18 October 2016

Sidley Shale and Hydraulic Fracturing Report

Vol. 5, No. 42

Topics discussed in this week’s Report include:

  • Railroad industry criticizes DOT’s rules for oil and ethanol trains in response to GAO report.
  • FERC approves second LNG export plant for Cheniere Energy.
  • Pennsylvania: New hydraulic fracturing regulations take effect.
  • Pennsylvania: State senators seek to intervene in lawsuit challenging Delaware River Basin Commission’s authority to regulate hydraulic fracturing.

Federal

Railroad industry criticizes DOT’s rules for oil and ethanol trains in response to GAO report. The Association of American Railroads renewed its criticism of the Department of Transportation’s (DOT) new braking regulations for trains carrying oil and ethanol after the Government Accountability Office (GAO) issued a report criticizing the rule. The GAO report asserted that DOT’s modeling in support of the rule lacked transparency and noted that independent researchers would have trouble replicating DOT’s findings. While the Association of American Railroads was largely supportive of DOT’s 2015 rail safety rule, it argued that the requirement to install costly electronically controlled pneumatic brakes would provide only marginal improvements in rail safety.

FERC approves second LNG export plant for Cheniere Energy. On Oct. 12, the Federal Energy Regulatory Commission (FERC) approved a second liquefied natural gas (LNG) export plant at Cheniere Energy Inc.’s Sabine Pass facility in Louisiana. Cheniere Energy began exporting LNG earlier this year. FERC’s approval will allow Cheniere energy to double its LNG export capacity to 1.3 billion cubic feet per day. Cheniere intends to construct two additional LNG export plants at the Sabine Pass facility. LNG exports are expected to reduce excess supply of natural gas in the United States.

States

Pennsylvania: New hydraulic fracturing regulations take effect. On Oct. 7, the Pennsylvania Department of Environmental Protection’s (DEP) Chapter 78(a) regulations for hydraulic fracturing were published in the Pennsylvania Bulletin and became effective immediately. Among other things, the new regulations permit DEP to impose additional protective measures on hydraulic fracturing operations near schools, parks, forests and other public resources; require remediation if water supplies are degraded as a result of oil and natural gas development; impose additional requirements on the storage of flowback and produced water at well sites; and largely prohibit the disposal of drill cuttings at well sites. Before issuing the regulations, DEP held more than two dozen public meetings and received more than 28,000 comments. On Oct. 13, the Marcellus Shale Coalition filed a lawsuit challenging the new regulations.

Pennsylvania: State senators seek to intervene in lawsuit challenging Delaware River Basin Commission’s authority to regulate hydraulic fracturing. Sens. Joseph B. Scarnati (R), Lisa Baker (R) and Gene Yaw (R) filed a motion to intervene as plaintiffs in Wayne Land and Mineral Group LLC’s lawsuit challenging the Delaware River Basin Commission’s (DRBC) authority to require approval of hydraulic fracturing activities within the Delaware River Basin. In the underlying lawsuit, the plaintiff alleges that its proposed well site, of which 75 acres are located within the basin, is not a “project” that is subject to DRBC approval. Echoing the plaintiff’s allegations, the senators contend that the DRBC has improperly interpreted its authority under the Delaware River Basin Compact and has usurped the Commonwealth of Pennsylvania’s authority to regulate and approve oil and natural gas development in the state. They further allege that their interests are broader than those of the Wayne Land and Mineral Group and would remain even if the DRBC approved the well at issue.

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