ATSDR issues report on Dimock study. The U.S. Environmental Protection Agency (EPA) previously found that water from residential wells in Dimock, Pennsylvania, was safe to drink, but the Agency for Toxic Substances and Disease Registry (ATSDR) issued a report disputing EPA's findings. According to ATSDR, the 2012 data show dissolved methane and metals at levels that present a "health and safety concern" and it urges homeowners to take measures to reduce risk. The Dimock wells sparked a controversy when residents claimed that hydraulic fracturing by Cabot Oil & Gas Corp. was the source of the methane. The movie Gasland featured the controversy and led the Pennsylvania Department of Environmental Protection (PADEP) to shut down Cabot's operations in the town for more than two years. After its review, EPA concluded the water from the wells was safe and found no evidence of hydraulic fracturing fluids in the well water. However, two Dimock families pursued claims in court and recently won a $4.2 million jury verdict against Cabot. Cabot has argued that the methane is naturally occurring, not from hydraulic fracturing, and the company's request to overturn the verdict is pending. ATSDR's report does not evaluate the potential source of the methane.
Federal government approves hydraulic fracturing in the Pacific. The Bureau of Ocean Energy Management (BOEM) and Bureau of Safety and Environmental Enforcement (BSEE) finalized an environmental assessment for hydraulic fracturing in the Pacific Ocean, concluding that the practice would not have a significant impact on the environment. BOEM and BSEE had imposed a moratorium on permitting for hydraulic fracturing in the Pacific Ocean until they could complete their environmental review under the National Environmental Policy Act. That moratorium is now set to be lifted, although it is anticipated that environmental groups will challenge their finding in court.
Pennsylvania environmental regulator out over email controversy. John Quigley has resigned as secretary of the PADEP. Although he gave no official reason, his resignation coincided with the circulation of a leaked April 2016 email to environmental groups that castigated them, using colorful language for insufficiently supporting the Commonwealth's new Chapter 78 gas drilling regulations. As previously reported here, certain members of the General Assembly are looking to repeal the regulations, which have also been challenged in court. The email insulted the members who are pursuing repeal and characterized legislative committee hearings on the subject as "Russian show trials." It remains to be seen what the full fallout may be from this incident, as there have been calls for an investigation. Patrick McDonnell, PADEP's director of policy, is serving as acting secretary.
Sidley Austin provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship. Attorney Advertising - For purposes of compliance with New York State Bar rules, our headquarters are Sidley Austin LLP, 787 Seventh Avenue, New York, NY 10019, 212.839.5300; One South Dearborn, Chicago, IL 60603, 312.853.7000; and 1501 K Street, N.W., Washington, D.C. 20005, 202.736.8000.
SIDLEY UPDATE Page 2
UK county approves hydraulic fracturing. Third Energy will be the first company in the United Kingdom to develop shale gas with hydraulic fracturing since the country rescinded its ban on the practice in 2012. By a vote of 7 to 4, the North Yorkshire County Council authorized the company to begin drilling in an area called Ryedale, near the village of Kirby Misperton. The vote followed two days of hearings where protestors lamented the potential for noise, industrial traffic, water contamination and earthquakes from the operations. The council noted that out of 4,420 comments on the proposal, only 36 were in favor, but a council spokesman said that national policy favors shale gas development. Environmental groups said this vote could be the first of thousands more authorizing hydraulic fracturing and resolved to reverse the decision, citing the need to avoid industrializing the Yorkshire countryside and to stop global warming. The British Chambers of Commerce released a statement calling the vote a "much-needed victory for pragmatism."
Chesapeake and Total settle royalty litigation. Chesapeake Energy and Total E&P USA agreed to a global settlement of disputed royalty claims by approximately 13,000 mineral rights owners. The plaintiffs alleged that the companies underpaid royalties owed on Barnett Shale leases. Under the settlement, if approved by the court, Chesapeake will pay $29.4 million up front and another $10 million three years after approval. Total will pay $13.1 million at the time of the settlement. Plaintiffs will receive payments based on individualized assessments of their claims. The settlement resulted from two Texas Supreme Court decisions in the litigation governing the amount of money the companies could deduct from royalty payments to cover costs and mediation between the parties with a former judge. At least two other lawsuits making similar allegations remain against Chesapeake, filed by the Tarrant County College District and the Tarrant County Commissioners.
Pennsylvania studying methane emissions from abandoned wells. PADEP and a group of researchers from several universities are undertaking a new survey of abandoned gas wells within the state. PADEP suspects that there are between 300,000 and 500,000 abandoned wells across the state, but there is no exact count and many locations are unknown. The research group is trying to learn about methane from these wells. Due to the uncertainty, EPA does not include estimates of methane emissions from abandoned wells in its greenhouse gas inventory, but the researchers believe these emissions are cumulatively significant. The survey will examine 208 known oil and gas wells abandoned before state plugging regulations were adopted to gauge methane emissions and identify any data trends. Depending on the results, PADEP may be able to identify higher emitting wells which could be prioritized for plugging with limited state funds. The survey is due to be completed this fall.
If you have any questions regarding this Sidley Update, please contact the Sidley lawyer with whom you usually work, or
Roger Martella Partner
+1 202 736 8097 [email protected]
Sam Boxerman Partner
+1 202 736 8547 [email protected]
Jim Wedeking Counsel
+1 202 736 8281 [email protected]
Joel Visser Associate +1 202 736 8883 [email protected]
Ben Tannen Associate
+1 202 736 8574 [email protected]
SIDLEY UPDATE Page 3
The Environmental Practice of Sidley Austin LLP
Our EnvironmentalPractice consists of approximately 40 lawyers who concentrate on environmental and natural resources law. Established more than 35 years ago, our group is now one of the largest environmental practices in the United States, with extensive experience in all aspects of environmental and natural resources law. The depth and range of our practice and the frequency with which we address cutting-edge issues enable us to advise clients quickly and cost-effectively. For further information on our Environmental Practice, please contact David T. Buente (+1 202 736 8111, [email protected]), Robert M. Olian (+1 312 853 7208, [email protected]) or Judith M. Praitis (+1 213 896 6637, [email protected]).
The Energy Practice of Sidley Austin LLP
Sidley has a diversified and global Energy practice. We represent clients in virtually every aspect of the energy industry, including upstream, midstream and downstream oil and gas companies, oilfield service companies, oil and natural gas, refined products and CO2 pipelines, electric utilities, merchant electric transmission companies, independent power producers, alternative energy developers, suppliers and contractors, energy trading companies and the financial institutions that serve companies in all of these industry segments. Our energy practice encompasses all types of transactional, litigation and regulatory matters. Sidley's energy transactional practice includes representing clients in a broad range of mergers and acquisitions, capital markets, project development, project finance and syndicated, structured and master limited partnership financing transactions. Our energy litigation practice includes representation of energy industry clients in all types of federal and state litigation and arbitration proceedings. Sidley's energy regulatory practice includes matters before the Federal Energy Regulatory Commission and state regulatory commissions as well as the U.S. Departments of Energy, Transportation and State.
To receive Sidley Updates, please subscribe at www.sidley.com/subscribe.
BEIJING BOSTON BRUSSELS CENTURY CITY CHICAGO DALLAS GENEVA HONG KONG HOUSTON LONDON LOS ANGELES MUNICH NEW YORK PALO ALTO SAN FRANCISCO SHANGHAI SINGAPORE SYDNEY TOKYO WASHINGTON, D.C.
Sidley and Sidley Austin refer to Sidley Austin LLP and affiliated partnerships as explained at www.sidley.com/disclaimer.