Source: http://oilandgas.jacksonkelly.com/leasingtitles/
Timestamp: 2018-04-20 05:15:25
Document Index: 363282475

Matched Legal Cases: ['§401', '§ 1341', '§ 401', '§ 401', '§ 401', '§ 19', '§ 401', '§ 401', '§ 401', '§ 401', '§ 401', '§ 401', '§ 401', '§ 401', '§ 401']

Oil and Gas Monitor: Leasing/Titles
Supreme Court of Ohio Declines to Recognize Implied Covenant to Explore Further
In Alford v. Collins-McGregor Operating Co., 2018-Ohio-8, the Supreme Court of Ohio decided that Ohio does not recognize an implied covenant to explore further, separate and apart from the implied covenant of reasonable development. In Alford, the Appellants were landowners and lessors of an oil and gas lease with Appellees. The lease was held by the production of a single well drilled to the Gordon Sand formation in 1981. The Appellants claimed that the lease should be partially forfeited due to the Lessee’s breach of an implied covenant to further explore deeper stratigraphic depths and utilize more modern drilling technology.
The trial court had dismissed the Appellants’ claim and held that the production from the 1981 well was sufficient to hold the lease. The Fourth District had affirmed, holding that Ohio does not recognize partial horizontal forfeiture of an oil and gas lease as an available remedy.
The Supreme Court of Ohio affirmed the judgment of the court of appeals, and declined to recognize an implied covenant to explore further. The holding found that long-recognized implied covenant of reasonable development is an adequate protection for lessors. The Court recognized the risk undertaken when lessees develop oil and gas leases, as well as the motivation of both the lessee and lessor to profit from the lease. Instead, the Court favored the implied covenant of reasonable development which considers all factors, including market conditions, geological knowledge and adjoining activity. While the Court acknowledged that the implied covenant of reasonable development was well suited to address the lessors’ interests, no opinion was expressed in this regard as the only issue raised by Appellants regarded the implied covenant to explore further.
This blog was authored by Andrew Schock, Jackson Kelly PLLC. For more information on the author, see here.
Posted on 01/10/2018 in Environmental, Leasing/Titles, Litigation, Marcellus, Permitting/Regulating Issues, Pipelines, Production | Permalink | Comments (0)
Posted on 01/05/2018 in Leasing/Titles, Litigation, Production | Permalink | Comments (0)
“For any company desiring to construct a natural gas pipeline, all roads lead to FERC.” Millennium Pipeline Company, L.L.C. v. Seggos, 860 F.3d 696, 698 (D.C. Cir. 2017).
In a significant and already controversial decision issued in mid-September, the Federal Energy Regulatory Commission (“FERC”) granted approval for Millennium Pipeline Company L.L.C. (“Millennium”) to proceed with a pipeline extension project despite the prior denial of the company’s application for a Clean Water Act (“CWA”) §401 water-quality certification by the New York Department of Environmental Conservation (“NYDEC”). See Millennium Pipeline Company, L.L.C., 160 FERC ¶ 61,065 (September 15, 2017).
As noted in prior articles of August 11, 2016 and September 7, 2017, the Natural Gas Act of 1938 (“NGA”) vests FERC with exclusive jurisdiction to regulate sales and transportation of natural gas in interstate commerce, including the construction and operation of pipelines. Prior to commencing construction, the NGA requires that the pipeline company obtain from FERC a certificate of “public convenience and necessity.” Armed with a certificate of public convenience and necessity, the pipeline company may exercise the right of eminent domain to gain property access and construct pipelines. Moreover, even though pipeline construction and operation must comply with environmental laws, the NGA restricts the rights of third parties to use state administrative remedies to challenge pipeline development.
On November 13, 2015, Millennium applied to FERC for a certificate of public convenience and necessity requesting authorization to construct a 7.8 mile pipeline spur to provide services to the Valley Energy Center in Wawayanda, New York. On November 9, 2016, FERC issued a provisional certificate of public convenience and necessity for the proposed project. FERC, however, conditioned its approval on proof of Millennium’s receipt of all authorizations required under federal law, including the CWA. Because Millennium’s proposed pipeline would traverse several streams in New York, the CWA required that New York’s NYDEC certify that any impacts from the pipeline will comply with the state-issued water quality standards. See 33 U.S.C. § 1341(a)(1).
On November 23, 2015, concurrent with its FERC filings, Millennium applied to NYDEC for CWA § 401 certification. After FERC issued its November 9, 2016 provisional certificate of necessity, NYDEC informed Millennium that “regardless of any action by FERC, including the issuance of a Certificate of Public Convenience and Necessity…, no construction activities may commence … unless the [CWA § 401] application is approved and [NYDEC] issues a [certification].”
In December 2016, more than a year after applying to the NYDEC for CWA § 401 certification, Millennium petitioned the D.C. Circuit under § 19(d)(2) of the NGA alleging that NYDEC had unlawfully delayed action on the water quality certification and waived its authority under CWA § 401. The D.C. Circuit dismissed Millennium’s petition on jurisdictional grounds, finding that Millennium had not been damaged in light of its other remedies. Millennium, 860 F.3d 696, 698 (D.C. Cir. 2017).
On July 21, 2017, Millennium requested permission from FERC to proceed with construction of the Valley Lateral Project pursuant to the previously-issued provisional certificate of necessity. In its request, Millennium asserted that NYDEC had waived its authority to issue a CWA § 401 certification by failing to act within one year of November 23, 2015, the date of Millennium’s application. NYDEC disagreed, contending that the time to act on the application had not been waived since the time did not start to run until NYDEC received a “complete” application, which it contended was August 31, 2016.
On August 30, 2017, NYDEC denied Millennium’s CWA § 401 water certification application. In support of its denial, NYDEC found that FERC’s review of the 7.8 mile pipeline spur failed to consider the indirect effects of downstream emissions that would come from the power plant if the connecting pipeline was approved.
Subsequently, on September 15, 2017, FERC rejected NYDEC’s denial of the CWA § 401 water quality certification for Millennium’s pipeline project, finding that the NYDEC had waived its authority to act on the application by failing to do so within the one-year statutory deadline. Citing the “plain meaning” of the statute, FERC found that state agency had “waived” its right to review Millennium’s application for a water quality certification under CWA § 401. See Millennium Pipeline Company, L.L.C., 160 FERC ¶ 61,065, at 5 (September 15, 2017).
Addressing what it called the crux of the case—the event that triggered the one-year waiver period—FERC looked to the language of CWA § 401 providing that “[i]f the State … fails or refuses to act on a request for certification within a reasonable period of time (which shall not exceed one year) after receipt of such request, the certification requirements of [Section 401] shall be waived with respect to such Federal application.” See Millennium Pipeline Company, L.L.C., 160 FERC ¶ 61,065, at 2 (September 15, 2017) citing 33 U.S.C. 1341(a)(1) (emphasis in original). FERC concluded that “receipt” was the triggering event and, after consulting the dictionary definition, concluded that “the plain meaning of ‘after receipt of the request’ is the day the agency received a certification application, as opposed to when the agency considers the application to be complete.” See Millennium Pipeline Company, L.L.C., 160 FERC ¶ 61,065, at 5 (September 15, 2017).
FERC found that its decision was consistent with Congress’s intent and FERC precedent. Congress has explained that “the review period of one year was established to ‘ensure that sheer inactivity by the State … will not frustrate the federal application.’” See Millennium Pipeline Company, L.L.C., 160 FERC ¶ 61,065, at 6 (September 15, 2017). Similarly, in Georgia Strait Crossing Pipeline LP, 107 FERC ¶61, 065 (2004), FERC found that the Washington Department of Ecology had waived its CWA § 401 authority after it declined the pipeline’s certification request more than two years after receipt. See also AES Sparrows Point LNG, LLC 126 FERC ¶ 61,019 (2009) (Order Issuing Certificate).
FERC found further support in its hydropower regulations and case law, as well as D.C. Circuit precedent. As explained by the D.C. Circuit, “[i]n imposing a one-year time limit on States to ‘act,’ Congress plainly intended to limit the amount of time that a State could delay a federal licensing proceeding without making a decision on the certification request. This is clear from the plain text.” See Millennium Pipeline Company, L.L.C., 160 FERC ¶ 61,065, at 5 (September 15, 2017) citing Alcoa Power Generating Inc. v. FERC, 643 F.3d 963, 972 (D.C. Cir. 2011). In the final analysis, FERC concluded that, consistent with its precedent in both NGA cases and hydroelectric licensing proceedings under the Federal Power Act, the triggering date for waiver under § 401 of the CWA is the date the certifying agency receives the application.
Although NYDEC may appeal to the D.C. Circuit, that Court may have already foreshadowed its decision. As noted above, Millennium previously petitioned the D.C. Circuit to compel the NYDEC to approve Millennium’s application for the CWA § 401 water quality certificate. The D.C. Circuit rejected Millennium’s petition because the delay of the NYDEC had not caused injury in fact to Millennium. In reaching its finding of no injury, however, the D.C. Circuit paved the way for Millennium to ultimately receive the sought-after FERC approval:
… if the [NYDEC] has delayed for more than a year—as Millennium alleges—the delay cannot injure Millennium. Instead, the delay triggers the Act’s waiver provision, and Millennium then can present evidence of waiver directly to FERC to obtain the agency’s go-ahead to begin construction.
Millennium Pipeline Company, L.L.C. v. Seggos, 850 F.3d 696, 700 (D.C. Cir. 2017).
This article was authored by Kevin M. McGuire.
Posted on 10/10/2017 in Environmental, Leasing/Titles, Legislation, Litigation, Permitting/Regulating Issues, Pipelines, Production | Permalink | Comments (0)
Monkey Wrenches on the Way: Anti-Pipeline Group from the Midwest Wants in on the Appalachian Action
According to a recent publication by Inside Climate News, a group claiming to have played a pivotal role in the efforts to block the Keystone XL Pipeline, is here to help wage war against the Atlantic Coast and Mountain Valley Pipelines. A group known as Bold Alliance bills itself as a network of “small and mighty” groups in rural states (Nebraska, Iowa, Louisiana and Oklahoma), which “fight fossil fuel projects, protect landowners against eminent domain abuse, and work for clean energy solutions while building an engaged base of citizens who care about the land, water and climate change.” The group has recently announced that it now has “Three Pipeline Fighter Positions” available in the Appalachian Region (specifically West Virginia and Virginia); the Great Lakes Region (Wisconsin and Minnesota) and Indian Country.
The “Pipeline Fighters” are billed as the advance guard of the Bold Alliance who will be “the principle point of coordination with other local and national groups fighting pipelines in the region.” In the Appalachian Region the Pipeline Fighters “will have a specific focus on organizing landowners along proposed pipeline routes.” Specifically, their tasks will include: 1) “identifying and creating a list of landowners” along the proposed routes and connecting them through at least an email list; 2) organizing several landowner meetings to develop trust among pipeline opponents; and 3) creating a legal structure similar to one adopted in Nebraska where landowners pooled resources with one legal team to protect their property rights.
See hyperlinks for more information about Bold Alliance and its founder, Jane Kleeb. Ms. Kleeb addressed an anti-pipeline summit sponsored by the Allegheny Blue Ridge Alliance at Natural Bridge, Virginia in November.
Posted on 01/30/2017 in Environmental, Leasing/Titles, Permitting/Regulating Issues, Pipelines | Permalink | Comments (0)
EPA’s Science Advisory Board Critiques EPA Assessment of Hydrofracking Impacts on Water Resources
In 2009, Congress asked EPA to examine the relationship between hydraulic fracturing and drinking water resources. In June 2015, EPA released for external review a draft report entitled “Assessment of the Potential Impacts for Oil and Gas on Drinking Water Resources.” The Executive Summary observed that the Assessment “synthesizes available scientific literature and data to assess the potential for hydraulic fracturing for oil and gas to change the quality or quantity of drinking water resources.” Activities that EPA did not assess were acquisition or transport of constituents of hydraulic fracturing fluids besides water (e.g., sand mining and chemical production); site selection and well pad development; or other infrastructure development (e.g., roads, pipelines or compressor stations). The “major findings” listed in the Executive Summary were:
“[That] there are above and below ground mechanisms by which hydraulic fracturing activities have the potential to impact drinking water resources.” Those included:
– water withdrawals in times of, or in areas with, low water availability;
– spills of hydraulic fracturing fluids and produced water;
– below ground migration of liquids and gases; and
– inadequate treatment and discharge of wastewater.
That EPA “did not find evidence that these mechanisms have led to widespread, systemic impacts on drinking water resources …” though it did find “specific instances where one or more of the mechanisms led to impacts on drinking water resources, including contamination of drinking water wells.”
That its finding could be due to either a rarity of effects on drinking water resources or a paucity of data and studies.
EPA’s Office of Research and Development later asked EPA’s Science Advisory Board (“SAB”) to review the Assessment and provide responses to specific questions posed. By letter dated August 11, 2016, EPA’s SAB responded to EPA. The response was critical of conclusions in the Assessment’s Executive Summary. In particular, the SAB expressed “particular concern” about EPA’s “high-level conclusion” that it had not found evidence that hydraulic fracturing-related activities had led to widespread systemic results. The SAB found that “EPA did not support qualitatively its conclusion about lack of evidence …” and that if EPA intends to retain this conclusion, then it “should provide quantitative analysis that supports its conclusion.”
Other criticisms offered by the SAB included:
Recognition of Local Impacts: The SAB concurred with EPA’s goal of assessing national-level impacts, but said the report didn’t acknowledge that local impacts can occur in stressed watersheds. It also recommended that EPA should critically analyze the data and investigation previously performed concerning potential groundwater impacts in Dimock, Pa.; Pavillion, Wy.; and Parker County, Tx., “where members of the public have stated that hydraulic fracturing activities have caused local impacts to drinking water….”
Prospective Case Studies: The SAB expressed concern that EPA had planned originally to conduct original research, but had not done so. It recommended that EPA delineate the planned studies and explain why they were not undertaken.
Lack of probability and risk of failure discussion.
Lack of information on toxicity of fracking chemicals.
Failure to distinguish between: i) hydraulic fracturing vs. constituents of “produced fluids”; and ii) constituents/impacts unique to hydraulic fracturing vs. those that exist with conventional oil and gas development.
Posted on 08/17/2016 in Environmental, Leasing/Titles, Legislation, Marcellus, Permitting/Regulating Issues, Production | Permalink | Comments (0)