Babst Calland: Pennsylvania Environmental Hearing Board Dismisses Request To Establish Well Spacing And Drilling Units

Babst Calland: Pennsylvania Environmental Hearing Board Dismisses Request To Establish Well Spacing And Drilling Units

By Sean M. McGovern |

On August 26, 2013, Hilcorp Energy Company (Hilcorp) filed a complaint and application requesting that the Pennsylvania Environmental Hearing Board (PAEHB) issue an order to establish well spacing and drilling units pursuant to the Oil and Gas Conservation Law of 1961 for a 3,267 acre reservoir of natural gas in the Utica-Point Pleasant formation beneath Mercer and Lawrence counties, known as the “Pulaski Accumulation”, since Hilcorp was unable to obtain leases from all property owners in this parcel.  After conducting a prehearing conference and considering legal memoranda by the Pennsylvania Department of Environmental Protection (PADEP) and Hilcorp regarding whether the PAEHB had original jurisdiction to issue well spacing and drilling unit orders under the Oil and Gas Conservation Law, the PAEHB’s Chief Judge Renwand issued an opinion and order on November 20, 2013 dismissing Hilcorp’s well spacing and drilling unit application because the PADEP, and not the PAEHB, has original jurisdiction to issue well spacing and drilling unit orders under the Oil and Gas Conservation Law.  Chief Judge Renwand’s opinion noted that the Oil and Gas Conservation Commission, the since-abolished entity established by the Oil and Gas Conservation Law to issue well spacing and drilling unit orders, “was a very specialized and technical agency” with the “power to file enforcement actions”, issue permits, hold public hearings, and conduct other regulatory type actions.  According to Chief Judge Renwand, these powers, duties, and responsibilities of the former Oil and Gas Conservation Commission are analogous to the current powers, duties, and responsibilities of the PADEP and not related to the PAEHB’s role “as an independent quasi-judicial agency” that is “completely independent of the [former, now PADEP] Department of Environmental Resources.”  Judge Mather wrote a concurring opinion noting that the PADEP currently has “effective and binding regulations” at 25 Pa. Code Chapter 79 that implement the Oil and Gas Conservation Law and direct the PADEP “to issue orders establishing well spacing and drilling units, in the first instance, that can then be appealed to the Board.”

Copyright 2013 • Babst, Calland, Clements and Zomnir, P.C. • Two Gateway Center, Pittsburgh, PA 15222 • 412-394-5400 • Administrative Watch is privately distributed by Babst, Calland, Clements and Zomnir, P.C., for the general information of its clients, friends and readers. It is not designed to be, nor should it be considered or used as, the sole source of analyzing and resolving legal problems. If you have, or think you may have, a legal problem or issue relating to any of the matters discussed in the Administrative Watch, consult legal counsel.

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