Oil + Gas Update - Pipeline Disputes in SCOTUS, Latest ERA Decisions from Commonwealth Court, Venue Battles in Climate Change Cases.
Oil prices plummeted by more than 20% since our last report alongside declining natural gas prices due in large measure to a Coronavirus that has wreaked havoc on the U.S. and global economies. In pipeline news, the Supreme Court heard from Atlantic Coast Pipeline in the ongoing battle over rights of way under a portion of the Appalachian Trail while PennEast lodged its cert petition challenging the Third Circuit's ruling that pipeline companies certificated by FERC under the Natural Gas Act can't condemn properties in which New Jersey has interests. In Appalachia, the Commonwealth Court issued two more decisions involving the so-called Environmental Rights Amendment while the Fourth Circuit sent Baltimore's climate-change case against the majors back to state court. In other regions, North Dakota said "no" to strict liability for injuries sustained during oilfield activities, the Texas high court weighed in on email-exchanges and contract formation, and the Montana Supreme Court rejected a criminal defendant's argument that tampering with a pipeline and shutting off its flow qualified as a constitutionally protected way to raise awareness about climate change.
Here's the latest...
Rig Counts, Spot Prices + Oil Prices
Rigs: National (-790); Marcellus (-37); Utica/Point Pleasant (11)
Brent Crude: -$36.53/bbl
West Texas Intermediate: -$32.83/bbl
NYMEX: April 2020 @ -$1.634/MMBtu
Spot Prices: Henry Hub (-$1.60/MMBtu); Dominion South (-$1.65/MMBtu); Tenn. Zone 4 (-$1.60/MMBtu)
("+" or "-" or blank denotes increase, decrease, or flat. )
WOPL - Appalachia
In our new section, WOPL ("waiting on pipelines"), we provide the latest news on the status of various pipeline projects in Appalachia:
Adelphia Project (Greater Philadelphia Region): Nothing new to report.
Atlantic Coast (W. Va. to Va. and NC): The U.S. Supreme Court heard oral argument from Atlantic Coast Pipeline, the United States, and environmental groups challenging ACP’s permit to cross beneath the Appalachian Trail.
Atlantic Sunrise (Northeastern PA to SE Pennsylvania): Nothing new to report.
Constitution (Northeastern PA to NY): On the heels of Williams' decision to shelve the Constitution Pipeline project, President Trump said New York’s efforts to block new natural-gas pipelines are “unfair to the rest of the country” and vowed to fight back to promote energy development.
Empire Pipeline (NY to PA): Nothing new to report.
Leidy South - Benton Loop Expansion (PA): Nothing new to report.
Mariner East (Western PA to Eastern PA): The Public Utility Commission announced that it is directing an independent “remaining life study” of the Mariner East 1 (ME1) pipeline crossing Pennsylvania, along with enhanced public reporting of pipeline integrity activities, in the wake of a pipeline leak near Morgantown, Berks County. The Commission also requires Sunoco to pay a $200,000 penalty in connection with an April 2017 leak involving approximately 840 gallons of ethane and propane
Mountaineer XPress (WV): Nothing new to report.
Mountain Valley Pipeline (Northern WV to Southern Va. and NC): Nothing new to report.
NEXUS (Ohio to Michigan): Nothing new to report.
NFG FM100 Project (NC PA to Transco): Nothing new to report.
Northeast Supply Enhancement Project (NJ/NY): Nothing new to report.
Northern Access (NW PA to Western NY): Nothing new to report.
PennEast (PA to Central Jersey): PennEast filed a petition for a writ of certiorari in the Supreme Court challenging a Third Circuit decision that said the pipeline company could not condemn property owned by New Jersey under the Natural Gas Act and FERC-issued certificate of public convenience because the state did not waive sovereign immunity from those suites in federal court.
Regional Energy Access (NE PA to PA/NJ): Nothing new to report.
Revolution Pipeline (PA): The Department of Justice has opened a criminal investigation in connection with the 2018 Revolution Pipeline natural gas explosion in Beaver County.
Rover (OH, WV, PA to Michigan): Nothing new to report.
TransCanada Eastern Panhandle Project (PA to WV): Nothing new to report.
Headlines & Holdings - Appalachia
Commonwealth Court Rejects Environmental Rights Challenge to Meter Locations. In a case in which municipalities challenged a PUC regulation regarding the location of meters and their impact on aesthetics at historic sites, the Commonwealth Court dismissed the claim, holding that the PUC’s regulation didn’t result in the kind of degradation of historical sites the Environmental Rights Amendment to the Pennsylvania Constitution was meant to protect. City of Lancaster, Borough of Carlisle, & Borough of Columbia v. Pennsylvania Pub. Util. Comm'n, --- A.3d ---, No. 251 M.D. 2019, 2020 WL 864986, at *1 (Pa. Cmwlth. Feb. 21, 2020).
Commonwealth Court Denies DEP’s Bid to Dismiss ERA Defense. The Commonwealth Court rejected an application for summary relief filed by DEP seeking to dismiss a a municipality’s constitutional defense to DEP’s lawsuit under the Environmental Rights Amendment, holding that the municipality can proceed with its defense that state laws cannot preempt local measures banning disposal wells because the state statutes on which DEP’s preemption claim is based may be unconstitutional. Commonwealth of Pennsylvania, Dep't of Envtl. Prot. v. Grant Twp. of Indiana Cty. & The Grant Twp. Bd. of Supervisors, --- A.2d ---, No. 126 M.D. 2017, 2020 WL 1026215 (Pa. Cmwlth. Mar. 2, 2020).
Fourth Circuit Sends Baltimore Climate Change Case Back To State Court. The Fourth Circuit rejected an appeal over whether Baltimore’s climate change-infrastructure damage case back to Maryland state court after concluding that the federal officer removal statute does not provide a proper basis for removal. Mayor & City Council of Baltimore v. BP P.L.C., --- F.3d ---, No. 19-1644, 2020 WL 1069444 (4th Cir. Mar. 6, 2020).
Headlines & Holdings - Beyond Appalachia
Kids Seek Reargument in Ninth Circuit Climate Case. The lawyers representing children who sued the feds for supporting fossil fuel energy production that led to the negative effects of climate change asked the Ninth Circuit for reargument en banc in an effort to get a remand for trial on the issues. Juliana v. United States, --- F.3d ---, No. 18-36082, 2020 WL 254149 (9th Cir. Jan. 17, 2020).
No Strict Liability for Oilfield Injuries Sustained During Drilling Operations Under ND Law. A federal court in North Dakota dismissed a claim for strict liability for injuries sustained during drilling operations, holding that North Dakota does not recognize that tort and that, in any event, oil drilling activities, including the activity of providing mud for oil drilling operations, do not qualify as an ultra-hazardous activity given the enhanced recovery techniques, the prevalence of oil well drilling, and the importance of oil and gas as an energy source. Mark Bowen, Plaintiff, v. Pioneer Drilling Servs., LTD, & Whiting Oil & Gas Corp., Defendants., --- F. Supp. 3d ---, No. 1:19-CV-74, 2020 WL 908115 (D.N.D. Feb. 25, 2020).
California Court Finds Merit in Challenges to Local O+G Ordinance Designed to Streamline Permits. A court of appeals in California revived challenges under California's Environmental Quality Act to a local ordinance designed to streamline the permitting process for new oil and gas wells and to certifications for an environmental impact report issued under that ordinance, concluding that the plaintiffs stated claims under CEQA for violations involving water, agricultural land, and noise. King and Gardiner Farms, LLC v. County of Kern, --- P.3d ---, No. F077656, 2020 WL 913788 (Cal. Ct. App. Feb. 25, 2020).
N.D. Federal Court Says Separate Class Action Involving Similar Royalty Claims Tolls Statute of Limitations. A federal court in North Dakota denied a motion to dismiss royalty claims dating back to 1989 as barred under the state's six-year limitations statute, holding instead that the royalty claims in this matter are nearly identical to those filed in a 2013 class action and therefore are tolled under the doctrine espoused in American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974) (class action tolls statute for identical claims brought separately by potential class plaintiffs). Fullerton v. Energen Reources Corporation, --- F. Supp. 3d ---, No. 1:19-CV-00346-RB-KRS, 2020 WL 953976 (D.N.M. Feb. 27, 2020).
Wyoming Supreme Court Says Courts, not O+G Conservation Commission, Decide Trespass Claims. In a "race to permit" case in which two companies jockeyed to be the operator of drilling unit, the Wyoming Supreme Court held that the loser properly sued the winner/operator in court for trespassing on the non-operator's portion of the unit to obtain data to include in its applications for permits to drill in violation of Wyo. Stat. Ann. § 40-27-101, rejecting the operator's claim that the non-operator had a duty to raise the trespass claim with the Wyoming Oil and Gas Commission in order to exhaust administrative remedies. Devon Energy Prod. Co., LP v. Grayson Mill Operating, LLC, --- P.3d ---, No. 2020 WY 28, 2020 WL 948353 (Wyo. Feb. 27, 2020).
Idaho Judge Upends BLM's Guidelines for O+G Leasing. A federal judge in Idaho held that the Bureau of Land Management unlawfully constrained public participation in the oil and gas leasing process when it adopted new guidelines that removed provisions for public involvement and protests, particularly in areas of federally-recognized sage-grouse habitat. Western Watersheds Project v. Zinke, --- F. Supp. 3d ---, No. 1:18-CV-00187-REB, 2020 WL 959242 (D. Idaho Feb. 27, 2020).
Texas Supreme Court Says Email Exchanges Fell Short of Making Contract. The Texas Supreme Court held that an email exchange between parties in a $230 million oil and gas deal didn't constitute a final sale agreement. Chalker Energy Partners III, LLC v. le Norman Operating LLC, --- S.W.3d ---, No. 18-0352, 2020 WL 976930, at *1 (Tex. Feb. 28, 2020).
Utah Federal Court Says Challenges to O+G Leases are Moot. A federal judge in Utah concluded that an environmental group's challenge to oil and gas leases are moot because BLM suspended the leases to perform additional environmental analysis and will issue new final leasing decisions. Friends of Cedar Mesa v. U.S. DOI, --- F. Supp. 3d ---, No. 4:19-CV-00013-DN-PK, 2020 WL 999836 (D. Utah Mar. 2, 2020).
Montana Supreme Court Upholds Conviction for Interference with Pipeline. The Supreme Court of Montana held that civil disobedience in protest of the fossil fuel industry to draw attention to climate change is not an act of "necessity" at common law that would constitutionally justify a criminal defendant's tampering with a pipeline. State of Montana v. Higgins, --- P.3d ---, No. 2020 MT 52, 2020 WL 1025632 (Mont. March 3, 2020).
TX Appellate Court Upholds Easement Rights for Pipeline. A court of appeals in Texas held that under standard principles of contract interpretation, an easement agreement created a blanket easement that permitted the pipeline company to construct a new line anywhere on the property subject to the requirement that the use of the right does not unreasonably interfere with the property rights of the owner of the servient estate. Atmos Energy Corp. v. Paul, --- S.W.3d ---, No. 02-19-00042-CV, 2020 WL 1057331 (Tex. App. Mar. 5, 2020).
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