P. 3 ~ Continued - Trends emerge on hydraulic fracturing litigation

Dec. 5, 2011

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Pending legal disputes

Since 2009, when the first lawsuits alleging contamination as a result of hydraulic fracturing were filed, there has been a small wave of litigation by landowners seeking damages from energy companies who engaged in fracturing on or near their properties. These suits share a number of common elements, including similar types of plaintiffs, similar causes of actions, and similar damages claims. In addition, the lawsuits typically name the same defendants, usually joining the owner (lessee) and or operator of the well along with the drilling company.

Notably, the focus of the bulk of these lawsuits, while they may allege property damage or the like, is that the fracturing process allegedly polluted the plaintiffs' groundwater or drinking water, purportedly leading to serious health problems.

Some of the earliest cases, which give a flavor to this type of litigation, were filed in Pennsylvania in fall 2009. As is common to this sort of litigation, these cases typically were brought by landowners who alleged that the defendant's hydraulic fracturing operations leaked chemicals into their water supplies, either aquifers or wells.

The plaintiffs based their claims in each of these suits on several common legal theories, including negligence, because the leaks allegedly resulted from improper protective casing of the well, negligence per se, invoking supposed violations of the Pennsylvania Oil & Gas Act or the Pennsylvania Hazardous Sites Cleanup Act, as well as fraudulent misrepresentation and breach of a contract.

These latter two claims are based on the plaintiff's allegations that the energy companies made promises regarding either safety procedures or the potential risk of toxic leaking and subsequently violated those agreements.

In the bulk of these cases, the plaintiffs are seeking similar remedies, including injunctive relief that would place a court-ordered moratorium on fracturing for the companies involved, compensation for damage to property or property values, and damages for the loss of the use and enjoyment of the property or their water sources.

In more than one of the cases, the plaintiffs allege not only physical damages, but medical damages as well, seeking costs for personal injury and for future health monitoring, which is a common claim among fracturing cases, as often the plaintiffs have yet to suffer health injuries, but allege that exposure to certain chemicals, including heavy metals such as manganese, may have latent consequences that do not reveal themselves for years.

Colorado, Louisiana, New York, Texas, and West Virginia, all states with burgeoning shale-mining operations, have themselves seen similar cases filed in recent years. In one Texas case, the plaintiffs claim that after the energy company commenced hydraulic fracturing near their property, their groundwater turned gray and became contaminated. Testing of the water allegedly revealed a number of metals, including aluminum, arsenic, barium, beryllium, calcium, chromium, cobalt, copper, iron, lead lithium, magnesium, manganese, nickel, potassium, sodium, strontium, titanium, vanadium, and zinc.

Like the plaintiffs in Pennsylvania, plaintiffs outside Pennsylvania also are primarily landowners. Their claims include:

• Negligence, for allegedly failing to properly case the well and thus prevent chemicals from seeping into their water.

• Negligence per se, if there is a state statute on point.

• Breach of contract or other similar allegations, if there is a lease.

Several cases allege trespass, based on the alleged intrusion of the polluted water into the plaintiffs' subsurface properties, or alternatively, based upon an unwarranted expansion of the oil or gas lessee's right to operate on the land—unwarranted because the leaking of chemicals is alleged to be outside of the scope of the oil or gas lease.

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