Archive for May, 2011

Governor Corbett Signs Senate Bill 265 – Coal/Gas Coordination – Carl Everett, Esq., Saul Ewing LLP

On May 13 Governor Corbett signed legislation amending the Coal and Gas Resource Coordination Act, 58 P.S. §§501-518, the purpose of which is to reconcile competing interests between coal mining and natural gas extraction activities. The key elements of the amendments are as follows:

The definition of “active coal mine” is expanded by deleting current text covering projected and permitted mines plus 1000 feet beyond those boundaries and focusing instead on the workable coal seam shown on the five-year timing map submitted to DEP in connection with new, amended or renewed permits and which is contiguous to the permit area of an operating coal mine. The five year timing map is to include the area of a workable coal seam which may reasonably be expected to be mined during the five year period beyond the projected completion of mining in the currently permitted area.

Timing maps are to be considered confidential except that DEP is required to provide a copy upon request of any person who already operates one or more oil or gas wells or holds a valid permit to drill an oil or gas well and can document a valid existing right to develop the oil or gas under any portion of the timing map.

At currently permitted mines, the mine operator is to provide the current five-year timing map to the department within thirty days after the effective date of enactment. Since the act is effective immediately, the deadline is June 12.

“Operating coal mine” is redefined as that portion of a workable coal seam which is covered by an underground mining permit. The prior definition included expansive text that included coal mines to be established or reestablished as operating coal mines within one year.

“Workable coal seam is redefined as a coal seam in fact being mined or a coal seam which, in the judgment of DEP, can reasonably be expected to be mined by underground methods. The prior definition focused exclusively on coal seams identified by DEP’s Topographical and Geological Survey..

Section 6 has been expanded to address well completion in addition to permit applications and now requires gas well operators, within 60 days of completion of drilling operations, to supply to the coal owner a copy of the portion of any well bore deviation survey between the surface and a point below the deepest known coal seam encountered during drilling. In addition, permit applications under the Oil and Gas Act for gas wells that will penetrate an operating coal mine must include the written consent of the coal mine operator to the proposed well location. If coal rights have been severed from the surface where the well is to be drilled, the applicant must forward a copy of the plat to the coal owner via certified mail regardless of whether the seam is workable.

Section 7 revises the 900 foot minimum distance between a gas well and a workable coal seam to allow the coal operator to consent in writing to a lesser distance. Also, a 2,000 foot minimum distance between well clusters is established. That too can be reduced by written agreement. Wells within the same cluster are not subject to the minimum distance.

“Well cluster” is defined as an area within a well pad intended to host multiple horizontal wells and which comprises an area no greater than 5,000 square feet. The Environmental Quality Board is authorized to promulgate regulations modifying the maximum area of a well cluster based on the Pillar Study update noted below. If the permit applicant and the owner of a workable coal seam can not agree on the spacing of well clusters, either may invoke dispute resolution. If a well cluster will penetrate a workable coal seam that is not part of an active coal mine, the gas well applicant must provide the coal owner with a copy of the plat, and the owner of the coal seam has 15 days to provide recommendations on the location of the new cluster.

The law calls for two studies. The first is a comprehensive evaluation and update of the Joint Coal and Gas Committee Gas Well Pillar Study commissioned in 1956. The second is an independent study to be commissioned by DEP within 60 days of the effective date (approximately July 12) to assess the appropriate pillar size around an active well, an inactive well, a well-cluster, an inactive well-cluster, a plugged well cluster or a plugged well necessary to ensure the integrity of the well, to furnish adequate protection to the workable coal seam and to ensure the safety and protection of coal miners. The study is also to address additional criteria or standards that should be considered by DEP when considering approval of pillars around an oil or gas well which penetrates a workable coal seam. The independent study is to be submitted to DEP within 240 days of May 13 and published in the Pennsylvania Bulletin.

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NY Attorney General Plans DRBC Suit — by Carl Everett, Esq., Saul Ewing LLP

On April 18, New York‘s Attorney General Eric T. Schneiderman announced plans to sue the United States unless a full environmental review of regulations related to gas fracking proposed by the Delaware River Basin Commission (“DRBC”) is performed.  The announcement referred to the National Environmental Policy Act (“NEPA”), which applies to major federal actions affecting the environment.   

 

The DRBC is composed of the governors of New York, New Jersey, Pennsylvania and Delaware plus one presidential appointment.  Decisions are based on majority rule.  A threshold question raised by the possible lawsuit is whether actions by the DRBC are “federal” and thus subject to NEPA.  Thirty years ago, in Delaware Water Emergency Group v. HanslerJudge van Artsdalen questioned whether the DRBC is a federal agency for NEPA purposes.  Noting the co-equal status of Commission members, he wrote, “That DRBC is a federal agency for purposes of NEPA is very doubtful.” 

 

Historically the DRBC appears to have taken the position that NEPA applies to its actions.  For that reason, it is possible that neither the DRBC nor New York will raise that issue.  Somebody should.  If the litigants are free to agree on NEPA applicability, Marcellus Shale development in the northeast portion of the formation that lies withing the DRBC’s jurisdiction could be on hold for years.  The review process is comprehensive, and one can expect a challenge to the ultimate product of that review and likely further delays. 

 

The threatened lawsuit even has potential ramifications for drilling activities in the area subject to the Susquehanna River Basin Commission.  SRBC voting power is like that of DRBC with one federal representative and majority rules.  Currently the SRBC seems preoccupied with Chesapeake Bay issues.  However, drilling opponents might try to argue that SRBC’s failure to regulate is itself a federal action significantly affecting the environment.  One question such a lawsuit would present is whether inaction can be considered action.  If drilling opponents in the SRBC area can establish NEPA applicability, they might halt development in north central PA dead in its tracks.

 

 

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