On January 25, 2017, the Sixth Circuit granted a motion to hold in abeyance litigation regarding U.S. EPA’s rule defining “waters of the United States” (WOTUS) pending the Supreme Court’s review of whether the Sixth Circuit has jurisdiction to hear the case. The Supreme Court granted certiorari to settle the jurisdictional issue on January 13, 2017.
On May 12, 2017, EPA’s first rule regulating chemical substances produced at the nanoscale will take effect as part of the Toxic Substances Control Act (“TSCA”). The Nanoscale Rule, part of TSCA Section 8(a), will require all current and future manufacturers and processors to report to EPA when such nanoscale chemical substances are produced in new forms not previously reported to the EPA. Anyone who has produced a new form of a nanoscale chemical substance at any time during the three years prior to May 12, 2017, will have to report to EPA before May 12, 2018 (a one time only report will be required for anyone intending to process a new form after the effective date of the rule – this report will be required 135 days before processing). TSCA recently underwent a major revision through the Frank R. Lautenberg Chemical Safety for the 21st Century Act (“Act”). The Act provides for civil penalties of up to $37,500 per violation, per day, under TSCA. Accordingly, if you are a manufacturer or processor of nanoscale chemical substances, you need to be focused on compliance with these new pending obligations and tuned-in to any new EPA guidance on the Nanoscale Rule before EPA enforcement efforts begin.
Today, in its Order List, the Supreme Court of the United States denied certiorari in Jon D. Walker, Jr. v. Patricia J. Shondrick-Nau, Executrix of the Estate of John R. Noon and Successor Trustee of the John R. Noon Trust. Walker involved interpretation and application of the Ohio Dormant Mineral Act (R.C. § 5301.56) (the “DMA“), and was most recently decided by the Supreme Court of Ohio.
The Supreme Court of Ohio Decision
In 2012, Walker filed a complaint to have a dormant mineral interest declared abandoned pursuant to the 1989 version of the DMA (the “1989 DMA“). Prior to the filing of his complaint, certain lower courts in Ohio had held that the 1989 DMA automatically abandoned dormant mineral interests when the record revealed that none of the six “savings events” occurred from March 22, 1969 to March 22, 1992. In concluding that the dormant mineral interest was not abandoned, the Supreme Court of Ohio held that the 1989 DMA was not self-executing; instead, the 1989 DMA created only a conclusive presumption as to abandonment. The Court further held that the abandonment procedure set forth in the 2006 version of the DMA (the “2006 DMA“) applies to all claims to abandon dormant mineral interests asserted after June 30, 2006. The Supreme Court of Ohio’s decision in Corban v. Chesapeake Exploration, L.L.C., et al., was the basis for these holdings. Although Walker attempted to abandon the dormant mineral interest by complying with the abandonment procedure set forth in the 2006 DMA, the holder of the dormant mineral interest filed a claim to preserve in response. As such, the DMA did not operate to abandon the dormant mineral interest.
Appeal to the Supreme Court of the United States
Walker subsequently filed a petition for a writ of certiorari with the Supreme Court of the United States. In his petition, Walker argued that the dormant mineral interest was abandoned and had vested in him on March 22, 1992, pursuant to the 1989 DMA. Walker still contended that the 1989 DMA was self-executing citing Justice Pfeifer’s dissenting opinion in Corban and the Supreme Court of the United States’ decision in Texaco v. Short. Texaco involved interpretation of Indiana’s Dormant Mineral Interests Act, which Act was, in fact, self-executing in nature and held to pass constitutional muster. Moreover, Walker advanced the proposition that the 2006 DMA is to be applied prospectively only, and application of the 2006 DMA to an already abandoned and vested dormant mineral interest was a violation of due process. Today, the Court denied certiorari and Walker (and Corban) remains the law in Ohio.
On January 11, 2017, the U.S. Fish and Wildlife Service (“Service”) published a final rule listing the Rusty Patched Bumble Bee as an endangered species under the Endangered Species Act of the 1973 (“ESA”). Pursuant to Section 4 of the ESA, the Service is required to make listing decisions – relying on the best scientific and commercial data available – based on (a) the present or threatened destruction, modification or curtailment of habitat, (b) species overutilization, (c) disease or predation, (d) inadequate existing regulatory mechanisms, or (e) other natural or manmade factors affecting the species continued existence. The Service’s decision to list the bee as endangered is based on a study of the species’ overall viability in which the Service found that the resiliency, representation, and redundancy of the species have all declined since the late 1990s and are projected to decline over the next several decades. The study showed an 88 percent decline in bee populations along with a decrease in range and distribution since 2000. The Service sites several past and ongoing stressors as likely causes of the decline in the bee’s population, including disease, pesticides, and habitat loss.
The final rule becomes effective on February 10, 2017.
In May of 2016, environmental groups sued the U.S. E.P.A., alleging that the agency failed to review and revise its regulations and state waste management plan guidelines regarding waste materials from oil and gas production as required by the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq. On December 28, 2016, the court approved a consent decree between the parties that requires the agency to review its existing regulations and guidelines, and by March 15, 2019, propose revisions to these items or determine that such revisions are unnecessary.
Read the consent decree here.
Effective November, 21, 2016, the U.S. Fish and Wildlife Service (USFWS) revised its guiding 1981 Mitigation Policy to provide a new structure for mitigation during permitting in order to diminish the impact of private development upon fish, wildlife, plants and their habitats. The policy revision’s stated purpose is to replace project-by-project or single-source mitigation with the use of landscape-scale mitigation (which applies a hierarchy for impacts to resources and their values, services, and functions), consistent with the Presidential Memorandum on Mitigating Impacts on Natural Resources from Development and Encouraging Related Private Investment and the Secretary of Interior’s Order 3330, “Improving Mitigation Policies and Practices of the Department of the Interior.” According to the USFWS, the overarching goal of landscape-scale mitigation should be a “net gain” in conservation outcome, or, at the very least, “no net loss” of resources, their value, services, and functions resulting from proposed action. However, development supporters criticize the policy for its failure to define “net benefit’ and “no net loss” which creates uncertainty that could create bureaucratic delays in permitting.
Ohio producers will soon be able to transport more natural gas out of the state. In a recent article, the U.S. Energy Information Administration (EIA) summarized several pipeline projects that are in various stages of development. According to the EIA, these projects could add an additional 6.8 billion cubic feet per day (Bcf/d) of takeaway capacity from the Utica region by the end of 2018. Click here to read the article.
In a recent decision, Harper v. Muskingum Watershed Conservancy Dist., the Sixth Circuit Court of Appeals dismissed a qui tam action brought under the False Claims Act (FCA), 31 U.S.C. 3729, against the Muskingum Watershed Conservancy District (MWCD). MWCD received property through a deed from the United States government. The deed contained restrictions providing that the property would revert to the United States if MWCD alienated it or stopped using it for recreation, conservation, or reservoir-development purposes. Between 2011 and 2014, MWCD executed several oil and gas leases on the property. The relators were several Ohio residents who alleged that by entering into the leases, MWCD had triggered the reversionary provisions of the deed, and that its continued possession of the property violated provisions of the FCA concerning unlawful retention of government property. On November 21, 2016, the Sixth Circuit affirmed the dismissal of the lawsuit, concluding that relators relied on provisions of the FCA that contained scienter requirements, and that relators’ complaint failed to allege that MWCD knowingly committed any of the alleged violations.
Click here to read the decision.
On November 2nd, the Supreme Court of Ohio issued its decision in Lutz v. Chesapeake Appalachia, L.L.C. In its opinion, the Court declined to answer a certified question from the Northern District of Ohio regarding whether Ohio follows the “at the well” rule or the “marketable product” theory with respect to post-production costs, leaving it up to the federal court to interpret the parties’ contracts under traditional cannons of contract construction.
To learn more about this decision, read our Client Alert.
The Superior Court of Pennsylvania recently upheld a lower court decision finding that Atlas Resources, LLC (“Atlas”) qualified as a statutory employer under Section 302(a) of the Workers Compensation Act (the “Act”). As a statutory employer, Atlas is entitled to immunity from the wrongful death suit brought by the estate of a rig worker who was killed while working on the drilling rig. The deceased rig worker was an employee of a drilling company subcontracted by Atlas for the “removal, excavation or drilling of . . . minerals” on land subject to an oil and gas lease taken by Atlas. The drilling company paid the workers’ compensation benefits to the decedent’s beneficiary after the accident. Even though compensation payment was not made by Atlas, the Superior Court held that Atlas was still entitled to the benefit of immunity since the benefit is solely dependent upon a party’s qualification as the statutory employer under the Act – regardless of whether it was the party who actually paid the compensation.
The Superior Court’s interpretation of the plain meaning of Sections 302(a) and 203 of the Act is consistent with prior Pennsylvania court decisions; however, oil and gas operators should be aware of the growing sentiment for the Pennsylvania legislature to reconsider the Act. This call for change was echoed by the Superior Court in its decision. The Superior Court opined that the Act should not permit a general contractor to utilize the benefits of immunity unless it also undertakes the duties intended by the Act. General contractors, including oil and gas operators, should remain vigilant as the calls for legislative intervention increase.
Click here to read the full decision.