Panic Street Lawyer: Not the last splash

Sunday, 05 May 2013 06:00 AM Written by  Jay Hornack

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Hydraulic fracturing involves the use of liquid pressure to create fractures in underground rock that allow oil and natural gas it contains to escape and flow out of a well. While fracturing fluid includes sand and chemicals, it consists primarily of water.

There have been many articles written about gas drilling lately, and mine today is far from the final word on the subject. Some articles deal with hazards associated with drilling.

In Pennsylvania, one of the risks posed by this modern energy-related activity is connected to the Commonwealth’s oil and gas drilling history. For almost 100 years following the drilling of the first commercial well in Titusville in 1859, there was no state requirement that operators report well locations. Pennsylvania’s Department of Environment Protection (DEP) currently estimates close to 200,000 “lost” wells which, if methane migrates to the surface because a well is unplugged, can make modern drilling dangerous. Eventually, 1984 legislation required drillers in Pennsylvania to register their wells and – if a company or landowner owned or made money off a well after 1979 -- to plug inactive oil and gas wells with cement.

Pennsylvania courts are also weighing in on issues related to drilling. For example, on April 24th the state Supreme Court ruled on the question of whether rock and the natural gas contained therein were “minerals” for purposes of deed reservations. The decision in Butler v. Charles Powers Estate reminded me of the time I relied on Dutch jurist Hugo Grotius’ De Jure Belli et Pacis (1625) to argue, in a 1986 federal court case, that the Commonwealth of Pennsylvania (and its instrumentalities) possessed a reversionary interest in all real property within its borders. It was on that basis that my municipal authority client sought an injunction, to prevent waste associated with an announced plant closing as the authority prepared to resume its ownership interest in the plant’s entire assembled economic unit (see footnote 33 here).

Here is a look at two more law-related drilling subjects in the 2010s that resulted in more “flashbacks” for me to Pennsylvania in the 1980s.

Environmental Quid Pro Quo

20130505pgpz dukelakedame150The lake side view of the dam that held back Duke Lake in Richhill, Greene County. Pete Zapadka/Post-GazetteOne headline last week announced the settlement of a 2008 lawsuit brought by the Pennsylvania Department of Conservation and Natural Resources (DCNR) and Consol Energy by proclaiming: “Consol agrees to replace Greene County dam.” Indeed, Consol agreed to pay the state $36 million to cover the costs of rebuilding Duke Lake Dam in Ryerson Station State Park by the summer of 2017 (DCNR had alleged that Consol’s Bailey Mine caused the dam – a 1½ hour drive southwest of Pittsburgh -- to crack in 2005).

But the settlement also allows Consol to collect natural gas under the park by horizontal drilling and then constructing an as yet undetermined number of Marcellus Shale gas wells located outside the park (the agreement also allows Consol to mine in a seam of coal under the eastern end of the park). In hockey parlance, it looks to me like when a team committing the only major penalty in an on-ice scuffle somehow ends up getting a man-advantage power play out of it (here is another story on the agreement that does not “bury the lead” in the headline).

The negotiations which took place between a government department that is charged with conserving natural resources and a corporation employing thousands of workers brought to mind a consent decree reached between the U.S. Environmental Protection Agency and U.S. Steel. When 1981 amendments to the Clean Air Act allowed for the diversion of investment capital from pollution control equipment to production modernization, my steelworkers’ local union client tried to intervene in a 1983 enforcement case and argue that the amendments required company proof of reduced environmental expenditures equal to increased steelmaking expenditures at their plant. The court rejected this type of union intervention (the plant in question, the historic U.S. Steel Homestead Works, is now “The Waterfront”).

Eminent Domain

Last month it was reported that one gas company had filed two federal eminent domain lawsuits, demanding access to land for pipeline projects in Allegheny County as well as in counties north and east of Pittsburgh. Private property owners have been sued by a private energy company, which has the power of eminent domain thanks to the federal Natural Gas Act.

20120505wap versaillesgaswellsvents150A graphic depicting methane gas wells and vents around the Pittsburgh suburb of Versailles borough at a 2007 meeting on remediation plans. Keith Srakocic/Associated PressThe Fifth Amendment prohibits the taking of private property for public use without just compensation for the owner. Back at the time of my client’s 1986 lawsuit, there was legal support for the proposition that an industrial development authority could condemn the property of one private owner and transfer it to another private owner, as long as it was for a public purpose. Further support was later provided by the United States Supreme Court in its 2005 Kelo decision. Ultimately, my client’s lawsuit to take the Union Switch and Signal plant in Swissvale became bogged down in a jurisdiction dispute and then failed to raise the just compensation (the Union Switch and Signal property is now another shopping center).

Kelo’s Fifth Amendment challenge was litigated by the Institute for Justice, a national law firm which considers “economic development as public purpose” to be an example of “eminent domain abuse.” Looking over the IJ list of current “eminent domain abuse” cases, it does not appear that they have come to the rescue of our Pennsylvania gas pipeline defendants.

In order to conclude with a clue to this week’s “Hidden PSL Title Reference” mystery, I need to go back to the aforementioned 200,000 unaccounted for wells. Gene Pine, head of the DEP’s “Abandoned and Orphaned Well Program,” said that they sometimes find artifacts when they find an old well. StateImpact Pennsylvania reports that:

…[w]hen early drillers did plug their wells before moving on, they tended to do it with whatever debris was laying around. They would shove logs down the holes, or stuff bushes into them. Pine also says he has found cannonballs in wells…

I freely admit that I thought of that last finding first when the Breeders performed this second song from their second album live at Mr. Smalls Theatre Friday night:

(Top image: A pumping truck is seen near the well where pumps move a brine water below the surface in a hydraulic fracturing process to release natural gas from shale deposits in Zelienople, Pa. Keith Srakocic/Associated Press)

The Panic Street Lawyer is a personal opinion column by attorney Jay Hornack. Contact him right here at This email address is being protected from spambots. You need JavaScript enabled to view it. and follow Jay on Twitter: @panicstlawyer

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