Litigation

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    Lordstown, OH Power Plant Investor Tries to Block 2nd Plant

    Be careful who you sell your energy projects to. That’s the lesson we take away from a spat that’s developed in Trumbull County, OH over a proposed second Utica gas-fired electric plant in Lordstown. Clean Energy Future (CEF) is currently building the Lordstown Energy Center, and has been since June 2016 (see Lordstown Energy Center Breaks Ground on $890M Electric Plant). CEF then proposed, and got the Ohio Power Siting Board (OPSB) to approve, plans to build a second Utica-fired plant next door to the first (see Ohio Approves 2 Utica-Fired Power Plants in Guernsey, Trumbull Counties). As is typically the case, CEF (the builder) sold most of the first project to investors. In this case the new majority owner for the first power plant is Macquarie, an international equity firm. CEF sued Macquarie in September saying the company is preventing CEF from building the second plant. Macquarie says if a second plant gets built in the same location, the first plant (now owned by Macquarie) will take a $6.7 million hit on earnings each year. Macquarie wants CEF to pay them that amount annually when/if the second plant gets built. To which CEF says, “They’re looking for an extortion payment.” CEF is threatening to sue Macquarie for $100 million for delaying construction. A judge will now decide if construction can proceed and whether or not CEF will need to make annual payments to Macquarie…
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    EQT Sues WV for Passing Minimum Royalty Law re Flat Rate Leases

    Earlier this year the West Virginia legislature passed Senate Bill (SB) 360, which Gov. Jim Justice subsequently signed into law (see WV Gov Justice Signs Bill to Guarantee 12.5% Minimum Royalty). SB 360 overturns a ruling by the WV Supreme Court in Leggett v. EQT Production, a case in which the Supremes (in a very unusual move) reversed their own previous decision and allowed EQT to deduct post-production expenses in an old flat rate lease. In essence, SB 360 guarantees rights owners/landowners a 12.5% minimum royalty, regardless of post-production deductions–but only in flat rate leases. A flat rate lease is a lease in which a company pays a regular (in EQT’s case, annual) payment, regardless of how much oil/gas is produced. Traditionally drillers don’t deduct post-production expenses because the payments they make aren’t all that much anyway. But then EQT began to claim deductions, prompting a lawsuit that went all the way to the Supreme Court. The legislature aimed to “fix” what they considered an error in the court’s ruling. EQT claims the new law is unconstitutional and last week filed a lawsuit (copy below) asking a judge to block implementation of the law, set to take effect on May 31…
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    Southwestern Appeals “Trespass” Case to Entire PA Superior Court

    Southwestern Energy has just taken the next very important step in a process that frankly has us holding our breath. Two weeks ago MDN brought you the news that the Pennsylvania Superior Court handed down a decision that has the power to greatly restrict, perhaps even stop, Marcellus drilling in PA (see PA Superior Court Overturns “Rule of Capture” for Marcellus Well and PA “Rule of Capture” Case has Power to Limit Marcellus Drilling). The issue, in brief, is that the Superior Court decision disallows using an age-old principle called the “rule of capture” when it comes to shale drilling and fracking. It opens the door to a myriad of frivolous lawsuits claiming that a fracture, a crack created during fracking, is draining gas from a neighbor’s property without justly compensating the neighbor for the gas. Southwestern successfully argued in a lower court that the odd crack here and there that may slip under a neighbor’s property is permissible. The landowner appealed the case to Superior Court and three judges heard the case. One of the Superior judges authored a decision overturning the lower court, with a second judge “joining” (agreeing with) the decision. The third judge was AWOL (“not participating”). Frankly, the stakes could not be higher for the future of Marcellus drilling in PA. Southwestern has just filed a request with the Superior Court asking that all 20 judges who sit on that court hear and consider the case, which makes sense given the gravity of the case and PA’s economic future…
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    PA Supreme Court Takes a Close Look at Strippers…as in Wells

    It’s always fun to talk about strippers here on MDN. Uh, stripper wells that is. Background: In 2012 Pennsylvania passed the Act 13 drilling law that includes an impact fee on wells targeting shale layers, including the Marcellus. Snyder Brothers, headquartered in PA, drills mostly conventional (vertical only) wells in southwestern PA. In 2011-2012 they drilled 45 vertical-only wells targeting the Marcellus. All 45 of the vertical-only wells were fracked. Initially those wells produced more than 90 thousand cubic feet per day (Mcf/day), but by December of the year in which they were drilled, the wells produced less than 90 Mcf/day. The way the 2012 Act 13 law is written, if a well produces less than 90 Mcf/day during “any” month it is considered a stripper well and exempt from paying the impact fee. The state’s Public Utility Commission (PUC) assessed the fee anyway because for 11 months the wells produced more than 90 Mcf/day, arguing the word “any” is not a get-out-tax-jail-free card. Snyder Bros. sued and after an appeal of the case, Snyder Bros. won the case in March 2017, exempting those wells from paying impact fees (see PA Court Says Snyder Bros Wells are Strippers, No Impact Fees Due). That sent the state Public Utility Commission (PUC) into a tizzy with claims the Act 13 impact fees are now in jeopardy. So the PUC appealed the case to the PA Supreme Court. The Supremes heard arguments in the case last Wednesday…
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    Clearfield County, PA Residents to Appeal Injection Well Approval

    We suppose it was bound to happen. Several weeks ago MDN told you that the Pennsylvania Dept. of Environmental Protection (DEP) had given final approval to Windfall Oil and Gas to drill a wastewater injection well near Dubois, in Brady Township (Clearfield County), PA (see PA DEP Approves Wastewater Injection Well in Clearfield Count). Residents who live near the proposed injection well have opposed the plan from the beginning. They are now pledging to take the next step. What is that step? To appeal the DEP’s approval to the special court set up in PA to hear appeals of DEP decisions–called the Environmental Hearing Board. Clearfield County Commissioners are aiding residents in their fight against the injection well. However, the county and its residents are not putting all their hope in overturning the DEP approval. They’re also making backup plans in case the well is drilled–by testing water wells in the vicinity now, and by making “emergency plans” for the future–whatever that means…
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    Constitution Pipe Files Brief with Supreme Court, Exposes Cuomo/DEC

    In January, the Constitution Pipeline–a $683 million, 124-mile pipeline from Susquehanna County, PA to Schoharie County, NY to move Marcellus gas into NY and New England–filed an appeal with the U.S. Supreme Court asking the court to overrule a lower court decision and allow the pipeline to get built in New York State (see Constitution Pipeline Appeals NY Fight Directly to U.S. Supreme Court). The Andrew Cuomo-corrupted Dept. of Environmental Conservation (DEC) suckered Constitution into refiling an application for a state-issued (but federal) water crossing permit a second time, restarting a one-year clock under which NY could render a decision about the pipeline. Constitution fully cooperated with the DEC, changing plans at the DEC’s request. With four days left on the clock in the second one-year period, DEC, in bad faith, issued a denial of Constitution’s request for the permit (see NY Gov. Cuomo Refuses to Grant Permits for Constitution Pipeline). In January Constitution filed the lawsuit with the Supreme Court, but earlier this week Constitution filed a “reply brief” in the case. In the brief, Constitution exposes the DEC’s actions as nothing more than a political move orchestrated by Andrew Cuomo himself. It is a devastating brief, laying bare the naked corruption of Cuomo and those who run the DEC…
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    Penn Twp Antis Try to Use PA ERA to Block Shale Drilling

    Last November we updated you on a lawsuit filed by a group of radical anti-fossil fuelers in Penn Township (Westmoreland County), PA (see Penn Twp Ninny Nannies File Lawsuit to Block Apex, H&H Wells). A group calling themselves Protect PT, backed with money and legal help from Big Green group PennFuture, filed a lawsuit to try and stop Apex Energy and Huntley & Huntley (H&H) from drilling wells in the township. The lawsuit finally made it to a county judge who is hearing testimony this week. One of the “expert witnesses” called by Protect PT is retired and discredited Cornell professor Tony Ingraffea, who makes a living by traveling around the country bashing fracking (see our Ingraffea stories here). The peril with this particular lawsuit is that it uses Pennsylvania’s so-called Environmental Rights Amendment (ERA), which liberal PA judges have, in recent years, breathed new life into. The argument is that fracking denies those who live near this temporary activity their “right” to enjoy Mom Nature, therefore it should be banished forever. That’s what Protect PT is attempting to pull off–a total frack ban in the Penn Township…
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    Kentucky County Suing to Stop TGP from Reversing Pipeline for NGLs

    Rowan County, KY

    In February MDN told you that Kentucky antis went to court to try and block a plan by Kinder Morgan to convert a portion of the Tennessee Gas Pipeline that flows natural gas from the Gulf Coast to the northeast, to reverse the pipeline and flow natural gas liquids from the Marcellus/Utica region to the Gulf (see Kentucky Antis File Lawsuit to Stop TGP NGL Pipe Reversal). The reversal is part of a $4 billion project called the Utica Marcellus Texas Pipeline (UMTP) project. The first step in reversing the existing pipeline was approved by the Federal Energy Regulatory Commission last October (see FERC Advances Plan to Reverse Part of TGP to Haul M-U NGLs to Gulf). Antis in Kentucky got their bluegrass knickers in a twist over FERC’s action. They filed a request for “rehearing” of FERC’s decision, which is the first step in a process that typically ends up in court. Normally FERC has 30 days to decide on a rehearing, however, they have a tactic they call a “tolling order” which allows them to extend the amount of time to make a rehearing decision–indefinitely. FERC pulled out the tolling order card and played it last November (see FERC Frustrates Kentucky Radicals Seeking to Stop TGP Pipe Reversal). The ticked-off antis filed a lawsuit challenging the FERC tolling order. While all of that continues to play out, one of the Kentucky counties along the TGP route–Rowan County–is filing its own lawsuit to stop the reversal and conversion of the pipeline. No, Rowan County has no standing to file such a lawsuit, but apparently they’ll need to learn that the hard way…
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    Fracking Trespass Case (Rule of Capture) Still Reverberating in PA

    Last week MDN brought you the news that the Pennsylvania Superior Court handed down a decision that has the power to greatly restrict, perhaps even stop, Marcellus drilling in PA (see PA Superior Court Overturns “Rule of Capture” for Marcellus Well and PA “Rule of Capture” Case has Power to Limit Marcellus Drilling). The issue, in brief, is that last week’s Superior Court decision disallows using an age-old principle called the “rule of capture” when it comes to shale drilling and fracking. It opens the door to a myriad of frivolous lawsuits claiming that a fracture, a crack created during fracking, is draining gas from a neighbor’s property without justly compensating the neighbor for the gas. Was the court’s decision a big deal? Or was is not such a big deal? We’ve seen stories appear every day since the decision, some indicating the decision is monumental in scope and impact–others saying meh, not so big after all. Which is it? We still believe the issue turns on how far cracks extend out from a wellbore during fracking–and whether you can accurately measure the distance of such fractures. If the cracks extend just a few hundred feet, the court decision is not a big deal. Most drillers stay at least 350 feet from the boundary line when drilling a well–meaning the cracks that drain gas do not extend to neighboring properties. However, if the cracks, the fractures, extend out more than a few hundred feet, say more than 300 feet, that’s a problem. Southwestern Energy responded in the lawsuit that IF their cracks had intruded (trespassed) under the boundary line, it would fall under “rule of capture”–the legal principle of he who gets there first, wins. The court ruled otherwise. We’re still haunted by the definition used (and accepted) in the lawsuit that says fracking fluid and sand can travel up to 3,000 feet…
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    Monroeville Continues to Block Seismic Testing to Prevent Drilling

    Monroeville, PA (Allegheny County, suburb of Pittsburgh) is hostile toward the shale industry. In September, Monroeville Council voted to enact a super-restrictive seismic testing ordinance (see Monroeville, PA Passes Restrictive Seismic Testing Ordinance). The ordinance is meant to hassle Huntley & Huntley (H&H), which wants to conduct seismic testing in two rural areas of the municipality (for potential drilling in a neighboring municipality). In October, the contractor hired to do the seismic work for H&H, Geokinetics, took Monroeville Council to court over their punitive seismic ordinance (see Monroeville Seismic Testing Ordinance Challenged in Court). Both sides compromised and in November settled the case, which Monroeville Council voted to accept in December (see Monroeville Council Approves Seismic Testing Court Settlement). That should be the end of the story, right? Wrong. Monroeville has continued their harassment by asking a court to immediately suspend the testing because (they claim) Geokinetics did not give proper notification to residents that the testing was happening. This is nothing more than a transparent attempt to prevent future drilling by slowing, or stopping, H&H’s ability to get an accurate picture of the best places are to drill a Marcellus well. Fortunately Geokinetics just finished the testing, so Monroeville’s pathetic attempt to stop it is now moot…
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    PA “Rule of Capture” Case has Power to Limit Marcellus Drilling

    As we indicated in our post yesterday, the Pennsylvania Superior Court has handed down a decision that has the power to greatly restrict, even stop, Marcellus drilling in PA (see PA Superior Court Overturns “Rule of Capture” for Marcellus Well). This is a legal issue–and MDN is not written by a lawyer. Hence our earlier misreading of the importance and facts in the Superior Court decision. The issue, in brief, is that Monday’s court decision disallows using an age-old principle called the rule of capture, which we previously described. The rule of capture works for conventional drilling where underground deposits of oil and gas are in pools and the pool may exist underneath multiple surface property owners. Whoever gets there first and sucks the oil/gas out, wins. That’s the rule of capture in a nutshell. And it makes sense. You can’t be held responsible for oil and gas moving from one place to another as it’s extracted. And who knows how much of the pool is located under your property, or your neighbor’s property? The Superior Court justices ruled that the rule of capture doesn’t work for hydraulic fracturing because gas (and oil) trapped in shale rock does not freely move from one place to another as it does in a pool. The judges say the gas would “stay forever” where it is without fracking. In the case of Briggs v. Southwestern Energy, the Briggs family (in Susquehanna County, PA) alleges that when Southwestern drilled and fracked on the Briggs’ neighbor, the fracking was done close enough to their property that some of the gas located under their property (unleased) was released and extracted through the Southwestern well–a “trepass.” Southwestern countered that IF such a “trespass” took place, it falls under the rule of capture. The ultimate issue boils down to this: How far do fractures extend from a lateral well? An expert energy attorney told MDN off the record that Monday’s decision “could change the entire Pennsylvania shale industry” in two important ways…
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    PA Superior Court Overturns “Rule of Capture” for Marcellus Well

    STOP PRESS: Shortly after this post was published, a MDN reader (an energy attorney) called us to alert us that our initial take on this case is not right. The case is NOT about a company stretching a lateral too far so that it trespasses under an adjoining property. Instead, the case is about the “zone of fracking”–that is, that fracking, by its nature, creates cracks that may open up and drain some of the gas under a neighboring property–even though the fracking was done properly within the boundaries of the leased property. The case (ominously) says that fracking itself can cause a trespass. Our attorney friend said this case has the potential to negatively affect Marcellus drilling in PA–in a BIG way. We will write another post on this issue tomorrow. In the meantime, just be aware that our initial take below is not correct. – Jim Willis, Editor

    The Pennsylvania Superior Court handed down an important decision yesterday that impacts both Marcellus landowners and drillers. The decision removes “rule of capture” as a way for shale drillers to drill under adjoining neighbors who haven’t specifically leased their property for drilling. The rule of capture came about with conventional (vertical only) drilling, cases in which a pool of oil or natural gas exists that runs underneath the property owned by multiple surface owners (see the image to the left). The rule of capture principle says “the first person to capture a natural resource owns that resource.” If you put a well or two or three on your property to extract the oil/gas, if it flows from the neighbor’s side to your side and up the well, it’s yours. Same for your neighbor. He/she can grab the oil and gas under your property if the pool exists under both. The principle originated in England (it’s a very old principle). However, Southwestern Energy tried to use the rule of capture principle to drill under property not leased for drilling that sits next to property that is leased–claiming the rule of capture. The molecules in shale are a whole other story than molecules sitting in a common pool. That’s what the Superiors ruled. Southwestern (and by extension, other Marcellus drillers) can’t simply extend a lateral well a few hundred feet under an un-leased neighbor, which certainly makes sense to us…
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    PA Supreme Court Axes DEP $4.5M Fine in EQT Tioga Wastewater Leak

    EQT had to take their case all the way to the Pennsylvania Supreme Court, but in the end, the company was victorious over a wildly overinflated $4.53 million fine levied by the state Dept. of Environmental Protection (DEP) for a leaky wastewater impoundment in Tioga County dating back to 2014 (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 was 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, unrelated matter (i.e., sour grapes on the part of the DEP). EQT appealed the fine and the case all the way to the PA Supreme Court, which heard oral arguments last November (see PA Supreme Court Hears Arguments in EQT Wastewater Leak Case). Last Wednesday the PA Supremes ruled (5-2) in favor of EQT, saying that the DEP’s levied fine was excessive and that the DEP misinterpreted language in the 1937 Clean Streams Law…
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    PA Appeals Court Rules ME2 Pipe NOT Under Local Zoning

    The entire panel of judges sitting on Pennsylvania’s Commonwealth Court, an appeals court in PA, ruled yesterday that zoning regulations in a local municipality–in this case Middletown (Delaware County)–do NOT supersede the state Public Utility Commission when it comes to regulating Sunoco Logistics Partners Mariner East 2 (ME2) NGL pipeline. In May 2017, six anti-pipeline residents living near where the ME2 pipeline will pass asked the Middletown town council to reject the path of the pipeline near their property because it would, supposedly, pass closer than town code allows. The 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, agitated and funded by Big Green groups filed a lawsuit against ME2, to force it to conform with Middletown’s ordinance (see 6 Middletown Antis Sue Sunoco LP to Stop Mariner East 2 Pipe). The lawsuit was filed in the the Delaware County Court of Common Pleas. The judge dismissed the case in June, so the antis, again funded by Big Green groups, appealed the case to the next higher court, Commonwealth Court. An “en banc” panel (meaning all of the judges) heard the case, indicating its high importance. The en banc panel ruled yesterday, against the Middletown residents…
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    Fed Court Dismisses Anti Lawsuit to Stop Atlantic Coast Pipeline

    Earlier this month MDN reported that the Southern Environmental Law Center and Appalachian Mountain Advocates, on behalf of a mishmash of second tier radical groups, filed a “hail Mary” request with the federal Fourth Circuit Court of Appeals to stop construction of Dominion Energy’s Atlantic Coast Pipeline until a lawsuit sitting before the Fourth Circuit questioning the validity of the permits granted for the project is played out (see Big Green Makes Desperate Attempt to Stop Atlantic Coast Pipe). Last week the Fourth Circuit responded by denying the request to stop ACP. Why? Because the Federal Energy Regulatory Commission (FERC) has not yet decided on whether or not to rehear their decision on ACP, which Big Green previously requested. FERC has used a “tolling order” to give themselves more time to consider whether or not they were wrong in approving the ACP project. The Fourth Circuit doesn’t have jurisdiction until FERC makes a decision on rehearing. In the meantime, construction on ACP continues…
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    WV Judge Refuses to Eject Tree Sitters Blocking Pipeline Work

    If the so-called “tree sitters” in Jefferson National Forest who are trying to block tree cutting for the Mountain Valley Pipeline (MVP) get themselves hurt, Monroe County Circuit Court Judge Robert Irons will be the one to blame. Well actually, the protesters can blame themselves (they’re idiots), but Irons is certainly complicit. On Tuesday Judge Irons refused to grant MVP a court order to remove the radical protesters. Apparently they are 7 feet outside of the right of way zone for tree felling. Have you ever cut a big tree down? Trees don’t care if they fall 7 feet this way or 7 feet that way when they fall. MVP wants to ensure the protesters don’t get hurt, and wants them gone before they cut trees near them. But because the radicals technically, according to the judge, are not in the actual right of way, they can stay up the trees where they’ve been for the past 25+ days. There are two suspended tree houses (platforms), held in the trees with ropes. Up to seven people have been living in the two magic tree houses, eating, breathing and defecating up in the trees (harming the environment they profess to be protecting). MVP technically has a deadline of March 31 to fell trees along the path of the pipeline. We suspect MVP has a Plan B for this segment where the loons have perched themselves up a tree. We predict sitting up a tree will get old sooner or later–and MVP can wait them out…
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