Baker Energy Blog

Baker Energy Blog

Colorado House Votes Down Bill Giving Local Authorities Power Over Fracking

Posted in Colorado, Fracking

Two Democrats joined the Republicans in the Colorado House of Representatives on April 4, 2016, to defeat a bill that sought to assert local government control over oil and gas drilling.

Drilling operations in Colorado have begun moving from rural communities into more populated areas, which has led to an outcry against oil and gas operations in suburban neighborhoods. Aware of the frustration, Governor John Hickenlooper formed a task force in 2015 to propose rules around local governance. The task force was intended to be a compromise that would address the concerns of the public while avoiding a ballot initiative that would give local governments the authority to ban hydraulic fracturing. But for some, the task force did not actually resolve any of the public’s concerns. Democratic Rep. Mike Foote of Lafayette, one of the bill’s sponsors, said, “The current system works very, very well for the industry. It doesn’t work so well, though, if you’re in these neighborhoods, particularly along the Front Range, and you want to have a meaningful say in what happens.” Though supporters of the bill claimed it was just a restatement of authority local governments already have, the bill reinitiated the debate on state-versus-local authority over the energy industry. Continue Reading

Moratorium on New Oil and Gas Operations Lifted in Adams County

Posted in Colorado, Oil and Gas

On Tuesday, Adams County, Colorado, commissioners lifted a six-week moratorium on new oil and gas drilling operations in urban areas. The moratorium, previously approved by the county commissioners in early February following contentious public debate about a proposed 10-month moratorium, applied to new permits for wells or well pads within 1,500 feet of homes, schools or public buildings.

In addition to ending the six-week moratorium, the commissioners approved an increase in new permit application fees and enhanced regulations that include a site-specific review process. Modeling the new regulations on the procedures utilized in Arapahoe County, Adams County now requires an operator that has previously entered into a memorandum of understanding with the county to apply for a Use by Special Review permit for each new oil and gas facility location. The application, which can take up to 42 days to review, may be approved, conditionally approved, denied or referred to the county commissioners. Applications that are denied can be appealed to the county commissioners. Continue Reading

Options to Help Oklahoma Alleviate Its Emerging Oilfield Water Crisis

Posted in Oklahoma, Water

Hydraulic_Fracturing_iStock_000025097211MediumThe Oklahoma Corporation Commission has restricted injection well activity over a combined zone of nearly 10,000 square miles—approximately the size of Massachusetts (Exhibit 1). In Central Oklahoma, the OCC seeks to reduce water injection into the Arbuckle Formation by at least 300,000 bpd. Furthermore, the OCC now requires new injection well applications to go through a full-court process, and approval can be granted only by a majority vote of commissioners. Furthermore, any permit approved is limited to six months, and contains requirements for seismicity monitoring and regular testing, and, perhaps most important, existing wells in the Area of Interest can be shut-in with no prior court hearing. Continue Reading

Pennsylvania Jury Awards $4.2 Million in Groundwater Contamination Case

Posted in Groundwater, Pennsylvania

Rural Landscape_463185431On Thursday, a federal jury in Pennsylvania ordered Cabot Oil & Gas to pay more than $4.2 million in damages to two Pennsylvania families who sued in 2009 alleging that the Texas-based company’s drilling operations contaminated local groundwater.

The long-running dispute – which originally featured more than 40 plaintiffs before most settled their claims – had previously made headlines after it was featured in the Emmy-winning documentary “Gasland.”

The plaintiffs claimed that Cabot, one of the largest operators in Pennsylvania, negligently conducted its hydraulic fracturing operations near Dimock, Pennsylvania, which in turn caused methane gas to leak into nearby groundwater. The company argued that methane occurred naturally and that the plaintiffs could show no causal link between the contamination in their wells and the company’s drilling operations.

The jury returned verdicts on the plaintiffs’ negligence and private nuisance claims – the only counts that remained after Cabot was granted partial summary judgment on the plaintiffs’ strict liability, breach of contract, and fraudulent inducement claims, among others.  Continue Reading

Off the Tracks: Quantifying Potential Monetary Exposure From Crude-by-Rail Incidents

Posted in Shale, Transportation

railThis article is the second in a three-part series that began with “Off the Tracks: A Data-Driven Analysis of Crude-by-Rail Liability Factors, Exposure, and Potential Solutions,” which was published on December 19, 2015.

In Part One of this series, we analyzed factors that influence liability for crude-by-rail (CBR) incidents. But knowing the liability factors leads to a second question: What is my monetary exposure?

Rail transportation has a strong operational safety record. And the CBR industry—in response to a meteoric rise in crude oil traffic—has leveraged rail’s proven track record to refine risk-management techniques in response to past incidents. Should a CBR incident occur, however, the analysis below provides a benchmark to evaluate potential monetary exposure.

Unit-train scale CBR incidents are a new phenomenon, and there is not yet a statistically meaningful dataset of regulatory fines, settlements, and jury verdicts. For that reason, we have expanded our inquiry to include the consequences of not only CBR incidents, but also those involving other railborne hazardous materials as well as passenger train derailments involving injuries and fatalities. This expanded inquiry better illustrates the extent of potential liability associated with CBR incidents. Continue Reading

The Fight to Stop the EPA’s “Clean Power Plan” Continues in the D.C. Circuit, Amid an Uncertain Future for Its Presumed Ultimate Destination – the Supreme Court

Posted in EPA Issues

Electricity power plant

On February 19, 2016, 27 states, the United States Chamber of Commerce, and over 150 different organizations and entities (the “Petitioners”) filed their joint Opening Brief on Core Legal Issues (the “Opening Brief”), related to their petitions for review of the Environmental Protection Agency’s (EPA’s) final agency action titled “Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units,” or as it is commonly referenced, the “Clean Power Plan” (the “Final Rule”).

According to the comprehensive and detailed Opening Brief, the Final Rule relies on “an obscure provision of the Clean Air Act,” to institute “an ‘aggressive transformation’ of the mix of electricity generation in nearly every [s]tate by systematically ‘decarboniz[ing]’ power generation and ushering in a new ‘clean energy’ economy.” Opening Brief, at 3. EPA has taken this bold step, even though Congress has never adopted any legislation specifically intended to achieve this result. Id. Continue Reading

EQT Wins a Temporary Victory, but the Future of Oil and Gas Operations in Fayette County, West Virginia, Is Still Undecided

Posted in Oil and Gas, Water, West Virginia

OilWellEQT Corp. won a temporary victory in its continuing effort to defend against the potential shutdown of its 200 oil and gas wells and one wastewater injection well in Fayette County, West Virginia, after the District Court for the Southern District of West Virginia issued a preliminary injunction on February 8 enjoining the enforcement of a new county ordinance aimed at stopping all operation of oil and gas wells in Fayette.

On January 12, the Fayette County Commission adopted an ordinance banning the storing, disposing, handling, treating, and processing of gas or oil waste within the boundaries of Fayette County. The ordinance was created in response to citizen complaints about a wastewater injection well in Fayette County operated by Danny Webb Construction, another well operator in Fayette County seeking to enjoin the ordinance. After receiving a petition with 5,000 signatures pleading for a ban on wastewater wells in Fayette, the Commission began to develop the new ordinance. Drafting of the ordinance was headed by the West Virginia Mountain Party, a grassroots political party that believes the county has the right to protect its citizens from the alleged hazardous waste that comes from these wells. Continue Reading

Thirty States and Numerous Other Interested Parties Seek an Immediate Supreme Court Stay of the EPA’s “Clean Power Plan”

Posted in EPA Issues

supreme court iStock_000000865139_LargeOn January 26, 2016, 29 states and state agencies, including Oklahoma, Texas, West Virginia, Ohio, Colorado, and Mississippi (the “29 States”), submitted an application (the “29 States Application”) to the United States Supreme Court seeking an immediate stay of the October 23, 2015, final rule of the United States Environmental Protection Agency (“EPA”) titled “Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units” (the “Final Rule”).

The move came in response to the D.C. Circuit Court of Appeals’ January 21, 2016, ruling denying an immediate stay of the Final Rule, pending the court’s decision on various parties’ petitions for a review of the legality of the Final Rule. Continue Reading

Recent Federal Legislation Rings In the New Year With Some Exciting Developments for Both the Renewable and Oil Energy Industries

Posted in Oil and Gas

Library of Congress in Washington DC

On December 18, 2015, the current divided United States Congress, which has not been known for many grand compromises, passed an omnibus spending bill featuring key measures related to renewable energy tax credits and to the export of crude oil produced in the United States. President Obama signed the legislation, known as the Protecting Americans from Tax Hikes (“PATH”) Act of 2015, into law later that same day.

The vote totals in favor of passage in the U.S. House of Representatives (316-113) and the U.S. Senate (65-33), as well as President Obama’s speedy signing of it, revealed PATH’s strong bipartisan support, which had been the result of lengthy negotiations over the preceding months.  Continue Reading

Off the Tracks: A Data-Driven Analysis of Crude-by-Rail Liability Factors, Exposure, and Potential Solutions

Posted in Shale, Transportation

railCrude oil prices are now approaching what pundits believe is likely to be the bottom phase in the current market cycle. Due to the price downturn, the arbitrage window that drives a substantial portion of crude-by-rail (“CBR”) shipping volumes is closed. Yet once the price recovery begins, producers and refiners will again avail themselves of CBR’s speed and flexibility, and the market will see oil carload volumes recover accordingly. As such, we believe the current time presents an ideal opportunity to assess CBR risk and liability issues to help guide operators, shippers, and regulators as they prepare for an upswing in activity likely to begin in late 2016.

This article is the first in a three-part series and will address the primary factors that influence CBR liability: from factors that influence relatively ordinary fines to the factors that arise in the worst-case scenario. Part Two in the series will analyze the monetary magnitude of liability risks that accompany the liability factors outlined in Part One. And Part Three will offer insights into how BakerHostetler can help railroads, terminal operators, and crude oil shippers fine-tune their risk management strategies and reduce legal exposure as CBR activity begins to recover. Continue Reading