BakerHostetler Shale Symposium

The Utica Shale Play: Working in and with the State of Ohio June 6, 2013 The Regulation of and Liquids Pipelines and Related Infrastructure in Ohio: Who, What, When, Where and How?

Martin T. Booher, Partner Gas/Liquids System Overview (Ohio)

3 Why Are Pipelines and Related Infrastructure Important in Ohio

• The Utica can provide (as can other historically produced areas using new drilling techniques) significant oil, natural gas and natural gas liquids

• But unless there are markets (e.g., ethane) and the product can be processed and then moved to the markets, the oil, natural gas and natural gas liquids are going to stay in the ground

• Gathering lines, processing facilities, fractionation facilities and pipelines are needed and, as noted, several proposals are pending

4 Regulation of Natural Gas Pipelines and Related Infrastructure • Several Layers of Potentially Overlapping Jurisdiction – Federal – State – Local

• Depends on the Type of Pipeline/Project – Natural Gas Vs. Oil/Natural Gas Liquids – Interstate – Intrastate – Gathering Line, Processing Facility, Transmission Pipeline, Distribution Pipeline

5 Federal Jurisdiction

• Natural Gas Act – Grants Jurisdiction to the Federal Energy Regulatory Commission (“FERC”) over Interstate Natural Gas Pipelines (associated compressor stations), Storage Facilities and LNG Terminals (Interstate Commerce) – State Law Preemption – Right of Eminent Domain – Rigorous Licensing Process (National Environmental Policy Act)

6 Federal Jurisdiction

• What is Not Regulated – Oil and Natural Gas Liquids Pipelines (Licensing/Construction) – Intrastate Pipelines – Production and gathering pipelines – Distribution pipelines (i.e., local gas utilities)

7 Ohio Jurisdiction

• Ohio Regulatory Agencies still play critical role in FERC-jurisdictional pipelines through the implementation of various federal environmental laws

• SB 315 changed/clarified a number of jurisdictional issues in Ohio as it relates to “non FERC-jurisdictional” pipelines (e.g., intrastate pipelines, production and gathering pipelines and intrastate distribution pipelines)

8 Ohio Regulatory Agencies

Key Ohio Regulatory Agencies Regulating Natural Gas Pipelines and Related Infrastructure in Ohio

• ODNR • OPSB • PUCO • OEPA/US Army Corps of Engineers • Resource Agencies

9 ODNR

• Critical O&G agency in Ohio • Regulates Drilling and Pad, Production Pipelines • Deep Injection Wells • No meaningful, direct regulatory oversight over natural gas pipelines/related infrastructure (beyond production site)

10 OPSB

• Pre-S.B. 315 controversy over definition of gas pipelines • Kinder Morgan 2010 application to OPSB filed under protest (for natural gas liquids pipeline) • S.B. 315 limited OPSB’s regulatory authority over natural gas and liquids pipelines/related infrastructure • OPSB still a key player: Issues certificates (through an adjudicatory proceeding) for natural gas pipelines (and associated facilities) which are: (1) > 500 feet in length; (2) > 9 inches in outside diameter; and (3) designed for transporting gas at MAOP in excess of 125 psi • Excluded from OPSB certification requirements: gathering lines, gas gathering pipelines, processing plant gas stub pipelines, gas processing plants, natural gas liquids finished product pipelines, pipelines from gas processing plants to interstate or intrastate gas pipelines or to any natural gas liquids fractionation plant, an oil, gas or other production operated regulated by the Ohio, including pipelines upstream of any gathering lines and certain compressor stations. 11 PUCO

• Primarily Responsible for Pipeline Safety • No Direct Licensing/Siting Authority – Requires pipelines transporting gas from horizontal wells constructed on or after September 10, 2012 to comply with applicable federal design standards – 21 Day Preconstruction Notice – Submission of as-builts (60 days) • No authority exercised over liquid pipelines (rests with PHMSA)

12 OEPA/Resource Agencies

• Air Quality – PTI/PTO – Title V – No General Air Permit for Compressors – GHGs • Water Quality – NPDES • General Stormwater Permit • General Hydrostatic Testing Permit – Wetlands • 401/404 Permits/NWP 12 (U.S. Army Corps of Engineers Involvement) • Resource agencies (endangered species, cultural resources, fisheries, etc.) • Indiana Bats and Inadvertent Discharges

13 Other Ohio-Specific Siting Observations

• Board of Building Standards Regulations eliminate local jurisdiction over the construction of buildings/structures associated with the operation of natural gas liquids fractionation or processing facilities. • ODNR requirements supplant local jurisdiction • OPSB requirements supplant local jurisdiction • PUCO requirements supplant local jurisdiction • Eminent domain for siting of pipelines and related facilities is available • Acceptance by local communities remains critical

14 BakerHostetler Shale Symposium

The Utica Shale Play: Working in and with the State of Ohio June 6, 2013 Radioactive Waste Disposal: Examining the Legal Horizon

Ben L. Pfefferle, Partner Radioactive Materials

• The land formations that contain oil and gas deposits also contain radioactive materials.

• The drilling process may expose these materials to the surface.

• Such radioactive materials include: – Uranium – Thorium – Radium – Lead-210

17 NORM & TENORM

• The radioactive materials associated with the drilling process are commonly classified into two categories: – Naturally Occurring Radioactive Materials (NORM) – Technologically Enhanced Naturally Occurring Radioactive Materials (TENORM)

• The most recent version of Ohio’s proposed budget contains the following definitions of NORM and TENORM:

18

NORM

• NORM: material that contains any nuclide that is radioactive in its natural physical state – Does not include source material, byproduct material, or special nuclear material

19 TENORM

• TENORM: naturally occurring radioactive material with radionuclide concentrations that are increased by or as a result of past or present human activities – Does not include drill cuttings, natural background radiation, byproduct material, or source material

• Drilling creates TENORM by concentrating the naturally occurring radionuclides and exposing them to the surface environment and human contact.

20 Ohio Senate’s Proposed Budget

• The Ohio Senate’s proposed budget includes several provisions regulating the disposal of NORM and TENORM.

• The provisions are similar in some ways to NORM/TENORM provisions that the Ohio House stripped out of Governor John Kasich’s proposed budget.

21 Key Provisions

• Under the Senate’s proposed budget: 1) Well operators generally must sample any wastes potentially containing TENORM for radium prior to shipping wastes off-site. 2) Well operators do not, however, have to sample wastes for radium if: a) The material is reused in a horizontal well b) The material is disposed of at an injection well for which a permit has been issued under Ohio law c) The material is used in a method of enhanced recovery for which a permit has been issued under Ohio law d) The material is transported out of Ohio for lawful disposal 22 Key Provisions

• Under the Senate’s proposed budget: 3) If materials other than TENORM come in contact with a refined oil-based substance, then the well operator must either: a) Dispose of the materials at a solid waste facility authorized to accept such material under Ohio law; b) Beneficially use the material in accordance with Department of Environmental Protection rules; OR c) Recycle or reuse the material with the approval of the Chief of the Division of Oil and Gas Management. 4) Solid waste landfills are prohibited from receiving TENORM if the material contains radium-226 or radium-228 equal to or greater than 5 picocuries per gram above natural radiation levels. 23 Key Provisions

• Under the Senate’s proposed budget: 5) Solid waste landfills may accept TENORM containing radium-226 or radium-228 above acceptable levels for “purposes other than transfer or disposal,” so long as the landfill operator maintains all necessary authorizations. 6) Solid waste facilities may not receive or dispose of TENORM from drilling operations without first receiving representative testing results to determine compliance with Ohio law.

24 Key Provisions

• Under the Senate’s proposed budget: 7) The Director of Environmental Protection may adopt rules governing the handling and disposal of radioactive materials by solid waste facilities. 8) The Director of Environmental Protection may establish the definition of “beneficially use” as it applies to non-TENORM materials from horizontal wells that have come in contact with refined oil- based substances. 9) The Director of the Department of Health must promulgate rules governing TENORM, and the rules must not apply to NORM.

25 Brine Disposal

• The Senate’s proposed budget also includes provisions governing the disposal of brine and other fluids associated with the drilling process. • In general, the provisions: – Require that the Chief of the Division of Oil and Gas Resources Management adopt rules governing brine disposal – Prohibit the storing or processing of brine without the required permits – Establish rules governing impoundments

26 On the Horizon

• Industry and environmentalists have not had an opportunity to comment on the Senate’s NORM/TENORM provisions, as they were just released on June 4.

• Similar provisions in the Governor’s proposed budget, however, faced strong opposition from both industry and environmentalists.

27 On the Horizon

• According to industry, the provisions are unnecessary because Ohio’s current regulatory approach to TENORM is adequate. – They also note that testing at Utica well sites indicates low radiation levels.

• Environmentalists recommend that radioactive materials instead be shipped to landfills licensed to handle radioactive waste.

28 BakerHostetler Shale Symposium

The Utica Shale Play: Working in and with the State of Ohio June 6, 2013 David Mustine Managing Director 2013 Strategic Focus

Retention & Expansion o 2,000 companies for R&E calls

Attraction o Target select geographies and industries where Ohio has a comparative advantage

Marketing o Robust communications activity, including more editorial outreach, public events, and increased communication with internal audience and stakeholders

Revitalization Program o Work with Ohio Development Services Agency, Ohio EPA, and stakeholders to identify and prioritize potential sites o Provide a more streamlined, responsive, and flexible program

Ohio River Strategy o Develop comprehensive catalog of available properties

Workforce o Promote Governor Kasich’s workforce development initiatives and coordinate with his Office of Workforce Transformation o Work with colleges and universities to develop curriculum and certification programs that address industry needs

31 Targeted Industries

32 Ohio’s Robust Oil and Gas Supply Chain

V&M Star, Youngstown – steel tubing Miller Supply, Inc., Wooster – oilfield supply and services Pioneer Group, Marietta – fabrication and construction Timken, Canton – manufacturer and supplier of bearings Ariel Corporation, Mt. Vernon – gas compressors Gorman-Rupp, Mansfield – pumps used in oilfield operations Kelchner, Springboro – construction DBA Mutual Tool, Tipp City – fabricating Exterran, Youngstown – oilfield equipment

33 Pipeline & Midstream Projects: Ohio Utica Shale

Company Location Operations Estimated Investments MarkWest Harrison & Noble G, P, & F $1.5 Billion counties M3 Columbiana & Harrison G, P, & F $1.2 Billion Midstream counties Partnership NiSource Eastern Ohio G&P $390 Million

Dominion/C Eastern Ohio G&P $800 Million aiman* Spectra* Northern & Eastern Natural Gas $430 Million - plus Ohio Pipeline Enterprise* Eastern, Central, Ethane Pipeline $1 Billion-plus & Southwestern Ohio

*Announced Gathering – Processing – Fractionation

34 Midstream Map

35 Polymers & Chemicals

• Global polymer industry leader • World class university-based research and strong engineering programs • Four refineries in Ohio • Utica shale provides low-cost and reliable supply of natural gas and natural gas liquids • Possible links to specialty chemicals

36 Polymers & Chemicals

• Focus on opportunities that build on our existing strengths of adding value to base chemicals and polymers. Link to other sectors such as automotive and aviation.

• Recruit companies that add value to gas streams. Target major chemical and products companies.

• Pursue bio-based products, especially non-edible agricultural products converted to high value products.

37 Polymers & Chemicals

Natural Gas Liquids

Ethane/Propane/Butane

Ethylene/Propylene/Butadiene

Plastics/Synthetic Rubber

38 Workforce

• Recognizing the value of a strong workforce system, Governor Kasich created the Office of Workforce Transformation to prioritize the work of reforming the system.

• OWT’s goal is to create a unified workforce system that supports business in meeting its workforce needs.

• OWT is focused on three specific priorities: 1) identifying business’s most urgent job needs; 2) aligning those job needs with educators and trainers, and; 3) reforming Ohio’s workforce delivery system

39 Questions?

41 S. High Street, Ste. 1500 | Columbus, OH 43215 (614) 224-6446 | jobs-ohio.com

40 BakerHostetler Shale Symposium

The Utica Shale Play: Working in and with the State of Ohio June 6, 2013 Mergers and Acquisitions and Financing

Gary M. Alletag, Partner Mergers and Acquisitions 2012 Reported Upstream Mergers and Acquisitions

44 2012 Reported Upstream Mergers and Acquisitions

North America

45 2012 Reported Upstream Mergers and Acquisitions

United States

46 2012 Reported Shale Mergers and Acquisitions

Bakken / Williston Shale Play

Announced Buyers Sellers Date 12/31/2012 American Eagle Energy Corporation Undisclosed company(ies) 12/10/2012 Enerplus Corporation Undisclosed company(ies) 11/27/2012 Stratex Oil & Gas Holdings, Inc. Undisclosed company(ies) 11/26/2012 Magnum Hunter Resources Corp. Samson Resources Company 11/15/2012 Vanguard Natural Resources LLC Energy Services 11/8/2012 Continental Resources, Inc. Samson Resources Company 11/2/2012 Magnolia PLC Undisclosed company(ies) 10/22/2012 Halcon Resources Corporation Petro-Hunt Group 10/22/2012 PetroShale Inc. Undisclosed company(ies) 9/20/2012 Exxon Mobil Corporation; XTO Energy Incorporated Denbury Resources Incorporated 9/19/2012 Stratex Oil & Gas Holdings, Inc. Undisclosed company(ies) 9/12/2012 WellStar Energy Corp. Undisclosed company(ies) 8/23/2012 QEP Energy Company; QEP Resources, Inc. Black Hills Corporation; Helis Oil & Gas Company, LLC; Sundance Energy Australia Ltd.; Undisclosed company(ies); Unit Corporation 8/22/2012 Undisclosed company(ies) American Eagle Energy Corporation 7/10/2012 Emerald Oil, Inc. Emerald Oil & Gas NL 7/10/2012 Stratex Oil & Gas, Inc. Stratex Oil & Gas Holdings, Inc. 6/14/2012 Apache Corporation Undisclosed company(ies)

47 2012 Reported Shale Mergers and Acquisitions

Bakken / Williston Shale Play

Announced Buyers Sellers Date 6/8/2012 Undisclosed company(ies) U.S. Energy Corp. 5/25/2012 Noble Royalties Inc. Undisclosed company(ies) 5/10/2012 The X-Change Corporation Undisclosed company(ies) 5/1/2012 Legacy Reserves LP Undisclosed company(ies) 4/30/2012 Mountainview Energy Ltd. Undisclosed company(ies) 4/18/2012 Magnum Hunter Resources Corp. Baytex Energy Corp. 4/13/2012 The X-Change Corporation Undisclosed company(ies) 4/9/2012 The X-Change Corporation Undisclosed company(ies) 3/28/2012 Continental Resources, Inc. Wheatland Oil Inc. 3/26/2012 Emerald Oil & Gas NL Undisclosed private company(ies) 3/22/2012 Whiting Petroleum Corporation Undisclosed company(ies) 3/12/2012 Fidelity Exploration & Production Company; Undisclosed company(ies) MDU Resources Group, Inc. 2/29/2012 Undisclosed company(ies) Primary Petroleum Corp. 2/22/2012 Continental Resources, Inc. Undisclosed company(ies) 2/22/2012 Emerald Oil & Gas NL North Plains Energy, LLC 2/22/2012 Continental Resources, Inc. Undisclosed company(ies) 2/8/2012 The Blacksands Pacific Group, Inc. Undisclosed company(ies)

48 2012 Reported Shale Mergers and Acquisitions

Eagle Ford Shale Play

Announced Buyers Sellers Date 12/21/2012 Sundown Energy, Inc. Lucas Energy, Inc. 12/17/2012 NFR Energy LLC Undisclosed company(ies) 11/13/2012 Sundance Energy Australia Ltd. Texon Petroleum Ltd. 11/12/2012 Undisclosed company(ies) Abraxas Petroleum Corporation 10/24/2012 Corporation Undisclosed company(ies) 10/22/2012 Amadeus Energy Limited Ecofin Energy Resources PLC; Lonestar Resources, Inc. 10/12/2012 Undisclosed company(ies) Forest Oil Corporation 10/3/2012 Penn Virginia Corporation Undisclosed company(ies) 10/2/2012 Milestone Energy LLC Lucas Energy, Inc. 9/20/2012 Global Earth Energy, Inc. Local Partners 9/11/2012 Energy & Exploration Partners, LLC Chesapeake Energy Corporation 8/27/2012 Strata-X Ltd. Undisclosed company(ies) 8/23/2012 Lucas Energy, Inc. Dolphin Oil Partnership LP 8/10/2012 Japan Petroleum Exploration Co., Ltd. Marathon Oil Corporation 8/8/2012 Magnum Hunter Resources Corp. Undisclosed company(ies) 7/31/2012 Kohlberg Kravis Roberts & Co. L.P. Comstock Resources Incorporated 7/30/2012 Kohlberg Kravis Roberts & Co. L.P. Comstock Resources Incorporated

49 2012 Reported Shale Mergers and Acquisitions

Eagle Ford Shale Play

Announced Buyers Sellers Date 7/24/2012 TexStar Energy Corp. Undisclosed company(ies) 6/11/2012 Eagle Ford Oil & Gas Corp. Undisclosed company(ies) 6/11/2012 ZaZa Energy Corporation 6/11/2012 Penn Virginia Corporation Undisclosed company(ies) 6/11/2012 ZaZa Energy Corporation Hess Corporation 5/15/2012 Aurora Oil and Gas Limited Individual Investor 5/9/2012 Marathon Oil Corporation EnCap Energy; Macquarie Bank Limited; Paloma Resources II, LLC; Paloma Resources LLC 5/1/2012 Sun Resources NL Undisclosed company(ies) 4/30/2012 Aurora Oil and Gas Limited Eureka Energy Limited 3/29/2012 ZaZa Energy Corporation / Old Range Resources Corporation 2/29/2012 Undisclosed company(ies) Pioneer Natural Resources Company 2/24/2012 Access Industries; Apollo Global Management LLC; EP Energy Global LLC;El Paso Corporation Korea National Oil Corporation; Riverstone Holdings LLC; Undisclosed company(ies) 1/6/2012 Marubeni Corporation Hunt Oil Company 1/6/2012 Marubeni Corporation Hunt Oil Company 1/4/2012 Lucas Energy, Inc. Hall Phoenix Energy, LLC

50 2012 Reported Shale Mergers and Acquisitions

Utica Shale Play

Announced Buyers Sellers Date 12/17/2012 Gulfport Energy Corporation Wexford Capital LP 10/15/2012 Undisclosed company(ies) Carrizo Oil & Gas Incorporated 10/15/2012 Carrizo Oil & Gas Incorporated Avista Capital Partners LLC 10/9/2012 1st NRG Corporation Undisclosed private company(ies) 9/12/2012 Undisclosed company(ies) Chesapeake Energy Corporation 7/9/2012 Hilcorp Energy Company NiSource Inc. 6/25/2012 Halcon Resources Corporation Undisclosed company(ies) 3/27/2012 BP plc Local Partners 2/17/2012 Magnum Hunter Resources Corp.;Triad Hunter, LLC Undisclosed company(ies) 2/11/2012 Antero Resources LLC Undisclosed company(ies) 1/3/2012 China Petrochemical Corporation; Corporation; Undisclosed company(ies) International Petroleum Exploration & Production Corporation

51 2013 Reported Utica Shale Properties For Sale • Entervest

• Devon Energy

• Chesapeake Energy

52 Unreported Mergers and Acquisitions • Merger of independents

• Sale and purchase of developed properties

• Sale and purchase of undeveloped properties

• Farmout of shale rights

53 Unique Issues Related to the Purchase of Shale Properties • Horizontal drilling provisions

• Issues related to ownership of limited depths

• Issues related to farmouts

54 Financing Financing of Major Acquisitions • Availability of funds

• Hedging requirements

• Syndication issues

• Borrowing base

56 Drilling Programs BakerHostetler Shale Symposium

The Utica Shale Play: Working in and with the State of Ohio June 6, 2013 Litigation:

An Assessment and Analysis of Recent Hydraulic Fracturing Litigation Trends

W. Ray Whitman, Partner Rise of Hydraulic Fracturing Litigation

2009—Dramatic rise in fracturing litigation • Increased use of hydraulic fracturing

• Public awareness

• Economic and environmental implications Rise of Hydraulic Fracturing Litigation

• Anticipate Claims and Damages

• Steps to Manage Litigation

• Pre-litigation Preparation U.S. Shale Plays Litigation Hot Spots

14

1 17 3 4 1 4

12

12 3 Litigation to Anticipate Litigation to Anticipate

1. Contamination Claims

2. Challenges to State and Local Laws

3. Citizen and Environmental Group Enforcement Actions

4. Earthquake Claims Contamination Claims Litigation Hot Spots—Contamination Claims

2

13 2 3 2

4

10 3 Contamination Claims

Hydraulic fracturing activities alleged to cause: • Contamination to sources of ground water

• Gas explosions

• Surface spills and pollution

• Air pollution Contamination Claims— Anticipated Causes of Action

• Negligence • Fraud/ • Trespass Misrepresentation • Nuisance • Strict liability • Negligence per se • Statutory violations • Res ipsa loquitur • Injunctive relief • Gross negligence • Deceptive trade • Premises liability practices

Contamination Claims— Class Actions

• 5 contamination based class action claims

• Class claims assert negligence, trespass, nuisance, and strict liability claims

• Class action claims also made in earthquake cases Contamination Claims— Common Damage Models

• Personal injury • Medical monitoring • Property damage • “Stigma” • Loss of use and • Injunction against enjoyment future operations • Diminished property • Environmental value monitoring trust • Punitive damages

Contamination Claims—Ohio

Mangan v. Landmark 4, LLC No. 1:12-cv-00613 Discovery

Boggs v. Landmark 4, LLC No. 1:12-cv-00614 Discovery

OH Contamination Claims— Pennsylvania

• 13 cases since 2009 • 8 cases—Middle District • 2 cases—Western District • 3 cases—Court of Common Pleas

PA Contamination Claims— Pennsylvania

Zimmermann v. Atlas America, LLC No. 2009-7564 Discovery Fiorentino v. Cabot Oil & Gas Corp. No. 3:09-cv-02284 Settled Berish v. Southwestern Energy Prod. Co. No. 3:10-cv-01981 Discovery Armstrong v. Chesapeake Appalachia, LLC No. 10-cv-000681 Remanded to Court of Common Please Otis v. Chesapeake Appalachia, LLC No. 3:11-cv-00115 Stayed Pending Arbitration Bidlack v. Chesapeake Appalachia, LLC, No. 3:11-cv-00129 Stayed Pending Arbitration Kamuck v. Shell Energy Holdings GP, LLC No. 4:11-cv-01425 Discovery Dillon v. Antero Resources No. 2:11-cv-01038; Settled Becka v. Antero Resources No. 2:11-cv-01040 Settled Manning v. WPX Energy, Inc. No. 3:12-CV-00646 Motion Practice Roth v. Cabot Oil & Gas Corp. No. 3:12-cv-00898 Discovery Butts v. Southwestern Energy Prod. Co No. 3:12-cv-01330 Motion Practice Haney v. Range Resources Appalachia, LLC No. 2012-3534 Motion Practice Contamination Cases— New York

Maring v. Nalbone No. K12009001499 No Activity Baker v. Anschutz Exploration No. 6:11-cv-06119 Discovery

NY Contamination Cases— West Virginia

Hagy v. Equitable Prod. Co. No. 2:10-cv-01372 On Appeal from Dismissal Perna v. Reserve Oil & Gas, Inc. No. 11-c-2284 Discovery

WV Challenges to State and Local Laws Local Challenges—Ohio

• State ex rel Morrison v. Beck Energy Corp. • In 2011, Beck Energy received drilling permits from the Ohio Department of Natural Resources • Beck did not obtain permits required by city ordinances. • City of Munroe Falls sued to enjoin Beck • The Ninth District struck down the injunction and held that many of the city’s ordinances were preempted by Ohio’s oil and gas drilling statutes Local Challenges

• Municipal Attempts to Ban Hydraulic Fracturing in New York and West Virginia N.E. Natural Energy, LLC v. City of No. 11-C-411 Final Judgment Morgantown

Anschutz Exploration Corp. v. Town 2012 N.Y. Misc. LEXIS Final Judgment of Dryden 687 • Municipal Challenges to State Regulation in Pennsylvania

Robinson Township v. Pennsylvania No. 284 M.D. 2012 Appealed 11/2012 to Pennsylvania Supreme Court

Citizen and Environmental Group Enforcement Actions Citizen Suits

Ouachita Watch League v. U.S. Forest No. 4:11-cv-425 E.D. Ark. Defs.’ 12(b) MTD Denied Service New York v. U.S. Army Corps of Eng’rs; No. 1:11-cv-02599 E.D.N.Y. Dismissed for lack of New York v. U.S. Army Corps of Eng’rs; No. 1:11-cv-03857 subject matter jurisdiction; Del. Riverkeeper Network v. U.S. Army No. 1:11-cv-03780 no appeal Corps of Eng’rs Citizens for Pennsylvania’s Future v. No. 4:11-cv-01360 M.D. Pa. Discovery Ultra Res., Inc. San Juan Citizens Alliance v. Stiles 654 F.3d 1038 10th Cir. Final Judgment Ozark Society v. U.S. Forest Service No. 4:11-cv-00782 E.D. Ark. Defs.’ MTD Denied Ctr. for Biological Diversity v. Bureau No. CV-11-06174 N.D. Cal. Pre-Trial Motions of Land Mgmt. Powder River Basin Res. Council v. No. 1:12-cv-00996 D.C. Cross-MSJs Pending Bureau of Land Mgmt. Earthquake Claims Earthquake Events

• Series of 12 earthquakes reported in northern Ohio on New Year’s Eve 2011

• On March 9, 2012, the Ohio Department of Natural Resources (DNR) issued a preliminary report

• Compelling argument that seismic events induced by injection wells Other Earthquake Claims

• Cases Statistics: • Multiple class actions E.D. Arkansas • Cases

Sheatsley v. Chesapeake No. 4:11-cv-00353 Dismissed Without Operating Prejudice Hearn v. BHP Billiton Petroleum No. 4:11-cv-00474 Discovery/Settlement Conference Set 6/19/13 Earthquake Claims—Causation

Universities and research organizations are examining the relationship between hydraulic fracturing and earthquakes: • U.S. Geological Survey Report • Oklahoma Geological Survey Report • Cuadrilla Resources Ltd Report • University of Texas Institute for Geophysics

Litigation Solutions Litigation Solutions—Traditional Methods

• Motions to Dismiss

• Removal

• Summary Judgment

• Expert Challenges—Attack Causation

Litigation Solutions

• Anticipation of Litigation • National Council • Discovery • Custodians • Scope of Relevant Documents • Protective Orders • National Corporate Representative • Seek Regulatory Action • Case Management Plan/ Lone Pine Order

Litigation Solutions— Lone Pine Order

• “Lone Pine Order” requires plaintiff to address exposure and causation issues before extensive discovery • Lore v. Lone Pine Corp., 1986 WL 637507 (N.J. Sup. Ct. 1986). • FRCP Rule 16 grants discretionary authority for Lone Pine order

Litigation Solutions— Lone Pine in Federal Court

Fifth, Ninth, Eighth, and Tenth Circuits generally approve use of Lone Pine orders as a case management tool: • Acuna v. Root & Brown, Inc., 200 F.3d 335, 340 (5th Cir. 2000). • Avila v. Willits Environmental Remediation Trust, 633 F.3d 828, 83334 (9th Cir. 2011). • Schwan v. CHN America LLC, No. 4:04CV3384, 2007 WL 1345193, at *2 (D. Neb. Apr. 11, 2007). [Eighth Circuit] • Wilcox v. Homestake Mining Co., No. CIV 04-534, 2008 WL 4697013, at *1 (D.N.M. Oct. 23, 2008). [Tenth Circuit] Litigation Solutions— Lone Pine in Federal Court

• Some courts have rejected the use of Lone Pine orders on grounds that traditional procedural devises adequately protect parties’ interests • Hagy v. Equitable Prod. Co., No. 2:10-cv-01372, 2012 WL 713778 (S.D.W. Va. Mar. 5, 2012) (denying defendant’s motion for Lone Pine order in case where plaintiffs claim ground water contamination allegedly caused by oil and gas production). Litigation Solutions— Lone Pine in State Courts

Authority among state courts to support Lone Pine orders: • Schelske v. Creative Nail Design, 933 P.2d 799 (Mont. 1997) (affirming summary judgment in favor of defendants based upon plaintiff’s failure to comply with case management order). • Schneider Nat. Carriers, Inc. v. Bates, 147 S.W.3d 264, 268 (Tex. 2004) (noting without disapproval that trial court signed Lone Pine order requiring residents to specify dates of exposure). • Simone v. Girard City Bd. Of Educ., 872 N.E.2d 344 (Ohio Ct. App. 2007) (recognizing that Lone Pine order could be appropriate under certain circumstances).

Pre-Litigation Preparation

• Seismic monitoring and analysis of fracking operations

• Pre- and Post-fracking sampling of water and air

• Master Service Agreement BakerHostetler Shale Symposium

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