DeWine sues Rover Pipeline for discharges into waterways

Ohio Attorney General Mike DeWine has filed suit against Rover Pipeline LLC for alleged illegal discharges into waterways during construction of a natural-gas pipeline across the state, reports the Columbus Dispatch. The newspaper says DeWine's office filed the complaint, State of Ohio v. Rover Pipeline, LLC, in Stark County Common Pleas County in Canton on behalf of the Ohio Environmental Protection Agency. The lawsuit alleges that Rover violated environmental and clean-water laws by discharging drilling fluids and sediment-laden storm water while building the pipeline, according to the Dispatch. For more, read the full story.

Ohio, Oil & Gas Litigation

Federal court upholds approvals for LNG projects

The Associated Press reports that a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit has upheld U.S. Department of Energy decisions approving three projects to export liquefied natural gas (LNG), including Dominion Energy's export terminal in Cove Point, Maryland that will use natural gas from the Marcellus and Utica shale plays. The news service says the Sierra Club was seeking to overturn approvals for Dominion’s terminal as well as ones in Louisiana and Texas, claiming they would increase air and water pollution and contribute to global warming. But the three-judge panel ruled in a unanimous opinion that the Energy Department fulfilled its legal obligations in approving the projects under the National Environmental Policy Act and other laws. For more, read the full story.

National, Ohio, Oil & Gas Litigation, Pennsylvania, West Virginia

Federal court grants Chesapeake’s motion in royalty dispute

On October 25, 2017, the federal district court for the Northern District of Ohio issued an opinion in Lutz v. Chesapeake Appalachia, LLC, 4:09-cv-2256 (N.D. Ohio 2017) granting Chesapeake’s renewed partial motion for summary judgment concerning Lutz’s allegation of underpayment of royalties on a producing well. The leases at issue contained the following language: “The royalties to be paid by Lessee are: … on gas … produced from said land and sold or used off the premises … the market value at the well of one-eighth of the gas so sold or used, provided that on gas sold at the wells the royalty shall be one-eighth of the amount realized from such sale.” After a lengthy procedural history, the district court certified the question to the Ohio Supreme Court of whether Ohio follows the “at the well” rule or the “marketable product” rule in relation to royalty payments. The “at the well” rule states post-production costs of gas are to be shared proportionately by the working interest and royalty owners, while the “marketable product” rule states all post-production costs must be borne solely by the operator.

The Supreme Court of Ohio – in Lutz v. Chesapeake Appalachia, LLC, 148 Ohio. St.3d 524 (2016) – had declined to answer the at-the-well question, holding: “Under Ohio law, an oil and gas lease is a contract that is subject to the traditional rules of contract construction. Because the rights and remedies of the parties are controlled by the specific language of their lease agreement, we decline to answer the certified question.” After that decision, the district court held that the Ohio Supreme Court – under traditional contract construction principles – would apply the “at the well” rule to the leases at issue, and reject application of the “marketable product” rule. This case will likely affect how working interests and royalty interest holders structure oil and gas leases in the future.

Ohio, Oil & Gas Litigation

Federal judge: Home rule charter banning hydraulic fracturing is preempted by federal, Pennsylvania laws

A federal judge in the Western District of Pennsylvania on September 29, 2017 issued an opinion in Seneca Resources Corporation v. Highland Township, W.D.Pa. No. 16-cv-289 Erie, 2017 U.S. Dist. LEXIS 162629 (Sep. 29, 2017), granting a motion for judgment on the pleadings from Seneca Resources. The Court reviewed a Highland Township Home Rule Charter – approved by voters in a referendum in November 2017 –  that banned certain hydraulic fracturing operations within the township. The Court ultimately determined that the charter was preempted by both federal law and Pennsylvania state law. Further, it held that the charter was an impermissible use of legislative powers, a violation of the company’s First Amendment rights, and a de facto violation of the company’s Fourteenth Amendment substantive due process rights.

Oil & Gas Litigation, Pennsylvania

Appellate Court certifies conflict to Ohio Supreme Court on Ohio Marketable Title Act issue

On September 18, 2017, the Seventh District Court of Appeals issued an entry in Blackstone v. Moore, 7th Dist. Monroe No. 14 MO 0001, granting a motion to certify a conflict to the Ohio Supreme Court involving an important issue under the Ohio Marketable Title Act.  More specifically, the Seventh District determined that its June 2017 decision was in conflict with Duvall v. Hibbs, 5th Dist. No. CA-709, 1983 Ohio App. LEXIS 13042 (June 8, 1983) regarding whether a reference to a mineral reservation in a deed was specific or general pursuant to R.C. 5301.49(A). The Duvall court created a strict, bright-line rule that looked to whether the deed containing the reservation could be located without checking the indices in the county recorder’s office. The Seventh District, however, chose to analyze the issue using a four-factor test that has been followed in other appellate districts (1. the type of mineral right created; 2. the nature of the encumbrance; 3. the original owner of the interest; and 4. whether it referenced the instrument creating the interest).  Check back with ShaleOhio for updates on this case.

Ohio, Oil & Gas Litigation

Landowners file suit to block Mountain Valley Pipeline project

Some landowners in West Virginia and Virginia are trying to head off approval by the Federal Energy Regulatory Commission (FERC) of the Mountain Valley Pipeline by launching a lawsuit in the U.S. District Court for the Western District of Virginia, reports the Gazette-Mail in Charleston, West Virginia. The newspaper says the plaintiffs in Berkley v. Mountain Valley Pipeline LLC seek to block FERC from issuing a certificate approving the pipeline project and giving its developers the ability to use eminent domain to condemn property for its construction. The complaint argues that such an approval by FERC would violate the Fifth Amendment of the U.S. Constitution, which states that private property can not be taken “for public use, without just compensation.”

Oil & Gas Litigation, West Virginia

Athens County judge upholds rejection of oil and gas-related ballot issue

Athens County Common Pleas Court Judge George McCarthy has upheld the county elections board's rejection of an oil and natural gas-related charter initiative for the November 2017 ballot, reports the Athens News. The newspaper says Judge McCarthy ruled the charter proposal did not have the required number of signatures to be placed on the ballot, and also sided with the Athens County Board of Elections that a proposed executive council in the ballot initiative "does not meet Ohio Revised Code requirements for a county executive under an alternative form of government." The News says the charter issue, proposed by the Athens County Bill of Rights Committee, "doubles as an effort to keep oil and gas horizontal hydraulic fracturing out of Athens County." For more, read the full story.

Ohio, Oil & Gas Litigation

Virginia court rules in favor of pipeline company in surveying dispute

The Supreme Court of Virginia has ruled in favor of the company developing the Atlantic Coast Pipeline from West Virginia to North Carolina in a lawsuit involving a landowner who sought to keep surveyors off her property, reports the Associated Press. The news service says that in Palmer v. Atlantic Coast Pipeline LLC, property owner Hazel Palmer argued a Virginia law allowing surveying privileges shouldn't apply because the pipeline company is organized under Delaware law. The Court disagreed, ruling that Palmer's property rights don't allow her to exclude surveyors for the natural gas pipeline. For more, read the full story.

National, Oil & Gas Litigation, West Virginia

West Virginia Supreme Court rules post-production costs can be deducted from royalties

The West Virginia Supreme Court has ruled that natural gas companies can deduct post-production costs from the royalties paid to landowners under oil and gas leases, reports The Associated Press. The news service says the Court, in a 4-1 decision, concluded in Leggett v. EQT Production Company that the intent of West Virginia legislators and language in the state code permit the deduction "of reasonable post-production expenses actually incurred" by the company leasing the oil and gas mineral rights. For more, read the full story.

Oil & Gas Litigation, West Virginia

Ohio Supreme Court affirms Fourth District Court of Appeals, holds that lease did not terminate after energy companies failed to pay minimum annual rental fees

Today, the Ohio Supreme Court issued a ruling that an oil and gas lease in Washington County did not terminate when the energy companies failed to pay the minimum annual rental fees set by the lease. The primary issue before the Court was whether the Bohlens (lessors) have the right to terminate an oil and gas lease when energy companies (lessees) fail to make the minimum annual rental payments provided for in the lease. Click here for a Bricker & Eckler summary of the ruling.

Ohio, Oil & Gas Litigation
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