April 12, 2012 Articles

The Legal Environment for Hydraulic Fracturing

By Kevin M. Eddy

For the products liability practitioner, hydraulic fracturing represents a unique process that has been used to develop natural resources in almost a million wells. Growth of this kind typically results in increased legal issues, especially with a regulatory framework in flux. An increase in the number of lawsuits involving the chemicals used in the hydraulic fracturing process may also follow, and practitioners would be well-served to educate themselves on these issues sooner rather than later.

While used since the early 1950s, hydraulic fracturing, more commonly referred to by the media as "fracking," has come under the microscope lately because it is the preferred method for developing unconventional natural gas plays. The process of hydraulic fracturing involves the injection of millions of gallons of water per well that fracture the rock that traps the gas. The fracturing water usually contains proppant and other chemicals to keep the fractures open and allow the gas to flow up the well. The fracturing fluid is either reused or disposed of depending on the system in place.

While proppant is usually sand or some other form of synthetic granular, issues and publicity over the chemicals used during the hydraulic fracturing process have dominated media reports. Lawsuits have been filed in several unconventional natural gas plays such as the Marcellus in Pennsylvania, the Barnett in Texas, the Haynesville in Louisiana/Texas, and the Fayetteville in Arkansas, alleging that chemicals used in the hydraulic fracturing process caused tainted well water, injuries to livestock and people, and damage to wildlife. Typically, these lawsuits have alleged that the chemicals used in the fracturing process are carcinogenic, toxic, or hazardous. The lawsuits generally seek unspecified damages and, at times, medical monitoring or injunctive relief. 

One of the most notable lawsuits involving allegations of contamination from hydraulic fracturing is the lawsuit brought by several residents of Dimock, Pennsylvania against Cabot Oil & Gas. The residents are alleging that Cabot contaminated their water wells with methane gas and chemicals from the fracturing process. Recently, the EPA tested several water wells in the Dimock area and found the water "did not show levels of contamination that could present a health concern." However, the EPA report has been criticized because the well water purportedly contained sodium, methane, chromium, arsenic and bacteria, albeit at low levels. The lawsuit is still in the discovery stage. Other lawsuits are proceeding and have garnered media attention.

The oil and gas industry has consistently maintained that the hydraulic fracturing process is safe, that the chemicals used in the fracturing process are minute (99.5% of the liquid used in the fracturing process is water), and that any water contamination is either naturally occurring or caused by something other than hydraulic fracturing. Recently, the oil and gas industry started working closely with a collaborative called Fracfocus, a website managed by the Ground Water Protection Council and the Interstate Oil and Gas Compact Commission. Fracfocus was created to provide public access to the list of chemicals used during hydraulic fracturing in a particular area. The site also provides information on the chemicals, the purpose they serve, and the means by which groundwater is protected. Participating oil and gas companies voluntarily provide data and well information, which is updated regularly.

There are also efforts at the federal and state levels to require mandatory disclosure of all chemicals used in the fracturing process. Additionally, some states have restricted the locations where hydraulic fracturing can take place while, in some localities, there are increased attempts to control the oil and gas drilling process through zoning restrictions. Other than the EPA's present regulations addressing the use of diesel fuel, regulations governing hydraulic fracturing operations have come from the state and local level rather than from the federal government.

In the past five years, the process of hydraulic fracturing has expanded from the traditional oil and gas production states such as Texas, Louisiana, and Oklahoma, and become a common drilling process used anywhere in the country where natural gas is found in deep formations. It has therefore drawn the attention of federal and state regulators. Numerous states, including Pennsylvania and West Virginia, have recently enacted legislation governing where hydraulic fracturing can take place and creating disclosure requirements regarding the chemicals used in the fracturing process.

To date, most state legislation has attempted to balance public and environmental concerns with the rights of landowners and exploration and production companies to economically develop this valuable natural resource. One interesting aspect to Pennsylvania's amendments to its Oil and Gas Act involves health-care providers. The new law requires a health-care provider, when told of the proprietary nature of any chemicals during a medical emergency, to promise not to use the information for anything other than providing medical assistance. The vendor/operator can request and the health-care provider must sign a confidentiality agreement not to disclose the proprietary nature of the chemicals. This provision, along with the amendments to Pennsylvania's Oil and Gas Act, are being challenged in court.

Keywords: fracking, hydraulic fracturing, shale gas, unconventional natural gas plays

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