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May 09, 2012 Articles

Fracking's Alleged Links to Water Contamination and Earthquakes

The jury is still out on the environmental effects of hydraulic fracturing.

By Barclay Nicholson, Kadian Blanson, and Andrea Fair

Although hydraulic fracturing has been used in the United States for decades, the process and its alleged impact on water quality have received increased attention and scrutiny within the past two years from the media, Congress, the Environmental Protection Agency (EPA), and other regulatory agencies. Specifically, the scrutiny focuses on concerns about reduction of citizens’ water supplies due to the large volume of water used in the fracking process, alleged contamination of supply aquifers due to fracturing activities, and disposal or recycling of the wastewater or flowback water. Most recently, the attention has surrounded the potential causal link between hydraulic fracturing and earthquakes.

While lawmakers debate potential policies and regulations, and environmental agencies prepare studies and conduct testing, the number of lawsuits that have been filed involving hydraulic fracturing continues to rise. Since September 2009, approximately 40 lawsuits have been filed by landowners in various states against drilling companies. Nearly all of the plaintiffs in these suits are either landowners who leased oil and gas rights to the defendants or landowners who reside in close proximity to wells stimulated by hydraulic fracturing operations.

To date, the authors have not located any legal judgment against a well operator, drilling contractor, or service company for contamination of groundwater or earthquakes resulting from hydraulic fracturing. In fact, as further discussed below, the plaintiffs in one Texas case have filed a voluntary motion to dismiss because recent testing shows the contamination is no longer at a toxic level.

Water Contamination

Early Cases
Some of the first cases involving hydraulic fracturing were filed in Pennsylvania. More than 35 Pennsylvania plaintiffs filed at least four similar cases between September 2009 and December 2010 against several oil and gas companies, including Atlas America, LLC, Cabot Oil & Gas Corp., Southwestern Energy Production Co., and Chesapeake Appalachia, LLC. See Zimmermann v. Atlas America, LLC, No. 2009-7564 (Pa. Ct. Com. Pl., Sept. 21, 2009); Fiorentino v. Cabot Oil & Gas Corp., et al., No. 3:09-cv-2284 (M.D. Pa., Nov. 19, 2009) (including 19 families as plaintiffs); Berish v. Southwestern Energy Prod. Co., et al., No. 3:10-cv-1981 (M.D. Pa., Sept. 29, 2010) (including 13 families as plaintiffs); Armstrong v. Chesapeake Appalachia, LLC, et al., No. 3:10-cv-2453 (M.D. Pa., Dec. 6, 2010) (including three landowners as plaintiffs) (remanded to the Court of Common Pleas of Bradford County, Pennsylvania Civil Division on July 29, 2011, Cause No. 10-cv-000680). These lawsuits generally allege a causal connection between nearby hydraulic fracturing activity and water contamination. The various lawsuits assert that the use of toxic chemicals during the fracturing process has contaminated and polluted freshwater aquifers; that defective casing allowed contaminants such as diesel fuel, barium, manganese, methane, ethane, and strontium to migrate to the plaintiffs’ water wells; and that the release of combustible gas into the headspaces of the water wells has resulted in elevated levels of dissolved methane in the water. Similar cases are also ongoing in Texas, Arkansas, Colorado, Louisiana, New York, and West Virginia. See, e.g.Strudley v. Antero Resources Corp., et al., No. 11-cv-2218 (Denver County Dist. Ct., Mar. 23, 2011); Baker v. Anschutz Exploration Corp., et al., No. 2011-1168 (N.Y. Sup. Ct., Feb. 11, 2011); Hagy v. Equitable Prod. Co., et al., No. 2:10-cv-1372 (S.D.W. Va., Dec. 10, 2010).

In addition to these lawsuits, class actions are currently pending in Arkansas against Frontier Gas Services and Southwestern Energy Co., filed on behalf of all Arkansas residents who live or own property within one mile of any natural-gas compressor or transmission station and all Arkansas residents who live on or own property within three miles of any bore holes, wellheads, or other gas-extraction operations. Ginardi v. Frontier Gas Services, LLC, et al.,No. 4:11-cv-420 (E.D. Ark. May 17, 2011); Tucker v. Southwestern Energy Co., et al., No. 1:11-cv-44 (E.D. Ark. May 17, 2011); Berry v. Southwestern Energy Co., et al., No. 1:11-cv-45 (E.D. Ark. May 17, 2011). The plaintiffs in these actions allege that the defendants’ hydraulic fracturing operations from the Fayetteville Shale have polluted the atmosphere, groundwater, and soil with harmful gases, chemicals, and compounds.

The various causes of actions in the water-contamination lawsuits include claims of trespass, nuisance, negligence, gross negligence, negligence per se, strict liability, res ipsa loquitur, fraud, and misrepresentation. The plaintiffs seek similar damages, including compensatory damages such as lost profits and benefits associated with the property, natural-resource damage, permanent destruction of property, permanent destruction of water aquifers, loss of water-well use, reduction in property value, medical costs, loss of quality of life, emotional distress, and personal injury. Most plaintiffs also seek punitive damages and litigation costs and fees. Further, some of the plaintiffs seek the cost of remediation, the cost of future health monitoring, injunctions against further drilling, and the cost of purchasing an alternative source of water. The majority of these cases are currently undergoing discovery, and no dispositive rulings have been issued to date.

In addition to the civil lawsuits described above, federal and state government agencies have pursued actions against oil and gas companies. The Pennsylvania Department of Environmental Protection (PDEP) instituted an action against Cabot on behalf of theFiorentino plaintiffs whose water wells were allegedly contaminated by Cabot’s nearby hydraulic fracturing activities. In December 2010, PDEP and Cabot announced a settlement in which the families collectively received $4.1 million in compensation and other concessions, and Cabot paid a $500,000 penalty to the PDEP. The settlement also allowed Cabot to resume its hydraulic fracturing activities and allowed the families to continue their suit against the company. Pennsylvania, Cabot Reach Settlement over Methane Contamination, Greenwire, Dec. 16, 2010.

In December 2010, the EPA issued an emergency order that required Range Resources Corp. to perform certain actions in connection with Range Resources’ activities in the Newark East (Barnett Shale) Field near Fort Worth, Texas. The order identified contaminants that “may present an imminent and substantial endangerment to the health of persons.” Range disputed the EPA’s findings and the validity of the emergency order, and the United States brought a lawsuit seeking civil penalties and enforcement of the emergency order. Both cases were mooted, and consequently, dismissed, after the EPA withdrew its emergency order in response to the U.S. Supreme Court’s decision in Sackett v. Environmental Protection Agency, in which the Court ruled that EPA administrative orders could be judicially reviewed. Notably, a parallel investigation by the Texas Railroad Commission concluded that Range’s operations did not cause or contribute to contamination of the water wells.

Fall and Winter 2011
Since late summer 2011, a few new lawsuits alleging water contamination have been filed, and some of the prior lawsuits have settled or been dismissed. In August 2011, the Dillon and Becka families brought related lawsuits against Antero Resources for water contamination in Pennsylvania. Becka, et al. v. Antero Resources, No. 2:11-cv-1040 (W.D. Penn. Aug. 12, 2011); Dillon, et al. v. Antero Resources, No. 2:11-cv-1038 (W.D. Penn. Aug. 12, 2011). The plaintiffs allege that Antero Resources used dangerous instrumentalities, methods, and hydraulic fracturing in operating a well that is located near their respective properties. Through its operations, Antero Resources allegedly discharged, spilled, or released hazardous chemicals, carcinogens, and other substances into the plaintiffs’ surface and subsurface water. The causes of action include negligence, strict liability, and trespass, through which the plaintiffs seek injunctive relief, compensatory and punitive damages, the costs of present and future testing and monitoring of the land and water, and litigation fees and costs. The parties engaged in court-ordered mediation in mid-December, but according to the report filed by the mediator, the parties did not resolve the dispute. The case is currently undergoing further discovery.

More recently, in early December 2011, the Teekell family sued Chesapeake Operating, Inc. in Louisiana state court based on contamination of two wells on the Teekell’s property allegedly caused by the defendant’s nearby hydraulic fracturing activities in the Haynesville Shale. Teekell v. Chesapeake Operating, Inc., No. 555,703 (La. Dist. Ct., Caddo Parish Dec. 8, 2011) (removed to the U.S. District Court for the Western District of Louisiana on January 12, 2012, as Cause No. 5:12-cv-00044). Specifically, the plaintiffs claim that the defendants discharged salt water, natural gas, hydrogen sulfide gas, and other pollutants into the ground, air, surface water, ground water, and aquifers. Testing has allegedly revealed high levels of sodium salts, iron content, and total dissolved solids. The plaintiffs also claim that one of the wells is holding hydrogen sulfide gas, resulting in obnoxious smells and gas bubbling up through puddles after rainstorms. The causes of action are familiar: negligence and strict liability, as well as Louisiana statutory claims. Damages sought include loss of the use of water wells, loss of usable water, costs for obtaining usable water, inconvenience, hardship, mental anguish, pain and suffering, diminished use of the home and property, costs of drilling a new well, and damages for the obnoxious smell and taste of the water. The plaintiffs further seek injunctive relief ordering that the defendants discontinue their operations in the area.

Although litigation is ongoing across several states, three cases in Texas have been settled or dismissed since August, and results from a recent study out of the University of Texas show that hydraulic fracturing is not directly linked to groundwater contamination. The Scomas and Grace Mitchell brought separate lawsuits against Chesapeake Energy Corp. and Encana Oil and Gas (USA), Inc., respectively, alleging that the drilling-waste storage sites and disposal wells near their properties resulted in contamination of their respective water wells. Scoma v. Chesapeake Energy Corp., et al., No. 3:10-cv-1385 (N.D. Tex., July 15, 2010); Mitchell v. Encana Oil & Gas (USA), Inc., et al., No. 3:10-cv-2555 (N.D. Tex., Dec. 15, 2010). The Scomas complained of increased levels of benzene, toluene, ethylbenzene, xylene, barium, and iron in their well water, while Ms. Mitchell asserted that her water became slick to the touch, gave off a gasoline-like odor, and tested positive for various chemicals including hydrocarbons similar to diesel fuel. The Scomas’ case was dismissed on December 9, 2011, and Ms. Mitchell’s case was dismissed on December 27, 2011, both pursuant to a settlement agreement reached between the parties.

A third Texas case was dismissed—without prejudice—on January 25, 2012. Harris v. Devon Energy Prod. Co., L.P., No. 4:10-cv-708 (E.D. Tex., Dec. 22, 2010). In December 2010, the Harrises sued Devon Energy Production Co., L.P. for alleged groundwater contamination resulting from bore holes drilled under and near their property and from hydraulic fracturing activities. However, on December 6, 2011, the Harrises filed a motion to dismiss without prejudice, stating that even though testing showed contamination when the lawsuit was filed, recent testing had shown that “the contamination [wa]s no longer at a toxic level.” Plaintiff’s Motion to Dismiss, Doc. 56, at ¶ 1 (Dec. 6, 2011). When the plaintiffs filed their motion to dismiss, the defendant had a motion for summary judgment pending. The court did not rule on the motion for summary judgment, but instead granted the plaintiff’s motion to dismiss without prejudice.

In early November 2011, the Energy Institute at the University of Texas at Austin released early results of a study on the use of hydraulic fracturing in shale gas development that suggest no direct link to reports of groundwater contamination. Press Release, University of Texas at Austin Energy Institute, Early Results from Hydraulic Fracturing Study Show No Direct Link to Groundwater Contamination (Nov. 14, 2011). According to Dr. Charles Groat, a geology professor at the university, many of the problems are related to other aspects of hydraulic fracturing activities, including poor casing or cement jobs, above-ground spills, or other mishandling of wastewater. The final report is expected to be issued in early 2012 and, according to a media release from the Energy Institute, will include analysis of reports of groundwater contamination allegedly caused by hydraulic fracturing in the Barnett Shale, the Haynesville Shale, and the Marcellus Shale. It is also anticipated that the final report will include an evaluation of allegations of fugitive air emissions attributed to equipment leaks, evaporative losses from surface impoundments, and spills.

In addition to the lawsuits alleging water contamination, plaintiffs in several Arkansas class-action lawsuits have claimed that hydraulic fracturing operations damaged their properties by causing earthquakes. Frey v. BHP Billiton Petroleum (Arkansas) Inc., et al., No. 4:11-cv-475 (E.D. Ark. June 9, 2011); Hearn v. BHP Billiton Petroleum (Arkansas) Inc., et al, No. 4:11-cv-474 (E.D. Ark. June 9, 2011); Lane v. BHP Billiton Petroleum (Arkansas) Inc., et al, No. 4:11-cv-477 (E.D. Ark. June 9, 2011); Palmer v. BHP Billiton Petroleum (Arkansas) Inc., et al, No. 4:11-cv-476 (E.D. Ark. June 9, 2011). The class actions have been consolidated into one action currently pending in the Eastern District of Arkansas. Hearn v. BHP Billiton Petroleum (Arkansas) Inc., et al., No. 4:11-cv-474 (E.D. Ark.). The plaintiffs claim that “Central Arkansas has seen an unprecedented increase in seismic activity, occurring in the vicinity of” wastewater-disposal injection wells that are part of hydraulic fracturing operations. The plaintiffs cite several surveys, including the Arkansas Geological Survey and the U.S. Geological Survey, alleging “hundreds of earthquakes occur[ed] between September 2010 and December 2010.” Additionally, the complaint asserts that the largest earthquake in 35 years occurred on February 28, 2011, measuring 4.7 in magnitude, and that on that same day, the U.S. Geological Survey recorded as many as 29 earthquakes around Greenbrier and Guy, Arkansas, ranging in magnitude from 1.7 to 4.7.

Similar to the water-contamination cases, the causes of action include public nuisance, private nuisance, absolute liability, negligence, and trespass. Along with punitive damages and injunctive relief, the plaintiffs seek damages for physical damage to homes and commercial real estate, loss for the purchase of earthquake insurance, loss in the fair market value of the property, economic loss due to temporary stoppage of business operations, and emotional distress. After several changes to the parties, the remaining defendants include BHP Billiton Petroleum (Fayetteville) LLC, Chesapeake Operating, Inc., and Deep Six Water Disposal Services, LLC.

Recent studies have addressed this potential link. In July 2011, the Arkansas Oil and Gas (AOG) Commission held a hearing and determined that there was sufficient documentary and expert-witness proof to order a moratorium on drilling disposal wells in the earthquake area. Researchers with the Arkansas Geological Survey say that, while there is no discernible link between earthquakes and gas production, there is “strong temporal and spatial” evidence for a relationship between the Arkansas earthquakes and the injection wells. "Natural Gas: Arkansas Commission Votes to Shut Down Wells," Huffington Post (July 27, 2011). Further, Dr. Haydar al-Shukri, director of the Arkansas Earthquake Center at the University of Arkansas, testified before the commission that, because only 280 of the more than 10,000 small seismic events occurred within three miles of the well, these events were not caused by hydraulic fracturing.

Other organizations besides the AOG Commission have been studying the possible connections between drilling and earthquakes. In August 2011, the Oklahoma Geological Survey (OGS) drafted an open-file report, concluding that it is difficult to determine whether hydraulic fracturing causes earthquakes because of “our poor knowledge of historical earthquakes, earthquake processes and the long recurrence intervals in the stable continent.” Austin A. Holland, Examination of Possibly Induced Seismicity from Hydraulic Fracturing in the Eola Field, Garvin County, Oklahoma 25 (Aug. 2011).

In addition to the OGS study, Cuadrilla Resources Limited conducted a study to evaluate the relationship between Cuadrilla’s operations and two small earthquakes that occurred in Lancashire, United Kingdom. Dr. C.J. De Pater & Dr. S. Baisch, Geomechanical Study of Bowland Shale Seismicity: Synthesis Report (Nov. 2, 2011) (Quadrilla Resources Ltd.). The group concluded that the probability of a single factor, such as hydraulic fracturing, inducing a seismic event “with similar magnitude is quite low” and that many factors need to coincide to create a seismic event.

More recently, in March 2012, the Ohio Department of Natural Resources issued a report studying seismic activity near hydraulic fracturing operations after the Youngstown area suffered several low-magnitude earthquakes in 2011. The report concludes that a number of circumstances must occur for hydraulic fracturing to induce an earthquake, including the existence of a fault that is in a near-failure state of stress and an injection well deep enough and near enough to the fault with a path of communication to the fault. In fact, the report states that “properly located . . . injection wells will not cause earthquakes.” Preliminary Report on the Northstar 1 Class II Injection Well and the Seismic Events in the Youngstown, Ohio, Area 4, 17 (Mar. 2012) (Ohio Department of Natural Resources).

U.S. Geological Survey scientists have also studied possible connections between increased seismicity in the midcontinent and oil and gas operations. The scientists presented a paper at the Annual Meeting of the Seismological Society of America on April 18, 2012. The abstract of the paper is available and suggests that the increased seismic activity is “almost certainly manmade,” but that the relationship to changing extraction methodologies or the rate of oil and gas production is yet to be determined. W.L. Ellsworth, et. al, Are Seismicity Rate Changes in the Midcontinent Natural or Manmade?

The cases summarized in this article point to the concerns of landowners and citizens living near drilling operations that fracking is causing or will cause damage, not only to the environment and their property, but also to their personal health and safety. While that is merely speculation, the rise in hydraulic fracturing litigation evidenced by the cases discussed may be attributed, at least in part, to increased drilling in proximity to populated areas and heightened media scrutiny of the process. With the extensive media coverage, both in newspapers and on television, and with the higher visibility of fracking operations near towns, more people have taken an interest in fracking, both positive and negative. Some praise fracking as an enabler in providing gas supplies for lower-carbon sources of electricity and as creating numerous industry-related jobs, while others fear that a major fracking catastrophe is waiting to happen.

Given that most of the hydraulic fracturing cases are in the early stages of litigation, the claims and allegations being asserted are very fluid and change frequently. While it will likely be a number of years before any of these cases make it to trial, if at all, a few courts have already granted partial summary-judgment motions dismissing selected gross negligence and fraud claims. Notably, it will be interesting to see whether courts ultimately address the issues of water contamination and earthquakes before the final results of pending environmental studies and congressional investigations. With continued debates about state versus federal regulation, industry standards, and the facts in particular cases, more fracking cases will undoubtedly be filed and will continue to be filed until a set of “best fracking practices” are endorsed by the regulators and the energy industry and until the public is confident about the safety of fracking operations.

Keywords: litigation, energy litigation, hydraulic fracturing, EPA

Barclay Nicholson is a partner and Kadian Blanson and Andrea Fair are associates with Fulbright & Jaworski L. L.P. in Houston, Texas.

Copyright © 2012, American Bar Association. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association, the Section of Litigation, this committee, or the employer(s) of the author(s).