Not So Fast—Your Oil and Gas Lease Primary Term May Be Longer Than You Thought

Jeremy A. Mercer, Amy L. Barrette, and Elizabeth E. Klingensmith

Under Pennsylvania law, a defined primary term of an oil and gas lease may actually be longer than that stated term of year. In a September 12, 2017, unreported decision, the Pennsylvania Superior Court remanded a case to the trial court for consideration of whether a “limitation of forfeiture” provision, which required notice and opportunity to cure, extended the primary term by the length of the cure period. See L.D. Oil & Gas Enters., Inc. v. Loop, No. 1883 WDA 2016, 2017 WL 4001655 (Pa. Super. Ct. Sep. 12, 2017). In overturning the trial court’s grant of judgment on the pleadings to the lessor, the Superior Court returned the case to allow the trial court to take parol evidence of the impact of the “limitation of forfeiture” provision on the length of the primary term. Continue reading “Not So Fast—Your Oil and Gas Lease Primary Term May Be Longer Than You Thought”

Mountain Valley Pipeline: West Virginia Cements the Need for FERC and Congressional Action to Curb State Overreach on FERC Jurisdictional Pipelines

Michael L. Krancer, Frederick M. Lowther, and Margaret Anne Hill

As we have noted in our prior blog posts on the Constitution Pipeline and Millennium Valley Lateral projects, §401 of the Federal Clean Water Act has become a focal point in the growing efforts by States to exercise dominant authority over FERC jurisdictional pipelines. This time, the West Virginia Department of Environmental Protection (“WVDEP”) has taken the unprecedented step of actually revoking a §401 certification it had granted in March 2017 and then reaffirmed in May. This action by WVDEP may be the final straw in State authority to review FERC jurisdictional pipelines as FERC and the Congress will be energized to react to the oversteps by New York in Millennium and now West Virginia in Mountain Valley. Continue reading “Mountain Valley Pipeline: West Virginia Cements the Need for FERC and Congressional Action to Curb State Overreach on FERC Jurisdictional Pipelines”

Millennium’s Valley Lateral Project: Yet Another New York State Veto under the Clean Water Act

Frederick M. Lowther and Michael L. Krancer

On August 30, 2017, the New York State Department of Environmental Conservation (“NYSDEC”) issued a two-page letter (signed by the General Counsel of NYSDEC), which denies “conditionally” a water quality certification under §401 of the Federal Clean Water Act (“CWA”). As with the two prior denials (noted below), this denial has the effect of preventing construction of the eight-mile Valley Lateral Pipeline, which is part of the Millennium Pipeline intended to serve the 680 MW gas-fired CPV Valley Energy Center in Wayawanda, Orange County, NY, currently under construction. The “conditional” denial becomes unconditional in the event Federal Energy Regulatory Commission (“FERC”) does not grant NYSDEC’s petition to FERC filed last month to reconsider its approval of the line in light of “new law,” namely the recent D.C. Circuit decision Sierra Club v. FERC, 2017 WL 3597014 (D.C. Cir., August 22, 2017) (“Sierra Club”). Continue reading “Millennium’s Valley Lateral Project: Yet Another New York State Veto under the Clean Water Act”

D.C. Circuit Significantly Expands the Scope of FERC Pipeline Reviews

Frederick M. Lowther and Frank L. Tamulonis III

In an abrupt departure from long-standing precedent, the D.C. Circuit ruled on August 22, 2017 that, in approving a natural gas pipeline project, the Federal Energy Regulatory Commission (“FERC”) failed to consider potential “downstream” greenhouse gas emissions from power plants burning natural gas supplied by the pipeline when preparing an environmental impact statement (“EIS”) pursuant to the National Environmental Policy Act (“NEPA”). Continue reading “D.C. Circuit Significantly Expands the Scope of FERC Pipeline Reviews”

New PA DEP Data Confirms That Methane Emissions Continue to Plummet from Unconventional Natural Gas Production in Pennsylvania

Michael L. Krancer

Pennsylvania DEP’s 2015 Air Emissions Inventory for Unconventional Natural Gas Operations is out. It was released late in the day on Thursday before the Labor Day weekend so there will be a lot of “debrief” as time goes on. But here is an early take. Continue reading “New PA DEP Data Confirms That Methane Emissions Continue to Plummet from Unconventional Natural Gas Production in Pennsylvania”

CONSTITUTION PIPELINE: The 2d Circuit Reaffirms a State’s Right to Veto a FERC-Approved Interstate Pipeline Project

Frederick M. Lowther

On August 18, 2017, the U.S. Court of Appeals for the Second Circuit issued a long-awaited decision in Constitution Pipeline Company LLC v. New York State Department of Environmental Conservation et al., Docket No. 16-1568 (“Constitution”). At issue—once again—was whether a single State (in this case, New York) has the power under §401 of the Federal Clean Water Act, 33 U.S.C. §1341 (“CWA”), to deny a water quality certification for an interstate pipeline previously certificated by the Federal Energy Regulatory Commission (“FERC”), when the effect of the denial is to veto a pipeline project that would serve multiple States. In 2008, the 2d Circuit determined that such a veto power exists. Islander East Pipeline Co. v. McCarthy, 525 F.3d 141 (2d Cir, 2008) (“Islander East”). Although the factual situation in Constitution differs in some respects (noted below) from that in Islander East, the end result is the same: if a State determines that a FERC-approved pipeline is not consistent with its water quality standards approved by the Environmental Protection Agency, and the Court finds (as it did here) that the determination was not arbitrary and capricious (i.e., is supported by “sufficient evidence to provide rational support” for the denial, Constitution, sl. op. at 24), the federally-approved interstate pipeline cannot proceed. Continue reading “CONSTITUTION PIPELINE: The 2d Circuit Reaffirms a State’s Right to Veto a FERC-Approved Interstate Pipeline Project”

FERC Gets Quorum and New Acting Chairman

Joseph McMonigle

First business meeting set for September 20. NEXUS Natural Gas Pipeline leads the list of backlog of projects awaiting approvals.

New FERC Commissioner Robert Powelson, formerly of the Pennsylvania Utility Commission and former President of NARUC, was sworn last Thursday, giving the Commission a quorum for the first time in six months.

Continue reading “FERC Gets Quorum and New Acting Chairman”

You Made Your Bed, Now Lie in It: Samson Exploration, LLC v. T.S. Reed Properties, Inc.

Liz E. Klingensmith, Jeremy A. Mercer, Amy L. Barrette

In Samson Exploration, LLC v. T.S. Reed Properties, Inc., the Texas Supreme Court affirmed the decision by the Ninth Court of Appeals siding with royalty owners in concluding that the operator of a well within two overlapping units had to pay twice.

Samson’s leases contractually authorized unilateral pooling. Samson created Unit 1, which had boundaries of 6,000 to 13,800 feet subsurface, and obtained production from two wells within Unit 1’s boundaries, Well No. 1 and Well No. 2. Well No. 1 produced from 12,304 feet to 12,332 feet subsurface. Well No. 2 produced from 13,150 to 13,176 feet. Samson then unilaterally amended Unit 1 to reduce the surface acreage and change the depth to 12,400 feet subsurface and below (the “Amended Unit”). No production from Well No. 1 was attributed to the Amended Unit. Continue reading “You Made Your Bed, Now Lie in It: Samson Exploration, LLC v. T.S. Reed Properties, Inc.“

ERA Revisited: Solutions For Navigating An Uncertain Legal Landscape

Margaret Anne Hill, Michael L. Krancer, Frank L. Tamulonis III, and Stephen C. Zumbrun

On June 20, the Pennsylvania Supreme Court issued its opinion in Pennsylvania Environmental Defense Foundation (PEDF) v. Commonwealth, 2017 Pa. LEXIS 1393 (Pa. June 20), in connection with the so-called Environmental Rights Amendment or ERA (Article 1, Section 27 of the Pennsylvania Constitution). Suffice it to say, the opinion has reopened the debate as to the meaning of the ERA, and more importantly, how the ERA is implemented as a practical and legal matter. In brief, the court ruled that amendments to the state’s fiscal code (which sought to address budgetary shortfalls by redirecting money from a fund containing rents and royalties from oil and gas leases on commonwealth land to the general fund) violated the ERA. While the facts before the court were narrowly drawn, the court used the opportunity to revisit the decades old “test” applied in evaluating ERA claims, an issue it first addressed in its 2013 plurality opinion in Robinson Township v. Commonwealth, 83 A.3d 901 (Pa. 2013). It abruptly rejected the well-established Payne v. Kassab test and roughly 45 years of ERA-related case law, thereby placing the ERA, and industry, back into legal limbo. Despite some legal uncertainty, this opinion should not be interpreted as a major stumbling block to key energy and infrastructure projects.

Continue reading “ERA Revisited: Solutions For Navigating An Uncertain Legal Landscape”

ZECs and RECs: A Quick Look at the EPSA v. Star Decision on Nuclear Plant Subsidies

Frederick M. Lowther

lowther-fOn July 14, 2017, Federal District Judge Shah (N.D. Ill.), in EPSA v. Star, 1:17-cv-01164, dismissed the complaints of electricity consumers and an array of electric power generators and their association seeking to invalidate the Illinois Future Energy Jobs Act, enacted in December 2016. The Act created “zero emission credits” (“ZECs”) for the benefit of two nuclear power plants, which the plant owner (Exelon) threatened to retire absent outside economic support. As the Act’s title indicates, a principal motivation for the legislation was the prospect of significant job loss and other economic harms caused by shuttering the two nuclear plants, but the environmental benefit of “zero emission” nuclear power was a major driver as well. Continue reading “ZECs and RECs: A Quick Look at the EPSA v. Star Decision on Nuclear Plant Subsidies”