Litigation

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    PA Hearing Board Reduces EQT Fine from $4.5M to $1.1M

    In October 2014, the Pennsylvania Dept. of Environmental Protection (DEP) fined Marcellus driller EQT a whopping $4.53 million for a leaky wastewater impoundment in Tioga County, PA (see PA DEP Levies Biggest Fine Ever, $4.5M Against EQT). While EQT did not say there wasn’t a problem with leaks at the site, they did say the way the DEP calculated the fine is unreasonable and arbitrary. EQT appealed the fine and the case all the way to the PA Supreme Court. In December 2015, the high court handed EQT a “procedural victory” by saying EQT has a point about the manner in which the DEP is calculating the fine (see PA Supreme Court Gives EQT “Procedural Victory” in $4.5M Fine Case). The Supreme Court sent the case back to a lower court, PA Commonwealth Court, for follow up work, and in January 2017, a three-judge panel ruled that the method the DEP currently uses to assess fines–by how many days pollution lingers, instead of by how many days the initial release of pollution lasted–is not legal nor common sense (see EQT Wins Court Case Against PA DEP re $4.5M Wastewater Leak Fine). The judges said such a method in fining, “would result in potentially limitless continuing violations.” Under the old way of calculating fines, the DEP was considering upping the fine on EQT to an insane $157 million. Calculating it under the new way will mean a fine of around $120,000. We thought with that ruling it was all done and dusted. Not so. The soap opera continued when the DEP appealed the Commonwealth Court panel’s ruling back up to the PA Supreme Court where the Supremes will consider it all over again (see DEP Appeals $4.5M Wastewater Leak Fine Against EQT to Supremes). Into this mess, let’s now throw in another wrinkle. While the courts have been grappling with issues of procedure and whether or not the DEP can assess fines the way it claims it can (that is, Constitutional issues), at the same time the matter was brought up before the PA Environmental Hearing Board (EHB), a sort of quasi-court set up to hear appeals of decisions made by DEP. The EHB has decided to adjust the fine down significantly–from the DEP’s initial levy of $4.53 million down to $1.1 million. Here was their reasoning… Read More “PA Hearing Board Reduces EQT Fine from $4.5M to $1.1M”

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    WV Rights/Pooling Case May have Big Impact on Shale Industry

    A court case from Marshall County, WV decided in April 2016 is heading to the WV Supreme Court of Appeals (the state’s highest court). The stakes in Contraguerro v Gastar Exploration could not be higher for the Marcellus industry in the Mountain State. In brief, 70 years ago a 106-acre track of property was sold. The sellers retained a one-quarter “non-participating interest” in the oil and gas rights. That means the buyer got to decide when/if to lease the property for drilling, and if so, has the right to negotiate the price, etc. The remaining one-quarter non-participating interest holders would get royalties, but nothing else. Fast forward several generations and the heirs of the original sellers didn’t even know they owned an interest in the land until contacted by Gastar, which needed a signature in order to send them checks for royalties. The heirs decided to sue to stop the deal, either in a bid to negotiate a better deal or perhaps because they don’t like fossil fuels. Who knows? The case went to the Circuit Court of Marshall County and a judge there found in favor of the heirs–giving them, and by extension any minority rights owner, the power to stop lease deals. An unmitigated mess that threatens many lease deals because divided rights ownership is common in WV. Perhaps this case was part of the motivation to pass a new law this year addressing “co-tenancy” (see Analysis of New WV Bill SB 576 re Co-Tenancy & Joint Development). The co-tenancy law, if passed, means if there are multiple owners for the mineral rights under a property, you would only need a simple majority of those owners to approve a drilling lease. Currently, if one person with a teeny tiny share objects, it stops the process. In the Contraguerro case, although the heirs are owners, they are “non-participating”–so they should not have had a say anyway. However, a lower court judge found otherwise. So the case was appealed and is now before to the WV Supreme Court… Read More “WV Rights/Pooling Case May have Big Impact on Shale Industry”

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    Antis Score Small Victory Against ME2 Pipeline re Eminent Domain

    The radical Philadelphia-based Clean Air Council (CAC) has scored a very small, but notable, victory in it’s battle to block Sunoco Logistic Partners’ from building the Mariner East 2 Pipeline project. Last Thursday a judge with the Philadelphia Court of Common Pleas allowed a case filed by CAC to proceed. The case claims that Sunoco cannot use eminent domain powers granted by the State of Pennsylvania to force its way through properties where the landowner refuses to cooperate, because (CAC claims) the pipeline is technically not an intrastate pipeline (only located in PA), but is instead an interstate pipeline (crossing the border into Ohio). The judge said the case has enough merit that it can go to trial. We call it a small victory because Common Pleas court is the lowest trial court in the state. There are several layers higher where appealed cases are decided. This is more of a statement than a serious threat. But let’s play “what if.” What if CAC wins, and on appeal, wins again?…
    Read More “Antis Score Small Victory Against ME2 Pipeline re Eminent Domain”

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    WV Supreme Court Justice: EQT Royalty Ruling “Legal Sophistry”

    Last December the West Virginia Supreme Court ruled in a case to disallow Marcellus driller EQT from deducting post-production expenses from royalty checks, even with signed contracts in place (see WV Supreme Court Rules EQT Can’t Deduct P-P Costs from Royalties). The justices, in their ruling, said that drillers can “not deduct from that (royalty) amount any expenses that have been incurred in gathering, transporting or treating the oil or gas after it has been initially extracted, any sums attributable to a loss or beneficial use of volume beyond that initially measured or any other costs that may be characterized as post-production.” Last week, just five months later, four of five justices (including a newly elected judge) reversed their December decision (see WV Supreme Court Reverses Itself, Post-Production Deductions OK). The lone judge voting against the decision was Robin Jean Davis. Yesterday she released her dissenting opinion. In very strong language, Judge Davis said the court’s other four members “used legal sophistry” to prop up their decision, and that “the majority opinion is simply wrong.” Here’s what else Judge Davis had to say… Read More “WV Supreme Court Justice: EQT Royalty Ruling “Legal Sophistry””

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    WV Supreme Court Reverses Itself, Post-Production Deductions OK

    In a decision that will thrill drillers, but anger landowners, the West Virginia Supreme Court decided last week to overturn its own previous decision (from just last December) and allow driller EQT to deduct post-production expenses from royalty payments. Last December MDN reported on the huge West Virginia Supreme Court decision against driller EQT that disallows EQT from deducting post-production expenses from royalty checks, even with signed contracts in place (see WV Supreme Court Rules EQT Can’t Deduct P-P Costs from Royalties). The justices, in their ruling, said that drillers can “not deduct from that (royalty) amount any expenses that have been incurred in gathering, transporting or treating the oil or gas after it has been initially extracted, any sums attributable to a loss or beneficial use of volume beyond that initially measured or any other costs that may be characterized as post-production.” A really big deal. Then in February, with a brand new justice on the bench, the WV Supreme Court agreed to rehear the case after an appeal filed by EQT–a rare and unusual step (see EQT Catches Big Break in WV Supreme Court re Royalty Deductions). Those who won the case say newly elected Supreme Court Justice Elizabeth D. Walker has conflicts of interest and should not have been allowed to vote to rehear the case in the first place (which she did). On that basis, they tried to avoid the rehearing altogether, but that failed, and lawyers were in court arguing the case earlier this month. As it turns out, the lawyers mainly argued over the meaning of three short words: “at the wellhead” (see WV Supreme Court Post-Production Royalty Case Hinges on 3 Words). On Friday, the justices reversed their earlier decision, voting 4-1 in favor of allowing EQT to deduct “reasonable” post-production expenses (copy of the decision below). Newly elected Justice Beth Walker, with (according to the other side) conflicts of interest, voted in favor of EQT. This has BIG implications for landowners and drillers in the Mountain State… Read More “WV Supreme Court Reverses Itself, Post-Production Deductions OK”

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    Chesapeake Scores Court Victory to Prevent PA Royalty Class Action

    Sometimes we wish we had gone to law school–to better understand some of the cases involved with oil and gas. This is one of those times. When you read words like “arbitrability,” the eyes start to glaze over. We’ll do our best to summarize some important news for landowners who want to sue Chesapeake over shorted royalty checks. Starting in 2008, Chesapeake Energy, under then-CEO Aubrey McClendon, began leasing acreage in northeastern Pennsylvania for shale drilling. Said drilling happened and in 2013, Scout Petroleum purchased royalty rights from some NEPA landowners. That is, Scout took over receiving the royalty payments in return for giving those landowners an up front, lump sum. In 2014, when it became obvious Chesapeake was using aggressive deductions from royalty payments (i.e. landowners were getting hosed), Scout filed a lawsuit against Chesapeake, requesting (under the lease language) that their grievances against Chessy be arbitrated AND (not specifically under the lease language) that Scout and thousands of other landowners be lumped together into class action arbitration (see Bad to Worse: PA Royalty Owner Asks Court for Chessy Class Action). Scout lost the case over class action and appealed. In late April, an appeals judge found that class action arbitration is not part of the original lease language, express or implied, and therefore is not allowed. Scout is appealing the decision once again. This is far from over, but for now, Chesapeake has a small victory in forcing landowners to file individual lawsuits…
    Read More “Chesapeake Scores Court Victory to Prevent PA Royalty Class Action”

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    Dela. Riverkeeper Loses Another Court Case Against Marcellus Pipe

    The U.S. Court of Appeals for the District of Columbia Circuit slapped down THE Delaware Riverkeeper in yet another crushing defeat for the virulent anti-fossil fuel organization (and mouthpiece for the William Penn Foundation, its main funder). Even though Williams’ Transco Leidy Southeast expansion project went online some 18 months ago, Riverkeeper sued the Federal Energy Regulatory Commission (FERC) some 14 months ago over its approval of the project (see Dela. Riverkeeper Sues FERC Again – Over Leidy Pipeline Expansion). Leidy Southeast was/is 30 miles of additional pipeline segments laid next to existing pipe, called loops, in Pennsylvania and New Jersey, along with upgrades at several compressor stations. The project bumped up the capacity of the mighty Transco pipeline by an extra 525,000 dekatherms of natural gas per day–enough natural gas to serve 2 million homes. The project means more Marcellus gas now flows south to new markets. Riverkeeper claimed FERC should not have approved the project until PA had issued federal 401 stream crossing permits under the Clean Water Act. It was a “procedural” objection. That is, Riverkeeper claimed FERC did things out of order and should be, we don’t know, shut down? Punished? Flogged? Prevented from doing it ever again? Riverkeeper also went after PA and NJ after they issued the 401 certificates, saying they shouldn’t have. The Third Circuit Court of Appeals (in Philadelphia) rejected that argument last August (see Court Rejects Dela. Riverkeeper Case Against PA DEP Pipe Approval). The new news is that the U.S. Court of Appeals for the District of Columbia Circuit has now rejected Riverkeeper’s case against FERC. The justices said FERC is free to approve projects prior to states issuing 401 certificates because a project approval still doesn’t mean the project will get built–unless the states DO issue those 401 certificates. It all sounds rather complicated to follow. The short version is this: Delaware Riverkeeper lost yet another court case against a pipeline project…
    Read More “Dela. Riverkeeper Loses Another Court Case Against Marcellus Pipe”

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    PA Appeals Court Clears Way for EQT to Drill Jefferson Hills Well

    In December 2015 MDN told you about EQT’s application to drill a single shale well in Jefferson Hills (Allegheny County), PA (see Jefferson Hills, PA Antis Oppose EQT Well Near Future School Site). The well would be drilled “near” where a new school is due to be built, which provided anti-fossil fuelers with an excuse to oppose the project. As part of the a conditional use permit, EQT agreed to (a) not use Borough roads during construction, (b) use a pipeline from a local water company instead of trucks for the water needed to drill and frack, greatly reducing the amount of truck traffic, (c) pledged the project would not impact local streams and wetlands, (d) comply with local lighting regulations, and (e) install sound walls if needed. In other words, EQT bent backwards, forwards, sideways, jump through numerous hoops and turned itself inside out to comply with requests from the town. The Borough Planning Commission unanimously approved the conditional use permit request. But then the town, bowing to pressure from local antis, rejected the request in December 2015, saying the proposed project would endanger local health and the environment. In other words, they had no basis for rejecting the permit. EQT sued and won in the Court of Common Pleas of Allegheny County in June 2016. Jefferson Hills appealed and last week, the Commonwealth Court of Pennsylvania upheld the EQT verdict saying the town arbitrarily rejected the permit and EQT should be allowed to drill…
    Read More “PA Appeals Court Clears Way for EQT to Drill Jefferson Hills Well”

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    DEP Appeals $4.5M Wastewater Leak Fine Against EQT to Supremes

    There’s a reason hospitals and court rooms are frequently the settings for soap operas on TV–there’s always so much drama surrounding medicine and the law–the latter of which is our focus today. In January MDN reported what seemed like the final chapter in a long, drawn-out case between Marcellus driller EQT and the Pennsylvania Dept. of Environmental Protection (DEP). In October 2014, the DEP fined EQT a whopping $4.53 million for a leaky wastewater impoundment in Tioga County, PA (see PA DEP Levies Biggest Fine Ever, $4.5M Against EQT). While EQT did not say there wasn’t a problem with leaks at the site, they did say the way the DEP calculated the fine is unreasonable and arbitrary. In fact, EQT says the DEP levied the fine and took EQT to court because a few weeks prior EQT had sued the DEP over a different matter–that is, sour grapes. EQT appealed the fine and the case all the way to the PA Supreme Court. In December 2015, the high court handed EQT a “procedural victory” by saying EQT has a point about the manner in which the DEP is calculating the fine (see PA Supreme Court Gives EQT “Procedural Victory” in $4.5M Fine Case). The Supreme Court sent the case back to a lower court, PA Commonwealth Court, for follow up work, and in January 2017, a three-judge panel ruled that the method the DEP currently uses to assess fines–by how many days pollution lingers, instead of by how many days the initial release of pollution lasted–is not legal nor common sense (see EQT Wins Court Case Against PA DEP re $4.5M Wastewater Leak Fine). The judges said such a method in fining, “would result in potentially limitless continuing violations.” Under the old way of calculating fines, the DEP was considering upping the fine on EQT to an insane $157 million. Calculating it under the new way will mean a fine of around $120,000. We thought with that ruling it was all done and dusted. Not so. The soap opera continued when the DEP appealed the Commonwealth Court panel’s ruling back up to the PA Supreme Court where the Supremes will consider it all over again. When you read the “friend of the court” brief just filed by those supporting the DEP in their case, it’s a Who’s Who of Big Green organizations and virulent anti-drillers–which tells you all you need to know about which side is in the right in the case of EQT v DEP… Read More “DEP Appeals $4.5M Wastewater Leak Fine Against EQT to Supremes”

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    Time to Tear Down the DRBC’s Iron Curtain in Pennsylvania

    Wikipedia: “The Iron Curtain was the name for the boundary dividing Europe into two separate areas from the end of World War II in 1945 until the end of the Cold War in 1991. A term symbolizing the efforts by the Soviet Union to block itself and its satellite states from open contact with the West and non-Soviet-controlled areas. On the east side of the Iron Curtain were the countries that were connected to or influenced by the Soviet Union.” There is an “economic Iron Curtain” in Wayne County, PA–a curtain imposed by the Delaware River Basin Commission, or DRBC (equivalent to the Soviet Union in our metaphor). The DRBC refuses to allow shale well drilling and fracking in the Delaware River Basin, while next door in the Susquehanna River Basin such activity has been going great guns for years. As we previously reported, one brave landowner in Wayne County is fighting, in court, to rip down the DRBC Iron Curtain (see Wayne Co. Landowner Welcomes Decision in Dismissed DRBC Lawsuit). Here’s an update on efforts to defeat the Evil Empire… Read More “Time to Tear Down the DRBC’s Iron Curtain in Pennsylvania”

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    Huntingdon Family Lawsuit Against ME2 Pipeline Fails, Game Over

    You may recall our story about the daughter of a Huntingdon County, PA landowner, radicalized by Big Green groups (as evidenced by her association with well known protesters previously arrested), who took to a tree on her mom’s property in order to illegally stop crews working on tree clearing for the Mariner East 2 pipeline (see PA Anti Literally Goes Up a Tree to Stop Mariner East 2 Pipeline). It ultimately didn’t matter, because Sunoco came back and cut down the few trees they need to cut anyway (see Sunoco Tricks Radicalized Protester – Returns and Cuts More Trees). In December, the up-a-tree girl and her mom, with lawyers and backing by Big Green money, launched a final “hail Mary” pass by appealing a case to the PA Commonwealth Court, asking the court to stop the ME2 project by claiming it doesn’t have the right to use eminent domain (see Desperate Antis Try One Last Legal Maneuver to Stop Mariner East 2). Like so many other “hail Mary” desperation passes, this one never found the arms of a receiver. Yesterday the court turned down the appeal… Read More “Huntingdon Family Lawsuit Against ME2 Pipeline Fails, Game Over”

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    CORNballs Strike Again, File Lawsuit to Stop NEXUS Pipeline

    A group of landowners in Ohio calling themselves the Coalition to Reroute Nexus (CORN), whom we affectionately call CORNballs, have filed a lawsuit in court against the NEXUS pipeline project. Not to actually reroute NEXUS, but to kill it. To stop it. The landowners are asking a federal court to block the Federal Energy Regulatory Commission (FERC) from allowing the project to proceed–which of course is not going to happen–and to legally bar the NEXUS Gas Transmission project from building the pipeline. Which has been the aim of the CORNballs from the beginning–contrary to the party line that they just want it rerouted around them. The CORNballs seem to be in league with antis in the City of Green, OH, who recently voted to give $100,000 of taxpayer money to high-priced Cleveland lawyers to try and stop NEXUS (see Green, OH Paying Lawyers $100K to Fund Stop NEXUS Crusade). Green also gave CORN $10,000, which no doubt is helping fund CORN’s legal effort to stop NEXUS… Read More “CORNballs Strike Again, File Lawsuit to Stop NEXUS Pipeline”

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    6 Middletown Antis Sue Sunoco LP to Stop Mariner East 2 Pipe

    As we reported last week, six anti-pipeline residents living near where the Mariner East 2 pipeline will pass asked the Middletown (Delaware County, PA) town council to reject the path of the pipeline near their property because it would, supposedly, pass closer than town code allows. At a meeting earlier in the week, town council told the residents they’re out of luck–the town will not pursue any action to block Mariner East 2. Period. The residents, amped up and agitated by Big Green groups, was rumored to be considering a lawsuit against the pipeline to force it to conform with Middletown’s ordinance. It’s no longer a rumor. The amped up antis, spurred on and using lawyers from said Big Green groups, filed a lawsuit in the Delaware Court of Common Pleas on Friday… Read More “6 Middletown Antis Sue Sunoco LP to Stop Mariner East 2 Pipe”

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    Green, OH Paying Lawyers $100K to Fund Stop NEXUS Crusade

    The City of Green, Ohio, located in Summit County (south of Akron, north of Canton) seems to have no problems with spending boatloads of taxpayer money on anti-pipeline efforts. A few weeks ago Green City Council voted to give $10,000 to the anti-pipeline CORN–Coalition to Reroute Nexus. We call the group CORNballs and have written extensively about their supposed desire to just see the NEXUS pipeline routed around them, pretending to be NIMBYs (see our CORN stories here). In reality, CORN wants the pipeline stopped, period. Anti-fossil fuel nuttery. But $10K for the CORNballs is small potatoes for Green–almost a distraction. The city has just “upped the ante” by voting to spend $100,000 to hire a Cleveland law firm to file a lawsuit “aimed at stopping the pipeline from being built or stopping the project altogether.” Since when was it legal for a city like Green to squander taxpayers’ money on cockamamie anti-fossil fuel lawsuits against legal American businesses that build energy infrastructure? Will someone please investigate Green council members and their ties to Big Green groups (no pun intended)? Smells to us like somebody is getting paid off somewhere…
    Read More “Green, OH Paying Lawyers $100K to Fund Stop NEXUS Crusade”

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    PA Supreme Court Rejects Range Resources Well Contamination Case

    For years we’ve followed the story of Range Resources and their (former) wastewater impoundments in Washington County, PA. The PA Dept. of Environmental Protection (DEP) fined Range a whopping $4.15 million for violations in September 2014 (see PA DEP Fines Range Resources $4.15M for Wastewater Impoundments). Some of the nearby neighbors claimed that Range’s leaky impoundments (a quarter of a mile away) contaminated their water wells. One of those landowners was Loren Kiskadden, who sued Range in civil court. The problem is, the DEP determined that the nearby Yeager impoundment had not contaminated Kiskadden’s well, which led to allegations that the DEP had bungled the investigation (see Did DEP Mishandle Range Wastewater Impoundment Investigation?). Kiskadden had to press on, because if the DEP doesn’t reverse its finding, he has no civil case against Range. Press on he did (see Hearing on Range Yeager Impoundment/Water Contamination Continues). The matter was heard by the DEP’s Environmental Hearing Board (EHB). The EHB found that Kiskadden didn’t have a case–his well was not contaminated by Range’s impoundment. So Kiskadden and his lawyers asked for a re-hearing. The result of that re-hearing came in December 2015 and, we thought, finally closed the door, once and for all (see DEP Final Determination: Range Didn’t Pollute Kiskadden Water Well). But no, that was not the end. Kiskadden appealed again, and in October 2016 a Commonwealth Court appeals panel affirmed the EHB’s 2015 dismissal of Kiskadden’s appeal of the DEP 2011 ruling that Range’s Yeager site operations did not contaminate Kiskadden’s well water. Case closed, right? Nope. Kiskadden had one card left to play and he did it–filing an appeal with the PA Supreme Court (see Landowner Appeals Range Well Contamination Case to PA Supreme Crt). Earlier this week, the Supreme Court sent back the appeal marked “case denied.” The fat lady has now sung…
    Read More “PA Supreme Court Rejects Range Resources Well Contamination Case”

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    WV Supreme Court Post-Production Royalty Case Hinges on 3 Words

    Yesterday the five justices of the West Virginia Supreme Court reheard a case involving post-production deductions from royalty payments. Last week we reported that the court *might* rehear the case this week–if they didn’t grant a late-breaking motion to dismiss the rehearing (see WV Supreme Court to Rehear EQT Post Production Royalty Case, Maybe). In December MDN reported on the huge West Virginia Supreme Court decision against driller EQT that disallows EQT from deducting post-production expenses from royalty checks, even with signed contracts in place (see WV Supreme Court Rules EQT Can’t Deduct P-P Costs from Royalties). The justices, in their ruling, said that drillers can “not deduct from that (royalty) amount any expenses that have been incurred in gathering, transporting or treating the oil or gas after it has been initially extracted, any sums attributable to a loss or beneficial use of volume beyond that initially measured or any other costs that may be characterized as post-production.” A really big deal. Then in February, with a brand new justice on the bench, the WV Supreme Court agreed to rehear the case after an appeal filed by EQT–a rare and unusual step (see EQT Catches Big Break in WV Supreme Court re Royalty Deductions). Those who won the case say newly elected Supreme Court Justice Elizabeth D. Walker has conflicts of interest and should not have been allowed to vote to rehear the case in the first place (which she did). On that basis, they tried to avoid the rehearing altogether, but that failed, and yesterday the lawyers were in court arguing. As it turns out, the lawyers mainly argued over the meaning of three short words: “at the wellhead”… Read More “WV Supreme Court Post-Production Royalty Case Hinges on 3 Words”