North America Shale Blog

North America Shale Blog

Texas Supreme Court to Hear Defamation Case Involving Fracking Claims

Posted in Fracking, Texas, Water

On August 21, 2014, the Texas Supreme Court agreed to hear oral arguments in an ongoing dispute between a homeowner and Texas-based oil driller Range Resources Corp. The case is not a typical homeowner vs. oil driller lawsuit, though—in this case, Range is counterclaiming for defamation, and the Texas Supreme Court has agreed to hear the case.  The case turns on what Range views as an issue of first impression: how much evidence a plaintiff needs to show to avoid dismissal of a suit under the Texas Citizens Participation Act , which is intended to prevent strategic lawsuits against public participation, or SLAPP suits.

The lawsuit was filed by Steven Lipsky and his wife in 2011, when they alleged that Range’s fracking activities contaminated their drinking water supply. But the saga began in 2009, when Lipsky started to have issues with the water supply pump to his family’s Parker County, Texas, home. He had his water well driller come out to repair the pump, and Lipsky alleges that the pump wasn’t the issue – the real issue was “explosive levels of methane gas” in the well. He notified state inspectors from the Texas Railroad Commission, who investigated and found evidence of a leak in one of Range’s gas wells near the Lipskys’ home that was causing the contamination of the Lipskys’ water supply. They cited Range for a violation. Range fixed the leak, but Lipsky insisted that the repair did not help with the high gas content in his water well. Continue Reading

Colorado State Court Strikes Down a Second City-Wide Fracking Ban

Posted in Colorado, Fracking

A Colorado state judge recently struck down a city’s voter-approved moratorium on hydraulic fracturing, or “fracking.” This marks the second time a Colorado judge has quashed a city’s fracking ban within a matter of two weeks.

As we previously reported, three Colorado cities approved bans on fracking in late 2013. In Fort Collins and Boulder, the voters passed a five-year moratorium on in-town drilling, while in Lafayette the voters amended the city charter to ban the practice completely. At the time, the governor of Colorado, along with the Colorado Oil & Gas Association (COGA), threatened a lawsuit claiming the bans violated state law.

In his nine-page opinion, Larimer County District Court Judge Gregory Lammons granted the COGA’s motion for summary judgment and agreed that the city may not ban drilling entirely—a practice that Colorado regulates extensively within the state. Specifically, he held that Fort Collins’ ban on fracking is “preempted by the Colorado Oil and Gas Conservation Act for two reasons: the five-year ban substantially impedes a significant state interest and the ban prohibits what state law allows.”

This decision comes just two weeks after a Boulder County District Judge, D.D. Mallard, ruled that Longmont, Colorado’s ban on fracking clearly conflicted with the state’s regulations. Although Judge Mallard noted that the city may regulate aspects of oil and gas production related to the health and safety of its citizens, he ultimately held that Longmont’s regulation caused an untenable “operational conflict,” and that the state rules take precedence.

Below is additional media coverage of the rulings:

The North American Shale Blog will continue to track and report on the development of these cases.

Pennsylvania Public Utilities Commission Appeals Act 13 Ruling to State Supreme Court

Posted in Oil and Gas, Pennsylvania

The Pennsylvania Public Utilities Commission (PPUC) is asking the state Supreme Court to review a July ruling by the Pennsylvania Commonwealth Court that strips PPUC of its authority to review and approve local drilling ordinances.

Specifically, PPUC is appealing the Commonwealth Court’s rejection of PPUC’s right to withhold “impact fees” imposed under Pennsylvania’s oil and gas law, known as “Act 13,” from municipalities that enacted rules restricting drilling.  Over the past three years, the state has collected more than $600 million in impact fees from well owners.  The results of recent litigation related to Act 13, however, have undermined PPUC’s centralized regulatory authority and have instead vested municipalities with authority to modify and enforce local zoning laws within their respective jurisdictions. Continue Reading

Oil and Gas Developer Challenges an Extreme Waste Disposal Ordinance Enacted by a Pennsylvania Township

Posted in Pennsylvania

Oil and gas developer Pennsylvania General Energy Company, LLC (“PGE”) recently filed suit against Grant Township in Indiana County, Pennsylvania, alleging that a waste disposal ordinance enacted by the Township violates the United States Constitution and Pennsylvania statutes.  The nationwide oil and gas boom has given rise to disputes similar to this all over the country.  See our coverage of other cases addressing the authority of federal, state, and local governments to regulate oil and gas development here, here, here, here, here, here, here, and here.

Grant Township adopted an ordinance on June 3, 2014 titled “Community Bill of Rights Ordinance.”  Under the Community Bill of Rights Ordinance (the “Ordinance”), it is “unlawful within Grant Township for any corporation or government to engage in the depositing of waste from oil and gas extraction.”  The Ordinance provides that any “corporation or government that violates any provision of [the] Ordinance shall be…sentenced to pay the maximum fine allowable under State law for that violation.”  Continue Reading

Fracking Hearings Set to Begin in North Carolina

Posted in Fracking, Legislative

This Wednesday in Raleigh will see the first of four upcoming public hearings in North Carolina over the state’s proposed fracking rules.  The hearings are part of the final phase of rule making, coming after two years of research, discussion, and compromise.  Though the hearings are meant to focus on technical details of the proposed rules, they will more likely serve as an opportunity for fracking supporters and opponents to try to sway state officials and make a broader political point in a large public forum.  The other three hearings will take place in Sanford, Reidsville, and Cullowhee.

Speakers at the hearings will have three minutes to make their case on the rules the N.C. Mining and Energy Commission (the “Commission”) has proposed.  There are more than 100 proposed rules, but the issues most speakers are expected to address are “chemical disclosure, drilling distances from homes and water wells, baseline testing of drinking water, and the risks of storing chemical-laced fluids in open-air pits.”  Samples of the Commission’s proposed rules can be found here.  Speakers at the hearings are also expected to comment on areas not covered by the proposed rules, such as forced pooling, air quality monitoring, regulatory fees, road use, storm water control, waste disposal, and taxes.  According to the Commission, these and other “perceived holes” are either still under review or outside the Commission’s jurisdiction.

Fracking opponents are also likely to advocate for increasing safety buffers and setbacks, adding landowner protections and changing some of the proposed rules.  For example, this year the Commission decided to allow energy companies, upon approval by the Commission, to not disclose fracking chemicals under a “trade secret” provision.  A proposed rule change would eliminate these trade secret exemptions.

The Commissioners presiding over the hearings will accept public comments, but will not answer questions.  The Commission recognizes that most of the comments will be general declarations about energy policy, but notes that the most helpful remarks will address specific rules.  Public comments could modify the fracking rules, which will go before the state legislature in January.

For additional coverage of the hearings, click here, here, and here.

Texas Railroad Commission Proposes New Regulations for High-Risk Seismic Areas

Posted in Earthquakes, Hydraulic Fracturing, Texas

On Tuesday, amidst claims that hydraulic fracturing could be causing earthquakes in some parts of Texas, the Texas Railroad Commission proposed amendments to permitting regulations for injection wells. The proposed rules would require drillers to submit additional information as part of the permit application process for injection wells in areas designated as high-risk for seismic activity.

The proposed rules define an area as “high-risk” if it has characteristics that may increase the risk that hydraulic fracturing fluids won’t be confined exclusively to the injection interval, including areas that exhibit complex geology or a history of seismic events. Permit applicants who want to operate an injection well in a high-risk area would be required to submit information from the United States Geological Survey related to seismic activity in the area of elevated pressure created by the injection of fluids into the subsurface, logs, geologic cross-sections and structure maps. The proposed rules would also allow the Commission to suspend or terminate a permit if seismic activity occurs near an injection well.

“Whether there is a definitive link or not between disposal wells and seismic activity in Texas has not been determined,” Commission spokeswoman Ramona Nye said. “As our agency continues to work with the scientific community to coordinate an exchange of information … we have seen a need for laying the groundwork for some basic industry best practices.” The Commission estimates that the proposed regulations would add about $300 per injection well permit application. The public comment period for the regulations is open until noon on September 29, 2014.

Media Coverage Resources:

Proposed Amendment of 16 Tex. Admin. Code § 3.9, relating to Disposal Wells, and § 3.46, relating to Fluid Injection into Productive Reservoirs; Oil & Gas Docket No. 20-0290951.

Quake reaction: Railroad Commission looks at new rules for injection wells

Governor Christie Vetoes New Jersey Fracking Ban

Posted in Fracking, New Jersey

Last week, New Jersey Governor Chris Christie vetoed legislation that would have banned the treatment, discharge, and disposal of fracking wastewater in the state, arguing that the bill violated the United States Constitution.  This is the second time the governor has vetoed a prohibition on fracking waste since entering office.

The bill, known as S1041, which easily passed both houses of the state legislature with bipartisan support, would have forbidden the storage or release of fracking byproducts as well as their use on roads as de-icing agents.

Citing the legislation’s outright ban of fracking waste from any state, Governor Christie issued his veto on the grounds that the bill violated the dormant Commerce Clause.  In his veto message, he argued that since no fracking operations currently exist in New Jersey, the bill was designed as an embargo on out-of-state waste, which “would have created an unconstitutional restraint on interstate commerce.”  He also referenced his 2012 veto of similar legislation, contending “Dormant Commerce Clause jurisprudence has not changed in a way that would cause me to sign a bill that I previously rejected on constitutional grounds.”

Sponsors of the legislation argue the prohibition is necessary to safeguard the public water supply from becoming tainted by toxic chemicals sometimes found in fracking water.  While conceding that fracking does not occur in New Jersey, proponents of the bill point out that at least three sites in the state have been used to dump wastewater from operations in Pennsylvania.  Oil and gas industry representatives, however, counter by arguing that fracking water can be safely reused and recycled.

State legislators are currently weighing whether to stage a vote to override the governor’s veto.  Senator and bill supporter Robert Gordon argued that the bill “could withstand any challenge on constitutional grounds,” as it concerned a matter of public health and safety.

Click here and here for additional coverage.

Leading Energy Attorney L. Poe Leggette Joins BakerHostetler

Posted in Uncategorized

Prominent counsel to oil & gas companies and former Interior Dept. official becomes Co-chair of firm’s energy practice and national shale team

Denver, CO – August 11, 2014—BakerHostetler announced that eminent energy attorney L. Poe Leggette has joined the firm as a partner in its Denver office. Leggette becomes co-chair of BakerHostetler’s energy practice and its prominent national shale team. He arrives from Norton Rose Fulbright, where he was partner-in-charge of the Denver and Pittsburgh offices and regional head for the Americas energy practice.

Leggette has built an extensive practice representing leading oil and gas companies in a range of transactions, disputes, regulatory proceedings, and other matters. His active litigation and deal work focuses on three principal areas of representation within the energy sector: onshore shale plays; oil and gas companies operating on federal and Indian lands; and companies operating under federal leases in the Gulf of Mexico.

Prior to his private practice, Leggette spent more than a decade at the U.S. Department of the Interior, where he served as Assistant Solicitor and advised the Bureau of Land Management and the Mineral Management Service on their onshore and offshore energy programs. He authored or co-authored numerous briefs filed in federal courts on outer continental shelf issues, two of which helped obtain Supreme Court reversals of unfavorable Ninth Circuit decisions.

Leggette is highly knowledgeable on legal issues regarding ownership of mineral rights, royalty disputes and compliance with environmental statutes. He’s litigated many cases on behalf of energy clients at the trial, appellate and Supreme Court levels. He has been involved with many cases of prime importance to the oil and gas industry, involving such statutes as the National Environmental Policy Act, the Endangered Species Act, the Coastal Zone Management Act, the National Historic Preservation Act, the Marine Mammal Protection Act, the Federal Land Policy and Management Act, the Mineral Leasing Act, the Outer Continental Shelf Lands Act, and the National Forest Management Act, and various Indian mineral development statutes.

“In addition to spurring rapid growth and business investment among energy providers, the shale era is ushering in a raft of new regulation, legislation, tax changes, insurance risk, and especially litigation. Having someone of Poe Leggette’s national stature and deep experience – in all aspects of energy law – join our firm adds to our bench strength in the energy sector,” said BakerHostetler Chairman Steven Kestner. “Poe’s distinguished, wide-ranging track record and his command of substantive policy and regulatory issues will be of immense benefit to our large roster of energy clients.”

“As the energy sector continues to grow in importance and shale development makes an increasing impact on America’s energy profile, the addition of someone with Poe’s deep knowledge and experience becomes a real differentiator for us,” said Ray Whitman, Chair of BakerHostetler’s Litigation practice. “Oil and gas development inevitably brings with it a host of complex litigation, regulatory challenges, and policy changes. Poe has represented the world’s leading energy producers and trade associations before state and federal courts as well as the most powerful regulators and we look for him to make significant contributions to our entire energy practice moving forward.”

“The arrival of Poe Leggette is a boon to the Denver office and exemplifies the growing importance of the energy practice and BakerHostetler’s position as a top-tier energy counsel in the western U.S. as well as nationally,” said Raymond Sutton Jr., Managing Partner of BakerHostetler’s Denver office. “Hydraulic fracturing has been a hot-button issue in Colorado and in many other regions where the firm has offices. We are thrilled to have one of the nation’s foremost authorities on shale and offshore energy development as part of our team.”

“The production surge in shale gas promises to turn the U.S. into a net energy exporter for the first time and it’s certainly changing the landscape for energy and environmental law,” Leggette said. “BakerHostetler has been at the forefront of this change and has built a reputation as a go-to law firm for energy-related matters. This is a momentous time for the energy industry and I’m very happy to join such an esteemed practice and look forward to helping expand our base as the industry continues to evolve.”

BakerHostetler’s energy lawyers have successfully secured major projects for leading international and domestic energy companies and oilfield service providers involving oil, natural gas (including shale), and alternative energy matters. BakerHostetler’s energy practice offers business, litigation and regulatory expertise for transactions including financings, land acquisitions, exploration and drilling, and production distribution. BakerHostetler is one of the first national law firms to create a dedicated shale practice and also produces its own shale blog tracking the industry – www.northamericashaleblog.com.

Leggette received his J.D. from the University of Virginia and a B.A., magna cum laude, from Tufts University. He is recognized as a leading energy attorney by the top legal rankings organizations, including Chambers USA, Chambers Global, Legal 500, and The Best Lawyers in America©.

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About BakerHostetler
One of the nation’s largest law firms, BakerHostetler helps clients around the world to address their most complex and critical business and regulatory issues. With five core national practice groups – business, employment, intellectual property, litigation, and tax – the firm has nearly 900 lawyers located in 14 offices coast to coast. BakerHostetler is recognized for its role as court-appointed counsel to the Securities Investor Protection Act (SIPA) Trustee in the recovery of billions of dollars in principal lost in the Ponzi scheme perpetrated by Bernard L. Madoff. Additionally, BakerHostetler is widely regarded as having one of the country’s top 10 tax practices, a nationally recognized litigation practice, data privacy practice, and an industry-leading middle market business practice. For more information, visit www.bakerlaw.com.

Contact: Laura Scharf (216.861.6616) or Tracy Hager (303.764.4090).

Youngstown, Ohio, Contractor Sentenced to 28 Months in Prison for Wastewater Dumping Scheme

Posted in Hydraulic Fracturing, Ohio, Ohio DNR, Water

We previously reported on the federal criminal and State of Ohio enforcement actions arising from the release of tens of thousands of gallons of hydraulic fracturing waste into a Youngstown, Ohio, area tributary by Hard Rock Excavating (Hard Rock) during late 2012 and early 2013.  On Tuesday, U.S. District Court Judge Donald Nugent handed Hard Rock principal, Benedict Lupo, a 28-month prison sentence and a $25,000 fine on one count of making an unpermitted discharge in violation of the United States Clean Water Act.

Lupo plead guilty to the Clean Water Act charge in March, admitting that he ordered two employees to release the waste into a nearby storm drain flowing into the tributary after business hours. The District Court sentenced each employee to three years’ probation on the same Clean Water Act charges in March and July of this year. The employees discharged wastewater on 33 occasions from November 2012 to January 2013. Ohio Department of Natural Resources investigators observed the dumping after receiving an anonymous tip on January 31, 2013.

Judge Nugent rejected pleas for leniency by Lupo’s attorneys, citing Lupo’s insistence over the employees’ objections that they discharge the waste and conceal their actions, and the significant water source pollution portrayed by photos presented by the U.S. Attorney.  Supporting the stern sentence, Ohio Attorney General Mike DeWine leaned on the recent contamination of the Toledo water supply resulting from large toxic algae bloom believed to be enhanced by phosphorous runoff from farming activities and septic systems:

“The recent water crisis in Toledo is a grave reminder of how important it is to protect our waterways. Those who commit crimes against the environment jeopardize the health and safety of Ohioans, and our natural resources and wildlife. They must be held accountable.”

The sentence exemplifies the harsh actions that the authorities will take for abuses of the environmental laws applicable to hydraulic fracturing operations.

Did an Ohio Spill Expose a Leak in Ohio’s Hydraulic Fracturing Disclosure Laws?

Posted in Hydraulic Fracturing, Ohio, Ohio EPA, U.S. EPA

After a recent accident at an Ohio unconventional drilling site, Governor Kasich expressed concern about the state’s fracturing-fluids-disclosure laws. The June accident spilled chemicals ­– including the drilling company’s proprietary hydraulic fracturing fluid – into a nearby stream. But under Ohio’s disclosure laws, the company didn’t have to reveal the contents of its proprietary fluid to first responders, which caused controversy among environmental groups and the national media.

The spill occurred on June 28 when a broken hydraulic hose sprayed fluid onto hot equipment, igniting it and spreading the fire throughout the facility. The fire consumed most of the equipment and chemicals at the drilling site. First responders doused the fire with thousands of gallons of water, which caused the chemicals to run into a nearby stream. The Ohio Department of Natural Resources (ODNR) Division of Wildlife removed 70,000 dead fish in the days following the spill.

Controversy sprung from the U.S. Environmental Protection Agency (USEPA) report, which stated that the drilling company did not inform the USEPA or the Ohio Environmental Protection Agency (OEPA) of the ingredients in its proprietary fracking liquid until July 3 – five days after responders first arrived on the scene. This raised concern among environmental groups and politicians, including Governor Kasich. Kasich told the Columbus Dispatch that it would be unacceptable for emergency responders to be restricted from the full list of chemicals that might have spilled into the stream. He added that “[w]e want people to know what the fracking fluid contains.”

Ohio law only requires companies to disclose the contents of its proprietary hydraulic fracturing fluids to the ODNR – at its request – in response to a spill, or to medical professionals treating someone affected by a drilling incident. In either instance, neither the ODNR nor the medical professional may disclose any information labeled as a trade secret. The USEPA report does not clearly state that the disclosure lawwas the reason why the USEPA did not find out about the proprietary chemicals until five days into the response. But now, many people – including the Ohio Governor – are demanding disclosure laws that would give first responders access to the complete lists of chemicals involved in a fire or spill.

The Ohio spill also could influence disclosure requirements being considered on a national level. The USEPA is currently taking comments regarding the adoption of its own disclosure rules. And while the USEPA acknowledged that the late disclosure in Ohio didn’t have any negative effects on its investigation, the optics were bad. At minimum, the incident caught the nation’s attention and might invoke a wave of comments asking for more stringent disclosure rules. The comment period on the USEPA’s advance notice of proposed rulemaking ends on September 18, 2014.