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Pennsylvania Company Sues DRBC, Challenges Authority to Regulate NatGas Development

A small Northeast Pennsylvania-based company has stepped up to challenge the Delaware River Basin Commission's (DRBC) longstanding ban on horizontal hydraulic fracturing in the 13,539-square mile watershed, arguing in a lawsuit filed in federal court this month that it lacks authority to regulate oil and natural gas development.

Wayne Land and Mineral Group (WLMG) LLC filed its lawsuit in the U.S. District Court for the Middle District of Pennsylvania on May 17, arguing that DRBC is impeding the development of private land and appeasing environmental groups opposed to oil and gas produced by unconventional drilling. It said the commission "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 WLMG's property in the Delaware River Basin."

The commission, WLMG said, is "seeking to placate those state governments and special interest groups opposed to natural gas development" and said it has "declared all natural gas well pads and related facilities targeting shale formations in the basin" as projects it will review.

"The commission, purporting to interpret and rely on Section 3.8 of the compact, claims discretionary authority to review, approve and thereby regulate nearly all forms of human activity in the basin, including the use of private land for residential, commercial and industrial purposes," the lawsuit said. "In addition to asserting that well pads and related facilities are projects that it must approve before they are constructed, the commission has announced that it will not review applications for well pads and related facilities, and associated activities, until it adopts governing regulations.

"This moratorium, which amounts to a ban on the lawful use of land that cannot be remedied at the ballot box, has been in effect since 2010."

The DRBC decided in 2009 that all gas drilling in the basin needed to be reviewed, saying it would not approve any development until it adopted new rules governing the industry (see Daily GPIJune 1, 2009). In 2010, it decided to postpone the review of natural gas development and has failed to act on adopting new rules, leaving in place a de facto moratorium.

In a statement, DRBC said it "intends to defend its authority under the Delaware River Basin Compact," and added that it has no further comment about the lawsuit at this time. The U.S. Congress approved the compact, an agreement among the United States, New York, Pennsylvania, New Jersey and Delaware, in 1961 to better protect the the Delaware River watershed. Pennsylvania is a member of seven other interstate river basin organizations.

WLMG, which state records show was established in September 2015, owns about 180 acres of land in Wayne County, PA, where it is headquartered. Seventy-five of those acres are within the river basin, the company said. According to its lawsuit, the company acquired the property last year with an intent to explore for, extract and sell natural gas from shale formations underneath the property.

It said it plans to build an access road and well pad on the property before drilling an exploratory well.

The company said the facilities would be designed and operated to produce natural gas and not for the "conservation, utilization, control, development or management of water resources," as the commission oversees. WLMG said any water used at the site would be obtained from "properly licensed and approved sources."

The company wants more clarity about what DRBC has authority to regulate. The Pennsylvania Department of Environmental Protection won't issue a drilling permit until DRBC approves development.

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