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 (barclay.nicholson@nortonrosefulbright.com 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 (barclay.nicholson@nortonrosefulbright.com 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 (barclay.nicholson@nortonrosefulbright.com 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 (barclay.nicholson@nortonrosefulbright.com 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 www.frackingblog.com.


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