Energy and the Environment

Published on: April 5, 2017

Judge Strikes Down Dimock Verdict

In March 2016, a jury awarded two families $4.2 million against Cabot Oil & Gas for contaminating their drinking water. On Friday, the judge set aside the verdict and said the case will have to be retried. The judge wrote that

(T)he weaknesses in the plaintiffs’ case and proof, coupled with serious and troubling irregularities in the testimony and presentation of the plaintiffs’ case – including repeated and regrettable missteps by counsel in the jury’s presence – combined so thoroughly to undermine faith in the jury’s verdict that it must be vacated and a new trial ordered.

The case was originally filed in 2009 by a large number of residents of the township of Dimock, Pennsylvania, alleging that Cabot was responsible for contamination of their groundwater, forcing them to truck water for drinking. The plaintiffs claimed negligence, gross negligence, private nuisance, strict liability, breach of contract, fraudulent misrepresentation, and claims under the Pennsylvania Hazardous Sites Cleanup Act. Most plaintiffs settled with Cabot before trial, but two families, the Elys and Huberts, went to trial. The judge dismissed all of their claims except nuisance and excluded any claims for mental or emotional discomfort or the cost of replacing the water. Despite these setbacks, the jury awarded them $2.4 million on their nuisance claim. Now the Elys and Huberts have to start over. A more complete report on the dispute and ruling can be found here.

Published on: February 9, 2017

High Tech to detect pipeline leaks

By John McFarland

Southwest Research Institute in San Antonio is developing smart technology to improve the industry’s ability to detect pipeline and industry facility emissions of hydrocarbons into the atmosphere. The system uses smart computer algorithms that learn to distinguish emissions from natural atmospheric conditions and report them to be repaired. Watch the story here. Great idea. Let’s hope the industry embraces it.

Published on: December 19, 2016

The Problem of Abandoned Wells

By John McFarland

The article below appeared in the latest newsletter of the Texas Land and Mineral Owners Association. It reviews the Texas Railroad Commission’s recent amendment of its Rule 15, dealing with dormant oil and gas wells. Thanks to TLMA and the author, Trey Scott, for giving me permission to publish his article. TLMA submitted comments on the proposed rule, arguing that the proposed amendments should not be adopted. Abandoned wells are a huge problem for Texas landowners and the public at large. Landowners should consider addressing the problem in their oil and gas leases, since the RRC has failed to do so.

RAILROAD COMMISSION ADOPTS RULE CHANGES AFFECTING
INACTIVE WELLS

As part of Railroad Commissioner Christi Craddick’s Texas Oilfield Relief Initiative, the Railroad Commission has adopted two proposed rulemakings to ease the administrative burden on oil-and-gas companies. The Commissioners amended Statewide Rule §3.15 (“Rule 15”) to relax the production requirements to return a well in active status, and the changes to Statewide Rule §3.28 will minimize the frequency of deliverability testing requirements for gas wells. Continue reading →

Published on: November 14, 2016

Pennsylvania Appellate Court Dismisses Landowner’s Claim Against Range Resources of Water Well Contamination

By John McFarland

The Commonwealth Court of Pennsylvania last month issued its decision in Kiskadden v. Pennsylvania Department of Environmental Protection, copy of opinion here: Kiskadden. Kiskadden claims that chemicals from Range Resources’ Yeager wells, located about a half-mile from Kiskadden’s water well, contaminated his well. One judge dissented. The Commonwealth Court is an intermediate court of appeals in Pennsylvania, so Kiskadden can appeal to the Pennsylvania Supreme Court.

The case began with Kiskadden’s complaint to the Pennsylvania Department of Environmental Protection. The DEP conducted an investigation and held a hearing and concluded that Kiskadden’s well was not contaminated by Range’s operations. Kiskadden appealed to the Board of the DEP. The parties conducted extensive discovery. Kiskadden refused to produce a list of all products and the composition of products used at the Yeager drillsite, but Range refused to produce that information. The Board then ruled that it would grant a “rebuttable presumption” that the chemicals found in Kiskadden’s water well were presumed to be present at the Yeager drillsite. In effect, this shifted the burden of proof to Range to show that it had not contaminated the well. After a hearing before the Board, it issued extensive findings and conclusions and affirmed the conclusion of the Department that chemicals spilled at Range’s site were not the source of the contamination of Kiskadden’s well. Continue reading →

Published on: October 6, 2016

Fracking and Water Use in Arid Regions of the U.S.

By John McFarland

The environmental group Ceres has released a map showing the overlap between shale plays and water-stressed areas of the U.S. You can view it here. It is based on a study of 110,000 wells fracked over the past five years. Read Ceres’ summary of findings here. Its report is an update of an earlier 2014 report on fracking and water use.

In Texas, operators rely almost exclusively on groundwater to frac wells. Operators in the Eagle Ford play rely on the Carrizo Wilcox aquifer, a huge fresh water resource that extends across South Texas – and an aquifer that is being rapidly depleted by pumping for agricultural and municipal uses. Oil and gas operators are exempt from laws in Texas that allow local groundwater districts to regulate and limit pumping.

Published on: August 29, 2016

EPA Grades Railroad Commission on Regulation of Injection Wells

By John McFarland

The EPA has issued a report evaluating the Texas Railroad Commission’s regulation of injection wells: EPAreviewRRC The report criticizes the RRC in three areas, discussed below.

Injection wells, permitted by the RRC, are used to dispose of oilfield waste – produced water, frac water, and other fluids. These liquid wastes are injected into underground reservoirs determined to have no useable groundwater or producible hydrocarbons. Called Class II injection wells, Texas has more than 56,000 such wells – a third of all Class II injection wells in the U.S.

Injection of waste underground is governed by the Safe Drinking Water Act passed by Congress in 1974. That act allows states to take responsibility for permitting and regulation of injection wells if the state’s program meets the requirements of the SDW Act and the EPA. Texas has been regulating injection wells under authority delegated by the EPA since 1982. As part of that delegation, the EPA evaluates Texas’ performance each year and issues an annual report with its findings.

By and large, the EPA report finds that the RRC’s regulation of injection wells meets or exceeds the requirements of the Act. But the RRC is criticized in three respects. Continue reading →

Published on: May 16, 2016

RRC Sunset Review Part II: Monitoring and Enforcement

By John McFarland

The third issue identified by the Sunset Commission in its draft report on review of Texas Railroad Commission operations was the RRC’s monitoring and enforcement of its regulations. As in previous Sunset reports on the RRC, the Sunset Commission criticized the Commission’s enforcement practices and policies.

RRC field inspections and enforcement are the areas where landowners most often come into contact with RRC operations. The RRC is responsible for enforcing rules related to oil and gas spills and contamination, including contamination of groundwater.

Facts:

The RRC employs 151 oil and gas field inspectors. In FY 2015, the RRC reported that those inspectors conducted 134,484 inspections and cited 61,189 violations. When it finds a rule violation, the RRC can fine the operator, and it can issue a “severance order,” requiring suspension of oil and gas production until the violation is remedied. In FY 2015, the RRC assessed 1,878 administrative penalties and issued 7,936 severance orders.

Continue reading →

Published on: April 11, 2016

Friends of Lydia Ann Channel v. Corps of Engineers

By John McFarland

I have generally tried to avoid using this platform to promote or brag on my law firm. But every rule should have its exceptions, and I want to brag about Graves Dougherty’s representation of the Friends of Lydia Ann Channel. Lydia Ann Channel is a feature on the Texas Gulf Coast near Port Aransas, a fishing and recreation community dear to many Texans’ hearts. Below is a shot from Google Earth showing the channel. (click to enlarge)

The Friends of Lydia Ann Channel are a group of environmentally conscious citizens who are seeking to cancel a permit granted by the Corps of Engineers for installation of a facility allowing barges to be moored in the channel. With our firm as counsel, the Friends sued to require the Corps to revoke the permit, remove the barge moorings and restore the affected habitat along the channel. The facility is essentially a mile and a half parking lot for mooring of up to 200 barges that carry oil, chemicals and hazardous cargo.

The Friends allege that the permit was granted without the necessary environmental reviews, and that the facility risks harm to the environmental, recreational, historical and archeological environment of the channel. The area is home to eight federally listed threatened or endangered species, including the whooping crane and sea turtles.

Continue reading →

Published on: September 14, 2015

The Power to Regulate Pollution

By John McFarland

During my vacation I read The Quartet: Orchestrating the Second American Revolution, 1783-1789, by Joseph J. Ellis. Ellis tells the story of the writing and passage of the US Constitution, orchestrated, he asserts, by George Washington, Alexander Hamilton, John Jay and James Madison (the quartet).

Before the adoption of the Constitution, the thirteen states were essentially independent countries who had won their independence but failed to found a new country. The “United States” were always referred to in the plural. The genius of the quartet, says Ellis, was the compromise they crafted in the Constitution in the debate over federal vs. state power. States were understandably reluctant to relinquish their sovereignty, but the quartet knew that the new nation, to survive, had to have federal power – to levy taxes, provide for common defense, and regulate commerce among the states. The Constitution enumerates the powers of the federal government. The Bill of Rights – the first ten amendments to the Constitution, passed simultaneously — enumerates the rights retained by the states and the people, limitations on federal power. The tenth amendment provides: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” The contours of this compromise are still being debated in courts across the land. “States rights” were fighting words in the civil war, and today are the battle cry of states seeking to curb the federal government’s regulation of health care, water quality, voting rights, and abortion.

Continue reading →

Published on: September 4, 2015

ExxonMobil v. Lazy R Ranch – a Case to Watch

By John McFarland

In January, the El Paso Court of Appeals decided the appeal of Lazy R. Ranch, LP, et al. vs. ExxonMobil Corporation. The court reversed a summary judgment in favor of Exxon and remanded the case to the trial court for a trial on the merits. Exxon has asked the Texas Supreme Court to review the El Paso Court’s decision. Exxon argues that it has conclusively proven that Lazy R’s claims are barred by limitations.

The Lazy R Ranch is 20,000 acres in Ector, Crane, Ward and Winkler Counties. Exxon had operations on the ranch for many years. In 2009, the Ranch hired an environmental firm to investigate several sites on the property for oil-related contamination. The environmental firm found substantial hydrocarbon contamination at five sites, and found that at one of the sites the contamination had percolated down into the groundwater and that contamination at the other sites also posed a risk of leaching down into the groundwater. Lazy R sued Exxon for an injunction to require Exxon to take sufficient steps to prevent further spread of the contamination into the subsurface and groundwater.

The trial court ruled that the Ranch had waited too long to sue and dismissed its claims. The El Paso Court of Appeals reversed, holding that the statute of limitations does not apply because the Ranch is only suing for an injunction to require Exxon to abate a continuing nuisance, the spread of hydrocarbon contamination into the subsurface.

Continue reading →