We are reminded in Claybar v. Samson Exploration that a court will (if it’s doing its job) enforce an agreement according to what it actually says, not by that which one party or the other would have liked it to say or imagines that it said. Continue Reading An Indemnity Agreement Means What it Says
Occasionally we visit issues larger than one-off courthouse decisions. Here are a few selected stories on the extent to which fracking contributes to rising levels of methane and, maybe, to climate change. There are conflicting facts and opinions, so decide for yourself. If you find a tilt in one direction, we’re just levelling the field. See the last entry. Continue Reading What’s New in the Methane Debate?
In light of the adverse effects the storm, floods and tornadoes will have on oil and gas production, transportation and processing operations, we offer several bits of advice:
Winds and floods are among the very reasons for the seldom-invoked force majeure provisions of your oil and gas leases, operating agreements, transportation agreements and other contracts. If your operations are affected by the storm, study your contracts and be mindful of what you will need to do and when in order to invoke the protections force majeure clauses offer. Continue Reading Hurricane Harvey and Oil and Gas Operations – What To Do
Forest Oil Corporation v. El Rucio Land and Cattle Inc. et al deserves your attention for four reasons:
- You won’t see another one involving damage to a rhinoceros pen.
- It confirms that the Texas Railroad Commission does not have exclusive or primary jurisdiction over private claims for environmental contamination. Welcome to the courthouse.
- The South Texas redistributionist approach to civil justice includes arbitrations.
- For once, the Texas Supreme Court declined to eviscerate a multi-million dollar plaintiff victory.
It was a bad day for the Parrs in Aruba Petroleum v. Parr. The trial court judgment was against the operator for intentional nuisance. The Parrs recovered $2.9 million for pain and suffering and mental anguish and for loss of market value of their home caused by Aruba’s gas wells in Wise County, Texas. (See our erudite discussions of this case at the trial court here, here and here.)
This, along with Cerny v Marathon Oil, makes one wonder what it might take for a Texas plaintiff with a nuisance claim arising out of oil and gas activities to recover personal injury damages, especially if there are operations in the area by non-defendants (there were no wells on the Parrs’ property and 87 other wells in the area). As you will see, litigation by ambush is not likely to work.
The Parr’s claim was for “environmental contamination and polluting events” on their property by way of, among others, air contamination, light pollution and offensive noises and odors.
Recall Crosstex v. Gardiner, in which the Supreme Court described what is required to prove an intentional nuisance:
The actor desires to cause the consequences of his act or believes that the consequences are substantially certain to result from it. It is a subjective standard. It is not enough to conclude that the defendant intentionally engaged in the conduct that caused the injury.
The Parrs relied on three categories of evidence:
- complaints by a neighbor to Aruba,
- complaints to the Texas Commission on Environmental Quality,
- complaints by the Parrs to Aruba.
Generalized, anonymous grievances fall short
For all their complaints, the Parrs never identified themselves or their specific problems to anyone in particular at Aruba. They failed to identify evidence that Aruba knew that the Parrs were complaining to the TCEQ or that complaints were about the Parr’s property.
The jury didn’t believe Aruba’s conduct was abnormal and out of place in its surroundings. Recall that after Crosstex that is an improper jury question anyway.
My guess is that the jury was persuaded by testimony of an Aruba witness that well sites are noisy, dusty, emitted odors, and result in underground vibrations and significant lights at night, that the Parrs “probably “ had complaints, that he considers smoke plumes a health hazard and a nuisance. That all might be true, but to the court that wasn’t the issue.
It’s all about the evidence
There was no evidence to support the jury’s finding that Aruba intentionally created or maintained a condition that substantially interfered with the Parrs’ use and enjoyment of their land. The Parrs couldn’t cite any evidence that Aruba knew who placed phone calls to Aruba and complained to the TCEQ, or that complaints were specific to the Parr’s property.
For our musical interlude, happy Valentine’s Day.
Will the rules be good or bad for America?
The President says good. Will it be as “good” as the ACA? While you decide for yourself, consider these facts:
Methane is down
From 2005 to 2014 natural gas production increased by 33 percent and methane emissions from natural gas systems decreased 11 percent. The EPA places the natural gas industry in third place on the list of methane emitters behind landfills and “enteric fermentation” (It’s Blazing Saddles, but with cows).
What’s wrong with the free market?
EPA’s last greenhouse gas inventory in April 2015 specifically credited a 38 percent drop in methane emissions since 2005 to voluntary efforts by producers. Where is Friedrich Hayek when we need him?
Is it worth the cost?
Methane emissions from natural gas systems represent 3.4 percent of all the greenhouse gases emitted in the United States. EID has done the math: Assume methane emissions every year from 2025 to 2100 are kept at the target of 45 percent reduction from 2013; that would impact global temperature by .004 degrees Celsius. Some would call that benefit de minimis compared to the cost.
Close enough for government work
In justifying new methane rules the EPA assumed substantially higher natural gas prices than did the EIA. Result: Faulty cost-benefit analysis. How has the agency has fared in other regulations? It estimated its new CAFE standards would save consumers a few thousand dollars on gas and add $948 to the cost of a new car. Three different groups have gauged the additional cost to be more like $3,800 even after fuel savings.
EID reports on the debunking of Bill McKibben’s fracking “facts” Highlights (details in the links):
- Several of his claims have even been rebuked by the IPCC, the international global-warming alarmist enterprise.
- The IPCC considers the rapid deployment of hydraulic fracturing as an important reason for the reduction of greenhouse gas emissions.
- The Harvard study allegedly showing the nation is leaking methane in “massive quantities” doesn’t point to shale gas production as its source.
- The greatest methane increases have been in areas where there is no shale development.
- Even the EDF agrees: Study after study shows that emissions are far lower than Ingraffea claims.
- Gasland has proven to be a fraud.
A contrary look at the EDF study
Several observations about last week’s EDF’s study:
- Alex Trembath of the Breakthrough Institute explains that methane leakage is a minor factor in determining the benefit of coal-to-gas transition; such levels are within acceptable ranges.
- Even after targeting the “super emitters”, the EDF study shows an overall very low methane leakage rate.
Mother’s Day is coming up. How about a musical interlude for Mom!
You might recall previous entries discussing Parr v. Aruba (here is one) – a suit for personal injuries from oilfield pollution (and a $2.9MM verdict for the plaintiffs). Not all similar suits have the same result.
You could liken Cerny v. Marathon Oil and Plains Exploration & Production to a game of legal dodgeball. The “ball ” that the plaintiffs could not avoid was causation, thanks to Merrell Dow Pharmaceuticals, Inc. v. Havner.
The petition alleged, among other claims:
- continuous release of “ … strong odors and noxious chemicals into the environment, including the plaintiffs’ property, causing injury and harm to the plaintiffs’ property and to their persons … ” from Marathon wells and Plains facilities, and
- health problems, including headaches, rashes, chest pain, “strange nerve sensations,” high blood pressure, nausea, difficulty breathing, nosebleeds, anxiety and depression.
The causes of action were private nuisance, negligence, and negligence per se.
The problem for the plaintiffs
To dodge Havner, the plaintiffs had to satisfy these requirements:
- Prove with scientifically reliable expert testimony that their exposure to the defendant’s product more than doubled the plaintiff’s risk of contracting the disease.
- Where multiple sources of exposure exist, prove substantial factor causation. “Some” or “any” exposure won’t get it done.
- There must be defendant-specific evidence relating to the approximate dose to which the plaintiff was exposed, along with evidence that the dose was a substantial factor in causing the disease.
- Present reliable epidemiological and scientific evidence.
Ducking the problem
In an effort to satisfy the requirements, the plaintiffs:
- Disclaimed specific diseases, instead alleging symptoms,
- Disclaimed “personal injury damages” (which would require expert testimony under Havner),
- Sought recovery for “discomfort”, rather than disease,
- Submitted affidavits and reports from an air quality expert, a forensic meteorologist, a toxicologist, the Cernys themselves, and a lay witness who collected air samples at the Cernys’ home and at a Plains facility several miles away.
When considering the following conclusions, think “causation”:
- The trial court struck virtually all of the plaintiffs’ evidence, expert and otherwise. Thus, the plaintiffs had no proof. The evidence was speculative, hearsay, unreliable, and unqualified lay opinions.
- The plaintiffs failed to establish that the pollution came from the defendants’ operations and facilities, and not from dozens of other oilfield operations in the area.
- The court did not accept plaintiffs’ assertion that claims for symptoms, rather than disease, sidestepped Havner. It was still a toxic tort case.
- There was no direct, scientifically reliable proof of actual causation.
- Other potential causes of the Cernys’ illnesses were not addressed.
- The Cernys had plenty of symptoms before the events they sued on.
I submit that the plaintiffs had the wrong kind of expert.
- Sloppy play can lose the game
- Production sometimes declines after a big signing
- Lawyers don’t wear athletic supporters to work
- When the judge says “Call your next witness”, lawyers don’t step out of the batters’ box to adjust their gloves while the jury waits
- “Pace of play” is a constant debate
- Baseball doesn’t have a clock
Plaintiffs who fail to pay attention to the clock that is the statute of limitations end up as just more detritus littering courtrooms everywhere. See Ranchero Esperanza. Ltd. v. Marathon Oil Company.
What Happened and When
1989 – Marathon plugs and abandons Well 812 in Crockett County, Texas.
2004 – Rancho Esperanza purchases a 32-section ranch and undivided half in the Trinity Aquifer beneath the property. Well 812 is on the ranch.
July 2008 – The well begins leaking salt water onto the surface, apparently due to injection activity in other wells nearby.
July 22, 2008 – Aspen, now the operator of nearby wells, notices saltwater flowing from Well 812, stops the flow, and cleans and remediates the area.
July 28, 2008 – The day RE says it discovers the leak.
July 27, 2010 – RE sues
Did RE Have Standing to Sue?
Yes. The cause of action for injury to land is a personal right belonging to the person owning the property at the time of injury. A subsequent purchaser cannot recover for an injury committed before his or her purchase unless that right is assigned to it. R E had standing to file the suit. The injury occurred in 2008 when the saltwater appeared, not in 1989 when Marathon negligently plugged the well.
Was RE Too Late?
Yes. When does a cause of action accrue for injury to property? When a wrongful act causes some legal injury, even if the fact of the injury is not discovered until later and even if all resulting damages have not yet occurred.
RE’s cause of action accrued in July 2008 when the surface damages first resulted from the alleged deficient plugging.
RE’s bigger problem was that it waited too long to bring suit. The claims were subject to the two-year statute of limitations. The leak was discovered on July 20, 2008 and RE sued on July 27, 2010. RE’s foreman saw the leak on July 28 (in which case the filing would have been just in time) but he admitted that had he driven to the well a week earlier he might have discovered the leak.
The discovery rule did not apply because the nature of the injury incurred – surface damages arising from saltwater flowing from a well onto the surface – is not inherently undiscoverable.
And we’ll never know if the jury would have deemed Marathon negligent.
Musical Interludes – Other things that are bad for you besides being too late to the courthouse:
Co-author Brooke Sizer
Another Louisiana court has ruled that the Subsequent Purchaser Rule applies to damages following a mineral lease. In Bundrick v. Anadarko Petroleum Corp. it is the 3rd Circuit.
An owner of property had no right or actual interest in recovering from a third party for damage which was inflicted on the property before his purchase, in the absence of an assignment or subrogation of the rights belonging to the owner of the property when the damage was inflicted.
The plaintiffs bought seven tracts in St. Martin Parish that had been previously leased and subject to oil and gas production. They acquired the property after the expiration of the mineral leases and without obtaining an assignment of their predecessor-in-interest’s right to proceed against responsible parties. Oops!
Plaintiffs argued that the 12 defendants were negligent and strictly liable for the damage and that their conduct created a continuing and damaging nuisance and continuing trespass on the property.
They were denied recovery because they had not been assigned the rights of the prior owners to sue for damages. That right is a personal right and is not transferred to a subsequent owner without a clear stipulation to that effect.
Why is This Case Different from Eagle Pipe?
The plaintiffs wanted it to be, but the court said it isn’t. In Eagle Pipe and Supply, Inc. v. Amerada Hess Corp. the Louisiana Supreme Court relied upon the Subsequent Purchaser Rule to deny recovery to plaintiffs for contamination.
In Eagle Pipe the defendants operated under a surface lease and the Supreme Court specifically declined to rule on whether the doctrine applied to mineral leases. A different 3rd Circuit panel had ruled that the Rule did not apply to operations under a mineral lease. But the Supreme Court later told the 1st Circuit that they should apply Eagle Pipe to facts involving mineral leases. In Bundrick the 3rd Circuit did just that.
The plaintiffs also argued a cause of action for remediation of the contaminated property pursuant to Louisiana Mineral Code Art.11, because mineral rights are real rights that pass with the property to the subsequent purchaser without the need for a specific assignment. According to the court, Eagle Pipe clearly stated that leases convey personal rights only and these rights must be expressly assigned.
Why is That Man in This Blog?
Visit here often enough and you won’t usually find agreement with LSU grad James Carville. But then there was his address to the 2015 graduating class of LSU’s Manship School of Communication. Always entertaining, he decried the looming destruction of Louisiana higher education by Gov. Bobby Jindal and asked what the grads – and proud parents – are going to do about it.
Here’s something to do about it: Think of Bobby Jindal as you would an unprincipled, ambitious college football coach. He cheats, achieves fame and success, and is off to a bigger contract before sanctions hit the fan. Or see him as an abscess. Tea Party tax relief metastacizes, and breaks catastrophically bad for those around him. He is Grover Norquist’s “girlfriend”. His lust for the power of higher office could leave Louisiana healthcare and higher education impoverished for years.
Mr. Carville and the crowd closed with this sing-along.
I often wonder if anybody actually reads our modest, quasi-weekly offerings. They do! And they respond! To criticize! I earn my keep being “critiqued” by impatient judges, aggressive opposing counsel and, occasionally, less-than-happy clients, so – challenge accepted.
Lipsky was not Range’s lessor, therefor I know nothing about the case. Surely, this person lives in my house, where I enjoy a long history of knowing nothing about anything. (Memo to self: check progress on subpoena for kids’ “sent” box). And the inquisitor is as adept as my beloved family in drawing expansive and incorrect conclusions from meager evidence.
As for Mr. Lipsky, he was a nearby landowner and not a lessor. But the point – and the lesson – remain the same: His big mouth spread accusations that Range says are untrue. Range wanted to put a stop to it and was partially rebuked. Whether against a lessor or a stranger, it will be more difficult than in the past for anyone to use litigation as a tool to quash criticism.
The EPA did not find Lipsky’s claims to be false, says our inquisitor. To evaluate this one, let’s use the time-honored, citizen-friendly, and court-validated process invoked by the TCPA: Can the reader draw rational inferences from circumstantial evidence in determining what the EPA believed about Mr. Lipsky’s claims?
What Really Happened?
The Railroad Commission ordered Range to test its gas, launched an investigation, and held a formal hearing – in which Mr. Lipsky and the EPA were invited to participate (they declined). The RRC considered scientific testimony on “geology, hydrogeology, microseismic analysis, hydraulic fracturing, geochemical gas fingerprinting, and petroleum engineering” and determined that gas in Mr. Lipsky’s water well was most likely from the Strawn formation, found at 200 to 400 feet, and not the Barnett Shale, from which the Range wells produced at 7,000+/- feet, and that Range’s wells did not contribute to the contamination. Shortly thereafter, the EPA – declining to explain why – withdrew its earlier finding that Range’s wells were an imminent and substantial endangerment to a public drinking water aquifer. The inquisitor blames “political pressure”.
Who had the motive and stroke to apply “political pressure” on the EPA to withdraw its report?
A. EPA BFF then-Gov. Rick Perry
B. Sen. Ted “Hands Across the Aisle” Cruz
C. The ghost of George Mitchell
Who is it?
Who is our nemesis, the avenger of truth, the harbinger of a world purified by its abstinence from hydrocarbons? The inquisitor claimed to be “Sharon Wilson”. Given the anger revealed in the communications and on a certain Website, I assume it is “Texas Sharon”. Those running for high office adhere to a cardinal rule: Never name your adversary. However, this is a public service. When you hear a story, consider the source. Get to know Texas Sharon as a source. Then draw your own inferences, rational or otherwise.
Answer to the Quiz:
Nobody. It was a trick question. My “inference”: The EPA realized they were wrong and, wisely, drug the report off into a gloomy corner of the bureaucratic netherworld where it died, alone and abandoned, shorn of its misshapen graphs, charts and footnotes.
In the name of “debate”, we have this musical interlude.
The dog barked last night; thought I heard the rumble of tanks from the invasion. Turned out it was just thunder.