition to finding the E&P company was entitled to summary judgment on the merits, the Court also found that plaintiff’s failure to prosecute his case and to obey court orders with respect to discovery obligations offered an independently adequate ground upon which to dismiss the case.  Despite plaintiff’s pro se status, “courts have directly spoken to the type of willful avoidance of litigation responsibilities which has marked [plaintiff’s] approach to this lawsuit over the past two years, condemning the practice of avoiding depositions and generally ‘playing possum’ when instructed to fulfill their litigation responsibilities.”  “The plaintiff cannot refuse to address the merits of his claims, and then assert the untested merits of these claims as grounds for denying a motion to sanction him.”

Read the Court’s complete opinion.


This post was written by Jeremy Mercer (jeremy.mercer@nortonrosefulbright.com or 724 416 0440) and Michael Gaetani (michael.gaetani@nortonrosefulbright.com or 724 416 0429) from Norton Rose Fulbright's Energy Practice Group.

Study concludes that fracking does not increase methane levels in drinking water

Over the past couple of years, the number of studies related to the alleged environmental impact from hydraulic fracturing have increased dramatically. In fact, some of these studies have contradicted each other. That said, lately, multiple studies have concluded that hydraulic fracturing does not have the detrimental impact on the environment that several environmental groups have alleged. The latest study to examine hydraulic fracturing has concluded that fracking does not cause methane contamination of drinking water in Pennsylvania.

The study concluded that the methane present in drinking water did not result from hydraulic fracturing operations in the area. This latest report studied over 11,300 drinking water wells in Pennsylvania. This study was led by Donald Siegel, a hydrogeologist at Syracuse University. Siegel noted that in rare instances poorly constructed wells permit the transfer of methane to drinking water; however, he stressed that this was the result of poor construction, not hydraulic fracturing in general.

Siegel’s study casts doubt upon two earlier studies that suggested that there was a connection between the methane content in drinking water and hydraulic fracturing. Notably, one of these studies only examined 60 wells and the other 141 wells. According to Siegel, these prior studies erred by selecting wells known to have structural problems. In fact, the prior studies acknowledged that the primary culprit for methane contamination is poorly constructed wells.



This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.

Middle District of Pennsylvania finds separate natural gas compressor stations are not a “single source”

On February 23, 2015, the US District Court for the Middle District of Pennsylvania granted Ultra Resources, Inc.’s motion for summary judgment, holding as a matter of law that eight compressor stations owned and operated by Ultra Resources, Inc. (“Ultra”) were not a “single source” for air quality permitting purposes. See Citizens for Pennsylvania's Future v. Ultra Res., Inc., No. 4:11CV01360, 2015 US Dist. LEXIS 21357 (M.D. Pa. Feb. 23, 2015). This post provides a brief summary of the Ultra Resources decision. Check back to this web site soon for our more in-depth analysis of the Ultra Resources decision.

If the compressor stations were aggregated as a single source, their emissions would have exceeded major source thresholds, and Ultra would have been required to obtain a single, more stringent, major-source air permit for the compressor stations. Under Pennsylvania regulations, as under EPA regulations, compressor stations are considered a single source for air permitting purposes only if they are under common control and are contiguous or adjacent. 40 C.F.R. § 70.2 (defining “major source”); 25 Pa. Code § 121.1 (defining “facility,” “major facility,” and “Title V facility”). The sole issue in dispute in Ultra Petroleum was whether the compressor stations were “adjacent” to one another. The parties stipulated to the distance between the compressor stations (ranging from 0.78 to 4.43 miles).

In granting summary judgment to Ultra, the court found that a determination of adjacency should focus on the plain meaning of the term, requiring physical proximity. Based on the plain meaning of the word “adjacent,” the court held that Ultra’s compressor stations were not adjacent to one another as a matter of law. The court rejected PennFuture’s argument that the compressor stations were “adjacent” by virtue of being “functionally interrelated” solely because the eight compressor stations deposit gas into a common pipeline.

In reaching its determination in Ultra Petroleum, the court cited PADEP’s “Guidance for Performing Single Stationary Source Determination for Oil and Gas Industries” (DEP ID: 270-0810-006), 42 Pa. B. 6344 (Oct. 6, 2012); Sixth Circuit case law in Summit Petroleum Corp. v. EPA, 690 F.3d 733, 735 (6th Cir. 2012), in which the Sixth Circuit interpreted “adjacency” to require physical proximity and could not be shown by functional relationships among facilities; and Nat’l Envtl. Dev. Ass’n’s Clean Air Project v. EPA, 752 F.3d 999 (D.C. Cir. 2014), in which the D.C. Circuit extended the Summit Petroleum decision nationwide. Norton Rose Fulbright’s past discussions of Summit Petroleum and NEDACAP are available on our web site.

The Ultra Resources court agreed with the majority in Summit Petroleum that the plain meaning of “contiguous” and “adjacent” should normally operate to allow a determination as to whether stationary sources should be aggregated. Departing from Summit Petroleum and NEDACAP, however, the court left open the possibility that, under PADEP guidance, a court in Pennsylvania might still consider “functional interrelatedness,” but only in unique factual situations beyond the normal oil and gas configurations and arrangements contemplated by PADEP.


This article was prepared by Janet McQuaid (janet.mcquaid@nortonrosefulbright.com or +1 724 416 0427) , Jeremy Mercer (jeremy.mercer@nortonrosefulbright.com or +1 724 416 0440) and Bob Greenslade (bob.greenslade@nortonrosefulbright.com / +1 303 801 2747) from Norton Rose Fulbright's Energy Practice.

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 that the Supreme Court will alter its jurisprudence on fracking.

Two of the Supreme Court justices who voted in favor of striking down portions of Act 13 recently retired. Robert Powelson, chairman of Pennsylvania’s Public Utility Commission (PUC), has expressed his desire that in light of the absence of the retired justices, the Supreme Court will reconsider its ruling on Act 13.

According to Powelson, under the current system, drilling operators could be forced to comply with varying standards because localities would have the authority to enact contradictory drilling ordinances. It is therefore imperative, in Powelson’s view, that the Supreme Court agree to hear another appeal involving Act 13.

Currently pending before the Supreme Court is a decision on remand from the Court’s earlier opinion concerning Act 13. A state appeals court ruled that the PUC lacks the authority to oversee local rules governing drilling operations to ensure that they comply with Act 13. In the suit, the PUC argued that it had the authority to assess local ordinances governing drilling activities despite the Supreme Court’s prior ruling that invalidated several portions of Act 13. The Supreme Court has not yet decided whether it will hear the appeal.

Read the Supreme Court’s 2013 opinion and the appellate court decision.


This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.

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 challenge the constitutionality of those provisions. He argued that the statutory scheme violated his constitutional rights under the First and Fourteenth Amendments. Dr. Rodriguez’s suit was dismissed in 2013 for lack of standing. He later amended his complaint, but it was again dismissed for lack of standing. He subsequently appealed to the Third Circuit.

In its response to Dr. Rodriguez’s brief on appeal, the Attorney General argued that Dr. Rodriguez still lacked standing to bring the suit and failed to state a claim upon which relief may be granted.

The Attorney General highlighted that even if the Pennsylvania provisions at issue were declared unconstitutional, Dr. Rodriguez would have no means of compelling oil and gas companies to disclose the desired information. Moreover, according to the Attorney General, Dr. Rodriguez failed to demonstrate that his ability to treat patients was hampered in any way. To the contrary, the challenged provisions actually assisted Dr. Rodriguez’s ability to treat patients.

In addition, the Attorney General noted that the statutory scheme reflected a careful balance struck by the state legislature between the intellectual property of oil and gas companies and the health and safety needs of those patients potentially exposed to chemicals.

Indeed, the Attorney General argued that there were a number of similar federal laws. In the Attorney General’s view, Dr. Rodriguez’s primary motivation in bringing this appeal was to gather additional information for his political beliefs, not securing information for the treatment of his patients.

Read the Attorney General’s brief.


This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.

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 to provide doctors with the identity of or amount of chemicals used in their fracking fluid if the information is required in an emergency situation and the doctor agrees to keep the information confidential. Section 3222.1(b)(10) and (11) also prohibits doctors from disclosing any confidential information concerning the composition of hydraulic fracturing fluids.

These rules were challenged by Alfonso Rodriguez, a physician in Dallas, Pennsylvania. In the suit, Rodriguez argues that this law violates his rights under the First Amendment to disclose information regarding the fracking fluids to his patients and the remainder of the medical community. The United States District Court for the Middle District of Pennsylvania dismissed Rodriguez’s claims twice, reasoning that he lacked standing to challenge the law. On appeal, Rodriguez again argues that Section 3222.1(b)(10) and (11) violates his rights under the First Amendment.

The Pennsylvania Department of Environmental Protection (PDEP) has filed a brief in response, requesting that the Third Circuit dismiss Rodriguez’s claims. The PDEP argued that Rodriguez’s claims are hypothetical because he has never requested the protected information or been denied the information. The PDEP also claimed that Rodriguez is not entitled to a declaratory judgment on the constitutionality of Sections 3222.1(b)(10) and (11).

Read the PDEP’s brief.

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 undergo an additional environmental impact analysis and will be subject to public comment.

The USFS’ announcement comes just months after Pennsylvania Governor Tom Corbett similarly lifted a 2010 moratorium banning Pennsylvania from leasing public parks and forest lands.

Following Governor Corbett’s decision, Pennsylvania negotiated a settlement with environmental groups which barred the issuance of any new leases until the Commonwealth Court ruled on a related lawsuit regarding whether Corbett’s decision to use funds from natural gas leasing in the general budget violated the Pennsylvania constitution. Oral arguments in that case were held in October but no ruling has been issued to date.


This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Shannon DeHont (shannon.dehont@nortonrosefulbright.com or +1 724 416 0431) from Norton Rose Fulbright's energy practice group.

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 with whom they had entered into leases.

The subsurface owner, who did not have a lease with the defendants, later discovered the activity and initiated a claim in 2010 for ejectment, trespass, and conversion.

The trial court found in favor of the subsurface owner, determining that the trespass had been made in good faith until 2008, after which time the trespass was in bad faith due to a conversation between the parties that should have put the defendants on notice they may be trespassing on the plaintiff’s interest.

The Superior Court partially overturned the lower court’s decision, holding that Pennsylvania’s recording statute placed the defendants on constructive notice of the plaintiff’s interest and, consequently, defendants’ trespass was in bad faith for its duration.

The effect of this ruling is to open defendants up to additional damages as a result of the bad faith finding.

The court also addressed the issue of whether the plaintiff had a duty to inspect his property and discover the trespass sooner. Rejecting defendants’ claim that the statute of limitations should bar plaintiff’s claim, the Superior Court upheld the trial court’s determination that under an objective standard, a reasonable person would not have discovered the trespass.

Read the Pennsylvania Superior Court’s opinion of Dennis Sabella v. Appalachian Development.


This post was written by Michael Gaetani (michael.gaetani@nortonrosefulbright.com or 724 416 0400) from Norton Rose Fulbright's Energy Practice Group.

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 search revealed a previously unknown 1894 deed reserving half of the property’s subsurface rights in favor of a third party. As a result, the E&P company reduced its bonus payment to the landowners by half. In 2008, the landowners filed a motion to quiet title to the half interest reserved by the 1894 deed, ultimately acquiring full title to all 62 acres of subsurface rights.

In 2011, the E&P company exercised its right to extend the lease in exchange for another bonus payment, paying the landowners for the full 62 acres and claiming that the original lease was operative to hold the entire 62 acres. The landowners argued that because they did not own the rights to all 62 acres when they signed the lease in 2006, the E&P company could not extend the lease with respect to all 62 acres, but only with respect to the half interest they owned in 2006.

The E&P company argued that the doctrine of estoppel-by-deed, which mandates that lessee be given the benefit of property that lessors erroneously claim to control at the time of executing a lease agreement, operated to prevent the landowners from excluding the half interest. In March 2014, the Pennsylvania Superior Court agreed with the E&P company, and the landowners appealed.

Read the Pennsylvania Superior Court’s opinion.


This post was written by Michael Gaetani (michael.gaetani@nortonrosefulbright.com or 724 416 0400) from Norton Rose Fulbright's Energy Practice Group.

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 if state regulations and monitoring of fracking waste are sufficient to ensure accuracy, completeness and compliance with applicable environmental laws, ” Rep. Cartwright said in a letter to DEP Acting Secretary Dana Aunkst. Rep. Cartwright cited a July 2014 report from the state’s auditor general concluding that Pennsylvania’s current system of oversight of fracking waste “is not an effective monitoring tool” and is “not proactive in discouraging improper, even illegal, disposal of waste.” Rep. Cartwright asked for the records to be produced by November 12, 2014.

The full text of Rep. Cartwright’s letter to the DEP can be found here. Rep. Cartwright won reelection to a second term on November 4, 2014.


This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Michael Gaetani (michael.gaetani@nortonrosefulbright.com or 724 416 0400) from Norton Rose Fulbright's Energy Practice Group.

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 bill has another logical basis: landowners are paid royalties on a monthly basis, so monthly production reports could help serve as a way for those landowners to verify that their royalty payments match the actual production of natural gas. Thus, even for operators, the bill may have some benefits if it increases landowner confidence that the operators are properly compensating them for the use of their land and mineral resources.


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.”  The original parties to the lease made several assignments of interest, but neither the lessors nor their successors provided the lessee or its successors with notice of the change in ownership.  The plaintiff, Danko, was a successor of the lessor.  Danko sought a declaration that the lease had expired by its own terms because the predecessor of defendant EXCO made the extension payment to the original lessors who, at the time of the payment, had already assigned their interest.
Judge Brann held that because EXCO and its predecessors had not been provided with notice of the change in ownership, the payment made to the original lessors was sufficient to extend the lease under the change in ownership provision.  As the issue was novel under Pennsylvania law, Judge Brann relied on authority from other state and federal courts, as well as prominent oil and gas treatises, to conclude that change of ownership clauses are valid features of oil and gas leases and are strictly construed.  Moreover, Judge Brann held that constructive or actual notice of the change in ownership will not obviate a change of ownership clause.  The plain language of the lease required Danko or its predecessors to provide documentation of the change in ownership.

Judge Brann's opinion.


This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Michael Gaetani (michael.gaetani@nortonrosefulbright.com or 724 416 0400) from Norton Rose Fulbright's Energy Practice Group.

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 45 calendar days, unless there are extenuating circumstances.  The PADEP may order the operator to provide temporary water supplies to the complainant either before or after the final determination on contamination is made, depending on whether the water supply is located within the “rebuttable presumption area” (1,000 feet for a conventional well and 2,500 feet for an unconventional well).  If a final positive determination of contamination is made, the PADEP shall issue a notice of violation (“NOV”) to the operator and, after allowing an opportunity for the operator to respond, shall issue an administrative order to replace or restore the affected water supply unless (1) the water supply has already been replaced or restored, (2) the investigation request has been withdrawn, (3) the operator and water supply owner have reached an agreement, or (4) the water supply is no longer contaminated or diminished.

The Proposed Policy also addresses existing guidelines and policies.  One of these changes provides for more aggressive issuance of NOVs, which will now be issued for all violations noticed during an inspection, unless the violation is corrected by the end of the inspection visit.  Currently, an NOV will issue only if the violation is not corrected within 14 days of the inspection visit.  Other topics addressed by the Proposed Policy include a revised well inspection schedule, the process for on-site inspections, the issuance of administrative orders, permit suspension and revocation, the imposition of civil penalties, and a 180-day negotiation deadline for certain enforcement documents.

The PADEP is accepting public comments on the Proposed Policy until November 2, 2014. View the Proposed Policy.


This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Michael Gaetani (michael.gaetani@nortonrosefulbright.com or 724 416 0400) from Norton Rose Fulbright's Energy Practice Group.

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 complained about health problems more frequently than those who lived further from the wells. However, the researchers cautioned that their results are tentative and that more research should be done on the topic.

Pennsylvania State University researchers also came out with a new study recently, this one on the topic of whether residual fracking fluid that remains in shale formations after production poses a risk to groundwater. The researchers found it quite unlikely that groundwater could be contaminated by such residual water, because “capillary and osmotic forces . . . propel [residual water] into, not out of, the shale.” While narrow in scope, this study may help put to ease concerns about groundwater contamination, at least with respect to any hypothetical risks posed by residual water left in shale that has been fracked.


 This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Jim Hartle (jim.hartle@nortonrosefulbright.com or 713 651 5695) from Norton Rose Fulbright's Energy Practice Group.

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 notify only public water supply owners of spills; (iii) that health professionals constitutionally can be prohibited from disclosing the identity and amount of hydraulic fracturing additives; and (iv) that Act 13 does not unconstitutionally grant natural gas companies eminent domain power (Two of the five judges hearing the case issued concurring and dissenting opinions).

Most notable however, is the Commonwealth Court majority’s decision regarding the provisions of Act 13 which granted the PUC and Commonwealth Court jurisdiction to review local ordinances to determine whether they complied with Act 13 and Pennsylvania’s Municipal Planning Code (“MPC”), and if not, to withhold impact fees and/or to impose attorney fees and costs.

In its opinion, the Commonwealth Court majority held that the procedural provisions of Act 13, Sections 3305 - 3309, allowing for review of contested zoning ordinances were inseparable from the sections declared unconstitutional by the Pennsylvania Supreme Court (Importantly, the concurring and dissenting judges both agreed that the provisions regarding PUC and Commonwealth Court jurisdiction were severable and should have been retained).

The majority reasoned that the review process was so intertwined with the substantive provisions which the Supreme Court found to be unconstitutional that they could not be enforced independently. Therefore, the Commonwealth Court enjoined the application and enforcement of Sections 3305 - 3009. As a result, operators and landowners objecting to local zoning ordinances must continue to start those challenges before the local zoning boards, township supervisors, or, in certain cases, the Court of Common Pleas.


This post was written by Shannon DeHont (shannon.dehont@nortonrosefulbright.com or +1 724 416 0431) and Joshua Snyder (joshua.snyder@nortonrosefulbright.com or +1 724 416 0432) from Norton Rose Fulbright's Energy Practice Group.

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 claiming that the report conflates pressure with leakage. The study attempts to draw a causal relation between the two, according to spokespeople for the industry, and the existence of the former is not evidence of the latter.

Pennsylvania regulatory officials have stated that while gas leaks peaked in 2010, the leakage rates have declined since then.


This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.

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 without proper permits from Pennsylvania’s Department of Environmental Protection, and illegally disposing of solid waste into the ground.
Moreover, the grand jury found that the company overbilled every business it contracted with by inflating their invoices.
The Office of the Attorney General additionally filed insurance fraud charges against the owner. The Office discovered that several members of the owner’s family were on the payrolls of the company and another entity which was family owned. The grand jury stated that these family members were ghost employees and that they conspired for group health insurance rates.
Current and former employees apparently testified that they risked termination if they did not follow the owner’s demands to inflate invoices and add his family members to the payroll.
A press release containing all the criminal charges can be found on the Pennsylvania Attorney General’s Office website.


This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.

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 clear and convincing evidence:

  1. The damages existed prior to the seismic testing.
  2. The damage was not within 1,000 feet of the seismic testing.
  3. The damages occurred as a result of some cause other than the seismic testing.
The bill has been referred to the Judiciary Committee for consideration.


This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.

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 financially.

For conventional wells, the Environmental Quality Board (EQB), part of the state’s Department of Environmental Protection (DEP), estimated annual costs between $5 and $12 million, while the Pennsylvania Grade Crude Oil Coalition puts the estimate at between $181 million and $387 million.

Even the state’s Independent Regulatory Review Commission (IRRC) has expressed concerns over the gap in these estimates, stating that “there appears to be a basic misunderstanding of what this proposal will require and when those requirements will become effective.”

To analyze and clarify the financial and regulatory differences, the IRRC suggests that the EQB meet with trade organizations, oil and gas operators, and any interested stakeholders.

For information on Act 13, see “Pennsylvania Supreme Court strikes down major portions of Act 13 as unconstitutional.” For briefs filed in the remanded lawsuit, Robinson Township, et al v. Commonwealth of Pennsylvania, et al, 284 MD 2012, In the Pennsylvania Commonwealth Court, click here and here.


This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.

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, ponds, lagoons or tanks, as well as financial assurance requirements associated with such facilities.”

Among the common parameters are state requirements for liners in pits and impoundments, secondary containment requirements for tanks, set-back requirements, and various inspection requirements. However, the EPA did find gaps in regulations relating to groundwater monitoring, leachate collection, air monitoring, and waste characterization.

Overall, with the review, the EPA had developed an understanding of the wide-range of state regulatory programs currently in place in the twenty-six (26) oil and gas producing states covered in the summary.


This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.