Tuesday, November 16, 2010

Hydraulic Fracturing And Strict Liability

Well, I'm back.

After something of a hiatus over the summer and early fall due to work and personal commitments, I am back to blogging about water. And first up is an issue much in the press here in Pennsylvania - hydraulic fracturing, or as it is sometimes known hydrofracking or just fracking.

Just for the benefit of anyone not familiar with the term, hydraulic fracturing is a technique used to extract natural gas from shale formations. In much of the Northeast, it has become a matter of public debate due to technological developments that now allow hydraulic fracturing of the Marcellus Shale, a particularly deep and large shale formation which underlies much of New York, Pennsylvania, Ohio, and West Virginia.

The debate over hydraulic fracturing has been intense. On the one hand, the Marcellus Shale represents a massive reserve of natural gas - a far cleaner energy source than oil. And thus represents an enormous potential economic benefit to the various states the Marcellus Shale underlies. On the other hand, many have raised concerns, particularly in a post gulf oil spill world, over the potential for environmental contamination due to hydraulic fracturing. A number of stories about contaminated drinking and ground water have spurred these fears to the point that both New York and Pennsylvania have enacted moratoriums on hydraulic fracturing (though there is speculation that Pennsylvania's new governor may repeal Pennsylvania's limited moratorium).

Well, the foes of hydraulic fracturing have just won a minor victory in a recent federal court decision coming out of the Middle District of Pennsylvania. In Fiorentino v. Cabot Oil & Gas Corp., No. 09-cv-2284 (M.D. Pa. November 15, 2010) Judge John Jones refused to dismiss a suit against Cabot arising out of allegations that Cabot's hydraulic fracturing operations contaminated the plaintiffs’ property and water with methane, natural gas, and other toxins. The decision is significant because one of the questions before the court was whether a claim of strict liability can be brought against a hydraulic fracturing operation.

For the non-lawyers among my readers, certain types of activities – the most common example being blasting – are considered so intrinsically hazardous that someone engaged in those activities will be liable for any harm they cause, even though they have taken every possible precaution against such harm. This enormously reduces the evidentiary burden on plaintiffs, who only need to prove that the defendant was engaged in the activity, and that the activity caused the harm complained of.

In Fiorentino the plaintiffs asserted, among others, a claim for strict liability. Cabot sought dismissal of that claim, arguing that while Pennsylvania courts have never directly addressed this issue in the context of hydraulic fracturing, the Pennsylvania Supreme Court has consistently held that other oil and gas related activities are not sufficiently hazardous to invoke strict liability. The court, though not finding that Cabot’s drilling activities were subject to strict liability, ruled that a detailed factual record needs to be developed before such a decision can be made.

If the Fiorentino case does not settle first, there is the potential for a determination that gas exploration, and hydraulic fracturing in particular, could be found to be an abnormally hazardous activity subject to strict liability. That could have a profound effect on the exploration of the Marcellus Shale in Pennsylvania.

This is one to watch.

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