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. 

 

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.