Baker Hughes plans to disclose hydraulic fracturing chemicals without compromising its trade secrets

In a statement released on April 24, 2014, Baker Hughes, the third largest oilfield services provider, announced that it “believes it is possible to disclose 100% of the chemical ingredients we use in hydraulic fracturing fluids without compromising our formulations – a balance that increases public trust while encouraging commercial innovation. Where accepted by our customers and relevant governmental authorities, Baker Hughes is implementing a new format that achieves this goal, providing complete lists of the products and chemical ingredients used.”

The new disclosure policy may take several months to fully implement, according to a Baker Hughes spokesperson, because the company is still negotiating with its suppliers and customers and updating its system.

Baker Hughes’ disclosures would be made through, which was created for companies to voluntarily disclose their hydraulic fracturing fluid contents. The website is managed by the Groundwater Protection Council and the Interstate Oil and Gas Compact Commission and is funded by the industry and the U.S. Energy Department. has been criticized as having loose reporting standards, allowing companies to avoid disclosure by claiming trade secrets. In March 2014, a U.S. Energy Department task force report analyzed FracFocus’ operating and reporting procedures and recommended full disclosure of all known constituents added to fracturing fluid with very few exemptions.

This post was written by Barclay Nicholson ( or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.

Eight Arkansas families sue natural gas gathering company over compressor station operations

In the Circuit Court of Faulkner County, Arkansas, on April 24, 2014, eight families who live near compressor stations operated by Desoto Gathering Company sued that company, alleging the emission of “huge amounts of methane and hydrogen sulfide, as well as other flammable, malodorous and noxious gases, chemicals and compounds, directly into the air.” In addition, these families assert that the compressor stations “are injuriously loud and produce harmful levels of noise and toxic emissions” and that they have been harmed by the noise, vibration, odor and pollution.

Having purchased their property many years ago because it was in a rural, non-industrial setting, the families allege that they were not consulted when the compressor stations were built nor when the stations were enlarged. The families claim that their “homes are within the blast/impact zone of the Midge 2 [and Scotland CPF 2] compressor station[s], the area which is likely to be impacted in the event the massive amounts of explosive natural gas or other flammable hydrocarbons on-site were to explode or catch fire.”

Stating causes of action for strict liability and negligence, each of seven families seeks $3 million for compensatory damages and $5 million in punitive damages (with one family seeking $8 million and $12 million, respectively, claiming exacerbation of the husband’s post-traumatic stress disorder diagnosed by the Department of Veterans Affairs) for discomfort resulting from the company’s activities and for personal injuries resulting from the noise and vibration of the compressor stations.

This lawsuit, Ramsey, et al. v. Desoto Gathering Company, LLC, Case No. 23CV-14-258, in the Circuit Court of Faulkner County, Arkansas for the 20th Judicial District, was filed two days after a $2.925 million verdict in Dallas, Texas for nuisance damages arising from the drilling activities of a natural gas company. Click here for more information on the Dallas verdict.

The eight families in this lawsuit were severed from a class action lawsuit now in federal court, Ramsey, et al. v. Desoto Gathering Company, LLC, et al., Case No. 4:13-cv-00626-BRW, In the U.S. District Court for the Eastern District of Arkansas, Western Division, on March 27, 2014. The Court severed these families because the class action was not based on claims arising from the Midge CPF-2 and Scotland CPF-2 compressor stations, but rather on another compressor station.

More briefs filed in Robinson Township v. Commonwealth of Pennsylvania

Briefs continue to be filed in Robinson Township, et al. v. Commonwealth of Pennsylvania, et al., Case No. 284 MD 2012, in the Pennsylvania Commonwealth Court concerning two issues: (1) whether the valid provisions of Act 13, P.L. ___, 58 Pa. C.S. §§2301-3504 (a substantial re-write of the Commonwealth’s Oil and Gas Act) are severable from those provisions found to be unconstitutional and (2) whether a section of the law that exempts drillers from having to inform owners of private water sources in the event of a potentially contaminating spill near their properties is unconstitutional.

In opening briefs filed on April 1, 2014, the Pennsylvania Department of Environmental Protection (“DEP”) and the Pennsylvania Public Utility Commission (“PUC”) urge severability, contending that sections 3305-3309 can be implemented without invalidated sections 3303 and 3304. On April 21, 2014, Robinson Township and its fellow municipalities (“municipalities”) filed a response, arguing that “sections 3305 to 3309 are so entangled with Sections 3303 and 3304 that they cannot stand on their own.” According to the municipalities, “sections 3305 to 3309 create a statewide mechanism for establishing and enforcing sections 3303 and 3304’s statewide, uniform scheme for local regulations of oil and gas development, which is now a nullity.”

Invalidated section 3303 precluded local regulation of oil and gas operations when those operations were governed by state or federal laws, while invalidated section 3304 created a statewide, uniform zoning scheme for local ordinances dealing with oil and gas operations. Section 3305 allows the PUC to review local zoning ordinances for compliance with the Municipalities Planning Code (MPC); sections 3306-3307 provide that an aggrieved person can file a lawsuit to invalidate an ordinance that violates the MPC; section 3308 provides that, for noncompliance with the MPC, impact fees may be withheld from the municipality; and section 3309 gives a municipality 120-days to review and amend an ordinance for compliance.

With the second issue, whether section 3281.1 of Act 13 that exempts drillers from having to inform owners of private water sources in the event of a potentially contaminating spill near their properties is unconstitutional, the municipalities argue in their opening brief that section 3218.1 of Act 13 violates equal protection by excluding notice to owners of private water sources. In its April 21, 2014 response, the DEP points out that “section 3281.1 of Act 13 is but one of the numerous statutory mechanisms through which spill notification and remediation is addressed” and that these mechanisms “adequately protect unregulated private well owners in the event of a spill.”

The Commonwealth Court of Pennsylvania has scheduled an en banc argument for May 14, 2014, at 9:30 a.m. (EDT).

For additional information, click here and here.

This post was written by Barclay Nicholson ( or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.

Alaska Oil & Gas Conservation Commission finalizes hydraulic fracturing rules

The Alaska Oil & Gas Conservation Commission finalized its proposed hydraulic fracturing regulations at a public meeting on April 2, 2014. The Commission first proposed these regulations in December 2012 and has revised the draft regulations several times.

The regulations require the disclosure of chemicals used in the hydraulic fracturing process and, with this last revision, include a provision allowing the operators to submit the names of proprietary chemicals confidentially. The confidential information must be “separately filed in an envelope clearly marked confidential along with a list of the documents which are non-disclosable as trade secrets, the specific legal authority, and specific facts supporting non-disclosure” in accordance with Alaska’s public information statutes. Anyone can make a request for disclosure of that information under Alaska’s Public Records Act and file a lawsuit in Superior Court if the claim of confidentiality is challenged.

In addition, the latest regulations require a pre-hydraulic fracturing plan for baseline water sampling of water wells located “within a one-half mile radius of the current or proposed wellbore trajectory.” The operator must make “reasonable and good faith efforts” to secure the permission of all landowners to allow the pre-fracking sampling. A landowner who refuses pre-fracking sampling or refuses to allow disclosure of the results is not required to be included in the post-fracking water sampling plan.

The regulations include requirements relating to casing and cementing, identification of freshwater aquifers and all water wells located within one-half mile of the well’s surface location, the hydraulic fracturing program, pressure relief valves, confinement of hydraulic fracturing fluids, and annulus pressures. Within 30 days of completion of the hydraulic fracturing operation, the operator must file a Report of Sundry Well Operations with the Commission, outlining the work performed, the tests conducted and a summary of daily well operations. Prior to submitting the Report of Sundry Well Operations, the operator must post the information to the website.

This post was written by Barclay Nicholson ( or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.

Dallas jury awards damages for natural gas drilling nuisance claim

On April 22, 2014, a Dallas jury in a 5 to 1 verdict awarded $2.925 million to a Wise County, Texas family who claimed serious health problems caused by the natural gas wells drilled on neighboring properties by several oil and gas companies. In their Eleventh Amended Petition, the Parr family alleged that “cumulative environmental contamination and polluting events” from the companies’ activities caused diminution of the value their 40-acre property and damages for physical pain and suffering and for mental anguish. They argued that they were forced to evacuate their home because medical tests revealed the presence of natural gas chemicals, compounds, and metals such as ethylbenzene and xylene.

When trial began on April 8th, there was only one oil and gas company remaining as a defendant, which has approximately 22 wells within a two-mile radius of the Parr family’s residence, out of the hundreds of wells in area. Stating that the Parr family could not prove that their illnesses were caused specifically by one of its wells, the company argued that its drilling activities, including hydraulic fracturing, stay within the air quality limits set by the Texas Commission on Environmental Quality and the Texas Railroad Commission and that the company operates within industry standards and best practices.

Answering the questions in the court’s charge, the jury found that the company had intentionally created a private nuisance with its activities and awarded $275,000 for loss of market value, $2.0 million for past pain and suffering, $250,000 for future pain and suffering, $400,000 for past mental anguish, and $0 for future mental anguish. The jury did not award exemplary damages, finding no malice and that the conduct was not abnormal nor out of place in its surroundings.

Counsel for the company stated that post-verdict motions challenging the verdict will be filed; and, if the verdict is entered, an appeal is likely. The court has set a final disposition hearing for May 27, 2014 at 9 a.m.

The lawsuit is Parr, et al. v. Aruba Petroleum, Inc., Case No. CC-11-01650-E, in the County Court at Law No. 5, Dallas County, Texas.

This post was written by Barclay Nicholson ( or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.

University of Colorado report examines economic effects of a statewide ban on hydraulic fracturing

With five municipalities and Boulder County in Colorado voting to ban hydraulic fracturing, the Leeds School of Business at the University of Colorado - Boulder studied the economic effects of a statewide hydraulic fracturing ban.

The research was conducted on behalf of several local economic-development companies, including the Metro Denver Economic Development Corporation, who wanted to show the worst-case scenario so the public would understand the size of the oil and gas industry in Colorado.

According to the report, which assumes a 95% reduction in drilling activities, the economic consequences of a ban beginning in 2015 would be an average $8 billion in lower gross domestic product and 68,000 fewer jobs in the first five years.

Over a longer time span (2015-2040), it would be an average of $12 billion lower gross domestic and 93,000 fewer jobs. The depletion in production would leave Colorado with an average direct revenue reduction of $567 million over the first five years, declining $985 million by 2040.

The ripple effect of reduced household spending would negatively impact all levels of the supply-chain, including retail stores, construction, educational services and health care.

This post was written by Barclay Nicholson ( or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.

Pennsylvania Department of Conservation and Natural Resources releases report on impact of shale gas development on public lands

On April 16, 2014, the Pennsylvania Department of Conservation and Natural Resources (DCNR) issued a long-awaited report concerning shale gas activities in the state’s forests. In late 2010, the Bureau of Forestry initiated a Shale-Gas Monitoring Program to “track, detect, and report on the impacts of” shale gas development and “to provide objective and credible information to the public and inform and improve shale-gas management efforts.”

According to the report, there are approximately 1.5 million acres of state forest located over the Marcellus Shale. Of that acreage, 44% (673,000 acres) is available for gas development. Leases would restrict surface disturbance in sensitive areas and limit overall surface disturbance to approximately 2% of the acreage within the lease tract.

The program monitors a broad set of values including water, wildlife, plants, forest health, invasive species, soil, air, incidents, recreation, community engagement, timber, energy, revenue, forest landscapes, and infrastructure. For each of these values, the report sets out key points and findings. Among these key points are the following:
  • Initial water monitoring results have not identified any significant impacts due to shale-gas development.
  • A widespread sampling of water, including over 300 locations, showed that pH results were primarily in the circum-neutral range.
  • As of 2012, approximately 1,486 acres of state forest have been converted to roads, pipelines and well pads.
  • Impacts to the forest surrounding disturbance can only be discovered through long-term forest health monitoring.
  • Increased susceptibility to pest attack, especially by nonnative invasive species, may occur wherever there is forest disturbance along newly created edges.
  • To the extent possible, placement of shale-gas infrastructure has avoided wet souls and soils with high runoff potential.
  • A short-term air quality study did not detect air pollutants above rural background conditions.
  • Wildlife habitat will change due to shale-gas infrastructure, resulting in more edge and early successional habitat.
The environmental group PennFuture has raised questions about the report, asking if it was peer-reviewed by outside experts, what changes the DCNR has made or will make as a result of this report, and when will the raw data be released. The group opposes drilling in parks and state forests and criticizes Governor Tom Corbett’s plan to lift a 2010 moratorium on additional state forest leasing in order to raise $75 million in revenues.

State Representative Greg Vitali, D-Delaware, asked the DCNR to release details of the plan to allow additional drilling for gas in the state’s forests. That request under Pennsylvania’s Right-To-Know law was essentially denied, with the DCNR stating that the requests were overbroad and that it “was unable to locate information or records…that specifically indicated $75 million through non-surface impact drilling on Commonwealth-owned land.” The DNRC indicated that it would produce records showing the mineral rights owned by the state in state parks, and it agreed to provide thousands of pages of underlying data for the Shale-Gas Monitoring Report upon receipt of a new request.

This post was written by Barclay Nicholson ( or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.

Court upholds Pennsylvania’s forced pooling statute as constitutional

On April 8, 2014, a Pennsylvania Court of Common Pleas judge upheld the state’s controversial forced pooling statute (section 34.1 of the Oil and Gas Lease Act) as constitutional. This pooling statute, which was signed into law on July 9, 2013, gives drillers the ability to pool leased properties into one unit for horizontal wells, as long as the oil and gas contracts in effect do not prohibit these combinations.

In her order, the judge stated that “so long as the lessors’ rights granted by lease and law are not impinged upon, the lessee has broad powers to develop the oil and gas estate as it sees fit, including crossing property lines between contiguous leases while engaging in horizontal drilling.” Finding that the “statute does not abridge any existing rights or create any new ones, but merely clarifies existing rights, it does not impair the obligations of contracts” the judge concluded that the statute was not unconstitutional. “[W]here [the lessee] has the right to develop multiple contiguous oil and gas leases separately, it may develop those leases jointly by horizontal drilling unless expressly prohibited by a lease.”

Shortly after the new statute was signed, this lawsuit was filed by an oil and gas operator against a number of landowners, who hold old oil and gas contracts without pooling provisions, accusing them of blocking the company from conducting surveys on their land to determine where to drill for shale gas. The operator requested a declaratory judgment granting it access to the properties and to engage in horizontal drilling on the pooled properties. On December 26, 2013, with the memorandum opinion issued on January 8, 2014, the judge ordered the landowners to allow the operator “reasonable ingress, egress, access to and use of the…properties…for the purpose of performing seismic testing.”.

For additional information on this lawsuit, click here and here.

This post was written by Barclay Nicholson ( or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.

EPA releases five white papers on methane and VOC emissions in the oil and natural gas sector

On April 15, 2014, the U.S. Environmental Protection Agency (EPA) released for public comment and external peer review five white papers on potentially significant sources of methane and volatile organic compound (VOC) emissions in the oil and gas sector. As instructed in the White House’s Strategy to Reduce Methane Emissions issued in March 2014 and with the input from the peer reviewers and the public, the EPA will determine how to best pursue additional emission reductions from these sources. The comment period ends on June 16, 2014.

The technical white papers analyzing methane and VOC emissions cover five sectors: compressors, emissions from completions and ongoing production of hydraulically fractured oil wells, leaks, liquids unloading, and pneumatic devices. Each white paper defines the source of the emissions, provides data on the emissions, and discusses available mitigation techniques. At the end of each white paper, there is a section requesting reviewers to consider listed questions, some specific to the methodology addressed in the paper and others addressing more general knowledge gaps on methane emissions and VOCs.

After the review period, the EPA will evaluate whether the current emission requirements need to be changed. In April 2012, the EPA completed rules to reduce emissions from oil and gas operations, including hydraulic fracturing. These rules targeted compressors, oil storage tanks and other oilfield equipment. For all wells being completed on or after January 1, 2015, operators must install “green completions” which are technologies that capture harmful emissions.

In August 2012, the EPA issued standards for oil and gas production facilities under the New Source Performance Standards (NSPS). These standards establish control requirements for hydraulic fracturing, including combustion controls during frack flowback which took effect in October 2012.

One year later, the EPA updated its 2012 performance standards addressing VOC emissions from storage tanks. The updated rule clarifies the type of storage tanks that are subject to the NSPS and delays the compliance deadlines for some tanks until April 15, 2014 and for others until April 15, 2015.

This post was written by Barclay Nicholson ( or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.

California hydraulic fracturing moratorium bill approved by State Senate Committee

On April 4, 2014, in a 5 to 2 vote with two members abstaining, the California Senate Natural Resources and Water Committee approved proposed legislation (Senate Bill 1132) that would place an indefinite moratorium on hydraulic fracturing and acidizing activities throughout the state, both onshore and offshore, until a sufficient state study on the threats and impacts of fracking is complete and regulations are in place to protect the state and its citizens.

This bill expands on the hydraulic fracturing law (S.B. 4) that took effect on January 1, 2014, which requires oil and gas companies to (1) apply for and obtain permits before starting fracking and other well stimulation operations, (2) notify near-by landowners of these activities, (3) disclose all chemicals used, and (4) monitor groundwater and air quality.

In addition, SB-4 requires a scientific study on well stimulation treatments. “On or before January 1, 2015, the Secretary of the Natural Resources Agency shall cause to be conducted, and completed, an independent scientific study on well stimulation treatments, including, but not limited to, hydraulic fracturing and acid well stimulation treatments. The scientific study shall evaluate the hazards and risks and potential hazards and risks that well stimulation treatments pose to natural resources and public, occupational, and environmental health and safety.”

Under S.B. 1132, the S.B. 4-ordered study would be broadened to include the investigation of the potential impacts of well stimulation and increased oil and gas activity on the state’s efforts to meet its greenhouse gas reduction targets; impacts on private property and land use; health risks; economic costs and harms; potential risks to worker safety; potential effects on ground and surface water, looking at the risks for contamination and effects on water sustainability; evaluation of the risks posed by flowback fluids and byproducts generated by fracking; potential disruption of low income communities and communities of color; and other potential environmental, health, and economic effects on the state and its residents.

Within six (6) months of the completion of the study, a panel consisting of the heads of the Natural Resources Agency, the Air Resources Board, the California EPA, and the State Water Board, shall be convened to determine whether the study is complete and whether additional regulations are needed to protect the state and its people. A tentative copy of the report would be released, allowing the public 60 days for comments. Once finalized, the report would be issued to the Governor and to the appropriate legislative committees. It will then be up to the Governor to decide if fracking and other well stimulation activities can safely resume and under what conditions. Gov. Brown has not been amenable to similar suggested moratoriums in the past, citing the economic benefits of the oil and gas activities.

This post was written by Barclay Nicholson ( or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.

Methane emissions from oil and gas operations targeted by state regulations

Ohio has joined Colorado and Wyoming in issuing new regulations aimed at limiting the emission of methane gas from oil and natural gas operations to address climate change and health concerns. In development for more than a year, the revised Ohio rules are effective immediately and apply to high volume hydraulic fracturing, oil and gas well site production operations. The rules modify the Ohio Environmental Protection Agency’s general permitting process and include the following:
  • Operators must now test and monitor for any fugitive emissions taking place at a well site on a quarterly basis.
  • A leak detection and repair program must be developed and implemented. The program must be “designed to monitor and repair leaks from ancillary equipment and compressors covered by [the] permit, including each pump, compressor, pressure relief device, connector, valve, flange, vent cover, any bypass in the closed vent system, and each storage vessel.”
  • “Leaks shall be detected by the use of either a ‘Forward Looking Infra-Red’ (FLIR) camera or” other approved technology.
  • The first attempt at repair of a leak must be made within five (5) calendar days of finding the leak. Full repairs must be completed within 30 days.
  • Information must be recorded during leak inspections and these records must be kept for at least five (5) years.
  • Permit Evaluation Reports must be filed annually with the Ohio EPA.
With continued public concerns, it is likely that other states, possibly Pennsylvania and New York, will follow the lead of Colorado, Wyoming and Ohio to regulate fugitive emissions. North Dakota recently approved flaring reduction regulations.

Federal rules are already in effect requiring the use of green completion technology at well sites beginning in 2015. These rules target emissions from compressors, oil storage tanks and other oil and gas equipment, with the exception of “wildcat wells.” In March 2014, the White House released its “Climate Action Plan: Strategy to Reduce Methane Emissions” to target emissions from coal mines, landfills, agriculture and oil and gas activities.

As part of this plan, the Interior Department is to propose updated standards to reduce flaring and venting of methane gas. In addition, the EPA will be assessing several potentially significant sources of methane and other emissions and will be soliciting information from independent experts through a series of white papers.

In the fall of 2014, the EPA will decide how best to pursue further methane reductions; and, if necessary develop additional regulations by the end of 2016.

This post was written by Barclay Nicholson ( or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.

Trial begins in Texas hydraulic fracturing lawsuit

On April 8, 2014, opening arguments were heard in the case of Parr v. Aruba Petroleum, Inc., Cause No. 11-01650-E (Dallas County Ct. at Law, Mar. 8, 2011), a lawsuit in which the Parr family claims that they have serious health problems due to defendant’s oil and gas development activities, including hydraulic fracturing. This is one of the first cases to go to trial alleging medical injuries linked to the chemicals used in hydraulic fracturing.

In January 2014, the court severely limited the family’s lawsuit by dismissing the claims for negligence and negligence per se and only allowing the nuisance and trespass claims to go forward. For the family’s personal injury damages, the court ruled that these would be limited to injuries that were “within the common knowledge and experience of a layperson” and barred recovery for “any claim that defendants’ actions caused a disease that occurs genetically and for which a larger percentage of the causes are unknown.” The court also disallowed expert testimony, stating that “the sequence of events is such that a layperson may determine causation without the benefit of expert evidence.”

In opening argument, counsel for the Parr family explained that, since 2008 when defendant began to drill numerous gas wells in the area surrounding the family’s home, they have suffered numerous medical problems, at times so severe that they could not work and had to leave their home. Due to defendant’s natural gas activities, including hydraulic fracturing, flaring, venting, and discharges of hazardous gases, the Parr family claims to have experienced serious health effects, with medical tests revealing the presence of natural gas chemicals, compounds, and metals, including among others ethylbenzene and xylene.

Defense counsel advised the jury that the Parr family could not prove that one of its wells made them sick since there are at least 22 wells within a two-mile radius of the residence and that there is no proof of diminished air quality at the home following drilling, asserting that its wells stayed within the air quality limits set by the Texas Commission on Environmental Quality and the Texas Railroad Commission. Counsel also explained that the company operates within industry standards and best practices. As for the Parr family’s medical conditions, counsel stated that evidence would be presented to show that the family suffered from these same maladies before the companies started drilling.

This post was written by Barclay Nicholson ( or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.

Lone Pine Order in hydraulic fracturing lawsuit to be reviewed by Colorado Supreme Court

On April 7, 2014, the Colorado Supreme Court agreed to review a court of appeals decision that overturned a Lone Pine Order and a dismissal order issued by the lower court in Strudley v. Antero Resources Corporation, Antero Resources Piceance Corporation, Calfrac Well Services, and Frontier Drilling LLC (Case No. 2011-cv-2218, Denver County District Court), a toxic tort case involving hydraulic fracturing. Two questions will be addressed by the Supreme Court:
  • Whether a district court is barred as a matter of law from entering into a modified case management order requiring the plaintiffs to produce evidence essential to their claims after initial disclosures but before further discovery.
  • Whether, if such modified case management orders are not prohibited as a matter of law, the district court in this case acted within its discretion in entering and enforcing such an order.
The Strudley family filed their lawsuit in March 2011, complaining that defendants’ natural gas well activities, including hydraulic fracturing, had contaminated their water supply. The Lone Pine order issued by the court required the plaintiffs to make a prima facie showing of exposure, injury, and specific causation by providing expert affidavits from doctors, contamination reports and other information relating to the identification and quantification of hazardous substances to which each family member was exposed from defendants’ operations, as well as how long and at what concentration levels. The plaintiffs submitted the affidavit of a doctor who, although never examining the family members, concluded that “sufficient environmental exposure and health information exists to merit further substantive discovery.” The lower court found this affidavit to be insufficient and ordered the case dismissed, leading to the appellate review of the two orders.

The Colorado Court of Appeals reversed, citing two primary reasons. The first was anchored in two Colorado Supreme Court cases that the court interpreted as standing for the proposition “that a trial court may not require a showing of a prima [facie] case before allowing discovery on matters central to a plaintiff’s claims”. Second, the court cited differences between Colorado Rule of Procedure 16 and Federal Rule of Civil Procedure 16 regarding a court’s discretion to manage pretrial matters.

The decision of the Colorado Supreme Court will be of great interest to both plaintiffs and defendants – with plaintiffs wanting Lone Pine Orders prohibited and defendants, seeking the opposite, seeing Lone Pine Orders as a means to fend off frivolous lawsuits early on by requiring plaintiffs to establish a causal connection.

For further information on this case, click here.

Environmental groups challenge shipments of crude oil by rail in the San Francisco bay area

On March 27, 2014, Earthjustice, on behalf of several environmental and conservation groups, filed a lawsuit against the Bay Area Air Quality Management LLC (BAAQM) for issuing a permit allowing North Dakotan Bakken crude oil to be transported to refineries in the San Francisco Bay area,  The environmentalists argue that the BAAQM issued the permit without any notice or public process, without considering the “well-known and potentially catastrophic risk to public health and safety” as evidenced in the Lac-Mégantic, Québec train derailment in July 2013, and without complying with the requirements of the California Environmental Quality Act (CEQA). 

The environmentalists contend that, in labeling the permit request as “ministerial,” the BAAQM ignored “the risks of derailment and accidents, risks of explosions, increased release of toxic air pollutants, increased greenhouse gases from further train travel, and increased noxious odors.”  The groups assert that these impacts from the issuance of the permit should have been publicly disclosed, analyzed and mitigated in an Environmental Impact Review (EIR).  They point to the already-heavily polluted community where the rail yard is located and to California’s inadequate and aged railroad infrastructure. 

The environmental groups seek a declaratory judgment and preliminary injunction to set aside the permit, to require full compliance with the CEQA , and to enjoin crude-by rail operations under the permit until an EIR is complete and subject to public scrutiny.

This post was written by Barclay Nicholson ( or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.

Bans, moratoriums, and votes relating to hydraulic fracturing

Each state has legitimate interests in the orderly development of their oil and gas resources and generally regulates all oil and gas activities through a state agency which implements state laws. Counties and municipalities have also taken interest in the development of oil and gas resources within their boundaries by enacting local ordinances ranging from set-back requirements to temporary moratoriums or permanent bans on hydraulic fracturing. Proposals for temporary moratoriums and bans have been voted on in local elections.

For example, Vermont decided to ban hydraulic fracturing on May 16, 2012. In November 2013, four cities in Colorado (Boulder, Fort Collins, Lafayette, and Broomfield) either extended moratoriums on hydraulic fracturing or banned it completely. In Ohio, the city of Oberlin voted to ban hydraulic fracturing while citizens of Youngstown and Bowling Green rejected proposed bans.

Recent events concerning moratoriums, bans and votes include:
  • On February 28, 2014, Los Angeles city council voted to draft regulations that would ban fracking, acid stimulation, and the use of waste disposal wells within the city, until they are assured that these activities do not pose a threat to residents’ health and safety. 
  • The city of Carson, California imposed a 45-day emergency moratorium on all new drilling on March 19, 2014. This moratorium can be extended for two years to allow the city council to consider the potential effects associated with hydraulic fracturing.
  • In Culver City, California, the city council is preparing an ordinance that would impose a moratorium on hydraulic fracturing and other unconventional well operations within the city.
  • Brighton, Colorado enacted a four-month moratorium on all hydraulic fracturing permits in order to address local concerns. The city will begin processing permits again on July 15, 2014.
  • On March 18, 2014, the voters in Johnson County, Illinois defeated a non-binding ballot measure that would have directed county commissioners to ban hydraulic fracturing within the county.
  • An anti-fracking group in Denton, Texas announced that it has obtained the requisite number of signatures to have its proposal to ban hydraulic fracturing on the November 2014 ballot.
The legal status of municipal controls depends on what authority the state has and what is regulated in the local ordinances. Traditionally the authority to adopt zoning ordinances which regulate where an activity can take place has been delegated to the municipalities.

Lawsuits challenging local bans of oil and gas development on the basis that they interfere with state regulatory authority are winding their way through a number of state courts. Lawsuits in New York, Pennsylvania and West Virginia concerning local bans or restrictions on hydraulic fracturing have resulted in differing results – with some municipal ordinance being upheld while others are rejected. For a detailed review of these cases, see Barclay Nicholson and Steven Dillard, Analysis of Litigation Involving Shale Gas and Hydraulic Fracturing, found at

This post was written by Barclay Nicholson ( or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.

Ohio Department of Natural Resources investigates earthquakes near gas drilling site

The Ohio Department of Natural Resources (ODNR) is investigating four small earthquakes that occurred on March 10, 2014 in Poland Township. These four earthquakes measured 3.0, 2.4, 2.2 and 2.6 in magnitude, causing no injuries or damages. The National Earthquake Information Center of the U.S. Geological Survey (USGS) placed the epicenter of the 3.0 earthquake near where Hilcorp Energy Company is drilling in the Carbon Limestone Landfill.

The ODNR, in “an abundance of caution” to protect public health and safety, ordered Hilcorp Energy to suspend its drilling operations pending further assessment of “the exact circumstances surrounding this event…All available information indicates the events are not connected to Class II injection activities.”  According to the ODNR, there are no disposal wells in the area where the earthquakes occurred.

Hilcorp Energy, which is the only oil and gas company in the area and has been drilling in the Landfill for two years with no prior problems, complied with the ODNR’s request, stating that “[i]t is far too early in the process to know exactly what happened and we’re not aware of any evidence to connect our operations to these events.”

This post was written by Barclay Nicholson ( or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.

EPA’s advanced notice of proposed rulemaking on TSCA reporting of hydraulic fracturing chemicals

On March 11, 2014, the White House Office of Management and Budget (OMB) received an Advanced Notice of Proposed Rulemaking (ANPR) from the Environmental Protection Agency (EPA) concerning the reporting of hydraulic fracturing chemicals under the Toxic Substances Control Act (TSCA).  Responding to a petition filed under TSCA section 21 by environmental groups, the EPA plans to initiate rulemaking proceedings under TSCA sections 8(a) and 8(d) to obtain data on chemical substances and mixtures used in hydraulic fracturing.  While granting the request to initiate rulemaking proceedings, the EPA stated that it “is not committing to a specific rulemaking outcome.” 

The EPA plans to develop the ANPR and “initiate a stakeholder process  to provide input on the design and scope of the TSCA reporting requirements that would be included in a proposed rule.”  Anticipating discussions with the states, industry, public interest groups and members of the public, the EPA wants to avoid duplication of efforts, “to ensure any reporting burdens and costs are minimized,” and to determine “how information that is claimed Confidential Business Information could be aggregated and disclosed to maximize transparency and public understanding.”

Previously the EPA rejected a request by the same environmental groups to require manufacturers and processors to test hydraulic fracturing fluid chemicals for toxicity under TSCA section 4.

This post was written by Barclay Nicholson ( or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.

Opening Briefs Filed In the Remand of Robinson Township v. Commonwealth of Pennsylvania

In a decision dated December 19, 2013, the Pennsylvania Supreme Court, Middle District, struck down major portions of Act 13, P.L. ___, 58 Pa. C.S. §§2301-3504 (a substantial re-write of the Commonwealth’s Oil and Gas Act) as unconstitutional. In the 4-2 decision, the Court held that portions of Act 13 violated the Environmental Rights Amendment of the state’s constitution and denied due process rights by “unconstitutionally, as a matter of substantive due process, usurp[ing] local municipalities’ duty to impose and enforce community planning…” The Court remanded the case back to the lower Commonwealth Court to determine whether the valid provisions of Act 13 are severable from those provisions found to be unconstitutional and whether a section of the law that exempts drillers from having to inform owners of private water sources in the event of a potentially contaminating spill near their properties is unconstitutional.

On April 1, 2014, opening briefs were filed in the Commonwealth Court on the remanded issues.

Both the Pennsylvania Department of Environmental Protection and the Pennsylvania Public Utility Commission (PUC) urge severability. In its brief, the PUC states that “when it is reasonably possible to sustain the bulk of a legislative enactment, the courts of the Commonwealth should do so. Here, there are no special circumstances that require – or even suggest the need for – this Court to deploy its red pen any further. It is plain that [certain sections] of Act 13 may operate independently of those provisions that have already been stricken.” The PUC asserts that, in spite of the December 2013 ruling, it retained the authority to review local ordinances regulating oil and gas drilling operations. Specifically, the PUC contends that sections 3305-3309 can be implemented without the sections that were declared invalid. Section 3305 allows the PUC to review local zoning ordinances for compliance with the Municipalities Planning Code (MPC); sections 3306-3307 provide that an aggrieved person can file a lawsuit to invalidate an ordinance that violates the MPC; section 3308 provides that, for noncompliance with the MPC, impact fees may be withheld from the municipality; and section 3309 gives a municipality 120-days to review and amend an ordinance for compliance.
In their brief, the petitioners argue that section 3218.1 of Act 13 which provides that the public water well owners are to receive notice of a spill resulting from drilling operations is unconstitutional because it violates equal protection by excluding notice to owners of private water sources.

The Commonwealth Court has scheduled an en banc argument for May 14, 2014, at 9:30 a.m. (EDT).
This case is Robinson Township, et al v. Commonwealth of Pennsylvania, et al, No. 284 MD 2012, In the Pennsylvania Commonwealth Court.

For additional information on the December 19, 2013 decision, click here.

This post was written by Barclay Nicholson ( or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.

EPA releases summary of December 2013 technical roundtable on potential impacts of hydraulic fracturing on drinking water resources

The U.S. Environmental Agency (EPA) held a Technical Roundtable on December 9, 2013, concerning the EPA’s on-going study of the potential impacts of hydraulic fracturing on drinking water resources. A follow-up webinar was held on January 28, 2014. A summary of these events was published on the EPA website on March 19, 2014. Comments of interest include:

  • In late 2014, the EPA will release the draft assessment report, which will undergo peer review by the Science Advisory Board (SAB) Hydraulic Fracturing Research Advisory Panel as well as public comment. The EPA is continuing to conduct research, analyze information and literature, and engage stakeholders from the oil and gas industry, academia, the states, non-governmental organizations, and the public.
  • The Analytical Chemical Methods (ACM) workshop will consider the use of artificial tracers for tracking hydraulic fracturing fluids and the analytical methods used to measure those tracers. In addition, the ACM workshop requested information concerning (a) advances in industry practices that change the chemical makeup of hydraulic fracturing injection fluids and implication for chemical selection or field sample analysis and (b) guidelines for baseline sampling (where, when, during what segment of well operations.
  • The workshop on Well Construction/Operation and Subsurface Modeling solicited information on (a) current design techniques that prevent leaks through production well casing and fluid movement along the wellbore, (b) what testing can be conducted to verify issues do not exist prior to, during and after hydraulic fracturing, and (c) what testing or monitoring techniques can ensure adequate confinement of the fluids used during hydraulic fracturing. This workshop emphasized the importance of using diagnostics and pressure monitoring to assess well integrity and that cementing is a critical confinement technique.
  • The workshop on Wastewater Treatment and Related Modeling will consider (a) the potential future trends in reuse, recycling, zero-liquid discharge and commercial transport and (b) how the residuals of hydraulic fracturing can be managed, disposed of and characterized. Other topics include the projected volumes of wastewater versus wastewater management capacity, consequences of disposal via landfills or beneficial reuse, centralized storage and treatment facilities, and the monitoring of wastewater disposition. It was noted that wastewater treatment has evolved from treatment largely at publicly owned treatment works to treatment at commercial wastewater and package plants.
  • The Water Acquisition Modeling workshop indicates that it will focus on water dynamics in heavily populated areas and will analyze existing and future water uses across geographies in order to understand local community impacts.
  • For the Case Studies, the importance of understanding site-specific geochemistry, including using statistical techniques and other appropriate techniques to analyze geochemistry, in order to understand the sources of ground water contamination was discussed.

This post was written by Barclay Nicholson ( or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.

Lesser prairie-chicken added to U.S. Fish and Wildlife Service’s list of threatened species

After more than 15 years of review, the U.S. Fish and Wildlife Service (FWS) announced on March 27, 2014 that the lesser prairie-chicken, a species of prairie grouse, is a “threatened” species, a step below “endangered” under the Endangered Species Act (ESA). The lesser prairie-chicken’s population is in rapid decline, due largely to habitat loss and fragmentation and the on-going drought in the southern Great Plains. Once abundant across much of the five range states of Texas, New Mexico, Oklahoma, Kansas and Colorado, the lesser prairie-chicken’s habitat of native grasslands and prairies has been reduced by an estimated 84%. The estimated population of the lesser prairie-chicken was reduced by half from 2012 to 2013.

Anticipating and hoping to ward off the threatened species designation, more than forty (40) private companies in the five states representing oil and gas, pipelines, electric transmission and wind energy voluntarily enrolled more than 3.5 million acres and provided more than $21 million to conserve the prairie-chicken habitat, as part of a comprehensive, science-based conservation strategy under the Western Association of Fish and Wildlife Agencies' (WAFWA) range-wide conservation plan. In addition, a number of on-the-ground programs have been implemented over the last decade to conserve and restore the lesser prairie-chicken’s habitat. These programs include the Lesser Prairie Chicken Initiative, the Bureau of Land Management’s New Mexico Candidate Conservation Agreement, and Candidate Conservation Agreements with Assurances (CCAA) in Oklahoma, Texas and New Mexico.

However, after reviewing the best available science and the on-the-ground conservation efforts and because “threats impacting the species remain and are expected to continue into the future,” the FWS determined that the “lesser prairie-chicken is likely to become endangered in the foreseeable future and warrants listing as threatened under the ESA.”

The FWS included a final special rule under section 4(d) of the ESA that is supposed to limit regulatory impacts on landowners and businesses from the listing. The rule will allow the five range states to continue to manage conservation efforts for the species and avoid further regulation of activities such as oil and gas development, that are covered under the WAFWA’s range-wide conservation plan. Oil and gas development activities include seismic and land surveying, construction, drilling, completions, workovers, operations and maintenance, and plugging and remediation.

Companies now have 30 days to enroll in a range-wide conservation plan or a CCCA. According to the president of the Permian Basin Petroleum Association, all entities having an interest in the activities covered should consider enrolling because “they’ll find it more palatable than going to the Fish and Wildlife Service for permission to drill a well.”

The president of the Texas Independent Producers & Royalty Owners Association expressed the organization’s disappointment in the threatened species designation, stating that “[t]his undoubtedly will affect independent oil and gas producers operating in the Lone Star State.”

The listing is expected to take effect May 1, 2014, 30 days after publication of the final rule and final special rule in the Federal Register.

This post was written by Barclay Nicholson ( or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.

Wrongful death lawsuits, by-pass routes and first responder training – Issues relating to the transport of oil products by rail

Nineteen wrongful death lawsuits from the July 2013 train derailment and explosion in Lac-Mégantic, Quebec, Canada were transferred from U.S. District Court in Illinois to the U.S. District Court in Maine on March 21, 2014.

The Maine federal judge ordering the transfer found that these lawsuits were “related to” the Maine bankruptcy proceedings filed by Montreal Maine and Atlantic Railroad Ltd. (MMAR) one month after the accident. Presented with evidence of shared insurance between MMAR and some of the wrongful death defendants, the Court made the “limited finding that claims against certain of the defendants named therein are related to the Railway’s bankruptcy.”

Concerns about the safety of transporting oil by rail have increased following a number of recent accidents, including the Lac-Mégantic incident in which more than 40 died, a December 30, 2013 derailment of 21 tank cars in Casselton, North Dakota resulting in an explosion which required the evacuation of 1,400 people, and a November 8, 2013 derailment of more than 20 cars in a 90-car petroleum crude oil train near Aliceville, Alabama.

Approximately one-quarter of the nation’s rail traffic (about 40,000 cars) passes through Chicago on a daily basis, with some freight cars taking more than 24-hours to complete the transit through the city. With an increasing role in oil transport logistics, a 150-mile by-pass around Chicago has been suggested. The by-pass would require the laying of new track, raising the issue of funding. It would not be economically feasible for one railroad to fund the by-pass, and Chicago’s mayor’s recommendation to charge a fee for each rail car carrying hazardous materials was quickly criticized by railroad organizations.

On March 25, 2014, the Fire Chief of Casselton (North Dakota) Volunteer Fire Department testified before the Senate Homeland Security and Government Affairs Committee concerning his experience with the crude oil train derailment near the town. Chief Tim McLean expressed his gratitude for the training he received and the fire equipment purchased using federal homeland security grant dollars, and he emphasized the need to continue that funding. “Because of the growing oil industry and the likelihood that oil will continue to be shipped via rail, we must continue to train and plan for these types of incidents. Yes…the tanker cars will likely be improved and pipelines may be used more extensively, but that does not erase the fact that crude oil and other hazardous materials will continue to be shipped through our communities. Our responder community must be ready for that.”

This post was written by Barclay Nicholson ( or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.