Local Fracking Ban Struck Down

We typically focus on state court class actions when they reach the appellate level, but wanted to note an interesting decision at the trial court level.  An Ohio court has rejected a proposed class action by a group seeking to ban hydraulic fracturing in their community.  See Mothers Against Drilling in Our Neighborhood v. Ohio, No. CV-14-836899 (Ohio Ct. Com. Pl., 7/1/15).

Last December, community activists filed the class action against the state, the governor, and some fracking defendants, with the far-reaching argument that the portion of state law (Ohio Rev. Code § 1509) that gives the state Department of Natural Resources exclusive authority to permit, locate, space and regulate oil and gas wells, somehow violates plaintiffs' state constitutional right to local self-governance.  Plaintiffs' community had voted in favor of a city ordinance that bans fracking within the boundaries of their city.

The court granted defendants' motion for summary judgment, relying in large measure on a recent Ohio Supreme Court ruling in State v. Beck Energy Corp., Ohio, No. 2013-465, 2015 WL 687475 (Ohio, 2/17/15).  The ban on fracking was an invalid exercise of the city's home rule authority as it was preempted by Ohio Rev.C. 1509 as a matter of law.  In Beck, the state supreme court had noted that Chapter 1509 regulates oil and gas wells and production operations in Ohio. While it preserves certain limited powers for local governments, it gives the state government “sole and exclusive authority” to regulate the permitting, location, and spacing of oil and gas wells and production operations within the state.The supreme court held that the Home Rule Amendment to the Ohio Constitution did not grant to a city the power to enforce its own permitting scheme atop the state system. 

More background on this local regulation debate can be found at Knight & Gullman, The Power Of State Interest: Preemption Of Local Fracking Ordinances In Home-Rule Cities, 28 Tul. Envtl. L.J. 297 (Summer, 2015).

EPA Draft Report on Fracking

The U.S. Environmental Protection Agency recently issued a draft report on hydraulic fracturing, concluding that there is no evidence that fracking has “led to widespread, systemic impact on drinking water resources in the United States.”  We have posted about fracking issues before, and many predictions of fracking-related litigation have rested on assumptions rejected by the report.  

The 1000-page "Assessment of the Potential Impacts of Hydraulic Fracturing for Oil and Gas on Drinking Water Resources" synthesizes available scientific literature and data to assess the potential for hydraulic fracturing for oil and gas to change the quality or quantity of drinking water resources, and identifies factors affecting the frequency or severity of any potential changes. This report is to be used by federal, tribal, state, and local officials, industry, and the public to better understand and address any potential vulnerabilities of drinking water resources to hydraulic fracturing activities.

Congress requested the report in 2010, so no one can say EPA rushed the process.  While there are theoretical mechanisms by which fracking-related activities “have the potential to impact drinking water resources,” the number of actual, identified cases of impact was extremely small compared to the number of hydraulically fractured wells in operation. (Somewhere around 30,000 new wells are being drilled annually.)

 

This assessment relied on relevant scientific literature and data. Literature evaluated included
articles published in science and engineering journals, federal and state government reports, nongovernmental organization (NGO) reports, and industry publications. Data sources examined
included federal- and state-collected data sets, databases maintained by federal and state
government agencies, other publicly-available data and information, and data, including
confidential and non-confidential business information, submitted by industry to the EPA.

 

The report evaluated the various stages of the water cycle used in hydraulic fracturing activities, including water acquisition, chemical mixing at the well pad site, well injection of fracking fluids, the collection of hydraulic fracturing wastewater and wastewater treatment and disposal. The report also confirms the growing consensus that fugitive gas or fluid migration through fractures at depth (that is, the actual hydraulic fracturing process) cannot result in groundwater contamination.

Fracking technology has promised true energy independence, and provided an economic boom to many key aspects of the economy. Hydraulic fracturing supports more than 2 million U.S. jobs, has increased supplies of oil and natural gas, and has helped to put downward pressure on energy prices. It also has strengthened America’s energy security and geopolitical position.

The EPA does report various ways to mitigate some of the potential impacts of hydraulic fracturing activities, including with respect to well construction. The API responded that hydraulic fracturing is being done safely under the strong environmental stewardship of state regulators and industry best practices. From 2009 to 2013, while the EPA was conducting this study, state agencies finalized an estimated 82 groundwater-related rules for oil and gas production, including hundreds of discrete rule changes, according to the Ground Water Protection Council. Continuous safety improvements have been an ongoing part of hydraulic fracturing for 65 years, said API.  

The draft EPA report is open for comment, and peer review by the Science Advisory Board. 

 

Fracking Toxic Tort Case Dismissed Per Lone Pine Order

Readers will recall our earlier postings on "fracking"; natural gas from shale rock promises to provide cleaner, abundant energy for the U.S.  New drilling methods allow companies to tap into huge quantities of gas from shale rock. New estimates show that we have enough of this natural gas to last 100 years at current consumption rates.

The second biggest natural gas field in the world -- the Marcellus -- runs through your humble blogger's home state of Pennsylvania. The energy, jobs, taxes, and independence that tapping into this domestic resource will bring has spurred much interest and anticipation. The method to extract the gas from the rock is called hydraulic fracturing, or fracking, which like any technology, carries potential risks.

However, the potential drilling into the Marcellus Shale has caught the attention of the plaintiffs' bar, including personal injury and environmental class action lawyers. Plaintiffs lawyers are openly speculating about everything from gas leaks and fires, to environmental groundwater impacts, to the problems of large tanker trucks on small rural roadways.

We posted before about one such case already filed regarding another deposit, out West. See Strudley v. Antero Resources Corp., No. 2011CV2218 (Colo. Dist. Ct., Denver Cty., 3/24/11). Plaintiffs sued the gas exploration company and drilling equipment contractor, alleging that the hyrdrofracking contaminated their well water.

Earlier this month, the Colorado court dismissed the claim, relying on a  Lone Pine order, 2012 WL 1932470. The case arose from drilling and completing three natural gas wells in Silt, Colorado known as the Diemoz A well, the Fenno Ranch A well, and the Three Siblings A well. Construction of the Wells allegedly began on August 9, 2010. By January 10, 2011, plaintiffs had moved out of their home and away from Silt.

The central issue was whether defendants caused plaintiffs’ alleged injuries, which
plaintiffs vaguely described as “health injuries” from exposure to air and water contaminated by
defendants with “hazardous gases, chemicals and industrial wastes." Plaintiffs also alleged that
defendants had caused loss of use and enjoyment of their property, diminution in value of
property, loss of quality of life, and other damages. 

Cognizant of the significant discovery and cost burdens presented by a case of this nature, the court endeavored to invoke a more efficient procedure than we see in the standard case management order. The court required plaintiffs, before opening full two-way discovery, to make a prima facie showing of exposure and causation, a form of a Lone Pine order. See Lore v. Lone Pine Corp., No. L-33606-85 1986 WL 635707 (N.J. Sup. Ct. Nov. 18, 1986). The court further
determined that the prima facie showing requirement should  not prejudice plaintiffs because
ultimately they would need to come forward with this data and expert opinion on exposure and causation in order to establish their claims anyway.

The court also seemed influenced by the fact that the Colorado Oil and Gas Conservation Commission (“COGCC”) had conducted an investigation of the plaintiffs’ well water and had concluded that the water supply was not affected by oil and gas operations in the vicinity. Defendants also provided evidence to support their contention that the air emission-control
equipment at the Wells and prevailing wind patterns made it unlikely that plaintiffs or their
property were exposed to harmful levels of chemicals from defendants’ activities.

Specifically, the CMO required plaintiffs to identify the identity of each hazardous substance from defendants’ activities to which he or she was exposed and which caused him or
her injury;  evidence whether any and each of these substances can cause the type(s) of disease or illness that plaintiffs claimed (general causation);  the dose or other quantitative measurement of the concentration, timing and duration of his/her exposure to each substance; a medically recognized diagnosis of the specific disease or illness from which each plaintiff allegedly suffers or is at risk for such that medical monitoring is purportedly necessary; and a conclusion that such illness was in fact caused by such exposure (specific causation).

Plaintiffs were given 105 days to comply with the CMO. After that time, all plaintiff's expert could opine was that “sufficient environmental and health information exists to merit further substantive discovery.” Significantly, he offered no opinion as to whether exposure was a contributing factor to plaintiffs’ alleged injuries or illness. And the requested march towards further discovery
without some adequate proof of causation of injury is precisely what the CMO was meant to
curtail. The expert  suggested, at best, a very weak circumstantial causal connection between the Wells and plaintiffs’ injuries. In fact, he merely temporally associated plaintiff’s symptoms with the Wells being brought into production.

While the proffered evidence showed existence of certain low level gases and compounds in both the air and water of plaintiffs’ Silt home, there was neither sufficient data nor expert analysis stating with any level of probability that a causal connection does in fact exist between the alleged injuries and exposure to defendants drilling activities.  This is particularly telling, since Mr. Strudley complained of “nasal sinus congestion, nose bleeds at inconvenient times” and “an aversion to odors,” while he owns a painting business, and was frequently exposed to paint vapors -- offering a ready alternative explanation for his alleged respiratory symptoms.

The expert did not opine on whether any and each of the substances present in the air and water samples (taken after plaintiffs had moved out) can cause the type(s) of disease or illness that plaintiffs claimed (general causation). He did not discuss the dose or other quantitative measurement of the concentration, timing and duration of the alleged exposure to each substance. Finally, and perhaps most significantly,the expert did not even attempt to draw a conclusion that plaintiffs’ alleged injuries or illnesses were in fact caused by such exposure (specific causation).

The case reflects an effective, but also appropriate, use of the Lone Pine order. It may be a useful model for other fracking toxic tort suits, and is important as an illustration of a method to avoid long, expensive, and unnecessary discovery in such cases. 

 

Update BUT SEE Strudley v. Antero, Colo. Ct. App., No. 12CA1251, 7/3/13.

Fracking Meets Medical Monitoring

We have posted before about medical monitoring claims, and recently noted how plaintiff attorneys have cast their eyes on hydraulic fracturing operations as a new source of revenue.

Now let's see how they combine: some Pennsylvania residents are suing various drilling companies over hydraulic fracturing operations, alleging that such operations have increased their risk of future disease such that they need medical monitoring.  Fiorentino v. Cabot Oil & Gas Co., et al., No. 3:09-cv-02284 (M.D. Pa.).  Plaintiffs seek a medical monitoring trust fund, paid for by the drillers.

The case is in the discovery stages, and defendants, logically, are seeking medical records of the plaintiffs.  Those not familiar with medical monitoring may wonder why medical records would be relevant regarding those plaintiffs who do not allege a traditional present physical injury but only the risk of future injury.  Indeed, plaintiffs earlier this month filed a motion seeking to block defendants from obtaining the medical records.  

However, defendants correctly point out in response that, in Pennsylvania, plaintiffs must prove all of the following elements to succeed on a claim for medical monitoring:
(1) exposure greater than the normal background levels;
(2) to a proven hazardous substance;
(3) caused by the defendant’s negligence;
(4) as a proximate result of the exposure, plaintiff has a significantly increased risk of contracting a serious latent disease;
(5) a monitoring procedure exists that makes the early detection of the disease possible;
(6) the prescribed monitoring regime is different from that normally recommended in the absence of the exposure; and
(7) the prescribed monitoring regime is reasonable necessary according to contemporary scientific
principles.
Redland Soccer Club, Inc. v. Dep’t of Army & Dep’t of Def. of U.S., 696 A.2d 137, 195-96 (Pa. 1997).

At the least, medical records are relevant to the sixth element, namely that “the prescribed monitoring regime is different from that normally recommended in the absence of the exposure.” For example, a plaintiff might already be undergoing testing because of an existing medical condition, or already be a candidate for screening because of other risk factors in his life, such as occupational exposure to toxins or a family history of disease or genetic risk factors, all
requiring their own medical monitoring regime which may overlap the claimed monitoring regime for the alleged exposure in this case. Without medical records, a medical monitoring defendant is denied a fair opportunity to attack plaintiff's proof on this element and to show a plaintiff is not able to satisfy the sixth element of the Redland test -- and, therefore, not prove a claim for medical monitoring. See, e.g., Barnes v. American Tobacco Co., 984 F. Supp. 842, 871-72 (E.D. Pa. 1997).

While arising here in a discovery context, this issue also is relevant to class certification claims in medical monitoring cases, as the individualized nature of the medical monitoring remedy demands that each plaintiff be evaluated to determine whether the medical monitoring on account of the alleged exposure to the class called for by plaintiff experts is any different from the medical monitoring a plaintiff is or should be receiving because of the separate and existing risk factors currently facing an individual proposed class member.  Such an individual issue weighs heavily against class certification.

In any event, several courts have found that a defendant is entitled to the records. See O’Connor v. Boeing North American, Inc., 185 F.R.D. 272, 283 (C.D. Cal. 1999);  Cook v. Rockwell Int’l Corp., 147 F.R.D. 237, 242 (D. Colo. 1993).

Plaintiffs Bar Looking to Attack Exploration of Shale Gas

Many of our readers may have seen the recent cover story in Time noting how natural gas from shale rock promises to provide cleaner, abundant energy for the U.S.   While the fuels of the future were often said to be solar, wind, or nuclear (before Japan perhaps?), new drilling methods allow companies to tap into huge quantities of gas from shale rock. New estimates show that we have enough of this natural gas to last 100 years at current consumption rates.

The second biggest natural gas field in the world -- the Marcellus -- runs through your humble blogger's home state of Pennsylvania. The energy, jobs, taxes, and independence that tapping into this domestic resource will bring has spurred much interest and anticipation. The method to extract the gas from the rock is called hydraulic fracturing, which like any technology, carries potential risks.

As detailed in the Legal Intelligencer, however, the potential drilling into the Marcellus Shale has caught the attention of the plaintiffs' bar, including personal injury and environmental class action lawyers.  Plaintiffs lawyers are openly speculating about everything from gas leaks and fires,  to environmental groundwater impacts,  to the problems of large tanker trucks on small rural roadways.

Some plaintiff firms are reportedly trolling for clients, among local residents and workers on Marcellus Shale drill sites as well.

Out west, there has already been litigation filed. See Strudley v. Antero Resources Corp., No. 2011CV2218 (Colo. Dist. Ct., Denver Cty., 3/24/11).  Plaintiffs sued the gas exploration company and drilling equipment contractor, alleging that the hyrdrofracking contaminated their well water. Of more interest to our readers, perhaps, is the count for medical monitoring. Plaintiffs lawyers say they have other case to file, and are quoted as planning other medical monitoring class actions.

Medical monitoring is recognized under Pennsylvania law, and a handful of other states, and a plaintiff must prove:

1. exposure greater than normal background levels;

2. to a proven hazardous substance;

3. caused by the defendant's negligence;

4. as a proximate result of the exposure, plaintiff has a significantly increased risk of contracting a serious latent disease;

5. a monitoring procedure exists that makes the early detection of the disease possible;

6. the prescribed monitoring regime is different from that normally recommended in the absence of the exposure; and

7. the prescribed monitoring regime is reasonably necessary according to contemporary scientific principles.

Redland Soccer Club v. Dep't of the Army, 548 Pa. 178, 696 A.2d 137, 145-46 (Pa.1997).

A number of these elements implicate individual issues that should defeat class certification under the predominance or cohesiveness analyses of Rule 23.  Nevertheless, it should come as no surprise to industry that this vital economic activity comes with litigation risks as well.