American Oil and Gas Reporter - December 2016 - 17

IndustryDigest
owned by the operator."
According to Wright, the court
declined to enjoin requirements for onsite processing of fluids and drill
cuttings, requirements for reporting and
remediating spills and releases, and a
section requiring monthly rather than
semi-annual waste reports.
Citing DEP's estimate that the
Chapter 78a provisions would cost
operators $40 million-$70 million
initially and up to $16 million annually,
Spigelmyer contends the rules would,
nevertheless, result "in little discernible
environmental benefit." ❒

briefs supporting Chesapeake
Appalachia, which argued its leases
allowed post-production costs to be
deducted from royalty calculations.
While admitting disappointment that
the Supreme Court did not affirmatively
declare that Ohio followed the at-thewell rule, OOGA Executive Vice
President Shawn Bennett nevertheless
points to a silver lining, "The court did
follow traditional Ohio law by requiring

the question be answered by the terms
of the parties' contracts, which is an
implicit rejection of the marketable
product rule," he states.
"Second, recognizing the
fundamental importance of contract
language to resolving the issue ought
to-and rightly so-present significant
challenges to certifying royalty classaction litigation going forward,"
Bennett adds.

Ohio Supreme Court
Punts Question On
Post-Production Costs
COLUMBUS, OH.-The Ohio
Supreme Court has punted the question
of whether natural gas producers in that
state may deduct post-production costs
before calculating royalties. According
to the Ohio Oil & Gas Association, the
court's nondecision came Nov. 2 in
Regis F. Lutz et al. v. Chesapeake
Appalachia.
According to OOGA, the case began
in 2009 when a group of landowners
filed a class action lawsuit in the U.S.
District Court for the Northern District
of Ohio against Chesapeake Appalachia,
alleging underpayment of royalties
because the producer was deducting
post-production costs. In June 2015, the
federal court certified a question to the
Ohio Supreme Court, asking it to
determine whether Ohio followed the
"at the well rule," which allows
producers to deduct post-production
costs, or whether it followed the
"marketable product" rule, which limits
such deductions.
But, OOGA says, the Ohio court
decided, "Under Ohio law, an oil and
gas lease is a contract that is subject to
the traditional rules of contract
construction. Because the rights and
remedies of the parties are controlled by
the specific language of their lease
agreement, we decline to answer the
certified question."
By choosing not to answer, OOGA
explains, the Ohio Supreme Court is
leaving it to trial courts to determine on
case-by-case bases.
OOGA and the American Petroleum
Institute had filed friend of the court
DECEMBER 2016 17



http://www.ocsbbs.com

American Oil and Gas Reporter - December 2016

Table of Contents for the Digital Edition of American Oil and Gas Reporter - December 2016

Contents
American Oil and Gas Reporter - December 2016 - Cover1
American Oil and Gas Reporter - December 2016 - Cover2
American Oil and Gas Reporter - December 2016 - Contents
American Oil and Gas Reporter - December 2016 - 4
American Oil and Gas Reporter - December 2016 - 5
American Oil and Gas Reporter - December 2016 - 6
American Oil and Gas Reporter - December 2016 - 7
American Oil and Gas Reporter - December 2016 - 8
American Oil and Gas Reporter - December 2016 - 9
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American Oil and Gas Reporter - December 2016 - 37
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American Oil and Gas Reporter - December 2016 - 42
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American Oil and Gas Reporter - December 2016 - 49
American Oil and Gas Reporter - December 2016 - 50
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American Oil and Gas Reporter - December 2016 - Cover3
American Oil and Gas Reporter - December 2016 - Cover4
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