In Frederick v. Allegheny Township Zoning Hearing Board, et al, the Pennsylvania Commonwealth Court affirmed a local zoning ordinance allowing oil and gas operations in all zoning districts in the Township as long as they satisfied enumerated standards that were designed to protect the public health, safety and welfare of the citizenry.

Facts and Findings

CNX received a permit to drill a well. The ordinance imposes a 1,000 foot setback and prescribes notice requirements and operational limitations. Citizens owning neighboring tracts complained that the well was not compatible with agricultural and residential use, complaining about noise from pad site preparation and drilling activities.

The objectors did not challenge the Zoning Board’s fact findings. That was either a tactical mistake or a lost cause. One can’t tell from the opinion. The court noted these findings, among others:

  • This is an area that has historically had gas production. There are 242 conventional gas wells in the Township, some of which employ hydraulic fracturing.
  • One farm already has three gas wells plainly visible to persons driving by the property.
  • Nothing will be visible to the neighbors after the well has been drilled and completed.
  • The Zoning Board rejected as not credible the testimony of several experts sponsored by the objectors.

The questions on appeal

  • Did the ordinance violate substantive due process by instituting illegal spot zoning? No
  • Did the ordinance violate Pennsylvania’s Environmental Rights Amendment? No.
  • Did permitting oil and gas development in every zoning district violate the Municipalities Planning Code? No

The objectors’ right to substantive due process was not denied by the ordinance. The ordinance was not spot zoning because it did not treat one spot of land in a different manner than similar surrounding land. The court balanced the public interest served by the ordinance against confiscatory or exclusionary impact of regulation on individual rights. The objectors could not prove that the ordinance was arbitrary or unreasonable and unrelated to the public health, safety, morals and general welfare. The objectors’ “concern” about the negative impact on their health and their land values was deemed to be speculation.

The ordinance did not violate Pennsylvania Constitution Article 1 §27, the Environmental Rights Amendment.

  • The government’s duty to protect environmental resources does not require freezing of existing public natural resource stock.
  • The amendment’s requirements are tempered by legitimate development tending to improve upon the lot of Pennsylvania’s citizens.
  • Political branches are not required to enact specific affirmative measures to promote clean air, water, etc.
  • Objectors could not prove that the zoning ordinance does not reasonably account for the natural, scenic, historic and aesthetic values of the Township’s environment.

The ordinance does not violate Sections 603, 604 and 605 of the MPC. This appeal point was a reiteration of the substantive due process arguments that were rejected.

The court noted the statewide setback requirements and other rules imposed by the Department of Environmental Protection, which has authority to regulate how drilling is conducted, not where it is conducted. Whether the zoning ordinance was wise or the best means to achieve the desired result about is left to the legislature and not the courts.

What is this not like?

Coincidentally (or not) one can compare this act of a legislative authority to New York, which, as you and the beleaguered mineral owners of that state know, determined that the mere possibility of injury was enough to ban fracking throughout the entire state.

Taj Mahal, as good now as he was before. Maybe better?

In his Hardcore History podcasts, Dan Carlin presents himself, not as a historian, but as a journalist who likes history. Herein is my attempt to present yours truly, not as an environmental lawyer, but as a trial lawyer with an interest in energy policy. Therefore, here are differing assessments of the Trump EPA’s rollback of the Obama EPA’s methane regulations.

Executive summary 

Producers: “Regs bad, industry good; we’re saving the planet.”

Enviros: “Regs good, industry bad; you’re poisoning the planet.”

Read more and decide for yourself Continue Reading What They’re Saying About the EPA’s Methane Rule

Co-author Chance Decker

Gloria’s Ranch v. Tauren et al – the Louisiana lenders’ bad dream

Anyone seeking stability in the law governing E&P activities in Louisiana will view the lower court decision as a grave error that must be corrected. Virtually every mortgage provides safeguards to protect collateral and manage lenders’ risk. The court of appeal reasoned that because of those provisions, the lender controlled the ability of the borrower to execute a release of a mineral lease, resulting in solidary liability when the borrower-lessee failed to release its lease. Continue Reading An Oil and Gas Case to Expect From Louisiana, and Another From Texas

man bites dogSierra Club v. Chesapeake Operating LLC et al is news more shocking than “Man Bites Dog”! A federal court has acknowledged that others are better equipped to address certain issues than the judiciary!

Sierra Club alleged that that deep injection of liquid waste from operations by Chesapeake, Devon and New Dominion has contributed to earthquakes throughout Oklahoma and southern Kansas. Sierra asserted that waste disposal activities present an imminent and substantial endangerment to the public health or environment. This was a citizen suit under the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act.

There is reason to be concerned

Sierra Club alleged:

  • Earthquakes in Oklahoma increased more than 300-fold from before 2009 to 2015, from 167 to 5,838.
  • The severity has increased.
  • Seismologists say a magnitude 7 quake is possible in the Nehama fault.
  • Earthquake risks in Oklahoma are now the highest in the nation.

What the parties wanted

Sierra Club wanted an order requiring defendants to:

  • Reduce “immediately and substantially” the amount of wastes injected into the ground,
  • Reinforce vulnerable structures that would be impacted by a large magnitude earthquakes, and
  • Establish independent earthquake monitoring and prediction.

The defendants urged the court to:

  • Allow the Oklahoma Corporation Commission to take action in response to increased seismicity in the state.
  • Dismiss, because Sierra did not join every company that disposes of liquid wastes, and
  • Dismiss, because the claims fall outside the “zone of interests” Congress intended to protect under RCRA.

The court sided with the defendants, concluding that dismissal is appropriate under the Burford abstention and primary jurisdiction doctrines. Here’s why:

  • In 1981 the EPA gave primary enforcement responsibility for underground injection control to the state of Oklahoma.
  • Oklahoma vests that authority in the Oklahoma Corporation Commission.
  • The OCC exercises exclusive jurisdiction over injections wells.
  • The OCC has an extensive regulatory structure in place for injection well control.

Abstention doctrines explained

The Burford abstention doctrine says that where timely and adequate state court review is available a federal court must decline to interfere with the state agencies where there are difficult questions of state law whose importance transcends the results in the case at bar and where exercise of federal review of the question would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial public concern.

Oklahoma has established and is operating its own program to regulate wells, OCC oversight encompasses more wells than just those operated by these defendants, the issue is one of substantial public concern, and timely and adequate state court review is available to the plaintiff.

The primary jurisdiction doctrine protects the administrative process from judicial interference, and it applies here. The court should refer issues not within its conventional experience to the administrative agency having more specialized experience, expertise and insight.

Why is this a big deal?

Essentially, the court recognized that highly complex and technical issues should not be regulated by the courts. This presents fundamental differences between courts and regulatory agencies: The OCC is equipped as a regulatory body to apply continuous, persistent and flexible regulatory power, which the court can’t do. Immediate and substantial reduction in wastewater requires specific scientific and technical expertise, which the OCC has and the court doesn’t.

You don’t need to bite your dog.

 

godzillaWe begin with a Rorschach test. As the big election day approaches, which candidate do you see in the photograph? Discuss among yourselves.

Get ready for lots of musical interludes. The nation’s despair runs deep and wide, so profound that it cannot be expressed in mere words.

What do they promise?

Let’s look at what we might expect from our next president, based on campaign promises:

Mr. Trump:  Make oil and gas great again,

Ms. Clinton:  Wind on every hilltop, solar on every rooftop; renewables good, fossil fuels bad,

From Scott Gaille’s energy blog,

From Forbes.

And again from Forbes.

This is a way to evaluate the promises (a/k/a, don’t get your hopes up).

Your choices

You know what they are. It’s been said that one is reptilian, and the other venal (that’s Hillary in the middle; Nancy Pelosi on the “left”; Harry Reid, in drag and a wig, on the other side).

Here is P. J. O’Rourke’s choice.

Speaking of choices, here is how to survive election day:

  • Remain in the fetal position where you’ve been since the primaries, and continue to weep.
  • Surrender your belt and shoelaces to someone you trust.
  • Still undecided? Here is some advice.

Takeaways

  • This will pass. We survived Millard Fillmore and Warren G. Harding.
  • Special shout-out to you Trump primary voters! You vanquished those liberals and insiders like Ted Cruz, Marco Rubio and Mike Huckabee. You owe the party faithful.

 

steam engineWhich of these statements makes sense to you:

A. “Never before have the rulers of a society intentionally driven it backwards to scarcer, more expensive, and less efficient energy.”

B. “Communism is the optimal system for avoiding dangerous global warming”.

C. “This is the first time in the history of mankind that we are setting ourselves the task of intentionally, within a defined period of time, to change the economic development model that has been reigning for at least 150 years, since the Industrial Revolution.”

D. “Giving society cheap, abundant energy would be the equivalent of giving an idiot child a machine gun.”

E .“Global warming, like Marxism, is a political theory of actions, demanding compliance with its rules.”

What the quiz says about you

B, C and D? Comrade, you took a wrong turn at “fueling” and failed to yield to “freedom”.

A and E? Then you should read Fueling Freedom: Exposing the Mad War on Energy by Kathleen Hartnett White and Stephen Moore.

If you want a real book review, go to the National Review. This post is more of a polemic, a defense of an honorable industry that is vital to the security and prosperity of the world (excluding Venezuela, of course).

Ms. White, Distinguished Fellow-in-Residence at the Texas Public Policy Foundation, spoke last week at TIPRO’s summer conference. See this PowerPoint for the high points of her presentation. It’s no substitute for the presentation itself, but if you want to know more you should read the book.

Facts that will impress your friends 

Here are compelling facts from the book that reveal the importance of fossil fuels to our modern way of life:

  • Human misery remained at about the same level for 100,000 years until the Industrial Revolution in the early 1800’s. Since then, misery has declined and millions have been lifted out of poverty and into the middle class. This progress is a result of human ingenuity and fossil fuels.
  • America produced three times as much food as it did a century ago, with one-third fewer man-hours, on one third fewer acres, and on and at one-third the cost. (Think, natural-gas based fertilizers, tractors, and other fruits of petroleum.)
  • In 1875 the average American family spent 74% of its income on food, clothing and shelter. In 1995 the same family spent 13% of its income on these fundamental necessities.
  • In cost per megawatt hour, oil and natural gas receive 64 cents, wind $56.29 and solar $775.64 in federal subsidies.

Some points might be overstated:

  • Haynesville and non-core Bakken operators might not agree that, “In many places fracking is profitable at $40 per barrel and in most places it is profitable at $50 per barrel.”

Now, for our musical interlude.

Sources for the quiz

A. Fueling Freedom, p. xv (no link, you gotta read the book).

B. IPCC chief Christina Figueres, Daily Caller, January 15, 2014.

C. Figueres, U N Regional Information Centre for Western Europe, February 3, 2015.

D. Paul Ehrlich.

E. Paul Johnson, The Nonsense of Global Warming, Forbes, September 8, 2008.

truthinessTruthiness: A quality characterizing a “truth” that a person making an argument or assertion claims to know intuitively, “from the gut” or because it “feels right” without regard to evidence, logic, intellectual examination or facts.

Today we explore truthiness in action. Let’s start with the loftiest bully pulpit in the land. The Washington Post gave President Obama four pinocchios  for his justification for cancelling the Keystone XL Pipeline.

  • The Prez: Keystone oil “will bypass the United States and its products will end up in foreign markets”.
  • The Post: Most of the products to be refined at Gulf Coast refineries will be consumed the United States.
  • The Prez: Keystone was just for Canadian oil and we should be focusing on American infrastructure, American jobs and American producers.
  • The Post: 65,000 BOD will be moved from the Bakken; U.S. energy companies control 30% of Canadian oil sands production.

Propaganda disguised as truthiness

According to Energy in Depth, anti-fracking activists use lies to scare us, such as:

  • Fracking causes widespread water contamination,
  • Fracking causes earthquakes (specifically, all injection wells induce earthquakes),
  • Fracking causes climate change and increases air pollution (Really? See the Sierra Club article below),
  • Fracking negatively impacts health (especially in babies),
  • Fracking chemicals are not disclosed,
  • Fracking is not regulated,
  • The industry does not provide safety measures for workers.

See the article for details explaining why they are wrong.

Facts  

Michael Lynch in Forbes runs through 11 of what he calls myths about the economics of petroleum and labels them either wrong, misinterpreted, or irrelevant.

An Energy In Depth report quantifies the threat of earthquakes from injection wells. To summarize:

  • Percentage of U.S. disposal wells potentially linked to seismicity – 0.55%
  • Percentage of disposal wells operating without seismicity – 99.45%
  • Percentage of Class II injection wells potentially linked to seismicity – 0.15%
  • Percentage of Class II injection wells operating without seismicity – 99.85%

The numbers are similarly low in Texas.

Could go either way?

This could be truth or truthiness. Energy In Depth reports that the Sierra Club admits but downplays the contribution of cheap natural gas to the reduction in carbon emissions in the United States. Read the article itself and all the links and decide for yourself who is more correct. This one could be a matter of your point of view.

Why this blog uses cute pictures

A study examining truthiness was carried out by Eryn Newman of Victoria University of Wellington. Experiments showed that people are more likely to believe that a claim is true regardless of evidence when a decorative photograph appears alongside.

An interlude

Today we have a movie interlude. You will want to view this if college is in the present or future for you or someone for whom you are responsible.

Les Advises the Tigers Not to Buy Leases in NY
Les Advises the Tigers Not to Buy a Lease in NY

Political actions have consequences. A force majeure clause in New York oil and gas leases does not modify the primary term of the habendum clause and the leases are not extended because of the state ban “moratorium” on hydraulic fracturing.

The force majeure clause:

[I]f and when drilling . . . [is] alleged or interrupted . . . as a result of some order, rule, regulation, requisition or necessity of the government, or as the result of any other cause whatsoever beyond the control of Lessee, the time of such delay or interruption shall not be counted against Lessee, anything in this lease to the contrary notwithstanding.”

No operations were conducted during the primary term and there was no production.

This question was certified to the New York State Court of Appeals: “If [the moratorium was a force majeure event] does the force majeure clause modify the habendum clause and extend the primary terms of the leases?” The state court answered “no”.

The Court’s Reasoning

  • The habendum clause did not incorporate the force majeure clause by reference or contain language expressly subjecting it to other lease terms, and the force majeure clause did not specifically refer to the habendum clause.
  • Under New York law the force majeure provision did not supersede all other clauses in the leases, only those with which it was in conflict. Because the two clauses were not in conflict, “anything in this lease to the contrary, notwithstanding” alone was insufficient to compel the conclusion that the force majeure clause modifies the primary term.
  • Because the clause expressly referred to delay or interruption in drilling or production, it follows that the clause only conflicted with, and therefore modified, the secondary term of the habendum clause.
  • The force majeure clause expressly indicated that it dealt with lease termination, not expiration. Thus, the “notwithstanding” language excused lessee’s performance only during the secondary term.

Based on the state court ruling a summary judgment terminating the leases was upheld.

Q and A in Which the Author Interviews Himself

Q:  What is the source of this heresy?

A: You’d be surprised. The court referred to several cases from Texas and California for support. A 1975 Texas case construed identical language in just the same way, meaning that someone didn’t update his forms.

Q:  Did it have to end this way?

A: Of course not. The lessees argued that “anything in this lease to the contrary notwithstanding” has consistently been held to enforce the clause. Several Texas cases could be relied upon for a contrary result. Being the highest court in New York, they could have decided to follow another approach. Supreme courts are fond of saying they just call ball and strikes. But they also define the strike zone, the distance between the bases, the height of the mound, and just about every other aspect of the game.

Q:  What does it mean?

A: Are you asking me, legally or politically? The legal effect is, if the “moratorium” ever ends, many lessees will by paying again for leases they paid for once before. Politically … not my problem, and unless you have leases in New York it’s not yours either.

And this musical commemoration of LSU v. McNeese.

Finally, Les’s failure to stop the lightning is yet another reason to fire him. You-know-who-I’m-talkin’-about would have willed the storms to proceed away from Tiger Stadium … quickly.

davy crockettYour Texas legislators have done their work and the citizens are safe for the next two years.  The other good news is that industry supporters generally believe the 2015 Legislature was their friend.

House Bill 2: Set aside $4,471,800 to the University of Texas at Austin Bureau for Economic Geology and appointed a technical advisory committee to study the effects of hydraulic fracturing and disposal wells on earthquakes. The Bill authorized seismic equipment, maintenance of seismic networks, and modeling of reservoir behavior in the vicinity of faults. The committee will have nine members appointed by the governor. Two members will represent higher education institutions and have seismic or reservoir modeling experience, two will be experts in the oil and gas industry, and at least one must be a RRC seismologist. The committee will advise the governor and the House Committee on Energy Resources.

House Bill 40:  Preempts local jurisdiction over subsurface operations. This is the legislative response to the ogre that was Denton’s anti-fracking ordinance.

House Bill 1331: Once an operator has transferred drill cuttings to a third party for subsequent beneficial use, such as recycling, the operator can no longer be held liable in tort for consequences of the subsequent use.

Senate Bill 1589: Requires holders of unclaimed mineral proceeds to include more information when reporting to the Comptroller, such as lease, property and well names, and identification numbers used to identify the lease, property or well.

House Bill 2207: An existing oil and gas lease will remain in effect upon the foreclosure of a security interest if the lease was executed and recorded before the foreclosure sale. If the leased property is sold in a foreclosure sale, the rights granted to the lessee to use the surface will be terminated. Royalty payments which become due after the foreclosure sale will pass to the purchaser of the foreclosed property. A subordination agreement would control conflicting provisions of the law.

House Bill 30: Requires regional water planning groups to include opportunities for benefits of developing large scale desalinization facilities. The point is to establish brackish groundwater production zones that would not affect industry’s use of brackish water. The Texas Water Development Board is to study the use of brackish groundwater. As passed the Bill does not create a scheme for the use of brackish groundwater.

The Ones That Got Away (or Euthanized, If You See It That Way)

House Bill 1552: The allocation well Bill. An operator would have been allowed with a RRC permit to drill, operate and produce from wells that traverse multiple tracts. The Bill would have removed doubts about the legality of allocation wells. Royalty and mineral owners defeated this one.

House Bill 3291: Would have established as a second degree felony the possession transporting, removing or purchasing oil and gas or condensate without a RRC permit. Passed in a version that was far different from the original, then  vetoed by the governor. I’m told the reason was because it would have criminalized what has otherwise been a RRC permitting violation. Thieves and some DA’s were pleased, operators were not.

House Bill 1392: The fieldwide unitization effort that has failed in every session since Davy Crockett realized there wasn’t a back door to the Alamo. This year it was known by the catchy “Cenozoic Era Unitization”. Some have been in favor, some not.

To see the text and history of the Bills, go to www.capitol.state.tx.us/.  Under Search Legislation type in bill number (“SB … or HB …), and search.  If it passed, see the “engrossed” version.

Our legislative interludes:

To the supporters of HB 40

To legislators everywhere who can’t get a bill passed

To legislators everywhere who prevent their colleagues from passing a bill