Latest on Hydraulic Fracturing/Fracking: A JD Supra Legal Reader

Recently David Letterman pushed the fracking debate deeper into the primetime spotlight as he voiced strong concerns over hydraulic fracturing on his “Late Show” – summing up his feelings in two words: “We’re screwed.”

Regardless of your position on this highly contentious topic, one thing is clear: today, there are numerous legal ramifications to fracking. And on that subject, here’s the latest roundup from lawyers and law firms writing on JD Supra:

Fracking Risk and the Nationwide Underwriting Guidelines (Gilbert LLP):

“Nationwide Mutual Insurance Co. made headlines in the ongoing debate over hydraulic fracturing earlier this month, declaring that it won’t cover damage related to the controversial drilling process… Lawsuits related to fracking activities are currently being litigated across the United States, including in New York, Pennsylvania, Texas, Colorado, and West Virginia. The majority of these suits have been filed against energy companies on behalf of individual property owners, primarily for property damage and personal injury resulting from water, soil, or air contamination.” Read on>>

Hydraulic Fracturing: A Future Source of Silicosis Claims? (Sedgwick LLP):

“…Eric Esswein, an industrial hygienist from the National Institute for Occupational Safety and Health, made a statement at a conference sponsored by the Institute of Medicine that was guaranteed to attract the attention of plaintiffs’ attorneys looking for a new source for silicosis lawsuits. Esswein linked the sand used in hydraulic fracturing to silicosis. His statement came after conducting air sampling in 2010 and 2011 around workers and well heads at 11 wells in five states: Colorado, Arkansas, Pennsylvania, Texas and North Dakota… Esswein acknowledged that even though the companies had a good emphasis on safety regarding the handling of the toxic chemicals used in fracking operations, he felt that there was insufficient attention to health and exposure issues.” Read on>>

U.S. OSHA Issues Hazard Alert Regarding Silica Exposure in Fracking Operations (Fraser Milner Casgrain LLP):

“The U.S. Occupational Safety and Health Administration and the National Institute for Occupational Safety and Health have issued a hazard alert to employers engaging in hydraulic fracturing – or “fracking” – operations, requiring those employers to take adequate steps to protect workers from silica exposure.” Read on>>

Dusting Off Concerns About Silica — Fracking, OSHA, and Silica Dust Concerns (Dinsmore & Shohl LLP):

“The OSHA Hazard Alert also contains measures that employers should consider taking to protect workers from exposure to silica dust at well sites. These measures include engineering controls, development of safe and alternative work practices, provision of protective equipment, worker training, and where feasible, substitution of silica sand as a proppant with a safe alternative, such as sintered bauxite, ceramics, or resin-covered sand.” Read on>>

No Causation, No Case: How Lone Pine Orders Can Increase Judicial Economy and Dispose of Meritless Claims in Hydraulic Fracturing Litigation (Sedgwick LLP):

“Lone Pine orders are an effective tool in managing the complex and costly issues that arise from mass tort litigation. A properly crafted Lone Pine order can weed out meritless claims before the court and defendants invest substantial time and financial resources only to learn on the eve of trial that plaintiffs cannot establish a prima facie case. Lone Pine orders have been successfully used in a variety of tort cases over the past 25 years. Recently they have applied to cases involving hydraulic fracturing. Interestingly, requests for Lone Pine orders are rare, which is surprising given the increase in hydraulic fracturing litigation.” Read on>>

What’s the Deal with Fracking? Regulation, Litigation and Due Diligence in Private Equity – Spring/Summer 2012 (Dechert LLP):

“Recent enhanced drilling techniques have made it economically feasible to drill wells in certain shale formations, like the Marcellus Shale, and tap into the estimated trillions of cubic feet of natural gas trapped within those formations. This has resulted in numerous M&A transactions involving companies in the shale gas exploration and production (E&P) business as well as those related businesses that support or benefit from shale gas E&P. PE firms too have been looking at the possibility of investing in companies in shale related activities.” Read on>>

Recent PA Sales Tax Guidance Concerning Natural Gas and Other Mining Activities (McNees Wallace & Nurick LLC):

“With the rush to develop the Marcellus Shale natural gas fields, the Pennsylvania Department of Revenue has been issuing guidance right and left to address the treatment of gas development activities under the sales and use tax and other state taxes. We have summarized below sales and use tax guidance from a recently-published bulletin, various Q&A’s published on the Department’s website, and several unpublished letter rulings and informal advisories. These supplement the Department’s formal regulations which pre-date the Marcellus Shale ‘fracking’ activity.” Read on>>

North Carolina Legalizes Horizontal Drilling and Hydraulic Fracturing (K&L Gates LLP):

“Over the past year, North Carolina legislators, policy makers, scientists, independent experts, local governments, state environmental and commerce agencies, and a variety of other stakeholders have studied and debated the potential for shale gas development in North Carolina and potential enabling legislation for hydraulic fracturing and horizontal drilling. This process concluded on July 2, 2012, when the General Assembly voted to override a gubernatorial veto of the enabling legislation, Senate Bill 820 also known as the Clean Energy and Economic Security Act.” Read on>>

Benefits of Fracking on U.S. Manufacturing in Trade & Manufacturing Alert – July 2012 (King & Spalding):

“The United States became the world’s largest producer of natural gas in 2011, according to BP’s Statistical Review of World Energy 2012. Natural gas production in the United States grew by 7.7 percent between 2010 and 2011, the largest volumetric increase in the world. Much of this production growth can be attributed to hydraulic fracturing, which has allowed the United States to tap natural gas reserves in shale deposits that previously were unavailable.” Read on>>

Two Federal Agencies Issue Draft Rules on Fracking (McAfee & Taft):

“After several years of anticipation, the federal government has finally entered into one of the most contentious debates in recent environmental history – hydraulic fracturing. In this process, sometimes called ‘fracking,’ chemicals and/or fluids are injected into wells in order to break up underground formations and release trapped natural gas and oil… To date, the federal government had been relatively silent on the issue, preferring instead to leave regulation largely to the states. However, in the past couple of months both the EPA and the Department of the Interior have announced proposed rules for future fracking operations.” Read on>>

Ohio Governor Signs Legislation to Address Horizontal Drilling Issues (Dinsmore & Shohl LLP):

“Key provisions in [the new law] include a requirement that permit applicants identify the source of water used to fracture their wells, whether it be ground or surface water, or even recycled water. (This is no small amount of water usage, considering that a single horizontal well can use upwards of 5,000,000 gallons of water in the fracking process.) Water sampling of nearby wells is now a statutory requirement; in urban areas, an operator must conduct well-sampling for wells within 300 feet of a proposed well, whereas in non-urban areas, the radius is 1500 feet.” Read on>>

Shale Gas Boom and Earthquakes Shake-up Ohio Laws (Dinsmore & Shohl LLP):

“A rare Ohio earthquake on New Year’s Eve has provided new fuel in the growing controversy over shale gas exploration in the state. The earthquake, which was tied to the underground injection of wastewater from the fracking process, provided a new sense of urgency to create rules to address the environmental consequences of fracking. Ohio is in the process of crafting enhanced oil and gas regulations with the goal of making them the best in the nation.” Read on>>

Limited Gas Drilling in New York? (Cullen and Dykman LLP):

“The New York Times recently reported that Governor Andrew M. Cuomo’s administration is quietly contemplating allowing hydraulic fracturing to occur on a limited basis in towns that welcome drilling and in areas where the Marcellus Shale formation is deepest. While the deliberations are still continuing and DEC Commissioner Joe Martens has declined to give any definitive timeline or answer as to whether fracking will be allowed at all in New York, this latest development acknowledges the necessary balance in addressing the growing economic need in upstate New York for hydraulic fracking and recognizing the strong opposition based largely on environmental concerns.” Read on>>

As Fracking Operations Are Poised to Take Place in Illinois, Lawmakers Are Contemplating How to Regulate and Tax the Industry (Sedgwick LLP):

“Currently, there is little or no hydraulic fracking activity taking place in Illinois. However, Illinois residents and lawmakers believe that is all about to change. The potential for natural gas exploration of the New Albany Shale has drawn the attention of oil and gas companies. Over the past year, these companies have leased hundreds of thousands of acres of property from landowners in southeastern Illinois so they can conduct future fracking operations…The rush to begin hydraulic fracking in Illinois has raised concerns with lawmakers who are now scrambling to get hydraulic fracking restrictions on their books.” Read on>>

Sands Through the Hourglass or the Next Big Tort? (Robert Smith):

“The chemical additives used in fracking include substances such as ethylene glycol and methanol. Some of the additives are known carcinogens, and the fluid is being pumped into the ground, so plaintiff attorneys are paying attention. Although fracking technology has been around for several decades, more recent technological improvements have made it commercially productive and helped spark the recent energy boom in the U.S.” Read on>>

Waterless Fracking? (Cullen and Dykman LLP):

“While the New York hydraulic fracturing moratorium is still in place as the DEC is working on the Supplemental Generic Environmental Impact Statement, it is believed that the use of liquefied petroleum gas (LPG) may sidestep the New York ban… In 2008, a Canadian energy company based in Calgary, Alberta developed a waterless fracking method known as LPG fracking.” Read on>>

True Grit: The Ups and Downs of Fracking (Lawson Lundell LLP):

“In preparing for the coming groundswell of regulatory change, and the increase in operating costs that will accompany those changes, prudent operators should begin to look at the current regulatory regime merely as a starting point for building best operating practices.” Read on>>

New Decisions — Pleading Requirements for Complaints Alleging Contamination from Hydraulic Fracturing (King & Spalding):

“During litigation in the U.S., it is typical that before incurring huge costs of discovery, a defendant may move to dismiss an action due to the plaintiff’s failure to comply with state or federal pleading requirements. This article discusses two recent federal decisions regarding such motions to dismiss complaints alleging fracking contamination, Tucker and Fiorentino. These decisions may shed light as to how other courts are likely to apply pleading requirements that may require dismissal at an early stage. They are applicable to estimating defense costs for fracking contamination litigation.” Read on>>

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