The Legal Intelligencer
Despite the intense scrutiny and focus on environmental issues relating to hydraulic fracturing in shale gas plays across the United States, the onslaught of anticipated litigation alleging impacts to human health or the environment has been slower to develop than originally anticipated. Since the first complaints were filed in 2009, there have been more than 40 lawsuits filed in state and federal courts alleging some level of harm to person, property or the environment caused by fracking or related activities. The following provides a brief overview of the current state of fracking litigation.
Current Focus: Common Law
The majority of fracking lawsuits filed to date have been filed based on common law theories of liability. The predominant claim by plaintiffs has been that, as a result of fracking of natural gas wells located near plaintiffs' property, plaintiffs have suffered medical issues and their property, including groundwater wells, has become contaminated due to the release of contaminants to the land, water and air during the fracking process. Common-law theories of liability that have been asserted include: (1) public nuisance; (2) private nuisance; (3) trespass; (4) negligence; (5) negligence per se; (6) strict liability for abnormally dangerous activities; (7) fraud; (8) indemnification; and (9) contribution.
While a handful of these lawsuits have been dismissed or settled, most remain unresolved. Courts are just beginning to work through issues such as the factual sufficiency of plaintiffs' claims. For example, in Harris v. Devon Energy Production Co. , E.D. TX Docket No. 4:2010-cv-00708-MHS-ALM, plaintiffs alleged in their complaint that, in approximately April 2008, the defendant's drilling and fracking operations caused the plaintiffs' groundwater to become polluted with gray sediment. The plaintiffs generally alleged in their complaint that groundwater testing revealed the presence of hazardous substances, some of which are contained in bentonite mud used during well drilling. On Jan. 25, 2012, the court dismissed all claims against Devon Energy on the basis that recent testing of the plaintiffs' groundwater wells showed no contamination present at levels that are toxic for human consumption.
And, on Feb. 17, the court in the consolidated cases Tucker v. Southwestern Energy Co. , E.D. AR, Docket No. 4:2011-cv-44-DPM, and Berry v. Southwestern Energy Co. , E.D. AR, Docket No. 4:2011-cv-45-DPM, ordered the plaintiffs to replead their claims. The court stated that the plaintiffs failed to meet the standard articulated by the U.S. Supreme Court in Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949 (2009), which requires plaintiffs to plead facts sufficient to permit a "court to draw the reasonable inference that the defendant is liable for the misconduct alleged." The Supreme Court in Iqbal stated that a plaintiff must plead facts sufficient to move his or her claims "across the line from conceivable to plausible."
According to the court in Tucker and Berry, the facts alleged in the plaintiffs' complaints were "mostly conclusions and general statements." The court specifically stated that the plaintiffs failed to "allege specific facts tending to show Southwestern Energy did anything to cause" the contamination alleged. While the court chose not to dismiss the plaintiffs' complaints outright, the court has required plaintiffs to file amended complaints that provide "particular facts about particular fracking operations by particular fracking companies using particular substances that allegedly" caused the plaintiffs harm.
More recently, on May 9, a district court in Colorado dismissed with prejudice a toxic tort action involving personal injury and property damage claims arising from well development activities. See Strudley v. Antero Resources Corp ., 2011CV2218 (Denver Dist. Ct. 2011). The court observed that an efficient case management order was appropriate given the significant discovery and cost burdens that would be associated with the case. Accordingly, the court required the plaintiffs to make a prima facie showing of exposure and causation relying upon Lone Pine procedures, which the plaintiffs were unable to do. Interestingly, the court also relied upon an investigation conducted by the Colorado Oil and Gas Conservation Commission, which determined that the plaintiffs' water supply was not affected by the nearby oil and gas activities.
It is possible that, as a result of the increased chemical disclosure requirements states are adopting, as well as the U.S. Environmental Protection Agency's focused studies on the effects of fracking on groundwater, plaintiffs may, in the future, have less difficulty pleading facts sufficient to support their claims. Until that time, the filing of complaints alleging harm from fracking may remain at current levels as plaintiffs struggle to satisfy courts that require plaintiffs to comply with the Iqbal standard.
The Future: Statutory Claims
Plaintiffs have a more limited right to assert statutory claims in connection with fracking, as evidenced by the fact that only a few such claims have been asserted to date. The right to file a claim under a state or federal environmental statute must be specifically set forth in that statute or it cannot be alleged. This is in contrast with a plaintiff's ability to assert a common-law claim of negligence per se for the alleged violation of a statute. See Fiorentino v. Cabot Oil and Gas Corp ., et al. (M.D. PA, Docket No. 3:2009-cv-02284).
In general, environmental statutes permit plaintiffs to file two types of claims. For example, plaintiffs may file claims under the citizen-suit provisions of federal and state statutes such as the Air Pollution Prevention and Control Act, 42 U.S.C. §§7401 to 7671q, and the Pennsylvania Clean Streams Law, 35 P.S. §691.1. The only citizen suit relating to fracking that has been filed to date was filed by Citizens for Pennsylvania's Future against Ultra Resources Inc. in July 2011. See Citizens for Pennsylvania's Future v. Ultra Resources , (M.D. PA, Docket No. 4:2011-cv-01360-RDM). The basis for Penn Future's claim is not that fracking in and of itself causes harm, but rather that Ultra violated the Clean Air Act when it failed to obtain a permit prior to constructing and operating the natural gas wells, pipelines, compressor stations and associated equipment that Ultra refers to as the "Marshlands Play." Penn Future has asked the court to order Ultra to comply with the Clean Water Act and to pay civil penalties. This case is still pending as of press time.
A plaintiff may also assert a private right of action to recover damages for alleged environmental violations, including the recovery of remediation costs, under statutes such as the Pennsylvania Hazardous Sites Cleanup Act, 35 P.S. 6020.701. See Armstrong v. Chesapeake Appalachia , (Bradford County Court of Common Pleas, Pennsylvania). While the majority of existing plaintiffs have not asserted private rights of action to recovery of remediation costs, there are a few exceptions. For example, in Armstrong , the plaintiffs have alleged that they have been harmed by the release of combustible gases, hazardous chemicals and industrial wastes from the defendants' drilling, construction and operation of natural gas wells near the plaintiffs' homes. The plaintiffs specifically seek to recover costs to remediate the contamination of their water supplies.
It is likely that defendants may be subject to increased claims for the recovery of response costs by individuals and government agencies if and when the EPA, as a result of its ongoing studies, makes a determination as to the impacts of fracking on groundwater. Until that time, agencies will continue to have uncertain success in asserting their authority to require remediation of contamination under statutes such as the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. §9601. For example, on Jan. 19, 2012, the EPA sought approval to conduct an emergency removal action under CERCLA to investigate claims of contamination at four residential water wells located in Dimock, Pa. Although the EPA initially concluded that elevated levels of arsenic, manganese and sodium (as well as several other hazardous substances) were present in the targeted water wells, it later reversed its position. As of May, the EPA determined that the water was safe to drink, after testing 61 homes. At issue was whether arsenic, manganese and sodium, which are CERCLA-regulated hazardous substances and which were found in some wells, were naturally occurring. CERCLA prohibits the EPA from using its authority to conduct a removal action in response to a release of a naturally occurring substance through a naturally occurring process.
More recently, the National Institute of Occupational Safety and Health released preliminary results from a field study in support of its position that exposure to silica during fracking is the most significant known health hazard to workers at oil and gas sites. NIOSH recommended that operators evaluate their employees' exposure to silica dust during fracking operations that involve the use of sand as a proppant. Surely, the continued evaluation of this potential health issue will generate more toxic tort claims — just a different variety.
Questions Still Unanswered
Fracking litigation is in its infancy and there are many questions that still need to be resolved. One of the most significant questions at this time centers on the potential impact of increased chemical disclosure requirements and the results of the EPA's groundwatercontamination studies on fracking litigation. These two issues alone have the potential to derail fracking litigation in its entirety, or to provide the significant basis for plaintiffs to assert their claims of harm from fracking that is otherwise missing at this time.
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