Fracking Litigation

Shale gas deposits have been identified across the US and drilling efforts had begun as early as the 1940s. As natural gas extraction intensified in the early twenty-first century and environmental concerns gained publicity, some landowners filed lawsuits, particularly in the northeast Marcellus Shale region. Many of these lawsuits allege that existing fracking activity has contaminated private property and should be considered an ultra-hazardous activity subject to strict liability standards. Courts are currently determining whether exhaustive factual support is necessary to allow plaintiffs' complaints to proceed, or whether the discovery process will prove more beneficial. Fiorentino v. Cabot Oil and Gas Corp. In the case of Fiorentino v. Cabot Oil and Gas Corp., 63 residents of Dimock and Montrose, Pennsylvania, signed leases with the Cabot Oil and Gas Corporation permitting Cabot to extract natural gas from their property. Their properties are located in the Marcellus Shale region. These plaintiffs alleged, in a complaint filed in the US District Court for the Middle District of Pennsylvania, that Cabot improperly conducted the fracking process, allowing "...methane, natural gas, and other toxins" to infiltrate their land and groundwater. The Fiorentino court ruled on whether plaintiffs may proceed with "abnormally dangerous" activity claims. The court, relying on Federal Rule of Civil Procedure (FRCP) 12(b)(6) precedent such as Bell Atl. Corp. v. Twombly and Ashcroft v. Iqbal, declined to dismiss "abnormally dangerous" activity claims raised by the plaintiffs. The court held that such claims contained "sufficient factual matter, accepted as true, to 'state claim to relief that is plausible on its face.'" Even though other Pennsylvania courts have ruled that storage and transmission of gas and petroleum products are not "abnormally dangerous," there is, as yet, no settled law on whether drilling and extraction of gas and petroleum products constitutes an "abnormally dangerous" activity. Per the court:
As noted by both parties, Pennsylvania courts have yet to address whether the conduct at issue sub judice, gas-well drilling, is an abnormally dangerous activity that is subject to strict liability under Pennsylvania law. While we understand that there is case law that suggests that other activities, such as the operation of a pipeline, are not subject to strict liability, we believe it improvident to automatically extend this reasoning to drilling activities without more thorough consideration. Plainly, the record at this early juncture is insufficiently developed for the Court to render an informed decision as to whether this line of cases and the logic expressed therein should apply to the gas-well drilling activities at bar. Therefore, we will deny Defendants' Motion to Dismiss with respect to Count IV. If warranted, Defendants may reassert their argument with respect to strict liability in a motion for summary judgment, based upon what we assume will be a more fully developed record on this point, when appropriate.
Berish v. Southwestern Energy Production Co. The February 2011 case of Berish v. Southwestern Energy Production Co., also from the US District Court for the Middle District of Pennsylvania, applied the ruling in Fiorentino. Distinct from Fiorentino, the plaintiffs in Berish did not sign leases with the drilling company defendant, Southwestern Energy (a Texas company). Rather, the defendant engaged in fracking activities at a site located in close proximity to the plaintiffs' properties. The plaintiffs alleged that discharged fracking fluids contaminated their properties and contributed to physical illnesses. Similar procedural issues were present in Berish and Fiorentino. In Berish, the defendant again filed a motion to dismiss under FRCP 12(b)(6), alleging that the plaintiffs' claim that fracking is an "abnormally dangerous" activity did not contain sufficient factual allegations to sustain the claim. However, the Berish court found:
A number of Pennsylvania cases with facts analogous to the instant suit have determined that the activities involved there were not abnormally dangerous ... However, since the determination of whether or not an activity is abnormally dangerous is fact-intensive, courts often wait until discovery is complete before making this determination.
The Berish court also reiterated the holding in Fiorentino that the applicable test in Pennsylvania for determining whether an activity is "abnormally dangerous" can be found in the Restatement (Second) of Torts. The last noted activity in Berish was the amendment of the plaintiffs' complaint in May 2012. Tucker v. Southwestern Energy Co. A case in the early stages of litigation, Tucker v. Southwestern Energy Co. [PDF] encompasses civil procedure issues similar to Fiorentino and Berish. Filed in the US District Court for the Eastern District of Arkansas, Northern Division, Tucker concerns natural gas extraction from the Fayetteville Shale. The judge in Tucker, citing concerns about the factually-intensive nature of determining whether fracking is an "ultra-hazardous" activity and should therefore held to a strict liability standard, cited Fiorentino and Berish in his opinion. Refusing to dismiss the plaintiffs' claim outright, the Tucker court instead requested that the plaintiffs amend their complaint, and scheduled the matter to move forward to summary judgment stage. As of June 2012, this case was still pending. Anschutz Exploration Co. v. Town of Dryden In the New York trial court decision of Anschutz Exploration Co. v. Town of Dryden, the town of Dryden, located within the Marcellus Shale region, passed zoning regulations banning fracking activity within town limits. The plaintiff, a natural gas company with mineral and gas leasing rights to approximately 22,200 acres within town limits, objected to the implementation of the fracking ban after the leases had been obtained and drilling infrastructure had been built. The natural gas company sued the town, seeking rescission of the zoning regulation, arguing that the state permits it had obtained superseded the town's zoning ordinance. Ultimately, the court ruled that the town could not seek to invalidate an otherwise lawful permit. However, the court did not bar all potential remedies in the case:
The Zoning Amendment provides that "[n]o permit issued by any local, state or federal agency, commission or board for a use which would violate the prohibitions of this section or of this Ordinance shall be deemed valid within the Town" (Dryden Zoning Ordinance, Section 2104[5]). While the Town may regulate the use of land within its borders — even to the extent of banning operations related to production of oil or gas — it has no authority to invalidate a permit lawfully issued by another governmental entity. Rather, enforcement of the provisions of its Zoning Ordinance relating to the use of land is restricted to those remedies authorized by Town Law § 268 and Municipal Home Rule Law § 10(4)(a), (b).

Kamuck v. Shell Energy Holdings GP, LLC

In Kamuck v. Shell Energy Holdings GP, LLC, plaintiff Edward Kamuck lived on property in the Marcellus Shale region. All of his neighbors signed an amended mineral rights lease with the defendants, oil and gas drilling companies Shell Energy and Shell Western Exploration and Production (SWEPI), extending mineral rights to natural gas extraction, including methods such as fracking. Kamuck was the only resident who declined to sign this extended lease, and in fact allowed the prior mineral rights lease, which was more limited in scope, to lapse. He then filed suit in the US District Court for the Middle District of Pennsylvania against Shell Energy Holdings and several related entities, alleging several claims in tort and contract.

The court in Kamuck granted the defendants' motion for dismissal of all contract claims, as the plaintiff did not have any contracts with the named defendants. They also granted the motion to dismiss Kamuck's "anticipatory trespass" claim, ruling that an actual trespass had to take place:

[W]e have found no Pennsylvania cases which permit recovery on an anticipatory trespass theory of liability. Moreover, when we endeavor to assess whether the Pennsylvania courts might embrace such a claim, we are struck by the fact that, while Pennsylvania recognizes the tort of trespass, it is well-settled that: "Trespass is a strict liability tort, 'both exceptionally simple and exceptionally rigorous.'"
However, the court denied the defendants' motion to dismiss on the plaintiff's negligence and "ultra hazardous" (strict liability) claims. Referencing Fiorentino, Berish and Tucker, the Kamuck court refused to dismiss an "ultra-hazardous activity" claim before discovery.

Currently, there are few fracking cases pending in the federal court system. Lawsuits that have been filed have not yet reached a high level of appellate review. Some of the more noteworthy, in particular the Fiorentino case, have settled out of court. Given the lack of precedent, it is likely that both industry and environmental groups will watch existing cases closely as new complaints are filed and decisions in existing cases are delivered.

 

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