Power & Pipes

FERC, CFTC, and State Energy Law Developments

The Delaware River Basin Commission (DRBC) on February 25, 2021, approved a new regulation formally prohibiting high-volume hydraulic fracturing (HVHF), or fracking, in the Delaware River Basin. The final rule makes permanent a drilling moratorium imposed by the DRBC in 2010.

In a release announcing the ban, the DRBC declared that the hydraulic fracturing ban was imposed “to control future pollution, protect the public health and preserve the waters of the Basin” for uses outlined in the DRBC’s Comprehensive Plan and Water Code. The DRBC further noted that it considered public comments following publication of the draft regulation, along with “additional scientific and technical literature and reports, studies, findings and conclusions of other government agencies on the impacts of HVHF on water resources.”

The governors of the DRBC’s four basin states—New York Governor Andrew Cuomo, Pennsylvania Governor Tom Wolf, Delaware Governor John Carney, and New Jersey Governor Phil Murphy—voted in favor of the resolution, while the federal DRBC member abstained in light of the recent White House administration transition.

The move largely affects drilling in northeastern Pennsylvania counties sitting on the Marcellus Shale natural gas field. Delaware and New Jersey are not natural gas producers, and fracking is already banned across the State of New York.

In a separate resolution adopted by unanimous vote, the DRBC commissioners directed DRBC staff to develop and propose amendments to the Comprehensive Plan and Water Code to update regulations concerning inter-basin transfers of water and wastewater. The amendments will impact the drilling industry’s use of river basin water for fracking activities outside the region.

Ban Already Faces Legal Challenges

Landowners and Republican Pennsylvania lawmakers have filed legal challenges to the drilling moratorium as far back as 2016 and as recently as January of this year.

In a declaratory judgment action slated for trial in October in the US District Court for the Middle District of Pennsylvania, a Wayne County, Pennsylvania, landowner group alleges that the DRBC lacks authority under the Delaware River Basin Compact to review and approve a natural gas well pad, a gas well, and related facilities and associated activities on the landowners’ property in the Delaware River Basin. The challenge, filed in May 2016, turns on the meaning of the word “project” under the Compact and whether the landowner group’s plans constitute a “project having a substantial effect on the water resources of the basin,” such that they are subject to DRBC review and approval. Wayne Land & Mineral Grp., LLC v. Del. River Basin Comm’n, 3:16-cv-00897 (M.D. Pa. 2016).

In a more recent suit filed in January by the Pennsylvania Republican Caucus and two state senators, the moratorium (now a ban) faces claims that it usurps the Pennsylvania General Assembly’s authority to make laws managing the state’s resources. The suit also contends that the DRBC’s ban amounts to an unconstitutional taking of property from Pennsylvania mineral rights owners and from taxing authorities. Yaw, et al. v. Del. River Basin Comm’n, 2:21-cv-00119 (E.D. Pa. 2021).