[Update: For the first time, the federal Environmental Protection Agency has released a report that finds a connection between fracking and groundwater contamination at a site in Wyoming. Unsurprisingly, natural gas companies have gone on the offensive about it. The report certainly helps strength plaintiffs’ claims arising from these types of claims, but they remain on the cutting edge of science, and thus are difficult to prove in court because our court system operates primarily off of long-standing scientific consensus, rather than novel, even if strongly meritorious, theories and evidence. Much will depend on what comes out of the EPA’s big report on the health hazards of fracking, slated for release in 2014.]
I’ll admit it: I find real estate law boring. On Monday, though, I saw an article about a an 1882 Pennsylvania case that touched upon gas deposits in the Marcellus Shale, a hot topic these days:
In 1882, the Pennsylvania Supreme Court announced a presumption that a reservation of “minerals” does not include oil absent evidence within the four corners of the deed of a contrary intent. Dunham v. Kirkpatick, 101 Pa. 36 (1882). In 1960, the Supreme Court announced that its decision in Dunham was a rule of Pennsylvania property law and that pursuant to the Dunham logic, a grant or reservation of “oil” would not include “gas” absent clear expression of the parties’ intent to do so. Highland v. Commonwealth, 161 A.2d 390 (Pa. 1960).
In Butler v. Charles Powers Estate, the Court of Common Pleas of Susquehanna County was faced with a similar claim that a reservation of “one half the minerals and Petroleum Oils” included the Marcellus Shale and, therefore, any gas contained therein. … On September 7, 2011, the Superior Court of Pennsylvania (at No. 1795 MDA 2010, 2011 PA Super 198) reversed and remanded Butler, ruling that the Plaintiffs should be given the right to develop a record in an attempt to prove: a) that the Marcellus Shale is a “mineral” and therefore within the reservation; b) that as unconventional gas, Marcellus Shale gas was not the type of natural gas contemplated in Dunham and Highland; and c) that shale may be more similar to coal than conventional oil and gas reservoirs, so that under Pennsylvania’s nearly unique position that coalbed methane is owned by the owner of the coal (see U.S. Steel Corp. v. Hoge, 468 A.2d 1380 (Pa. 1983)), the owner of the shale may own any gas contained therein.
Almost as interesting as the Butler ruling — which, it could be argued, was very favorable to longtime Pennsylvania residents who might still hold some of these “mineral” rights and very unfavorable to the companies coming in for the natural gas “fracking” boom — was the author of the article, Russell L. Schetroma, of Steptoe & Johnson. There are two Steptoe & Johnson firms, but I didn’t know either to have expertise in Pennsylvania mineral rights law; that’s only happened since September, when they acquired the energy practice from a mid-sized firm near Pittsburgh, including Mr. Schetroma. As The Legal Intelligencer coincidentally reported the next day:
As the natural gas industry continues to expand its footprint in Western Pennsylvania, the region is quickly becoming a desired destination for energy and environmental attorneys.
Two Texas-based firms with relatively new offices in the Pittsburgh area recently brought aboard attorneys who moved either hundreds or thousands of miles to be on the groundfloor of Pennsylvania’s natural gas boom.
The article doesn’t even mention Steptoe & Johnson, but instead focuses on two other huge corporate firms racing to merge with small firms well versed in Pennsylvania real estate and environmental law. Even the lawyers (especially the lawyers?) are rushing to cash in on the Marcellus Shale natural gas boom.
The obvious group missing, though, are the trial lawyers, despite endless press and insurance company speculation that plaintiffs’ lawyers would be racing to file environmental contamination claims against oil and gas companies using hydraulic fracturing. After all, more than a year ago there was significant national press attention (Vanity Fair, New York Times) over contamination of water wells throughout Pennsylvania. That would, under ideal conditions, prompt government action to ensure the safety of residents, but the federal government has taken a pass — fracturing was exempted in 2005 by the intentionally misnamed Safe Drinking Water Act — and Pennsylvania’s own state government is, shall we say, highly inclined to take the gas companies’ side.
It would thus seem to be a perfect storm for lawsuits: the government has given multiple wealthy corporations almost carte blanche to engage in a dangerous process which can cause serious property damage and personal injury.
For all the discussion about environmental contamination caused by fracking in Pennsylvania, though, only a few lawsuits have been filed. I only know of two that have even passed the initial pleadings stage: Fiorentino v. Cabot Oil & Gas Corp. (reported by Reuters here) and Berish v. Southwestern Energy (reported by the NYTimes here). Both allege violations of Pennsylvania’s Hazardous Sites Cleanup Act (35 P.S. §§ 6020.101-6020.1305 (“HSCA”)), Negligence, Private Nuisance, Strict Liability, Trespass, and seek the establishment of a Medical Monitoring Trust Fund.
Both cases have survived the defendants’ motions to dismiss — the Fiorentino order is here, the Berish order here, and both are clear and well-written, and thus recommended reading even for non-lawyers — and are now in discovery. Fiornetino, arising from contamination in Dimock, has resulted in a settlement of the claim brought by the Pennsylvania Department of Environmental Protection to compel Cabot into paying to connect them to the main water systems, for methane mitigation systems, and for water treatment systems, but the plaintiffs’ individual claims for damages remain.
Seeing only two cases at the moment, neither of which has made it to any dispositive legal holdings or factual findings, the question, then, is: where are all the fracking water contamination lawsuits?
Truth is, environmental contamination lawsuits are expensive and hard to win. Contrary to corporate propaganda, you can’t just walk into court and collect a check. You have to prove every element of your claim, and courts have made doing that harder through procedural limitations (like on class actions) and through hostility towards plaintiffs’ environmental and medical experts. The increasingly sophisticated science of environmental testing and remediation further has made the cases as a whole more expensive.
Consider the fate of the vinyl chloride / brain cancer suits in Philadelphia County, which were dismissed mid-trial with the judge threatening the plaintiffs’ counsel with sanctions. Consider how a separate part of that same case resulted in the Third Circuit writing that it might be impossible to do medical monitoring claims as a class action. I’d expect the plaintiffs’ lawyers out-of-pocket expenses — just money actually spent, and not including attorney time and salaries for the lawyers’ staff — is well over $1 million and could go into several million.
Even a relatively ‘simple’ contamination case — like, for example, an asbestos case, where the science behind medical causation and treatment has been rock-solid for more than a generation — the plaintiffs’ lawyers out-of-pocket costs will typically run into six figures and can go much higher. For a complicated spill case, like the Lago Agrio litigation in Ecuador against Chevron, the costs can go into the tens of millions.
For hydraulic fracturing, the costs of bringing a lawsuit and the risks of losing will both be high. As strongly as many people (including myself) believe that fracking can release pollutants and toxins that can injure people, the scientific community has still not reached a complete consensus on the health risks. Similarly, the oil and gas companies have fiercely challenge even to the idea that fracking can lead to methane in water, and will certainly fight it in court, despite the latest studies.
The existence of a scientific debate over these issues isn’t fatal to the plaintiffs’ claims, but that lack of a consensus will make these fracking and methane water contamination cases much harder to win. That in turn makes the case much riskier and correspondingly more expensive as the plaintiffs’ lawyers will have to put their own money on the line to build the scientific case both for fracking causing contamination and for that contamination causing health problems.
That’s why we haven’t seen a wave of fracking lawsuits, at least not yet: any lawyer taking these cases has to be prepared to put their own money and resources on the line to be a trailblazer. Unfortunately, that means that for the residents of many of these small towns — residents who, common sense tells me, have undeniably have been harmed by fracking — they’re on the cutting edge of the law and science. They may not reap the benefits of the path they make for everyone else.