December 2, 2015
Arnold & Porter LLP is pleased to provide this digest of judicial decisions, settlements, case filings, and other
litigation- and enforcement-related documents on hydraulic fracturing and related activities around the United
States. It accompanies a litigation chart that the firm has posted online and periodically updates, where the
cases are organized by topic and where links are found to many of the decisions and pleadings. This digest
primarily includes cases from October 2015.
To be added to the free subscription list for this update service, or to send us additional decisions, complaints,
or other litigation documents for posting, please e-mail Margaret Barry.
FEATURED CASE
Pennsylvania Federal Court Invalidated Local Ordinance Banning Oil and Gas Waste Disposal. The
federal district court for the Western District of Pennsylvania ruled that Grant Township exceeded its legislative
authority when it enacted a Community Bill of Rights Ordinance that prohibited the disposal of waste from oil
and gas extraction and invalidated state and federal permits for such disposal. The court also said the
prohibition was unlawfully exclusionary because it completely banned a legitimate use. In addition, the court
said the township exceeded its legislative authority by creating a cause of action for its residents to enforce the
ordinance. Provisions of the ordinance that divested corporations of their rights as persons and restricted the
applicability of state laws were invalidated as preempted by Pennsylvania Limited Liability Companies Law and
the Second Class Township Code. The court declined to address constitutional challenges to the restrictions
on corporate rights, finding that constitutional analysis was not required since state statutes preempted the
restrictions. The court also denied the township's motion for judgment on the pleadings on its counterclaim
alleging that the lawsuit challenging the ordinance violated the rights of the people to local community selfgovernment. The township has sought reconsideration of the court's decision. Pennsylvania General Energy
Co. v. Grant Township, No. 14-cv-209 (W.D. Pa. Oct. 14, 2015).
DECISIONS AND SETTLEMENTS
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Civil Tort Actions
Challenges to Municipal Actions
Challenges to Agency Actions
Challenges to State and Federal Laws and Regulations
Oil & Gas Lease Disputes
Other Land Use and Property Rights Disputes
NEW CASES AND FILINGS
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Civil Tort Actions
Citizens Suits
Government Enforcement Actions
Suits Against Project Opponents
DECISIONS AND SETTLEMENTS
Civil Tort Actions
Pennsylvania Federal Court Allowed Deposition of Non-Testifying Defense Witness as Dimock Case
Moved Towards Trial. The federal district court for the Middle District of Pennsylvania issued two orders in an
action in which homeowners in Dimock Township hope to recover damages for negligence or private nuisance
in connection with alleged contamination of their water supplies by defendants' drilling activities. A trial is
scheduled to begin on February 22, 2016. On October 26, the court granted in part the plaintiffs' motion for
leave to take a deposition of a non-testifying expert who had previously been designated by the defendant as a
testifying expert. The court said that the plaintiffs could depose the witness, who is an expert in water treatment
systems, despite the fact that the defendants do not intend to use him as a witness at trial. The court found that
plaintiffs had demonstrated that exceptional circumstances justified a limited exception to the general rule that
parties may not take depositions of consulting experts. The court noted that the materiality of the witness's
testimony "came into sharp focus late in this litigation," due to a decision by the defense to raise an affirmative
defense of failure to mitigate based on plaintiffs' failure to accept water systems described by the expert in a
report. The plaintiffs asserted that the defense's other witnesses were unable to provide information about data
relating to these water treatment systems. The court was not persuaded by the defendant's arguments that the
plaintiffs had not shown that they were unable to obtain similar information from other sources, and that
plaintiffs had not taken steps to depose the witness during the two years he was listed as a testifying witness.
The court found that the plaintiffs had not unreasonably delayed, given that the failure-to-mitigate defense to
which the expert's knowledge was relevant had been raised only in May 2015. The court also indicated that the
defendant could not seek to insulate the witness while at the same time proffering experts who based their
opinions in part on information supplied by the witness. The court found that "on this unique constellation of
facts" the plaintiffs should be allowed a "narrow and limited opportunity" to take discovery from the expert
regarding his "opinions and related factual knowledge that helped form the basis for the opinions being offered
by the defendant's remaining experts with respect to water safety." On October 21, the court issued an order
clarifying its denial in July 2015 of the plaintiffs' motion to add the words "inconvenience and discomfort" to the
ad damnum clause of their complaint. The court noted that the plaintiffs' personal injury claims remained
dismissed, and recited the portion of its July decision that discussed why the court did not find it necessary for
the plaintiffs to explicitly seek damages for "inconvenience and discomfort" since such damages are so closely
related to damages already sought for loss of use and enjoyment of real property. The court said that its
decisions should not be construed to define the scope of the plaintiffs' testimony. Ely v. Cabot Oil & Gas Corp.,
No. 3:09-cv-02284 (M.D. Pa. memorandum order Oct. 26, 2015 and memorandum order Oct. 21, 2015).
Texas Court of Appeals Affirmed Judgment Dismissing Claims by Texas Homeowners Whose Property
Was "Completely Surrounded" by Wells and Production Facilities. The Texas Court of Appeals affirmed a
judgment in favor of oil and gas companies who faced nuisance and negligence claims by a family who alleged
that toxic emissions from oil and gas operations caused damage to their health and property. The appellate
court agreed with the defendants that expert testimony was required to prove the family's claims and affirmed
the trial court's granting of the defendants' no-evidence motion for summary judgment. The court found that the
plaintiffs failed to present "more than a scintilla of expert evidence that emissions" from defendants' facilities
caused their injuries and property damage. The court also found that the plaintiffs had not presented more than
a scintilla of evidence to support the portion of their nuisance claim seeking damages for loss of use and
enjoyment of their property due to dust, noise, traffic, and foul odors. The court found that the lay evidence was
too conclusory and speculative to establish that defendants' activities caused these damages. One justice
dissented from the portion of the opinion that affirmed judgment for the defendants on the plaintiffs' odor-based
nuisance claim. Cerny v. Marathon Oil Corp. (opinion & dissenting opinion), No. 04-14-00650-CV (Tex. Ct.
App. Oct. 7, 2015).
Challenges to Municipal Actions
New York Court of Appeals Said Village Resident Could Mount Challenge to Village Approvals for
Supplying Water to Pennsylvania Drilling Sites. The New York Court of Appeals revived a lawsuit
challenging the Village of Painted Post's compliance with the State Environmental Quality Review Act in
connection with the Village's entrance into two agreements: (1) a bulk water sale agreement with a company
that operated gas wells in Pennsylvania and (2) a lease agreement for a water transloading facility. The
transloading facility would serve as a "filling station" where water would be withdrawn, loaded onto trains, and
transported to Pennsylvania. The Appellate Division denied standing to a resident of the village who
complained about train noise. The Appellate Division reasoned that the resident could not establish a special
injury because so many people would be affected by the train noise since the trains traveled through the entire
village. The Court of Appeals found that "[t]he number of people who are affected by the challenged action is
not dispositive of standing" and that the resident's allegations that increased train noise kept him awake at
night were sufficient to confer standing. Matter of Sierra Club v. Village of Painted Post, No. 151 (N.Y. Nov. 19,
2015).
Challenges to Agency Action
Federal Circuit Ruled in Government's Favor Regarding Suspension of Oil and Gas Leases to Protect
Trona Mining. The Federal Circuit Court of Appeals affirmed the dismissal of claims brought against the
federal government by the holder of 26 oil and gas leases that cover 26,000 acres in Wyoming and by three
parties that held operating interests in the leases. The claims were made in connection with the government's
suspension in 2000 of oil and gas leases in an area of Wyoming where trona mining was conducted. Trona is a
sodium carbonate compound that is processed into soda ash or baking soda, and the suspension was
intended to protect trona extraction and trona workers from risks posed by oil and gas development. The court
affirmed the ruling on the merits against the leaseholder on its breach of contract claim, finding that the trial
court had properly determined that the federal government had not repudiated the leases since the United
States Bureau of Land Management had stated "unequivocally" that existing contractual rights would be
recognized. The appellate court also held that the federal government had not breached the leases by
imposing conditions to protect trona miner safety. The appellate court also affirmed the dismissal of the
leaseholder's takings claim for lack of ripeness, finding that no property-specific determination had been made
with respect to the leaseholder's rights because it never submitted an application for permit to drill. The
appellate court also affirmed the dismissal of the three other parties' breach of contract claims for lack of
standing because even though these appellants had operating rights under the leases, they were not in privity
with the United States. Barlow & Haun, Inc. v. United States, No. 2015-5028 (Fed. Cir. Oct. 9, 2015).
Challenges to State and Federal Laws and Regulations
Colorado Federal Court Closed Case Challenging BLM Fracking Regulations to Allow Parties to
Negotiate Settlement. In one of the two actions challenging the United States Bureau of Land Management's
(BLM's) regulations for hydraulic fracturing on federal and Indian lands, the federal district court for the District
of Colorado ordered the clerk to administratively close the case after the Southern Ute Indian Tribe and the
federal defendants filed a joint motion seeking to stay the proceeding. The parties indicated that they believed
they were close to reaching an agreement in principle that would resolve the case, but that the development
and approval of a final settlement would take weeks or months. The court said that a stay, with periodic status
reports, would pose unnecessary administrative burdens on the parties and the court and therefore order the
administrative stay, subject to any party seeking to reopen the case upon a showing of good cause at the
conclusion of the settlement efforts. Southern Ute Indian Tribe v. U.S. Department of the Interior, No. 15-cv01303 (D. Colo. order Oct. 19, 2015; joint motion to stay Oct. 9, 2015).
Oil & Gas Lease Disputes
West Virginia Federal Court Issued Preliminary Injunction Requiring Property Owners to Permit Access
for Drilling. The federal district court for the Northern District of West Virginia granted an oil and gas lessee's
motion for a preliminary injunction requiring property owners to allow the lessee to enter their property. The
court was not persuaded by the property owners' argument that the plaintiff's lease did not permit it to use the
surface of their property to drill horizontally into neighboring properties. The court found that the plaintiff was
likely to succeed on the merits, and that the plaintiff had made a clear showing of irreparable harm since it was
well-settled that unauthorized interference with a real property interest constituted irreparable harm and since
denial of entry would delay the plaintiff's oil and gas operations, which were scheduled to begin "in the very
near future." Noting West Virginia's public policy favoring responsible development of natural gas resources,
the court also found that the balance of equities tipped in favor of the plaintiff and that a preliminary injunction
was in the public interest. SWN Production Co. v. Edge, No. 5:15-cv-00108 (N.D. W. Va. Sept. 30, 2015).
Other Land Use and Property Rights Disputes
Pennsylvania Court Affirmed That Exception in 1950 Deed Retained Mineral Rights for Grantor's
Successors. The Pennsylvania Superior Court ruled that grantors under a 1950 deed and their successors
retained their subsurface rights to oil, gas, and minerals based on an exception in the deed. The court held that
the deed provided that the grantors retained these subsurface rights subject only to a lease entered into in
1949. The court rejected the contention by a successor to the 1950 grantees that the grantors' rights
terminated when the 1949 lease expired. The court also rejected the claim that the exception did not extend
past the grantors because the deed did not expressly extend the rights to their "heirs and assigns." The court
also said it was "of no moment" that the grantees and their successors had treated the oil, gas, and mineral
rights as their own. Wright v. Misty Mountain Farm, LLC, No. 1658 MDA 2014 (Pa. Super. Ct. Oct. 9, 2015).
NEW CASES AND FILINGS
Civil Tort Actions
Appeal Filed After Dismissal of Trespass Claim Related to Fracking Waste Well. Landowners appealed
the judgment of the federal district court for the Eastern District of Arkansas that dismissed their claim of
trespass and resulting unjust enrichment related to the subsurface migration of waste fluid from a fracking
waste disposal well located on an adjacent property. After the first phase of discovery had ended, the district
court concluded that there was not enough evidence in the record to support a verdict for the plaintiffs, finding
that a juror would have to speculate to conclude that a trespass had occurred. The court found that the
testimony of the plaintiffs' expert witness, who had derived an equation that he said showed that waste fluid
had migrated under the plaintiffs' land, did not meet the evidentiary standard in Daubert v. Merrell Down
Pharmaceuticals, Inc. The court said the equation "assumes the answer to the fighting issue" and that the
expert's testimony was not based on sufficient facts or data about the subsurface. The court also identified
other methodological problems with the expert's equation. Stroud v. Southwestern Energy Co., No. 4:12-cv00500-DPM (E.D. Ark. Sept. 25, 2015), appeal filed, No. 15-3458 (8th Cir. Oct. 29, 2015).
Fracking Site Worker Brought Personal Injury Action Against Site Owner and Staffing Company. A
worker who suffered a concussion and other injuries as a result of an ice plug blowing during a hydraulic
fracturing operation at a Texas drilling site filed a lawsuit against the owner of the site and a company that
allegedly hired the owner's on-site company man. The complaint said that the on-site company man failed to
order the use of proper anti-freeze materials in the pipes despite freezing temperatures. The complaint alleged
counts of negligence, negligent undertaking, and premises liability against the site owner; counts of negligence
and negligent hiring against the defendant who hired the on-site company man; and a count of gross
negligence against both defendants. Cole v. EP Energy Co., E&P, L.P., No. 4:15-cv-02844 (S.D. Tex., filed
Sept. 30, 2015).
Citizen Suits
Citing Earthquake Risks, Sierra Club Gave Notice of Its Intent to Sue Companies Under RCRA to Force
Changes in Disposal Practices for Production Wastes. On October 29, 2015, Sierra Club sent a notice of
intent to sue to four companies that it said had violated the Resource Conservation and Recovery Act (RCRA)
by injecting waste fluids from oil drilling and hydraulic fracturing into wells and causing or contributing to a
"huge increase in the number and severity of earthquakes" in Oklahoma and southern Kansas. Sierra Club
contended that the companies' actions might present an imminent and substantial endangerment to health and
the environment. Sierra Club said that, at minimum, the companies would need to immediately substantially
reduce the amounts of production wastes being injected, reinforce vulnerable structures, and establish an
independent earthquake monitoring and prediction center. Sierra Club, Notice of Intent to Sue for Violations of
the Resource Conservation and Recovery Act Involving Earthquakes Induced by the Injection and Disposal of
Oil and Gas Production Wastes into the Ground (Oct. 29, 2015).
Government Enforcement Actions
EQT Appealed Order Finding It Responsible for Contamination of Agricultural Water Supply in
Pennsylvania. EQT Production Company (EQT) filed an administrative appeal of an order of the Pennsylvania
Department of Environmental Protection (PADEP). The order said that the contamination of a water supply
used for agricultural purposes was caused by an overflow of drilling production fluids from a production pit at a
gas well pad operated by EQT. The order stated that EQT was presumed responsible and causally responsible
for the pollution of the water supply. PADEP also found that EQT's failure to provide temporary water or restore
or replace the water supply was unlawful and constituted a public nuisance. In its appeal, EQT objected to the
order on a number of grounds, including that PADEP exceeded its statutory authority and failed to provide a
factual basis for its determinations. EQT said the presumption of responsibility was not applicable and that
PADEP had failed to demonstrate causation. EQT Production Co. v. Pennsylvania Department of
Environmental Protection, No. 2015-152 (Pa. Envtl. Hearing Bd., filed Oct. 12, 2015).
Suits Against Project Opponents
Pennsylvania Property Owners Filed New Complaint Alleging Environmental Groups Interfered with
Their Oil and Gas Leases. After the Pennsylvania Court of Common Pleas dismissed a lawsuit by oil and gas
lessors in Middlesex Township against Delaware Riverkeeper Network, Clean Air Council, and five individuals
for allegedly interfering with their contractual relationships with oil and gas developers, the lessors filed an
amended complaint. The lessors alleged that Delaware Riverkeeper Network and Clean Air Council used the
individuals as their agents and employed their "power and resources" to "harass and deter" the lessors "in their
use of, and reliance upon the leases, and the proper use of zoning procedures, promulgation of zoning
regulations, and zoning adjudicating administrative proceedings." The amended complaint alleged that the
plaintiffs' substantive challenges to zoning permits and to a zoning ordinance were intended to prevent any
activity pursuant to the plaintiffs' leases. The complaint alleged that the defendants made misrepresentations
and presented false information to the Middlesex zoning hearing board. The amended complaint alleged three
causes of action: tortious interference with contract, tortious interference with potential contractual relations,
and conspiracy. Dewey Homes and Investment Properties, LLC v. Delaware Riverkeeper Network, No. 201510393 (Pa. CCP, filed Oct. 13, 2015).
To speak with an Arnold & Porter attorney about these issues, contact:
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Partner
Washington, DC
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Lawrence.Culleen@aporter.com
Matthew J. Douglas
Partner
Denver
tel: +1 303.863.2315
Matthew.Douglas@aporter.com
Michael D. Daneker
Partner
Washington, DC
tel: +1 202.942.5177
Michael.Daneker@aporter.com
Jonathan Martel
Partner
Washington, DC
tel: +1 202.942.5470
Jonathan.Martel@aporter.com
Arnold & Porter attorneys have a long history of counseling energy companies on regulatory compliance and defending their
interests in enforcement proceedings and litigation. Information about the firm's experience with hydraulic fracturing is
available here.
© 2015 Arnold & Porter LLP. This Advisory is intended to be a general summary of the law and does not constitute legal
advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.
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