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Overview of Legal Issues in Marcellus Shale Development

Agricultural Law Resource and Reference Center Ross H. Pifer, J.D., LL.M., Director. Overview of Legal Issues in Marcellus Shale Development. Penn State Ag Council Membership Meeting October 12, 2009. Agricultural Law Resource and Reference Center. Who Needs Legal Information?

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Overview of Legal Issues in Marcellus Shale Development

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  1. Agricultural Law Resource and ReferenceCenter Ross H. Pifer, J.D., LL.M., Director Overview of Legal Issues in Marcellus Shale Development Penn State Ag Council Membership Meeting October 12, 2009

  2. AgriculturalLaw Resource and Reference Center . Who Needs Legal Information? • Owners of Natural Gas Rights • Surface Owners • Private Attorneys • Local Government Officials • State Legislators • Industry / Industry Attorneys • General Public Penn State Ag Council October 12, 2009

  3. AgriculturalLaw Resource and Reference Center . Role of Agricultural Law Center • Presentations • Use of technology • Educational Programs • Pennsylvania Natural Gas Summit – November 16 to 18 • Continuing Legal Education • Publications • Fact sheets • Case summaries • Legislative summaries • Web site – Natural Gas Exploration Resource Area • The Agricultural Law Brief Penn State Ag Council October 12, 2009

  4. AgriculturalLaw Resource and Reference Center . Sources of the Law • Lease Agreement • Statutes • Regulatory Agencies • Court Opinions Penn State Ag Council October 12, 2009

  5. AgriculturalLaw Resource and Reference Center . Sources of the Law • Lease Agreement • Statutes • Regulatory Agencies • Court Opinions Penn State Ag Council October 12, 2009

  6. AgriculturalLaw Resource and Reference Center . Standard Leasing Process • Energy company presents landowner with lease agreement. • Landowner negotiates additional terms to be included as addendum to lease agreement. • Lease agreement will govern nearly all aspects of relationship between landowner and energy company. Penn State Ag Council October 12, 2009

  7. AgriculturalLaw Resource and Reference Center . Contents of Lease Agreement • Payment terms • Bonus • Delay rental • Royalty • Free gas • Conveyance of interest in mineral estate • Restrictions / conditions upon the energy company’s use of the property • Length of lease agreement Penn State Ag Council October 12, 2009

  8. AgriculturalLaw Resource and Reference Center . Sources of the Law • Lease Agreement • Statutes • Regulatory Agencies • Court Opinions Penn State Ag Council October 12, 2009

  9. AgriculturalLaw Resource and Reference Center . PA Oil and Gas Act • Declaration of Purpose – Section 102 • Permit optimal development . . . consistent with protection of health, safety, environment, and property; • Protect safety of employees and facilities; • Protect safety and property of those near development; and • Protect natural resources Penn State Ag Council October 12, 2009

  10. AgriculturalLaw Resource and Reference Center . PA Oil and Gas Act • Specific provisions include: • Permitting • Well location restrictions • Protection of water • Well site restoration • Well plugging • Bonding • Reporting Penn State Ag Council October 12, 2009

  11. AgriculturalLaw Resource and Reference Center . Sources of the Law • Lease Agreement • Statutes • Regulatory Agencies • Court Opinions Penn State Ag Council October 12, 2009

  12. AgriculturalLaw Resource and Reference Center . State Agencies • Department of Environmental Protection (DEP) • Bureau of Oil and Gas Management • Department of Conservation and Natural Resources (DCNR) Penn State Ag Council October 12, 2009

  13. AgriculturalLaw Resource and Reference Center . Federal Agencies • Susquehanna River Basin Commission (SRBC) • Delaware River Basin Commission (DRBC) • Federal Energy Regulatory Commission (FERC) • Environmental Protection Agency (EPA) Penn State Ag Council October 12, 2009

  14. AgriculturalLaw Resource and Reference Center . Sources of the Law • Lease Agreement • Statutes • Regulatory Agencies • Court Opinions Penn State Ag Council October 12, 2009

  15. AgriculturalLaw Resource and Reference Center . Municipal Regulation of Natural Gas Drilling Operations • Pennsylvania Supreme Court rulings • Borough of Oakmont • Restriction on oil and gas wells in R-1 zoning district was not preempted by Oil and Gas Act. • Salem Township • SALDO was preempted by Oil and Gas Act. Penn State Ag Council October 12, 2009

  16. AgriculturalLaw Resource and Reference Center . Minimum Royalty Act litigation • Hundreds, possibly thousands, of landowners seek to terminate their lease agreements. • Issue: Does reduction of royalty to pay for post-production costs violate Pennsylvania minimum royalty statute? Penn State Ag Council October 12, 2009

  17. AgriculturalLaw Resource and Reference Center . Rights of Surface Owner • Belden & Blake Corp. v. DCNR • DCNR could not require company to execute surface use agreement. Penn State Ag Council October 12, 2009

  18. Governments’ Roles in Natural Gas Development Agricultural Law Resource and Reference Center The Agricultural Law Resource and Reference Center Ross Pifer, J.D., LL.M., Director Phone: (814) 865-3723 Email: rpifer@psu.edu Web: www.law.psu.edu/aglaw Penn State Ag Council October 12, 2009

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