You may have seen recent headlines about a court case involving Cabot Oil and Gas in Pennsylvania. The case was brought by two families, Scott and Monica Ely and Ray and Victoria Hubert. There were three parts to the original lawsuit: personal injury and fraud, reduction of property values and nuisance claims which stemmed from the finding of the Pennsylvania Department of Environment Protection (DEP) that Cabot oil and gas was responsible for contaminating some water wells because of faulty well casing. The plaintiffs allege that faulty well casing allowed natural gas to migrate into water wells.
The parts of the lawsuit pertaining to personal injury and property values were thrown out by the judge for lack of evidence. As it relates to the lowering of property values, the judge found that property values had actually gone up.
The third issue, the nuisance claim, is more complicated because Pennsylvania law includes a “presumption of liability”. This means that the company is presumed to be responsible for any well contamination within 1,000 feet from a drilling site regardless of whether the company was actually at fault. It is the company’s responsibility to prove in court that they are not liable. The DEP had previously determined that Cabot was responsible for the presence of dissolved methane in some families’ water wells. Even though a Consent Order and Agreement was signed by the DEP and Cabot, Cabot disagreed with the determination that its activities caused the contamination.
In spite of Cabot’s vigorous defense, on March 10, 2016, a jury found that the company was guilty of the nuisance violation and awarded the two families a combined $4.2 million.
In 2010, Ohio passed Senate Bill 165 which made significant upgrades to the state’s oil and gas regulatory laws. One very important change included more stringent well casing standards for the industry. The bill required additional strings of steel casing and proper cement to protect underground sources of drinking water. Inspectors from the Ohio Department of Natural Resources must also be notified when the cement is being set.
Additional protections were put in place in 2012 when the legislature passed Senate Bill 315, which required water well testing within 1,500 feet of a horizontal well before drilling takes place.
While regulations can’t predict every unforeseen circumstance, Ohio’s oil and gas regulatory framework is considered one of the most comprehensive in the nation.