Wednesday, August 8, 2018

Shale Law in the Spotlight: Bankruptcy Filing Reveals Settlement of Water Pollution Claims in Butler County, Pennsylvania

Written by Chloe Marie – Research Fellow

On February 8, 2011, Janet and Fred McIntyre, both residents of Connoquenessing Township in Butler County, Pennsylvania, filed a complaint with the Pennsylvania DEP (DEP) claiming to have experienced drinking water quality issues. The McIntyres alleged that their drinking water quality had seriously deteriorated after Rex Energy Operating Corporation started drilling hydraulically fractured gas wells around their property. In their complaint, they said they suffered from extreme illness and severe vomiting every time they drank water and described the water as being foamy and very odorous.

Rex Energy performed water sampling testing and provided the McIntyres with a water buffalo and bottled water on February 3, 2011, until an investigation could be completed prior to the complaint being filed. The test results from Rex Energy showed no evidence of water pollution. DEP representatives collected water samples on February 10 and 14, 2011; these results also showed no detectable pollutants in the water. On April 4, 2011, DEP again conducted water testing and noticed “no sheen, odor, or foaming to the water.” 

On April 26, 2011, DEP determined that “the sample results of samples taken by the Department did not show any evidence that [the McIntyres’] water was affected by oil and gas drilling activities.” In the investigation report, DEP revealed the presence of iron and manganese in the sampling but concluded that this was caused by the prior removal and replacement of a submersible pump. 
Subsequently, other residents complained about similar symptoms to the ones suffered by the McIntyres. Nine families from the Woodlands communities in Butler County filed lawsuits against Rex Energy claiming health and pollution damages. 

Rex Energy ultimately agreed to pay $159,000 to the Woodland families as part of an agreement in order to settle this water pollution matter. Interestingly, this information became available to the public through Rex Energy’s Statement of Financial Affairs dated July 2, 2018, as part of Rex Energy’s bankruptcy filing before the U.S. Bankruptcy Court for the Western District of Pennsylvania (docket no. 2:18-bk-22032). 

According a recent news release, Rex Energy Corporation announced that it started the sale process for all of their remaining assets as part of a strategy to “maximize their long-term value and prospects.” The company also declared that it “has secured a financing commitment of $100 million from its existing first lien lenders, which, combined with its normal operating cash flow, will allow Rex Energy to maintain normal operations and meet ongoing financial commitments.” 

This project is funded by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture.

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