ENVIRONMENT: Fracking commission to recommend making it easier for landowners to sue

ENVIRONMENT — A commission tasked with advising Maryland on possible shale gas production supports a change in the law that would make it easier for landowners to bring claims against drillers regarding water contamination and other damages near hydraulic fracturing, or “fracking,” sites.

The new law, which commission chair and Towson University professor David Vanko said has “pretty broad support” from the commission, would shift the burden of proof to energy companies by creating a “rebuttable presumption” that drilling activity causes certain kinds of damages occurring close in time and proximity to natural gas operations.

“I think (asymmetry of resources) always has been an issue in litigation, particularly where an aggrieved party, Joe Homeowner, is suing a Fortune 500 company,” said Harry Weiss, a lawyer in the Philadelphia-based law firm Ballard Spahr and a member of the advisory commission. Weiss said Pennsylvania already has a similar presumption statute for damages that occur near natural gas operations.

This and other changes to the state’s liability structure, as well as potential revenue sources from gas drilling, will be included in a set of recommendations due Dec. 31 – the first milestone in a three-year study that Gov. Martin O’Malley required by executive order in May.

State regulators are working with the advisory commission to form recommendations on all aspects of shale gas drilling before deciding whether Maryland should ultimately allow the controversial practice.

The first recommendations will come just weeks after the Environmental Protection Agency announced for the first time that there may be a link between fracking and groundwater contamination. The draft report, released Dec. 8, describes high levels of benzene, synthetic chemicals and methane in private drinking water wells near Pavillion, Wyo., where fracking is widespread.

The EPA study is “a watershed moment in the discussion of this issue,” said Paul Roberts, a small business owner in Garrett County and a member of the governor’s advisory commission.

“We finally have the federal government confirming what people have been saying for years,” Roberts said.

Encana Corporation, which owns the natural gas field in question, issued a news release this week criticizing the EPA study’s methodology and findings. “Natural gas developers didn’t put the natural gas at the bottom of the EPA’s deep monitoring wells, nature did,” the statement read in part.

Fracking is an unconventional method of gas extraction that involves drilling horizontally into a shale layer and injecting a pressurized mixture of water, sand and chemicals to crack open the rock, releasing trapped gas.

Fracking sites are numerous in West Virginia and Pennsylvania, which allow energy companies to drill in the Marcellus Shale, a natural gas-rich rock formation that underlies much of northern Appalachia.

But Maryland, where the same formation cuts across Garrett County and part of Allegany County, has not approved or denied permits for Marcellus Shale drilling.

Vanko emphasized there may be differences between the fracking involved in the EPA study in Wyoming and the kind of fracking that might occur in Maryland.

“It should influence us if the situation in that case, in Wyoming, is similar to that of the Marcellus Shale, and I just don’t know yet how similar that is,” Vanko said.

In a news release accompanying the report, the EPA said the findings are “specific to Pavillion, where the fracturing is taking place in and below the drinking water aquifer and in close proximity to drinking water wells – production conditions different from those in many other areas of the country.”

The second phase of the Maryland study, due August 2012, will address “best practices” to limit the environmental and public health risks of shale gas production. The commission will look closely at the EPA’s findings in this phase, Vanko said.

Roberts said Maryland should consider a recent incident in Bradford County, Pa., where the state’s Department of Environmental Protection in May fined Chesapeake Energy almost $1 million for improperly casing wells, allowing methane to migrate and contaminate the private water supplies of 16 families.

“In our own region, right here in the Marcellus Shale, in less than four years, the state of Pennsylvania is confirming that water contamination has occurred at drilling sites in multiple instances when, again, the drilling industry insisted that’s not possible,” Roberts said.

“I don’t think it’s alarmist to point out that this is occurring and that this could be our future in Maryland if we allow drilling,” he said.

Not all of the advisory commission members agree that a presumption statute, which would make it easier for landowners to sue gas companies over water contamination or other damages, is desirable.

“My fear is, are we trying to find a way to do this and do it safely, or are we trying to find a way to make it so the drillers aren’t interested?” said Bill Valentine, Allegany County Commissioner and advisory commission member.

The commission also supports a recommendation to enact a “Surface Owners Protection Act,” Vanko said.

This law would mainly help landowners who do not own their mineral rights and cannot negotiate for contractual protections from drilling activity on their land, he said. Surface owners who also own their mineral rights are able to negotiate for protections or compensation for possible damages when entering lease agreements.

On the revenue side, Vanko said the commission is “strongly in favor” of a state-level severance tax on any gas that might be produced, “if it’s an appropriate level.”

But the commission is divided over a recommendation for a per-leased-acre fee on the industry to fund the state’s study of Marcellus Shale drilling.

— by Greg Masters, Capital News Service

Featured image by Greg Masters, Capital News Service: Residents of Accident, a small town on the westernmost edge of Maryland, are among those who would be affected if the state allows energy companies to drill for natural gas in the Marcellus Shale.