Water Supplies: Defending Against a Presumption of Liability
October 30, 2011
With the recent proliferation of horizontal drilling for natural gas in the Marcellus region, there continues to be significant scrutiny on potential water quality impacts, including impacts to sources of water supply. Given the current status of the law in Pennsylvania and West Virginia imposing liability upon oil and gas operators for the diminution or contamination of public water supplies, operators may want to consider a proactive approach to preserving their available defenses to such liability at the outset of the drilling activity.
West Virginia Law
West Virginia’s oil and gas law, W. Va. Code §§ 22-6-1 et seq., provides for a civil action against an owner or operator for contamination or deprivation of a fresh water source or supply within one thousand feet of the drilling site for an oil and gas well. Significantly, the statute also establishes a rebuttable presumption that the oil and gas activity is the proximate cause any contamination or deprivation of a water source or supply.
The state rule for oil and gas wells, 35 CSR 4, sets forth a number of requirements relating to the testing of water supplies within the vicinity of a proposed well. Specifically, upon the request of any surface owner or occupant of land within 1,000 feet of the proposed well, the operator must sample water from any wells or springs located within 1,000 feet of the proposed well that are actually utilized by the owner or occupant for human consumption, domestic animals, or other general use. The rule prescribes specific notification requirements by which the operator must inform surface owners or occupants of their right to request the operator to conduct such pre-drilling sampling of their water supplies. If no such request is made, however, at a minimum the operator must sample and analyze water from the one well or spring within 1,000 feet of the proposed oil or gas well that, in the operator’s judgment, has the “highest potential for being influenced by the operator’s well work.” Analyses must be run for the following parameters: pH, iron, total dissolved solids, chloride and detergents (MBAS).
Furthermore, it should be noted that after an operator has provided the notification to the surface owners or occupants as required by the rule, the operator or his agent enjoys a limited right of entry onto the land upon which a water well or spring is located to conduct the sampling authorized under the rule, which may be exercised for this purpose without the permission of the landowner or water or spring users. If a landowner protests or blocks entry to the property, the operator is not required to enforce this right of entry and shall not be liable for the failure to exercise this right. Perhaps most importantly, however, any protest or action to block entry shall be admissible as evidence in any action between the operator and the landowner or water well or spring user “in which the results of the test would have been relevant”—such as an action brought by a landowner alleging contamination or deprivation of a water supply.
Finally, it should be noted that the West Virginia Legislature’s Joint Select Committee on Marcellus Shale, which is charged with developing legislation to be considered by the full Legislature concerning regulation of horizontal well operations, has proposed a number of additional requirements related to the protection of nearby water supplies. Significantly, the proposed legislation would expand the existing 1,000-foot rebuttable presumption to a distance of 2,500 feet from the center of a well pad. Additionally, the legislation would adopt the five defenses found in Pennsylvania law (discussed below) by which this presumption may be rebutted. The proposed legislation also would establish a timeline for the operator to replace the water supply of an owner as follows: (1) provide an emergency drinking water supply within 24 hours, (2) provide temporary water supply within 72 hours and (3) begin activities to establish a permanent water supply or submit a proposal to WVDEP outlining a plan within 30 days. Finally, the proposed legislation directs that notwithstanding the operator’s denial of liability, the operator may not discontinue providing the required water service unless authorized by WVDEP.
Like West Virginia, Pennsylvania’s Oil and Gas Act, 58 P.S. §§ 601.101 et seq., creates a rebuttable presumption that an oil or gas well is responsible for the pollution of a public or private water supply located within 1,000 feet of that well, although notably limits the scope of this presumption to pollution occurring within six months after the completion of drilling or alteration of such well. To rebut this presumption under Pennsylvania law, the operator must assert one of five statutory defenses: (1) the pollution existed prior to the drilling activity as determined by a pre-drilling survey; (2) the landowner or water purveyor refused to allow the operator access to conduct a pre-drilling survey; (3) the water supply is not within 1,000 feet of the well; (4) the pollution occurred more than six months after completion of the drilling activity; and (5) the pollution occurred as a result of some cause other than the drilling activity. Any operator seeking to preserve its defenses under the first two options must retain the services of an independent certified laboratory to conduct the pre-drilling survey of water supplies within 1,000 feet of the well, a copy of which must be submitted to the Pennsylvania Department of Environmental Protection and the landowner and/or water purveyor.
Any well owner found to affect a water supply by pollution or diminution must restore or replace the affected supply with an alternate source of water adequate in quantity or quality for the purposes served by the supply. Pennsylvania’s regulations prescribe specific criteria that restored or replaced water supplies must meet in order to be considered adequate, including requirements relating to (1) reliability, permanence, cost, maintenance, control and accessibility; (2) water quality; (3) water quantity; and (4) water source serviceability (e.g., through necessary plumbing, conveyance ,pumping or auxiliary equipment).
Given the increased scrutiny on the potential impacts of oil and gas drilling on public and private water supplies, as well as the liabilities and obligations that may arise in the event that an operator is alleged to have caused contamination or diminution of a nearby water supply, operators may seek proactive ways to approach this issue. Whereas the relevant statutes and regulations establish minimum pre-drilling sampling requirements, an operator seeking to protect its interests as much as possible may elect to conduct pre-drilling sampling and analyses for all water supplies within 1,000 (or more) feet of the operator’s proposed oil or gas well. Further, operators may wish to expand this sampling beyond the minimum required parameters, as this additional data will allow operators to characterize more fully nearby water supplies. An operator can best defend against future contamination claims where it can demonstrate that a substance already existed (or not) in the water supply before operations begin. Similarly, testing water sources outside of the 1,000-foot radius would be helpful in utilizing defenses to the rebuttable presumption of causation.
Protection of water supplies is a very important issue, and one of the highest priorities of opponents to horizontal drilling. It is reasonable to expect a continued focus on the issue, with West Virginia’s current legislative efforts serving as but one example. Further, the costs and risks associated with adverse impacts to water supplies will likely increase in the future. Thus, a thorough plan to protect against such claims by extensively documenting pre-drilling conditions would be a prudent strategy.