Ely v. Cabot Oil & Gas Corp.
2014 WL 4071640, 2014 U.S. Dist. LEXIS 115390, 38 F. Supp. 3d 518 (2014)
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Rule of Law:
Under Pennsylvania law, natural gas drilling and hydraulic fracturing are not considered abnormally dangerous activities that give rise to strict liability. Claims for harm resulting from such activities must be proven under traditional negligence principles.
Facts:
- In 2006 and 2007, the Ely family and the Hubert family granted oil and gas leases to Cabot Oil & Gas Corporation ('Cabot') for exploration and production on their properties in Dimock Township, Pennsylvania.
- The Elys and the Huberts (who lived on the Ely property) alleged that their water supplies, located within 1,000 feet of Cabot's gas wells, became contaminated starting around 2007-2008.
- The Elys claimed they began experiencing physical symptoms, including headaches, upset stomachs, and rashes, around the time they noticed changes in their water.
- Cabot began drilling the 'Gesford 3' well in September 2008, but this well was never hydraulically fractured.
- On the same well pad, Cabot drilled a second well, 'Gesford 3S', which was hydraulically fractured in two stages in March 2009.
- The original 'Gesford 3' well was renamed 'Gesford 9', was drilled to a shallower depth, and was also never hydraulically fractured.
- Both the Gesford 3S and Gesford 9 wells were plugged and abandoned by Cabot in May 2010.
- The plaintiffs' own expert witness opined that any fluid migration that may have occurred was 'likely' due to 'faulty well design and/or construction,' suggesting negligence rather than an inherent danger in the activity itself.
Procedural Posture:
- A group of 44 plaintiffs, including the Elys and Huberts, filed suit against Cabot Oil & Gas Corporation and GasSearch Drilling Services Corporation in the U.S. District Court for the Middle District of Pennsylvania.
- After a number of plaintiffs settled, 12 plaintiffs remained in the case.
- In their second amended complaint, the remaining plaintiffs alleged, among other things, that hydraulic fracturing is an abnormally dangerous activity that subjects the defendants to strict liability.
- Defendants filed a motion for summary judgment, asking the court to dismiss the plaintiffs' strict liability claims as a matter of law.
- A U.S. Magistrate Judge reviewed the motion and issued a Report and Recommendation advising the District Court to grant the defendants' motion.
- The plaintiffs filed objections to the Magistrate Judge's report, which were then considered by the District Judge.
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Issue:
Does natural gas drilling, including the process of hydraulic fracturing, constitute an abnormally dangerous activity under Pennsylvania law, thereby subjecting the operator to strict liability for any resulting harm?
Opinions:
Majority - Carlson, Martin C., Magistrate Judge (adopted by Jones III, John E., District Judge)
No, natural gas drilling and hydraulic fracturing do not constitute abnormally dangerous activities that would subject an operator to strict liability under Pennsylvania law. The court applied the six-factor test from the Restatement (Second) of Torts § 520 and found that the plaintiffs failed to meet their burden. The court reasoned that: (1) the activity does not present a high degree of risk of harm when performed with due care; (2) any risk can be substantially mitigated or eliminated by exercising reasonable care; (3) the activity is a matter of common usage in the region and throughout Pennsylvania; (4) it is appropriate for the rural areas where it occurs; and (5) its significant economic value to the community outweighs its dangerous attributes. The court emphasized that no court in the United States has ever held hydraulic fracturing to be an ultrahazardous activity, and Pennsylvania courts have consistently declined to apply strict liability to related oil and gas activities. Therefore, claims for damages must be pursued under a negligence standard, which requires proof of a breach of the duty of care.
Analysis:
This decision reinforces the high threshold for classifying an industrial activity as 'abnormally dangerous' for the purposes of strict liability. By declining to apply strict liability to hydraulic fracturing, the court aligned with a long history of jurisprudence that favors negligence standards for oil and gas operations. This ruling significantly impacts environmental tort litigation by placing a higher burden of proof on plaintiffs, who must now demonstrate specific acts of negligence rather than simply proving that the defendant's activity caused harm. The decision provides substantial legal protection to the energy industry and signals that courts are hesitant to expand strict liability to economically significant activities where risks can be mitigated through proper care.
