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Ion Geophysical Corporation v. Hempfield Township

United States District Court, W.D. Pennsylvania

April 10, 2014



MAURICE B. COHILL, Jr., Senior District Judge.

On March 27, 2014, Plaintiff ION Geophysical Corporation filed this Declaratory Judgment action against Defendant Hempfield Township seeking relief from this Court that would, inter alia, permit ION to conduct seismic testing in Hempfield Township and conversely prohibit the Township from interfering with ION's operations in conducting seismic testing. Along with its Complaint, ION also filed a Motion for Temporary Restraining Order and Preliminary Injunction seeking to enjoin the Township from interfering with the proposed operations of ION in conducting seismic testing in Hempfield Township. ECF No. 2. Underlying this action is the state of law in the Commonwealth of Pennsylvania regarding the exploitation and recovery of natural gas in the geological formation known as the Marcellus Shale Formation relative to environmental and habitability concerns of those living in such areas. As both parties acknowledge, the state of the law is in flux.

A hearing to determine if a preliminary injunction should issue was held before this Court on April 2, and April 3, 2014. Oral argument was held on April 7, 2014, and this matter is now ripe for resolution. For the reasons that follow we will grant ION's motion for a preliminary injunction.

At the hearing both sides presented testimony and evidence. ION presented testimony from Ray Wall, an Operations Supervisor for ION, Joe Brown, Project Manager for Cougar Land Services, a subcontractor to ION, and Simon Stockwell, a Geophysicist was permitted to testify an expert in the area of seismic testing. The Township presented testimony from Leslie J. Mlakar, Esquire, the Solicitor for Hempfield Township, Scott Avolio, Esquire, Andrew L. Walz, the Hempfield Township Manager, and Thomas Logan, a Hempfield Township property owner opposed to the seismic testing.

We found all witnesses to be credible and professional in their presentation. Although the Township cross-examined ION's witnesses, the cross-examination was not aimed at discrediting the testimony as to ION's general operations, its method of obtaining a variety of permits, or method in conducting the seismic testing. The only factual dispute, which we need not decide, was whether the Township had initially indicated to ION that it would enter into a seismic agreement and then later backed out. That is immaterial to the present posture of the case. Legal issues to be decided by the Court are all that remain. The basic issue here is whether a township can prohibit seismic testing on a township road. Counsel for both sides prepared helpful briefs on short notice and presented excellent oral arguments.

I. Relevant Factual Background

ION Geophysical Corporation is a Delaware Corporation with its principal place of business in Houston, Texas. Hempfield Township is a Second Class Township in Westmoreland County, Pennsylvania, with offices located in Greensburg, Pennsylvania. ION is in the business of conducting seismic testing to assist oil and gas operators in locating hydrocarbons below the earth's surface. ION has contracted with oil and gas operators to perform seismic surveys that require the collection of data in several municipalities, townships, and boroughs located in Allegheny, Westmoreland, and Fayette Counties.

ION has contracted for three separate projects in Westmoreland County. The first project is called GroundhogSCAN. This project covers approximately 270 square miles, none of which is in Hempfield Township, and it has been completed. The second project is called GroundhogSCAN SOUTH. It covers approximately 100 square miles, and it too is completed. Nine square miles of the GroundhogSCAN SOUTH project is located in Hempfield Township. The final project, and reason this action was filed, is called GreensburgSCAN.

The GreensburgSCAN project covers approximately 115 square miles, with approximately 28 square miles of the project located in Hempfield Township. According to Ray Wall, an Operations Supervisor for ION, this project is ongoing, and seismic testing in Hempfield Township is set to begin no later than April 23, 2014.

ION submitted exhibits to show that it has obtained numerous surface permits and mineral permits for the entire project area of the GreensburgSCAN. Ex. A1 & A2. In addition, ION has obtained 313 surface permits from property owners located in Hempfield Township. Ex. B. ION's evidence also demonstrated that it has obtained a Blasting Activity Permit from the Pennsylvania Department of Environmental Protection (Ex. C), a Highway Occupancy Permit from the Pennsylvania Department of Transportation (Ex. D-1), and a Permit to use Westmoreland County roads from the Westmoreland County Engineer (Ex. D-2).

As part of the project ION also intends to use Hempfield Township roads to conduct seismic testing. Testimony indicated that the seismic testing will be performed by truck located on the road using the "Vibroseis, " or vibratory truck, method.

ION contracted with Cougar Land Services to assist ION in obtaining necessary permits, including permits for use of Hempfield Township roads. Joe Brown, a project manager with Cougar Land Services, testified that he initially contacted the Hempfield Assistant Township Supervisor, Bruce Beitel, in the fall of 2013 to discuss ION's use of the Township's roads for seismic testing. Mr. Beitel reported this contact in an email to the Township Manager, Andrew Walz. Email from Beitel to Walz and L. Dellera, 12/16/2013, attached as part of Ex. 3. Mr. Beitel explained that Mr. Brown contacted him about seismic testing on Hempfield Township roads and asked whether there were any road requirements. Id . Mr. Brown then followed up with Mr. Beitel by email on December 17, 2013, in which he attached maps representing the area where ION would be conducting its testing in Hempfield Township. Email from Brown to Beitel, 12/17/2013, attached to Ex. 3. Mr. Brown also indicated that Allen Gray from McDonald Land Services would attend any meeting that would be scheduled with Township representatives. Id . A series of emails were then exchanged between Mr. Brown and Mr. Beitel, with the two eventually agreeing to meet on Thursday, January 9, 2014. See Emails attached to Ex. 3.

Mr. Brown testified that during the meeting the solicitor for the township, Leslie Mlakar, Esquire, was brought in and shortly thereafter the meeting was concluded. Another meeting was held on Thursday, January 30, 2014. It is ION's position that representatives from the Township indicated to ION's representatives that the Township would be willing to permit seismic testing subject to the execution of a written agreement between the parties. It is undisputed that Hempfield Township does not have an ordinance regulating seismic testing. According to ION, in such cases ION attempts to work with the municipality to enter into a Seismic Agreement that would address any concerns a municipality might have about the use of local roads for seismic testing. It is the Township's position that no one from the Township agreed to permit seismic testing on Township roads subject to a written agreement between the parties. As previously noted, we need not determine this factual dispute in order to resolve the issue before us.

In any event, on February 5, 2014, ION's counsel, Kevin Gormly, Esquire, sent an email to Mr. Mlakar that stated in part as follows:

I am attaching a draft of Seismic Agreement that we have used with other Townships. It obviously has to be redlined to address some of the concerns raised at the meeting. After you have had a chance to review, I suggest we have a phone call to talk about specific revisions.

Email from Gormly to Mlakar, 2/5/14. Ex. F, with attached draft Seismic Operation Agreement. Mr. Gormly apparently did not receive a response from the Township until February 25, 2014, when Mr. Mlakar informed him that Hempfield Township would not enter into an agreement and it would not permit ION to conduct seismic testing on Township roads.

The February 25th communication from Mr. Mlakar occurred the day after the February 24, 2014 Board of Supervisors Monthly Meeting at which the Supervisors voted against authorizing the Solicitor and Township Manager to negotiate with ION regarding seismic testing. Ex. 2, Hempfield Township Board of Supervisors Monthly Meeting, 2/24/2014, at 5, ΒΆ r. Although this meeting was public and was duly announced, neither Mr. Gormly nor any ION representative was specifically informed that the Supervisors intended to vote on such a proposal. The fact that Mr. Gormly was unaware of this event is evident by his actions in sending a ...

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