Ohio Supreme Court Accepts Dormant Mineral Act Case

The Ohio Supreme Court will review a key question of state law concerning application of the Dormant Mineral Act (“DMA”). In Corban v. Chesapeake Exploration, LLC, the United States District Court for the Southern District of Ohio certified the following questions to the Ohio Supreme Court for review:

(1) Does the 2006 version or the 1989 version of the DMA apply to claims asserted after 2006 alleging that the rights to oil, gas, and other minerals automatically vested in the surface land holder prior to the 2006 amendments as a result of abandonment?

(2) Is the payment of a delay rental during the primary term of an oil and gas lease a title transaction and “savings event” under the DMA?

The question of whether the 1989 or 2006 version of the DMA applies to current disputes concerning ownership of mineral rights has been the subject of numerous lawsuits throughout eastern Ohio. Trial courts have reached varying conclusions, but the Seventh District Court of Appeals recently ruled that the 1989 version is self-executing and can still be relied upon. A decision from the Ohio Supreme Court will presumably resolve this unsettled issue of law.

Commonwealth Court Issues Decision On Remaining Issues In Act 13 Case

In its far-reaching decision in Robinson v. Commonwealth, which was issued on December 19, 2013, the Pennsylvania Supreme Court invalidated several critical provisions of Act 13.  Additionally, the Supreme Court remanded to the Commonwealth Court to address whether the remaining sections of Act 13 can be severed and whether several sections of Act 13 were unconstitutional.  Yesterday, the Commonwealth Court reached its decision on the remanded issues.

Regarding severability, the Commonwealth Court held that the last sentence of Section 3302 and all of Sections 3305 to 3309 were not severable and, therefore, invalid.  The cumulative effect of this invalidation of all substantive portions of Chapter 33 of Act 13 is that local zoning matters relating to oil and gas will “now be determined by the procedures set forth under the [Municipalities Planning Code] and challenges to local ordinances that carry out a municipality’s constitutional environmental obligations,” and that the Pennsylvania Public Utility Commission no longer has the authority to review local ordinances for compliance with Act 13 and withhold well fees where defects were found.

Regarding the other issues, the Commonwealth Court dismissed claims that providing notice only to public drinking water systems following a spill from drilling operations and that prohibiting health professionals from disclosing the identity and amount of hydraulic fracturing additives were unconstitutional special legislation.  The Court also dismissed the claim that Act 13 conferred the power of eminent domain to illegally permit taking private property for use by a private enterprise.

Review our recent Administrative Watch for more in-depth analysis.

For more background, review our blog post on the Supreme Court Decision.

 

 

USEPA Proposes Amendments to Air Rules Affecting Oil and Gas Industry

Today the U.S. Environmental Protection Agency (USEPA) published proposed amendments to federal air regulations at 40 C.F.R. 60, Subpart OOOO (Standards of Performance for Crude Oil and Natural Gas Production, Transmission and Distribution).  Subpart OOOO was first promulgated in 2012 and later revised in 2013.  In response to petitions for administrative reconsideration, USEPA is now proposing additional changes to Subpart OOOO and requesting public comment on a limited set of issues, including the management of flowback gases and liquids associated with well completions.  Comments are due on August 18, 2014 (or September 2, 2014, if a public hearing is requested).

NGL Transloading Facility Opens in Parkersburg

Natural Gas Intelligence reports that a new truck-to-rail transloading facility owned by Denver-based Concord Energy LLC, has opened in Parkersburg, West Virginia. The facility is capable of handling more than 150,000 bbl of crude oil condensate and natural gas liquids, and is expected to primarily serve E&P companies operating in southeast Ohio and northwest West Virginia.  The facility will load light condensates, stabilized condensate, raw natural gas liquids (NGL) and purity NGL products, and includes warehouse space, a lay-down area and its location provides access to highways and the Ohio River. This announcement is the latest in a series of similar facilities that have revived dormant railroads and industrial sites throughout the region. 

New York Court Dismisses Suits Seeking to Compel State’s Environmental Impact Statement

On July 11, 2014, a New York state trial court dismissed two similar cases in which the plaintiffs sought to compel the State to finalize a Supplemental Generic Environmental Impact Statement (“SGEIS”) pursuant to the State Environmental Quality Review Act (“SEQRA”) (Wallach v. N.Y. State Dep’t of Envtl. Conservation, N.Y. Sup. Ct., No. 6773-2013;  Joint Landowners Coal. of New York Inc. v. Cuomo, N.Y. Sup. Ct., No. 843-2014).  The court dismissed both suits based on the plaintiffs’ lack of standing after finding that a party raising a SEQRA challenge “must demonstrate that it will suffer an injury that is environmental and not solely economic in nature,” and that in both suits the plaintiffs’ injuries were purely economic.  Although a draft version of the SGEIS was first published in September of 2009, a final version has yet to be issued. The delay is due in part to a decision by the New York Department of Environmental Conservation to withhold its release of the SGEIS until the state health commissioner issues his findings on hydraulic fracturing.

Lackawanna County Landfill Approved to Receive Fluid Waste

As reported by the Wilkes Barre Times-Leader, the Pennsylvania Department of Environmental Protection (“DEP”) recently approved a solid waste disposal permit modification to allow Keystone Sanitary Landfill (“Keystone”), located in Lackawanna County, to process water-based drilling fluid waste.  Keystone will separate the solids from the incoming fluid waste.  According to DEP’s approval letter, the separated liquid will be returned to oil and gas industry operators for reuse, while the solid waste will be processed on site and deposited in the landfill.  The approved permit modification does not increase Keystone’s 2,000-ton daily limit on the disposal of drilling-related materials.

Pennsylvania’s Landlord and Tenant Act Is not Applicable to Oil and Gas Leases

In a recent opinion, the Pennsylvania Superior Court addressed whether Pennsylvania’s Landlord and Tenant Act of 1951 (the “Act”), and the applicable statute of frauds contained therein, applies to oil and gas leases.  In Nolt v. TS Calkins & Associates, LP, a landowner executed an oil and gas lease to lease the oil and gas rights in a 98-acre parcel of land.  The landowner thereafter agreed to sell a portion of his property to the plaintiffs.  The plaintiffs subsequently filed a quiet title action arguing that the oil and gas lease is invalid and created a cloud on the title on their property.  More specifically, the plaintiffs argued that the oil and gas lease was subject to the Act, and that the statute of frauds contained in the Act requires a lease to be signed by both the lessor and the lessee to be valid.  Because the lessee did not sign the lease, the plaintiffs argued that only a year-to-year lease was created and that it had expired.  In response, the defendants argued that an oil and gas lease is not a lease governed by the Act, but instead is a transfer of realty subject to the more general statute of frauds, which requires only the signature of the grantor.  The Pennsylvania Superior Court agreed with the defendants and held that the transaction did not create a lease, but rather a transfer of a property right in the oil and gas.  Accordingly, the conveyance was subject to the general statute of frauds, not the statute of frauds contained in the Act, and the plaintiffs’ argument fails.

 

Warren Resources to Acquire Marcellus Assets

Warren Resources has executed a purchase and sale agreement to acquire Marcellus shale assets from Citrus Energy Corporation and two other working interest owners, reports Shale Energy Insider.  The acquired assets, located in Wyoming County, Pennsylvania, are all held by production, and provide Warren with a new core area in addition to its oil assets in California and natural gas assets in Wyoming.