Sidley Shale and Hydraulic Fracturing Report

Vol. 5, No. 52

Topics discussed in this week’s Report include:

  • Study found local communities benefit economically from hydraulic fracturing.
  • Pennsylvania poised to approve new oil and gas disposal well permits with additional earthquake protection measures.
  • Ohio legislators approved $264 million energy sector tax incentive.
  • Oklahoma proposed new hydraulic fracturing guidelines designed to reduce earthquakes. (more…)

Supreme Court Affirms Insider Trader Ruling in Salman v. United States

On December 6, the Supreme Court unanimously affirmed a Ninth Circuit decision involving the scope of “personal benefit” required to find insider trading under the securities laws.  Salman involved an investment banker who provided inside information about pending mergers to his brother, intending that the brother would benefit from the information.  The brother traded on the tips and (without his brother’s knowledge) tipped additional friends – including Salman – who also traded.  The Court determined the facts of this case fell within the language of the 1983 Dirks decision, which found that a tipper breaches a fiduciary duty by making a gift of confidential information to a “trading relative.”  The Court did not agree with Salman’s position that only a clear pecuniary benefit to the tipper should trigger liability.

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Law Professors File Amicus Brief on De Novo Review, and FERC Files Opposition, in Powhatan/Chen Proceeding

On December 7, a group of ten administrative law professors filed a brief of amici curiae in the Powhatan/Chen proceeding in the U.S. District Court for the Eastern District of Virginia, which criticizes FERC’s position on what constitutes de novo review under Section 31(d) of the Federal Power Act (FPA).  The brief is substantially similar to the brief filed last month on behalf of Barclays in the U.S. District Court for the Eastern District of California, which was denied by Judge Nunley.  According to the brief, “Amici have grave concerns about the legal and policy implications of FERC’s apparent view of what constitutes a district court’s ‘de novo review’ of an agency’s civil penalty assessment.”  The professors argue that FERC’s position runs counter to the traditional understanding of court enforcement actions for civil penalties and cannot be squared with the FPA’s civil penalty assessment mechanism, which gives a defendant the choice of challenging FERC’s penalty assessment in a full trial-type proceeding before either an administrative law judge or a federal district court.

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Energy Enforcement Update

In our final enforcement update for 2016, we cover:

  • TOTAL files reply brief in declaratory judgment action against FERC in Fifth Circuit;
  • Trial concludes in the CFTC’s case against DRW and Wilson; and
  • Judge holds scheduling conference and orders briefing in ETRACOM proceeding.

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Sidley Shale and Hydraulic Fracturing Report

Vol. 5, No. 51

Topics discussed in this week’s Report include:

  • EPA hydraulic fracturing study retracted controversial conclusion.
  • Environmental groups, states intervened to defend BLM flaring rule.
  • Shale gas companies sought incidental take permits for bats.
  • Environmental groups opposed drilling near New Mexico site.
  • Oklahoma assessing possible link between hydraulic  fracturing and recent quakes.
  • New law opened Quebec to hydraulic fracturing.
  • Study found sharp rise in atmospheric methane primarily from agriculture in tropics.

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Sidley Shale and Hydraulic Fracturing Report

Vol. 5, No. 50

Topics discussed in this week’s Report include:

  • EPA expected to release hydraulic fracturing report, although an investigative report has raised questions.
  • Environmental groups moved to intervene in challenge to BLM’s methane rule.
  • Oklahoma: Class action lawsuit filed against oil and gas companies over seismic activity near Cushing.

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Energy Enforcement Update

This week’s enforcement update covers the following:

  • FERC Staff issues notice of alleged violations against GDF SUEZ;
  • FERC files motion to affirm civil penalties against ETRACOM; and
  • FERC files brief in TOTAL appeal proceeding in Fifth Circuit.

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Judge Denies DRW and Wilson Motion for Reconsideration, CFTC Files Pretrial Memorandum, and Trial Begins

The bench trial in the CFTC’s case against DRW is underway. On November 28, Judge Richard Sullivan denied the motions to strike testimony filed by the CFTC in its market manipulation case against defendants DRW Investments, LLC and Donald R. Wilson pending in the U.S. District Court for the Southern District of New York. In denying the motion, Judge Sullivan noted that the CFTC failed to submit its motion by the November 4 deadline to file motions in limine and failed to request leave to file this motion at the pretrial conference. In addition, on November 29, the CFTC filed its response to the defendants’ motion to exclude portions of a CFTC expert declaration, which Judge Sullivan granted in part. The trial in this proceeding began on December 1. The parties gave opening statements, and the court heard testimony from a number of DRW traders, including Wilson.

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Sidley Shale and Hydraulic Fracturing Report

Vol. 5, No. 49

Topics discussed in this week’s Report include:

  • Army Corps decided against granting an easement to Dakota Access pipeline.
  • EPA updated greenhouse gas reporting requirements for the oil and gas industry.
  • EPA extended rulemaking process regarding compliance deadline for discharge of wastewater from unconventional oil and gas production facilities to POTWs.
  • Study concluded that Oklahoma earthquakes could mostly cease within several years.

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PJM Market Monitor Files Complaint Over Approved PJM Capacity Market Rule Change

On November 22, PJM’s Independent Market Monitor (IMM) filed a complaint regarding a rule change to PJM’s capacity market approved by the PJM Markets and Reliability Committee (MRC).  At the November 17 MRC meeting, the MRC approved—over objections from the IMM—changes to PJM’s Manual 18 to delete language that imposed conditions on early replacement transactions.  In response, the IMM filed a complaint at FERC arguing that the modified rules are unjust and unreasonable, inconsistent with competitive markets, and allow behavior that defeats a well-functioning market.  The IMM argues that the modified rules “provide incentives to offer paper capacity in the PJM capacity market and to suppress market prices for actual physical capacity in the PJM market.”  According to the IMM, “The modified rules allow behavior that would otherwise be considered prohibited market manipulation because behavior permitted under the modified rules defeats PJM’s well functioning market for physical capacity.”

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