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Pa Environmental Hearing Board Tosses First Utica Conservation Act Application

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Hilcorp Energy Company filed the first application for spacing orders under Pennsylvania's 1960s vintage Oil and Gas Conservation Law affecting Utica shale operations with the Pennsylvania Department of Environmental Protection (PADEP) on July 17, 2013.  In a step that was, at best, baffling to many experienced observers, PADEP returned Hilcorp's filing and indicated that the application should be filed with Pennsylvania's Environmental Hearing Board (EHB).  Hilcorp followed PADEP's direction and refiled its application with the EHB.  Apparently also baffled by PADEP's action, the EHB required the parties to brief and to argue why they thought the EHB had jurisdiction over Conservation Law proceedings.  The parties complied.  On November 20, 2013, the EHB ruled:

  1. The Pennsylvania Environmental Hearing Board does not have Original Jurisdiction to issue well spacing orders pursuant to the Conservation Law, the implementing regulations set forth at 25 Pa. Code Chapter 79, and the Environmental Hearing Board Act.
  2. Such requests are required to be submitted to the Pennsylvania Department of Environmental Protection for its consideration.

Read the entire opinion.

This case presents yet another example of the unique economic and operational burdens borne by energy companies seeking to do business in Pennsylvania as the result of the Commonwealth's less developed oil and gas jurisprudence and regulatory regime.  In a concurring opinion, EHB Judge Richard P. Mather, Sr. referred to PADEP's Memorandum of Law as "Orwellian" concluding that PADEP was attempting "to ignore or rewrite the Department's forty-two year regulatory history of its implementation of the Conservation Law."

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