Wednesday, May 3, 2017

Shale Law in the Spotlight: Legal Developments Continue in the Effort to Assess Responsibility for Water Contamination in Dimock, Pennsylvania

Written by Chloe Marie – Research Fellow

More than eight years ago, contaminated drinking water wells, and their relationship with nearby gas wells, placed rural Dimock Township in Susquehanna County, Pennsylvania, at the center of the international shale debate. With a recent federal court ruling setting aside a multi-million-dollar jury award against the well operator, Cabot Oil & Gas Corporation (Cabot) and the filing of a new lawsuit by a landowner seeking damages against this well operator, legal developments exploring the responsibility of Cabot for this water contamination continue on. The legal battle between Cabot and some residents of Dimock Township began in early 2009 following the explosion of a residential water well, due to methane accumulation in the water wellhead, at the home of Norma Fiorentino on New Year’s Day. This residential water well was located in the vicinity of the several gas wells operated by Cabot. During this time period, several other residents also reported a degradation in their drinking water supplies due to what they alleged to be the discharge and spillage of pollutants associated with shale gas development.

In January 2009, the Pennsylvania Department of Environmental Protection (DEP) began an immediate investigation to identify the causes for those incidents. DEP’s investigation revealed high levels of dissolved methane and the presence of combustible gas in some of the nearby drinking water wells. Subsequently, DEP put in place a temporary moratorium on Cabot’s drilling activities in the Dimock area. In a Consent Order and Agreement dated November 4, 2009, DEP requested Cabot to develop and submit a casing and cementing plan, the purpose of which was to ensure the integrity of each new well to be drilled in the affected area. Furthermore, DEP required Cabot to provide and maintain temporary potable water supplies to residents until it identified and implemented corrective actions to comply with all applicable environmental laws and regulations.

Less than one month after the issuance of the Consent Order, on November 19, 2009, some local residents filed a lawsuit against Cabot in the U.S. District Court for the Middle District of Pennsylvania arguing that Cabot’s drilling operations had been improperly conducted, resulting for the residents in “health injuries, loss of use and enjoyment of their property, loss of quality of life, emotional distress, and other damages.”

As part of the ongoing investigation, DEP found that Cabot did not fully eliminate the risks of water contamination and did not restore or replace the affected water well supplies; therefore, on December 15, 2010, DEP and Cabot entered into a modified and final Consent Order and Settlement Agreement. Among other things, the Consent Order mandated that Cabot eliminate unpermitted natural gas discharges into state waters either by plugging wells or by using remedial actions as well as undertaking additional screening and water sampling. Furthermore, Cabot was required to establish an escrow fund in order to restore or replace the water supplies and to provide temporary whole house water supplies and fund residential water well treatment systems for selected residents. Finally, Cabot agreed to pay $500,000 to help DEP offset some of the costs associated with the investigation along with $4.1 million to the affected residents. Some of them, however, refused to settle, including the Ely and Hubert families. Thus, these plaintiffs continued to pursue the civil litigation that was filed on November 19, 2009.

In October 2011, Dimock residents requested EPA to further investigate the matter, which EPA agreed to do in November 2011. A month later, the EPA Region 3 Office asked the Agency for Toxic Substances and Disease Registry (ATSDR), an agency within the United States Department of Health and Human Services, to conduct an analysis of available water well data in the Dimock area. After reviewing the available data, ATSDR supported a “Do Not Use Until Further Notice” action for residential water wells fearing a risk for public health due to elevated levels of chemicals in the water. ATSDR also recommended that additional groundwater quality sampling be conducted. Meanwhile, following a request from Cabot, DEP authorized the corporation to stop supplying temporary water supplies to the affected residents in November 2011 on the basis that Cabot had satisfied its obligations under the Consent Order and Agreement.  

EPA, together with ATSDR, carried out successive water samplings on 64 private water wells from January to July 2012 and, based on the results of the sampling, found traces of toxic substances in certain wells, including lithium, arsenic, barium and manganese. On July 25, 2012, EPA concluded, however, that “the sampling and an evaluation of the particular circumstances at each home did not indicate levels of contaminants that would give EPA reason to take further action,” and thus ended its investigation. Shortly thereafter, in August 2012, DEP lifted the drilling moratorium on Cabot’s natural gas operations in the Dimock area.

Once Cabot resumed its natural gas drilling and completion activities, some residents remained concerned about changes in the quality of their drinking water, and thus they specifically requested the ATSDR to review the 2012 EPA water sampling data. In May 2016, the ATSDR released a new report – this time without any further intervention of EPA - reevaluating the 2012 water data and “recommend[ing] that people take steps to reduce health risks from exposure to contaminants found in their residential private wells.” More precisely, ATSDR found “some of the chemicals in the private water wells at this site at levels high enough to affect health (27 private wells), pose a physical hazard (17 private water wells), or make the water unsuitable for drinking.” According to the report, “this health consultation completes the ATSDR assessment of the EPA 2012 private well water data” and the findings and recommendations in this report “supersede” the prior ATSDR recommendations.

In late February 2016, the Dimock residents finally proceeded to trial. After years of multiple dispositive motions and extensions of time as well as extensive briefing, the jury reached a verdict on March 10, 2016, holding Cabot responsible for water contamination in Dimock Township arising from its natural gas exploration and production activities. The jury directed Cabot to pay a total of $4.25 million to the remaining plaintiffs covering property and private nuisance damages. On April 7, 2016, however, Cabot filed a number of post-trial motions including a motion for judgment as a matter of law, a motion for new trial, a motion to set aside verdict, and a motion for damages remittitur.

On March 31, 2017, in a Memorandum Opinion, the U.S. District Court denied Cabot’s motion for judgment as a matter of law but “agree[d] with Cabot that the weaknesses in the plaintiffs’ case and proof, coupled with serious and troubling irregularities in the testimony and presentation of the plaintiffs’ case . . . combined so thoroughly to undermine faith in the jury’s verdict that it must be vacated and a new trial ordered.” Thus, the U.S. District Court granted Cabot’s motions to set aside the verdict and placed the case on a path for a new trial.

On April 13, 2017, Raymond Kemble, a Dimock resident, filed a lawsuit in the U.S. District Court for the Middle District of Pennsylvania alleging that Cabot’s shale operations constituted a “private, temporary, continuing, abatable nuisance, and negligence/recklessness.” Kemble stated in his complaint that “[his] property, [his] livelihood, and [his] quality of life have all been negatively impacted and [he] is no longer able to enjoy his home and property in the way he previously enjoyed prior to [Cabot’s drilling activities].”

While significant legal developments have occurred in the past eight years, it does not appear that these legal developments will be concluded in the near future. Stay tuned for any further legal developments!

Further information on both lawsuits Ely et al. v. Cabot Oil & Gas Corp. and  Kemble v. Cabot Oil & Gas Corporation et al. can be found respectively at docket no. 3:09-cv-02284 and no. 3:17-cv-00665 in the U.S. District Court for the Middle District of Pennsylvania.


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