November 2017 Industry Digest

U.S. House Passes Bill To Protect ANF Drilling

WEXFORD, PA.–The U.S. House of Representatives on Oct. 2 unanimously passed a bill introduced by Representative Glenn Thompson, R-Pa., that protects oil and natural gas production in Pennsylvania’s Allegheny National Forest (ANF), reports the Pennsylvania Independent Oil & Gas Association.

PIOGA notes that a federal law passed in 1992 directed the U.S. Forest Service to write new regulations for oil and gas production in the ANF. However, as a result of litigation initiated by the Pennsylvania Oil & Gas Association, courts have ruled repeatedly that the Forest Service may not restrict production activities because more than 90 percent of the minerals in the 500,000-acre forest are privately owned.

Consistent with those court decisions, HR 2316, the Cooperative Management of Mineral Rights Act, “repeals the improper 1992 directive,” PIOGA says.

“This legislation will prevent future lawsuits that impede oil and gas production, and will ensure that individuals with subsurface rights can access their property,” PIOGA quotes Congressman Thompson.

The association adds that HR 2316 also protects timbering in the ANF. A previous version of the bill was passed by the U.S. House in 2016 (AOGR, October 2016, pg. 32).

BLM Increases Fee For Processing APDs

WASHINGTON–The U.S. Department of the Interior’s Bureau of Land Management has increased from $9,610 to $9,790 the fee it charges for processing an application for permit to drill. BLM announced the move on Sept. 18 and the policy took effect on Oct. 1.

According to the bureau, the fee applies to any new APD submitted on Form 3160-3, whether submitted individually or as part of a master development plan, is due on submission and is owed regardless of whether an APD receives subsequent approval.

An APD for a new well without the full fee will not be logged in, posted, processed or considered, the bureau states. Incomplete APD fees will prompt BLM to contact the operator and provide 10 business days to submit the required amount, the bureau says, adding that it will consider an APD filed only after it has received the full fee.

Although replacement wells that operators may use in the event of downhole problems may require a new 3160-3 for administrative purposes, BLM says, such wells do not require an additional processing fee because the bureau already has completed most of the APD approval task, including consultation and environmental work.

“If the (operator) moves the well location at the request of the BLM to accomplish agency or resource protection goals, or to accommodate a surface owner request, and the move results in a new APD, an additional processing fee is not required,” the notice goes on. “An example would be moving a well to reduce a cut and fill or loss of habitat. However, if the operator requests the move and the move results in a new APD, an additional processing fee is required.”

BLM adds that an additional processing fee is not required if an operator submits a second form 3160-3 to correct a clerical error or to adjust a drilling location that was changed at the on-site inspection.

Court Allows DAPL To Keep Operating During Litigation

BISMARCK, N.D.–The Dakota Access Pipeline may continue to operate while the U.S. Army Corps of Engineers completes its court-ordered environmental review of the pipeline’s disputed crossing of North Dakota’s Lake Oahe, indicates the North Dakota Petroleum Council.

The judicial determination in Standing Rock Sioux Tribe and Cheyenne River Sioux Tribe v. U.S. Army Corps of Engineers and Dakota Access LLC, by Judge James Boasberg in the U.S. District Court for the District of Columbia, allows crude oil to continue flowing through DAPL as its legal fate is decided. Boasburg’s ruling notes that, although the court’s June 14 decision denied the plaintiffs’ claims under the Clean Water and Mineral Leasing acts, and upheld the majority of the Corps’ determinations under the National Environmental Policy Act, it concurred with the Tribes’ claim that the Corps environmental assessment was inadequate. Specifically, the court says, the EA fails to sufficiently account for the:

  • Degree to which the DAPL’s effects are likely to be highly controversial;
  • Consequences of a spill for the tribes’ fishing and hunting rights; and
  • The project’s environmental justice impacts.

On Oct. 6, the Corps reported that its review of those issues would extend into spring 2018, notes NDPC Vice President Kari Cutting, which raised concerns about the pipeline’s continued operation in the interim. Boasberg’s determination that DAPL may remain open during the review was issued on Oct. 11.

Despite the flaws he identified in June, Boasberg writes in his latest determination that he “ultimately concludes that the three errors identified in the prior opinion are not fundamental or incurable flaws in the Corps’ original analysis; rather, the agency has a significant possibility of justifying its prior determinations on remand.”

“This is not only a win for the Dakota Access Pipeline, but also for all major infrastructure projects under construction or consideration,” Cutting assesses, adding that by the second week of October, DAPL had “already delivered some $18 million in revenues for the state of North Dakota in just its first three months of operation.”

Boasberg’s opinion concludes with a warning to the Corps that its due diligence must adequately address the court’s concerns. “Compliance with NEPA cannot be reduced to a bureaucratic formality, and the court expects the Corps not to treat remand as an exercise in filling out the proper paperwork post hoc,” he writes. “After the agency’s further work on remand, the parties may well disagree over the sufficiency of its conclusion. If and when such a dispute arises, they will again have the opportunity to address whether defendants have, in fact, fulfilled their statutory obligations.”

District Court Convicts Two Keystone Activists

CAVALIER, N.D.–The Pembina County, N.D., District Court has found two men guilty of criminal charges associated with protests against TransCanada’s Keystone Pipeline.

According to media reports, Michael Eric Foster of Seattle was convicted a felony count of criminal mischief and misdemeanor counts of reckless endangerment and criminal trespass. Four other charges were dismissed. Samuel L. Jessup of Winooski, Vt., was found guilty of the felony criminal mischief and a misdemeanor criminal conspiracy charge. Two other charges were dismissed.

The two men, members of the Climate Direct Action group, were charged after an October incident in which Foster used bolt cutters to break into a locked Keystone facility and closed a pipeline value, stopping oil flows for several hours. Jessup filmed the event, newspaper accounts indicate.

During the trial, District Judge Laurie Fontaine denied several defense motions, including a bid to introduce testimony from climate change witnesses to support Foster’s necessity defense, which newspapers describe as an argument allowing a person to commit a crime if there is no other way for that person to avoid risk or harm.

The case should not become a forum about climate change, Fontaine wrote, pointing out the issues were limited to whether the defendants willfully and/or recklessly violated the law.

“While the proffered experts could testify to the data supporting the existence and severity of climate change, there is no argument that they have the knowledge or expertise to testify on how knowledge of climate change affects an individual defendant’s mental state, intent or level of culpability,” court documents quote the judge.

Foster faces as long as 21 years in prison if convicted of all counts; Jessup faces an 11-year maximum sentence. According to media reports, sentencing for the two men is set for Jan. 18.

Federal Judge Denies Racketeering Lawsuit Against Greenpeace

WICHITA FALLS, TX.–A federal district judge has dismissed a lawsuit brought by a multinational forest products company against Greenpeace International under federal racketeering law, according to a report from the Texas Alliance of Energy Producers.

Citing published reports, the Alliance says Judge Jon Tigar of the U.S. District Court for the Northern District of California ruled Oct. 16 that Resolute Forest Products failed to prove Greenpeace acted with “actual malice” and awarded fees to the environmental group.

The report says Resolute filed a $7 million defamation suit in 2013 against Greenpeace in Ontario and an additional $300 million lawsuit last year in federal district court in Georgia, alleging violations of both the federal Racketeer Influenced and Corrupt Organizations Act and state laws against defamation in response to a Greenpeace campaign that labeled Resolute as a “forest destroyer.”

Dakota Access pipeline developers Energy Transfer Partners LP and Energy Transfer Equity LP have claims brought under federal and state racketeering statutes against Greenpeace and other anti-development groups pending in the U.S. District Court for the District of North Dakota (AOGR, September 2017, pg. 14).

Citing press accounts, the Alliance says Greenpeace was able to get Resolute’s U.S. lawsuit transferred to the California court where Judge Tigar granted all five of the environmental group’s motions to dismiss the case, contending it was an attempt to silence advocacy and stifle free speech.

The Alliance says Judge Tigar ruled Resolute failed to show that Greenpeace acted with “actual malice,” or to support its claims with specific time, place and content of false representations.

The judge did allow Resolute to file an amended complaint, which the Alliance says the company indicated it intended to do. The Canadian lawsuit is still pending.

Federal Court Sinks Local Injection Ban In Pennsylvania

ERIE, PA.–With her decision in Seneca Resources Corp. v. Highland Township et al., a federal judge has nixed a measure in Highland Township, Pa., that forbade underground injection wells.

The ban, part of a community bill of rights that township voters passed in November 2016, was challenged by Seneca Resources Corp., which argued before the U.S. District Court for the Western District of Pennsylvania that the charter’s legal flaws ran afoul of state and federal authority and due process rights, court documents say. U.S. Magistrate Judge Susan Paradise Baxter concurred, and in her decision granted Seneca’s motion for judgment on six of its nine counts, which included a determination that the federal Safe Drinking Water Act and Pennsylvania’s Act 13 both pre-empt the charter’s substantive provisions. The ruling also says the charter violates the company’s constitutional and due process rights, and constitutes an “irrational and arbitrary” act.

Media reports point out that none of the township’s board of supervisors had any role in the charter’s adoption and declined to defend the measure. A township ordinance banning wastewater injection wells was dissolved in August 2016, when the company and the township’s board of supervisors signed a consent decree overturning the ordinance (AOGR, Sept. 2016, pg. 14).

Two nonprofit organizations–Citizens Advocating a Clean Healthy Environment and Crystal Spring Ecosystem, and the Highland Township Municipal Authority–petitioned the court to intervene on the charter’s behalf, but the judge found that neither organization demonstrated that it would suffer concrete harm if the charter was repealed.

“The township defendants filed an answer to the complaint wherein they admitted the majority of Seneca Resources’ claims, including the unconstitutionality and unenforceability of the charter,” the ruling states. “This court could not locate precedent for situations such as this case where a plaintiff has filed the motion and defendants do not oppose, and indeed, actively concur in the plaintiff’s motion.”

Colorado Associations Sue City Over Local Rules

DENVER–The Colorado Oil & Gas Association and the Colorado Petroleum Council are suing the city of Thornton, Co., for adopting oil and gas rules that the groups deem are at odds with state and federal law.

Although Thornton has not experienced any new oil and gas activity in some time, COGA has expressed concern about the precedent that such local regulations may set (AOGR, October 2017, page 98). The association points out that the Colorado Oil & Gas Conservation Commission and the assistant attorney general assigned to COGCC also have expressed doubts in public and in writing about the rules’ legality.

“Thornton’s City Council passed illegal energy regulations in August after an extremely limited stakeholder process,” recounts COGA President and Chief Executive Officer Dan Haley. “COGA and other willing contributors were given little to no opportunity to offer feedback on the proposed rules. Still, to avoid litigation, we submitted multiple letters articulating serious legal concerns with Thornton’s proposed regulations, particularly regarding operational pre-emption. Those concerns were ignored, making it necessary to challenge Thornton’s regulations in court.”

According to COGA, among the components of the rule with which the suit takes issue is Thornton’s attempt to require well pads or production facilities to be set back 750 feet from existing or planned homes, in contrast to the state’s 500-foot setback. Thornton’s regulations also establish 500-foot setbacks between oil and gas operations and bodies of water or irrigation ditches. COGA says the litigation also claims Thornton’s standards clash with state and federal requirements by requiring gathering lines to:

  • Have an “integrity management plan;”
  • Be marked every 100 feet with a city-approved marker;
  • Have automatic shut-off valves or remote control valves;
  • Be equipped with computerized monitoring and leak detection.

Haley notes that active drilling along Colorado’s Front Range has been ongoing for more than a century, and describes Colorado as one of the country’s most prolific–and most regulated–natural resource basins.

“As Colorado communities grow and expand, it is important to keep in mind where our natural resources exist, the value development provides our economy and our national security, and the respect we must have for individual property rights on the surface and below,” he advises. “Working together with these factors in mind would improve the likelihood for broad stakeholder success, and limit the likelihood for expensive litigation funded on the backs of taxpayers.”

Ohio High Court Rejects Anti-Fracture Ordinance

COLUMBUS, OH.–The Ohio Supreme Court says the Mahoning County Board of Elections acted correctly when it rejected a pair of ballot measures, including one proposal that would have allowed voters in Youngstown, Oh., to amend the city charter to ban hydraulic fracturing.

Ruling in State ex rel. Flak v. Betras, the justices agreed 4-3 with the county officials’ decision to remove from an upcoming ballot the fracturing proposal as well as a measure that sought to change election procedures in Youngstown, including restrictions on campaign contributions, court documents state.

The proposed fracturing amendment–which follows six earlier attempts to add similar language to the city charter–declares Youngstown residents possess the right to clean water, air and soil, and to be free from activities that violate this right, “including, but not limited to, the drilling of new wells or extraction of oil and gas.”

The proposed amendment would authorize private citizens to enforce their rights through nonviolent direct action or by filing suit as a private attorney general, and also bar Youngstown law enforcement agencies from “surveil[ing], detain[ing], arrest[ing], or otherwise imped[ing] natural persons enforcing these rights.”

According to court documents, the elections officials cited a new state law, HB 463, which requires boards to invalidate local petition initiatives if any part of the petition is ruled to fall outside of the local government’s constitutional authority. The board of elections voted 4-0 against certifying the petitions on the grounds they exceeded the city’s initiative power.

The Ohio Supreme Court relied on case law, citing its 2016 decision in Sensible Norwood v. Hamilton County Board of Elections. According to the court, in that case, the board refused to certify a proposed municipal ordinance which would have changed a city’s marijuana ordinance, the power to designate felonies is not a matter that municipalities are authorized to control. Therefore, the supporters of the proposed ordinance had no legal right to place the measure on the ballot.

The dispositive question in the Youngstown action is whether the board of election violated a clear legal duty by refusing to certify the petitions, the court writes. “In refusing to certify the petitions, the BOE acted consistently with our most recent pronouncement on the matter–Sensible Norwood. We cannot conclude that in doing so it violated a clear legal duty.”

“After seven attempts and garnering fewer wins than the Cleveland Browns, it might be time to stop and take note,” suggests the Ohio Oil & Gas Association. “Oil and gas is not the enemy in Youngstown, as voters have proved time and time again.”

Alliance President Mills Retiring At Year-End

WICHITA FALLS, TX.–Texas Alliance of Energy Producers President and Chief of Staff Alex Mills has announced his intention to retire effective Dec. 31.

Mills became president of the Alliance in 2000, following the merger of the North Texas Oil & Gas Association and the West Central Texas Oil & Gas Association.

The Alliance says Mills moved to Wichita Falls in 1994 as executive vice president of NTOGA after living eight years in Washington, where he served as vice president of the Independent Petroleum Association of America. He also served as WeCTOGA executive vice president from 1981 to ’86.

Previously, Mills worked as managing editor of The American Oil & Gas Reporter, and for several newspapers, and television and radio stations in Texas.

According to the Alliance, Mills serves on the board of directors of the Domestic Energy Producers Alliance and the National Stripper Well Association. Texas Governor Ann Richards appointed him to the Interstate Oil & Gas Compact Commission in 1994, and Governor George W. Bush reappointed him in 1995.

Mills earned a B.A. from the University of North Texas, and served in the U.S. Army Security Agency from 1966 to 1970.

W.V. Oil & Gas Festival Honors IOGAWV’s Burd

SISTERSVILLE, W.V.–The 49th annual West Virginia Oil & Gas Festival honored Charlie Burd, executive director of the Independent Oil and Gas Association of West Virginia, as the 2017 Oil and Gas Man of the Year.

As part of the honor, Burd served as parade marshal during the festival parade, held Sept. 16 in Sistersville. According to media reports, in the parade Burd rode in a 1960 Corvette driven by its owner, Mike McCown, former IOGAWV president and the festival’s man of the year in 2014.

Before joining IOGAWV in 2002, Burd worked for Hope Gas, part of the Consolidated Natural Gas System in Parkersburg, W.V., for 29 years. In that time he also served as the economic development director of the Wood County Development Authority for three years as a loaned executive from Hope Gas.

Burd also serves on the Industry Advisory Committee for West Virginia University’s College of Petroleum and Natural Gas Engineering; WVU’s Advisory Committee for the Energy and Land Management Program; WVU’s Advisory Committee for the West Virginia Manufacturing Extension Partnership; is active with the Independent Petroleum Association of America, the West Virginia Chamber of Commerce, Petroleum Technology Advisory Council, and the West Virginia Manufacturers Association. He is the governor’s official West Virginia representative to the Interstate Oil & Gas Compact Commission.