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News & Flashes

  • 12
  • February
  • 2020

Pennsylvania Supreme Court finds that Rule of Capture May Bar Trespassing Claims

On January 22, 2020, the Pennsylvania Supreme Court announced its decision in Briggs, et al. v. Southwestern Energy Production Company, No. 63 MAP 2018 (Penn. Jan. 22, 2020), vacating a Superior Court opinion and holding that the rule of capture applies to fracking and protects fracking companies from trespass liability when a well taps into oil and gas below a neighboring property so long as there is no actual physical invasion. The rule of capture is a common law principle stating that the first person to “capture” a resource owns that resource, regardless of whether it is drained from below adjacent land. With this decision, Pennsylvania joins Texas as one of two states with cases holding that fracking, in and of itself, does not constitute trespass. In limiting its holding to situations where there is no physical invasion, the Supreme Court leaves an opening for landowners who can prove actual physical invasion, difficult though that may be.

In Briggs, the Briggs Family sued Southwestern Energy, an energy company conducting fracking operations on neighboring land. Southwestern Energy did not have leasehold interests on the Briggs Family's land. The Briggs Family sued for trespass and conversion, alleging that Southwestern Energy’s wells illegally drained natural gas from beneath their land. Southwestern Energy argued that it did not physically invade the Briggs Family’s property and, to the extent it produced any gas drained from that property to its lease, it was protected by the rule of capture. In response, the Briggs Family argued that the rule of capture should not apply in circumstances where gas has been captured by fracking, because (1) “artificially stimulating” the cross-boundary flow of oil and gas renders the rule of capture inapplicable and (2) “any time natural gas migrates across the property lines resulting, directly or indirectly, from hydraulic fracturing, a physical intrusion into the plaintiff’s property must necessarily have taken place.”

In its opinion, the Supreme Court rejected the Briggs Family’s arguments. The Supreme Court noted that the characterization of fracking as “artificial stimulation” was a distinction without a difference—all drilling is artificial. Even more to the point, the Supreme Court stated that early decisions had upheld application of the rule of capture to well-shooting and other forms of well stimulation. The Supreme Court held that the rule of capture protects fracking companies from trespass liability when a well taps into oil and gas below a neighboring property unless there is a physical invasion. Since the Briggs Family had not actually alleged physical intrusion into their subsurface property and the record did not support the conclusion that physical intrusion had occurred, the Supreme Court remanded the case for further factual development. Had the Briggs Family alleged actual invasion by fracture, fluid, or proppant, the Supreme Court indicated that a claim for trespass would have been viable, at least at the pleading stage.

Briggs has been viewed as a split decision by landowners and fracking companies. Although it upholds the rule of capture’s applicability to fracking, it does not fully foreclose liability for drainage resulting from fracking. Ultimately, the Supreme Court’s ruling places the burden on landowners to prove that a physical intrusion onto their property actually took place—a pricey and complicated proposition.

  • 12
  • June
  • 2018

Pennsylvania Issues Revised General Permits Regulating Methane Emissions from Unconventional Natural Gas Wells

On June 9, 2018, the Pennsylvania Department of Environmental Protection (“DEP”) released revised versions of General Plan Approval and/or General Operating Permits GP-5 and GP-5A (together, the “Revised General Permits”), applicable to “Natural Gas Compression Stations, Processing Plants, and Transmission Stations” and “Unconventional Natural Gas Well Site Operations and Remote Pigging Stations,” respectively. The Revised General Permits are aimed principally at regulating methane emissions from unconventional natural gas wells and midstream facilities, consistent with Governor Tom Wolf’s four point plan for reducing methane emissions announced in January 2016. The Revised General Permits are available to facilities with actual emissions less than 100 tons per year (“tpy”) of criteria pollutants (NOx, CO, SO2, PM10, and PM2.5), less than 50 tpy of VOCs, less than 10 tpy of any single hazardous air pollutant (“HAP”), and less than 25 tpy of total HAPs (use of the Revised General Permits is further restricted in Philadelphia, Bucks, Chester, Montgomery, or Delaware Counties to facilities with less than 25 tpy each of NOx and VOC emissions).

The Revised General Permits, which will apply to new and modified sources constructed on or after August 8, 2018, require compliance with federal New Source Performance Standards (such as 40 C.F.R. Part 63 Subparts OOOO and OOOOa, although EPA has proposed a temporary stay of some of the OOOOa requirements but also include more stringent requirements as well. Specifically, the Revised General Permits contain “Best Available Technology” (“BAT”) standards that apply in addition to federal New Source Performance Standards. Of the thirteen BAT determinations in the GP-5 permit, nine impose requirements more stringent than the federal New Source Performance Standards; eight of the eleven BAT determinations in the GP-5A permit are more stringent than federal New Source Performance Standards. 

Most notably, the Revised General Permits include a 200 tpy limit on methane emissions above which a BAT requirement for methane control applies--the first such numeric threshold applicable to methane emissions from unconventional natural gas wells and midstream facilities. While methane control techniques vary by emissions source, DEP considered “a closed vent system routed to a process or control” the primary control technique for emissions attributable to venting or process emissions, and a leak detection and repair (“LDAR”) program as the primary control technique for fugitive emissions. For fugitive emissions components, the Revised General Permits require LDAR within 60 days of startup and quarterly thereafter to comply with the BAT standard. Additional BAT requirements apply to storage vessels, tanker truck load-out operations, controllers, pumps, enclosed flares, well completion, combustion units, centrifugal natural gas compressors, fractionation process units, and sweetening units, among other sources addressed by GP-5 or GP-5A.

It remains to be seen whether the Revised General Permits requiring control of methane emissions will have any impact on drilling activity in Pennsylvania, where operators drilled 809 new unconventional natural gas wells in 2017. Industry groups may also choose to bring litigation challenging the issuance of the Revised General Permits; an industry challenge to DEP’s Chapter 78a regulations also applicable to the unconventional industry has resulted in a stay that has put many of the Chapter 78a requirements on hold for over twenty months and counting. In the meantime, Governor Wolf’s efforts to reduce methane emissions continue. The remaining items of his four point plan call for promulgation of a regulation aimed at reducing methane emissions from leaks at existing oil and natural gas facilities and the development of best management practices (including LDAR programs) applicable to production, gathering, transmission and distribution lines.

  • 01
  • December
  • 2017

DRBC Proposed Rule Would Ban High-Volume Hydraulic Fracturing

On November 30, 2017, the Delaware River Basin Commission (“DRBC”) published a proposed rule that, if finalized, would prohibit “high-volume hydraulic fracturing” within the Delaware River Basin.  The proposed rule reflects the DRBC’s conclusion that “high volume hydraulic fracturing poses significant, immediate and long-term risks to the development, conservation, utilization, management, and preservation of the water resources of the Delaware River Basin.”  The Delaware River Basin extends into four northeastern states and includes seventeen counties in Eastern Pennsylvania, many of which lie above the Marcellus Shale formation.

The proposed rule defines “high-volume hydraulic fracturing” as fracturing operations that use “a combined total of 300,000 or more gallons of water during all stages in a well completion . . . whether the water is fresh or recycled and regardless of the chemicals or other additives mixed with the water.”  This definition is likely to capture most hydraulic fracturing operations.   For example, the preamble to proposed rule states that the average hydraulically fractured natural gas well in the nearby Susquehanna River Basin injected 4.3 million gallons of water from 2008-2013; similarly, the preamble cites the United States Environmental Protection Agency’s 2016 hydraulic fracturing study, which concluded that the median volume of water used per well fracturing event in Pennsylvania between January 2011 and February 2013 was 4.18 million gallons.

In addition to the proposed ban on high-volume hydraulic fracturing, the proposed rule would also discourage the exportation of waters from the Delaware River Basin “to support hydraulic fracturing outside the Basin,” require an assessment of alternatives before allowing the importation of produced water into the Delaware River Basin, and require DRBC approval for produced water treatment within the Delaware River Basin.

The DRBC is accepting comments on the proposed rule through February 28, 2018 at 5 PM.  In addition, the DRBC will convene a series of public hearings on the proposed rule on January 23, 2018 in Waymart, Pennsylvania and on January 25, 2018 in Philadelphia, Pennsylvania.  Read the proposed rule in full here.

  • 22
  • February
  • 2017

DEP Concludes Seismic Activity in Pennsylvania “Likely Correlated” with Hydraulic Fracturing

On Friday, February 17, the Pennsylvania Department of Environmental Protection (“DEP”) published a report concluding that four specific low-magnitude seismic events that occurred on April 25, 2016 “were likely correlated” with hydraulic fracturing activity. The seismic events at issue were registered on the Pennsylvania Seismic Network and consisted of a series of four “microseismic events” at magnitudes unlikely to be noticed by humans. The report concludes that these seismic events showed a “marked temporal/spatial relationship” to hydraulic fracturing activities at a nearby well pad, but ultimately cautions that “there is no definitive geologic association of events at this time.” 

Nonetheless, the DEP’s report includes several recommendations that will likely have an impact on how operators conduct their fracturing activities in certain areas of the Utica Shale formation. The technique used at the time of the April 2016 seismic activity is called “zipper fracturing,” and involves conducting hydraulic fracturing operations concurrently at two horizontal wellbores that are parallel and adjacent to each other. The DEP report describes that DEP and the operator agreed to a seismic monitoring plan in November 2016 that requires the operator of the well at issue to (i) discontinue the use of the “zipper fracturing” technique during any future completions when there is less than a quarter mile between lateral portions of adjacent wellbores; (ii) maintain its own seismic network to detect events; and (iii) adopt a specific seismic reporting and response plan. The plan also requires the operator of the well at issue to abide by a “traffic light” system, whereby the operator must, among other things, (i) notify DEP of seismic activity above 1.0 magnitude within 6 miles of a wellbore path, (ii) suspend operations if three seismic events between 1.5 and 1.9 magnitude occur within three consecutive days within 3 miles of a wellbore path, and (iii) shut down well operations if a seismic event magnitude 2.0 or greater occurs within 3 miles of a wellbore path. The report recommends that other operators in North Beaver, Mahoning, and Union Townships in Pennsylvania follow similar plans.

The report’s “traffic light” system recommendations are particularly notable because they apply at conservative levels of seismicity compared to other jurisdictions. For example, Well Completion Seismicity Guidance applicable to operators in the Scoop and Stack plays published by the Oklahoma Corporation Commission in December 2016 requires reporting of seismicity at magnitude 2.5 or greater within 1.25 miles of fracturing operations, a temporary pause in operations at magnitude 3.0 or greater, and the suspension of operations at magnitude 3.5 or greater. It remains to be seen whether the report’s recommendations will affect the level of hydraulic fracturing activity in the affected townships.

  • 14
  • October
  • 2016

Industry Advocates Sue Over Pennsylvania’s New Hydraulic Fracturing Rules

On Thursday, October 13th, a trade group representing unconventional gas producers filed suit asking a Pennsylvania court to delay implementation of the rules until the appeal is decided. The challenge targets provisions in the new rules that industry representatives claim are vague, burdensome, and not authorized under Pennsylvania law, including a rule expanding operators’ responsibility to avoid and protect endangered species and rules governing site remediation, spill-reporting, and waste disposal, among others. The new rules have been in effect less than a week.

  • 12
  • October
  • 2016

Pennsylvania’s New Fracking Regulations

On October 8, 2016, the Pennsylvania Environmental Quality Board published a comprehensive set of new rules regulating hydraulic fracturing operations in the state. Discussion of these rules began in 2011 and resulted in significant opposition--including resistance at the Pennsylvania legislature. Pennsylvania’s rules governing above-ground operations at oil and gas well sites had not been updated since 2001, prior to the expansion of hydraulic fracturing in the state. Under the regime implemented by the new rules, Pennsylvania has bifurcated its regulation of conventional and unconventional wells; the regulations governing conventional operations appear at 25 Pa. Code Chapter 78, while the regulations governing unconventional operations appear at 25 Pa. Code Chapter 78a. Many fear that the new rules will stifle energy production at a time when production has already slowed due to uncertain commodity prices, while others argue that the rules provide changes to protect both public health and the state’s natural resources. Read the full article here.

  • 08
  • January
  • 2016

Pennsylvania DEP Releases Proposed Oil and Gas Well Requirements for Surface Activities

On January 6, 2015, the Pennsylvania Department of Environmental Protection released a package of proposed regulations that would place new requirements on surface activities at conventional and unconventional oil and gas well sites. The proposed Chapter 78 and 78a rules would require secondary containment for regulated substances, ban the use of temporary waste storage pits at unconventional well sites, and require reporting of gas production and waste generation. Well permit applications would also be required to identify potentially impacted public resources located within a certain distance of the well, and applicants would be required to notify agencies responsible for those resources. According to the state's regulatory analysis form, the new rules could cost the unconventional oil and gas industry up to $73.5 million in initial costs, and up to $31.1 million in annual costs. In addition, the rules could cost conventional operators up to $634,500 in initial costs and $28.6 million in annual costs. Trade groups have suggested that the actual costs of these regulations may be even higher. The state's Environmental Quality Board is currently scheduled to consider adopting the rules at a meeting on February 3, 2016.

  • 17
  • December
  • 2015

SAB Panel Reviews EPA's Draft Hydraulic Fracturing Study

An EPA Science Advisory Board (SAB) panel recently released an early version of its recommendations regarding the Agency's closely-followed hydraulic fracturing study. A draft of the study was issued by EPA's Office of Research and Development in June 2015, finding that while water supply "vulnerabilities" exist, hydraulic fracturing does not have "widespread, systemic impacts" on drinking water. Despite EPA's insistence that the report is not designed to inform specific policies, commentators have paid close attention because of the study's potential role in the ongoing debate regarding further regulation of the industry.

The SAB panel's review, presented in a "Preliminary Summary Responses" document, is the latest development in this discussion and may impact the final version of the study. Among other comments, the SAB panel report indicates that it is not clear how EPA's statement of no widespread, systemic impacts to drinking water "reflects the uncertainties and data limitations the data described" in the draft study. The SAB panel recommends that the Agency revise its statements of findings "to be more precise and specific, and to clearly draw from the body of the report."

In response to the SAB's recommendations, EPA could potentially amend its prior finding of no widespread, systemic impacts. The SAB is expected to issue a final report with consensus advice in the spring of 2016. EPA still plans to issue its final hydraulic fracturing study in 2016. EPA has faced criticism over its previous groundwater investigations in Pavillion, Wyoming; Parker County, Texas; and Dimock, Pennsylvania.

  • 13
  • March
  • 2015

Pennsylvania Federal Judge Determines That Compressor Stations Are Not Interdependent

A federal district court in Pennsylvania recently declined to aggregate as a single air emissions source under federal and state laws certain gas gathering operations involving eight compressor stations, thirteen well pads, and associated equipment based in part on a factually-intensive determination that these operations were not interdependent. Plaintiff, Citizens for Pennsylvania's Future, brought a citizen suit against defendant, Ultra Resources, Inc., alleging that defendant's gas gathering operations should be aggregated such that they constitute a major source of NOx emissions, in which case they would have been constructed without the proper permit. Because the compressor stations were not "adjacent" according to the plain meaning of that term, and the plaintiff presented no facts demonstrating that defendant's gathering operations were unique in a way that would justify looking beyond the plain meaning of "adjacent" and finding them "interdependent," the court granted defendant's motion for summary judgment. In determining that defendant's operations were not interdependent, the court noted that "there is no relationship between the compressor stations, except in the satellite arrangements which do not have the NOx potential to emit over 100 TPY, and that each compressor station is connected to the metering and regulation station, but not to each other" via a unidirectional connection. Though the plaintiff argued that the compressor operations should be aggregated because they are "integrated and collectively function as a production unit" based on each compressor's connection to the central metering and regulation station, the court rejected plaintiff's argument, finding "no discernable relationship between the individual emission stations" and noting that the compressor stations "operate independently of one another." Read the full opinion in Citizens for Pennsylvania's Future v. Ultra Resources, Inc. , No. 4:11-CV-01360 (M.D. Pa. Feb. 23, 2015), here.

  • 30
  • August
  • 2012

Marcellus Shale Coalition Releases Recommended Practices for Pre-Drilling Sampling and Western Australian Government Releases New Regulations Requiring Chemical Disclosure

  • On Aug. 28,  the Marcellus Shale Coalition released new recommended practices advising operators to take groundwater samples before commencing natural gas drilling activity. Pennsylvania's recently enacted Act 13 allows an operator to overcome the presumption of liability for water contamination if it can prove that contamination existed before drilling began, such as through pre-drilling sampling. 

  • In Australia, the government of Western Australia published comprehensive petroleum regulations in the Gazette on Aug. 28 that include strict reporting standards for fluids injected into the well bore. Under the regulations, producers in Western Australia are required to publicly disclose details regarding the chemicals and other substances used for hydraulic fracturing.

Read the Marcellus Shale Coalition Recommended Practices hereand Western Australia's Petroleum and Geothermal Energy Resources Regulations here.

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