December 18, 2014
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In This Issue
HB 2278 Becomes Law
New Tax Proposals
Quotable Quote
NY Bans Fracking
Pa. Super. Ct. rules on Title Diligence

Act Requiring Monthly Unconventional Production Report Signed into Law  

On Oct. 22, Gov. Tom Corbett signed HB 2278 into law.  The Act requires operators of unconventional wells to submit monthly production reports to Pa. DEP, starting March 31, 2015.
More Taxation Proposals on the Horizon   

-State Senator Jim Brewster announced plans this week to introduce a bill to impose a 5% tax on Marcellus Shale gas production, and dedicate that revenue toward education. Brewster says the tax would generate between $700 million to $1 billion for public schools.

-State Sens. John Rafferty and Andrew Dinniman plan to re-introduce legislation for a state gas pipeline impact fee next month, which would be imposed on new transmission and gathering lines (more here).
Quotable Quote: 
   "A candle is a small thing. But one candle can light another. And see how its own light increases, as a candle gives its flame to the other. You are such a light."  --Moshe Davis    
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Cuomo to Ban Fracking in NY State  



The Cuomo administration announced yesterday its decision to ban hydraulic fracturing in New York state because of "public health risks." While this Newsletter is not generally editorial, we must express our  disappointment at the triumph of politics over sound science, strong energy policy and the economic survival of New York's most downtrodden regions.  In the words of IOGANY Executive Director Brad Gill, "While industry will find opportunity elsewhere, our hearts go out to the farmers and landowners in the Southern Tier whose livelihoods in New York State are in jeopardy" (more here).  
Do Your Homework: Pa. Superior Court holds
producer to be a Bad-Faith Trespasser for want of sufficient Title Review


On Oct. 20, the Pa. Superior Court ruled that constructive notice of a title defect may preclude a good-faith defense to damages for trespass and conversion to oil and gas rights.

In Sabella v. Appalachian Devel. Corp., et al. No. 722 WDA 2013, Plaintiff Sabella purchased the oil and gas underlying 66 acres in Warren County, Pa. in 1997. In 2001, the surface owners entered into an oil and gas lease with Defendant Appalachian Development Corp., purporting to lease the rights owned by Sabella. In 2003, Appalachian sold the lease. The buyer of the lease (Pine Ridge) elected to conduct only a "bring-down" title search from the date of the lease forward, rather than a full title search. Pine Ridge obtained actual notice of Sabella's oil and gas interest in 2008, but did not inform Sabella that six wells had already been drilled on his property. Pine Ridge drilled three additional wells on the property after obtaining actual notice before Sabella filed suit in 2010.

The court ruled that Pennsylvania's constructive notice statute precluded Pine Ridge's argument that it had committed the trespass in good faith, stating, "In declining to conduct a full title search when such would have revealed conclusively Sabella's ownership...(Pine Ridge) lost (its) claim to bona fide purchaser status." Due to Pine Ridge's limited title search, the Superior Court reversed the trial court's decision that Pine Ridge had acted in good faith until it acquired actual notice of the Sabella's ownership interest in 2008.

Why it matters: In Pa., when improvements to land are made in good faith, an injured party may recover only the trespasser's net profits. But a bad-faith trespasser is liable to the injured party for all money derived from the trespass, with no offset for costs of development and production. As a result of the Superior Court's determination that the trespass occurred in bad faith, the court vacated the trial court's judgment and remanded the case for the recalculation of damages.