Concerns pervade Marcellus drilling

Source: Charleston Daily Mail (WV), May 24, 2011
Posted on: http://envfpn.advisen.com

The expansion of West Virginia’s natural gas industry could open up new battlefronts in the courtroom over the protection of property rights, health and the environment.

Some of the legal uncertainty may result from the failure so far of state lawmakers to settle questions about how to regulate drilling in the Marcellus shale. The shale contains a massive underground cache of gas that could help create thousands of jobs and generate billions of dollars.

But there are also new environmental concerns, including whether the water-intensive method called hydraulic fracturing threatens to suck too much water from streams. There is similar concern that the chemical serum that companies use in the same process threatens water supplies.

Joe Lovett, an environmental lawyer who directs the Appalachian Center for the Economy and the Environment, has been among those leading his side’s charge against mountaintop removal coal mining.

Now he’s begun looking at the environmental effects of gas drilling. State environmental regulators say they are already looking into some of the issues.

There are also air quality issues.

“People really complain about air emissions from the pads at certain times,” Lovett said.

Lovett also is looking at whether gas companies have too much leeway to use surface owners’ land without compensating them.

“The whole operation, could it be less invasive?” Lovett said. “Basically, the gas companies just take over your property when they do this.”

One issue lawyers hope to press would help steer money toward surface owners who don’t own the mineral rights beneath their land.

These landowners are in danger of being left out of the shale boom. Currently companies can come on surface owners’ property and develop the gas beneath without paying the surface owners anything in return.

David McMahon of the West Virginia Surface Owners’ Rights Organization wants to change that.

He argues that in the case of mineral rights deeds sold off decades ago, the landowners never imagined gas companies would use such large well pads to get gas from the Marcellus shale.

Then, McMahon said, drillers were just using traditional gas wells with a relatively small footprint.

Now drillers are building pads several acres wide with holes that extend thousands of feet underground in multiple directions. The company also visits these wells more often than they do normal wells.

That’s more than landowners bargained for, Lovett said.

“A lot of issues are about whether these companies have a right to takeover somebody’s property and make an industrial site out of it,” he said.

Patrick McGinley, an environmental lawyer who teaches natural resources law at West Virginia University, said surface owners successfully made a similar argument against strip mining several decades ago.

Then surface owners argued that when the rights to mine coal beneath the ground were sold off years earlier in the era of horsepower, the original landowners could never have anticipated large earthmovers tearing into the sides of mountains to take coal.

“It was a technology that made the difference,” McGinley said. “You would have to have been a swami, a fortuneteller, to figure out these sorts of developments would happen, and the same is true with Marcellus.”

McGinley said courts in every coal-producing state but Kentucky agreed with surface owners and required coal companies to renegotiate for the ability to strip mine. In Kentucky, voters eventually amended their constitution to do the same thing.

Corky DeMarco, a spokesman for the West Virginia Oil and Natural Gas Association, said he wasn’t sure if that argument would hold up.

“I don’t know whether the technology of the day was a wooden derrick or the technology of the day was a horizontal well pad, I don’t know what people understood, and what people understood may or may not be what’s going on today,” DeMarco said.

“But I don’t know that there’s a legal argument that, ‘Just because you didn’t know’ drilling a well would come to this, you’re entitled to anything other than what you got from your minerals in the first place.”

McMahon also has another, somewhat more complicated argument that could be tested in court even if his first theory doesn’t hold up.

He said surface owners might be able to challenge gas companies that put well pads on their property to get their neighbors’ gas.

Right now, companies have a right-of-way on Farmer A’s property if they own the mineral rights beneath the farm. But the companies also may build a well there that gets gas from Farmer B’s property if the companies also own the mineral rights there.

McMahon said that amounts to trespassing.

“Surface owners don’t believe that the driller can put a well on their surface that drills horizontally out from under the mineral tract under their surface to hundreds and hundreds of acres of surrounding mineral tracts,” he said.

“All the burden for drilling to all those mineral tracts is gathered on the one surface owner’s tract, and that was not what the deal was at the time surface and minerals on that one tract were separated.”

Winning a case like that would give surface owners a bargaining chip with companies.

“Surface owners are believing when drillers say, ‘We have a right to put this here,’ ” he said. “They don’t read legal treatises, so they end up signing documents that does give them permission for a whole lot less money than they ought to get.”

Kevin West, a spokesman for gas producer EQT, said he is not expecting more litigation right now and expects legislatures in Marcellus shale states to develop laws clarifying these issues.

“I would not expect more litigation, and I’m optimistic that both the Pennsylvania and West Virginia legislatures are on a good path to enacting comprehensive natural gas legislation,” West said. “Usually legislation takes a couple of sessions to work through all the issues, and EQT has been supportive of a comprehensive plan.”

West said he knew and has worked with McMahon but had not yet talked with him about some of legal theories being advanced.

“We have not seen any litigation like that before,” West said.

It’s not clear when or if these issues will end up in courts.

Lovett has no immediate plans to bring suits. But the possibility underscores the legal uncertainty as new drilling methods meet decades-old regulations and case law.

Richie Heath, executive director of West Virginia Citizens Against Lawsuit Abuse, a pro-business group, said legislative uncertainty gave courts plenty of room.

“I think that this is an area that obviously if you don’t have clearly identified rules, I think you will see an effort to apply regulations ad hoc through things like litigation, challenges, and it could become very court-driven if there’s a void on the regulatory front,” Heath said.

Heath also noted January’s “public hearings” in Marshall County held by representatives of the New York-based law firm of Weitz and Luxenberg, which specializes in plaintiff’s work. An attorney with the firm said in a press release the firm was looking at health issues, including air and water.

Heath said there could also be a push for medical monitoring of people near well sites because of the chemicals used to fracture wells. So far, the health affects of “fracking” are unclear but subject to close scrutiny.

“This is an issue that could be ripe for a flood of medical monitoring lawsuits, and that’s primarily because this is a novel issue and we’re still in the process of figuring it out,” Heath said.

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