United States District Court, M.D. Pennsylvania
D. MARIANI UNITED STATES DISTRICT JUDGE.
before the Court is a Motion to Dismiss filed by Defendant
Delaware River Basin Commission (the "Commission"
or "DRBC"). (Doc. 12). For the reasons that follow,
Defendant's Motion will be granted. On the face of
Plaintiffs Complaint, it is apparent that its proposed
activities within the Delaware River Basin constitute a
"project" within the meaning of that term as
defined in Sections 1.2(g) and 1.2(i) of the Delaware River
Basin Compact (the "Compact"). Accordingly, the
Compact requires Plaintiff to submit an application to the
Commission for a determination as to whether its proposed
"project" has a "substantial effect on the
water resources of the Basin" and, if so, whether the
Commission shall approve or disapprove such project based on
its determination that the project would or would not
substantially impair or conflict with the Commission's
comprehensive plan. Compact at § 3.8.
INTRODUCTION AND PROCEDURAL HISTORY
17, 2016, Plaintiff Wayne Land & Mineral Group, LLC
("WLMG" or "Plaintiff) filed a Complaint
against the Commission, (Doc. 1). In the Complaint, Plaintiff
"asks this Court to declare that the Delaware River
Basin 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
('Basin')." (Id. at 1).
Intervenors-Defendants the Delaware Riverkeeper Network and
Maya K. Van Rossum, the Delaware Riverkeeper (collectively
referred to as the "DRN") filed a Motion to
Intervene on July 5, 2016, (Doc. 10), which the Court granted
on September 12, 2016. (Doc. 26).
8, 2016, the Commission filed a Motion to Dismiss the
Complaint. (Doc, 12). On September 19, 2016, WLMG filed a
Motion for Oral Argument and Plenary Hearing on
Defendant's Motion to Dismiss, (Doc. 29), which the Court
granted on November 7, 2016. (Doc. 43). The Court held an
evidentiary hearing and heard oral argument on January 24,
STATEMENT OF FACTS
WLMG "owns approximately 180 acres of land, including
the natural gas and minerals present on the land, in Wayne
County, Pennsylvania. Approximately 75 acres of the land
owned by WLMG is located in the Basin" (the
"Property"). (Doc. 1, at ¶ 12). The Property
"is located in a part of the Basin that overlays natural
gas reserves in shale formations, " (Id.
at¶ 13), and Plaintiff "acquired the Property with
an intent to explore for, extract and sell the natural gas
located in shale formations associated with the Property and
other nearby land in order to recoups and earn a
reasonable return on, its investment in the Property."
Defendant Commission is an agency created by the Compact, an
agreement entered into by the United States, New York,
Pennsylvania, New Jersey, and Delaware, and approved by
Congress in 1961. (Id. at ¶ 14). Section 3.8 of
the Compact provides that: "[n]o project having a
substantial effect on the water resources of the basin shall
hereafter be undertaken by any person, corporation or
governmental authority unless it shall have been first
submitted to and approved by the commission, subject to the
Provisions of Section 3.3 and 3.5." (Id. at
¶ 15). Project is defined as "any work, service or
activity which is separately planned, financed, or identified
by the commission, or any separate facility undertaken or to
be undertaken within a specified area, for the conservation,
utilization, control, development or management of water
resources which can be established and utilized independently
or as an addition to an existing facility, and can be
considered as a separate entity for purposes of
evaluation." (Id. at ¶ 16).
intends to construct a well pad, drill exploratory wells on
its property, and commence hydraulic fracturing. Plaintiff
"will proceed in phases, beginning with the construction
of an access road and well pad on the Property, "
(Id. at ¶ 22), and "has identified a
location for the access road and well pad on the Property,
taking into account siting requirements." (Id.
at ¶ 23). Following construction of the well pad and
access road, Plaintiff "will drill an exploratory well
to locate productive zones of natural gas located in shale
formations on the Property. The next phase of development
will include the drilling of one or more lateral wells
followed by hydraulic fracturing and, ultimately, the
production of natural gas." (Id. at¶ 24).
The well pads and facilities constructed on the Property, as
well as all related activities, "will be designed,
built, operated and carried out for the exploration,
extraction and development of natural gas and not for the
conservation, utilization, control, development or management
of water resources." (Id. at ¶ 27).
Plaintiff "does not propose to develop, construct or
operate a water withdrawal, dam, impoundment or reservoir, or
to construct or operate a wastewater treatment or discharge
facility in connection with the development of the
Property." (Id. at ¶ 28). "All water
used in connection with the planned Well Pad on the Property
will be obtained from properly licensed and approved sources
owned and operated by persons or entities other than WLMG,
which will be managed and delivered to the Well Pad in
accordance with all applicable laws and regulations and any
applicable fees will be paid." (Id. at ¶
29). "All wastewater generated in connection with the
Well Pad on the Property will be managed by properly licensed
and/or permitted entities other than WLM6 in accordance with
all applicable laws and regulations." (Id. at
to the Complaint, the Commission "has declared that all
natural gas well pads and related facilities targeting shale
formations in the Basin are 'projects' that it will
review under Section 3.8 of the Compact." (Id.
at ¶ 4). Specifically, Plaintiff alleges that the
Commission "has determined, and, by publicly announcing
its position, has informed WLMG and other landowners in the
Basin, that it has jurisdiction over natural gas and well
pads, all appurtenant facilities, and related activities
carried out in connection with gas wells targeting shale
formations in the Basin." (Id. at ¶ 17).
Moreover, the Commission "has determined, and publicly
announced, that Well Pads constitute 'projects' that
cannot be constructed or undertaken in Wayne County,
Pennsylvania and other areas of the Basin with[out] first
applying for and obtaining Commission approval."
(Id. at ¶ 18). "The Commission has also
announced that it will not consider applications for
approvals for Well Pads, which are referred to by the
Commission as 'well pad dockets, ' until after it
adopts regulations purporting to govern Well Pads."
(Id. at ¶ 19). "The Commission's
de facto moratorium on the otherwise lawful use of
private property for natural gas development has been in
force since 2010 and the Commission has yet to adopt
regulations governing Well Pads." (Id. at
State of Pennsylvania "has adopted comprehensive
environmental regulations governing all phases of development
of natural gas resources within Pennsylvania."
(Id. at ¶ 25). According to those regulations,
"persons and entities seeking to construct well pads and
appurtenant facilities, and proposing to carry out related
activities such as drilling, fracturing, completing and
operating natural gas wells in Pennsylvania, must obtain
permits and approvals from the Pennsylvania Department of
Environmental Protection" ("PaDEP").
(Id.). According to the Complaint, the proposed
development on Plaintiffs property, as well as all related
activities, "will be designed, constructed and carried
out in accordance with all applicable statutory and
regulatory requirements including those implemented" by
the PaDEP. (Id. at ¶ 26). However, according to
It would be futile and wasteful for WLMG to apply for permits
and approvals from PaDEP before resolving the insurmountable
obstacle created by the Commission's assertion of
jurisdiction and imposition of a moratorium. Permits and
approvals issued by PaDEP are valid for defined and limited
periods of time and, moreover, PaDEP will not issue final
permits and approvals for a Well Pad over which the
Commission has asserted jurisdiction and project review
authority until after the Commission reviews and approves the
(Id. at ¶ 32). Moreover, "[g]iven the
Commission's decision not to consider well pad dockets
until some indefinite point in the future, it would be futile
for WLMG to apply for Commission approval for the Well Pad to
be developed on the Property." (Id. at ¶
33). Plaintiff further claims that it "should not be
required to engage in an expensive, time consuming, and
ultimately futile exercise of attempting to obtain review and
approval by the Commission for its Well Pads where... no such
review and approval is required under the Compact."
Complaint alleges that "[t]he Commission's final
determination that Well Pads constitute "projects"
subject to the Commission review and approval under Section
3.8 of the Compact, " constitutes an "unlawful
assertion of jurisdiction, " and poses "an absolute
barrier to WLMG's ability to move forward with its plan
to develop a Well Pad on the Property." (Id. at
¶ 35). "As a result of the Commission's
unlawful assertion of jurisdiction, WLMG is unable to develop
a Well Pad on the Property and to thereby recoup its upfront
costs and earn a reasonable return on its investment."
(Id. at ¶ 37). "Among other things, WLMG
is unable to drill an exploratory well in order to precisely
identify productive gas zones on the Property and, thereby,
to immediately increase the value of the Property and
WLMG's nearby land." (Id.).
Commission "is authorized to seek civil penalties from a
person who undertakes a 'project' without Commission
approval pursuant to Section 3.8 of the Compact."
(Id. at ¶ 38). "Specifically, Section
14.17 of the Compact provides that a person, association or
corporation who violates or attempts to conspire to violate a
provision of the Compact or a rule, regulation or order of
the Commission may be liable for a penalty of as much as $1,
000 for each offense and $1, 000 per day for a continuing
violation, attempt or conspiracy to be fixed by a court of
competent jurisdiction." (Id.). According to
the Plaintiff, the Commission's "final determination
regarding its jurisdiction and authority under the Compact
puts the public on notice that persons that construct well
pads and appurtenant facilities, or that engage in related
activities, in connection with wells targeting shales located
in Wayne County and other areas of the Basin without prior
authorization from the Commission that they are at risk of
incurring substantial civil penalties and other potential
enforcement actions." (Id. at ¶ 39). Thus,
Plaintiff "must choose between proceeding in the face of
substantial civil penalties and other sanctions or waiting
for the Commission to lift the moratorium at some indefinite
point in the future and then incurring substantial expense of
seeking Commission approval for an undertaking over which the
Commission does not have jurisdiction." (Id. at
Plaintiff, through the Complaint, "seeks relief from the
Commission's ultra vires assertion of
jurisdiction and related dictate that WLMG is prohibited from
constructing a well pad and drilling a natural gas well
without Commission approval." (Id. at ¶
6). The Plaintiff "requests that the Court declare that
the Commission does not have authority to require WLMG to
apply for and obtain Commission 'project' approval
for a natural gas well pad and related facilities targeting
natural gas in shale formations on WLMG's property."
(Id. at ¶ 7). Absent the relief requested,
Plaintiff maintains that it "will be deprived of its
constitutionally protected right to use its Property in a
lawful and productive manner" and "will incur
economic injury in that it will be prevented from confirming
the full scope of, and then extracting and selling natural
gas associated with, the Property and also from benefiting
from an increase in the market value of the Property which
will follow the drilling of an exploratory well."
(Id. at ¶ 44).
The Commission's Actions Regarding Well Pad Construction,
Natural Gas Drilling, and Related Activities in the
Commission has raised a factual challenge to many of the
allegations in the Complaint. Specifically, the DRBC disputes
Plaintiffs allegations that it has taken final action in
connection with well pad construction and natural gas
drilling activities in the Basin and therefore moved to
dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1)
and 12(b)(6). Upon Plaintiffs request, the Court held a
plenary hearing to address and resolve certain material
factual disputes with respect to subject matter jurisdiction.
See McCann v. Newman Irrevocable Trust, 458 F.3d
281, 290 (3d Cir. 2006) ("If a defendant contests any of
the jurisdictional allegations as pled by the plaintiff, the
court must permit the plaintiff to respond with rebuttal
evidence in support of jurisdiction, and the court then
decides the jurisdictional issue by weighing the evidence. If
there is a dispute of material fact, the court must conduct a
plenary hearing on the contested issues prior to determining
plenary hearing conducted on January 24, 2017, the Court
heard argument and received testimony with respect to the
DRBC's challenge to this Court's jurisdiction in
support of its Motion to Dismiss pursuant to Federal Rule of
Civil Procedure 12(b)(1). DRBC Executive Director Steven
Tambini, the Executive Director of the DRBC since August of
2014, testified. Mr. Tambini testified that although the DRBC
has yet to adopt final rules regarding the conduct of natural
gas activities within the Basin, that the Commission would
entertain a jurisdiction determination with respect to
natural gas activity if such a determination were sought:
Q. So if someone sought a jurisdiction determination from the
commission today with respect to a natural gas activity,
would the commission entertain it?
Q. Anyone sought a jurisdictional determination from the
Q. Regarding natural gas activities?
A. That's correct, yes, there have been other
jurisdictional determination questions, yes.
Q. Not with regard to natural gas?
A. That's correct, yes.
Q. Have the commissioners made a final decision regarding
whether the commission has jurisdiction over plaintiffs
A. No, the commission has not made a final decision.
Q. Have the commissioners made a final decision regarding
whether or not plaintiffs activities constitute a project?
A. No, they have not.
Q. Has the commission made a final decision regarding whether
plaintiffs activities may have a substantial effect on the
water resources of the basin?
Q. In other words, has the commission made any determination
as to whether they have section 3.8 authority over natural
gas exploration and activity - exploration and production
activities at a well pad site?
A. They have not made a final determination, no.
Jan. 24, 2017, Unofficial Hr'g Tr. at 53:8-25; 54:1-10.
on cross-examination, Executive Director Tambini confirmed
that his predecessor, Carol R. Collier, issued a document on
May 19, 2009 entitled "Determination of the Executive
Director Concerning National Gas Extraction Activities in
Shale Formations Within the Drainage Area of Special
Protection Waters" (the "2009 EDD"). (Def s
Exhibit 2). The 2009 EDD provides that sponsors of natural
gas extraction projects in shale formations within the
drainage area of Special Protection Waters (such as
Plaintiff) must apply for and obtain Commission
approval. Neither the Plaintiff nor any individual
or entity filed an administrative appeal pursuant to the
DRBC's Rules of Practice and Procedure, or an application
requesting the DRBC Commissioners to review the 2009 EDD, and
the Commissioners have not done so. At a May 5, 2010, meeting
of the Commissioners, the Commission postponed any
consideration of applications of well pad approvals until
certain regulations could be drafted which would govern any
confirmed that the 2009 EDD issued by then-Executive Director
Collier provided notice to natural gas extraction project
sponsors that "they may not commence any natural gas
extraction projects located in shale formations within the
draining area of special protection waters without first
applying for and obtaining Commission approval." Jan.
24, 2017, Unofficial Hr'g Tr. at 63:10-16. Tambini agreed
that his predecessor issued the 2009 EDD pursuant to the
authority given to her by the Commission to act on its
behalf. Yet, on cross-examination, Tambini
repeated his testimony that "the Commission has not made
a decision that the jurisdictional determination on what is a
project and what is not in this case." Id. at
further testified that WLMG was not required to wait for
rule-making by the Commission in order to obtain a
jurisdictional determination, stating: "p]f you'd
like a jurisdictional determination, you don't have to
wait for rule-making, come and do it." Id. at
81:3-5. Tambini was also questioned with respect to
Plaintiffs Exhibit 8, the August 8, 2008, letter from William
J. Muszynski, Manager, Water Resources Management Branch of
the DRBC to Stone Energy Corporation wherein the Commission
found that Stone Energy's drilling project in Clinton,
Wayne County, Pennsylvania, was undertaken "without
prior review and approval by the Commission." (PL's
Ex. 8). The letter indicated that the penalty for Stone
Energy Corporation's violation was a fine of not less
than $90, 000.
asked whether it was clear from the 2009 EDD and the
DRBC's fine imposed on Stone Energy Corporation that
drilling activity and construction of a well pad require that
an application had to be filed with the DRBC, Tambini
Q. Okay. So it was clear from the executive director's
determination that if you were going to drill a well,
construct a well pad, you had to file with the Commission.
Jan. 24, 2017, Unofficial Hr'g Tr. at 89:22-26.
when asked by Plaintiffs counsel whether the Commission would
process its application for its proposed well pads, answered:
A. We are speaking past each other. I answered the question.
So you keep saying I want to understand the jurisdictional
determination path, and then you move on to the project
review path. So I suggest we following one path at a time. If
you want me to answer the question what would it take to do a
jurisdictional determination, we can do that. If you want to
get me to say that we're not accepting applications for
jurisdictional determination, you're not going to get the
answer. I think the Commission has indicated in its documents
that it would accept whatever. If you went to the website, I
will be the first to admit that there is no application for
But if you'd like to have a meeting, have a conference,
write a letter, write me an e-mail, whatever you want to do
to get this started on jurisdictional determination, the
commission has indicated that we will make a jurisdictional
Id. at 100:5-21.
asked what WLMG would have to do to get a jurisdictional
determination, Tambini answered: "[a] lot more
information on the activities associated with the
project" and when pressed further, stated:
A. We need to know where the water is coming from, how much
water is being used, how many wells, how many wells by when.
Gain [sic], your oil and gas expert is indicating how much
will stay in the formation, how much will be returned, when
it does return, what is the water quality, how is it being
stored, potentially how it is being treated, where it is
discharged. That's a start. You know, that's a start.
So again, how would it happen, I've already indicated
that open avenue for any way you like it to happen, send me a
letter, send the commissioners a letter, I'm - I'm
not going to say there is an application that you have to
fill out. Then you will say there's no application, Then
you're going to say the commission won't act on ...