To: Attendees of HB’s Shale Gas Drilling Conference

From:  Conference Co-Chair Jennifer Quinn-Barabanov, and panelists Mark Fitzsimmons and Antonia B. Ianniello, all with Steptoe & Johnson LLP.

Thank you for attending HB’s Shale Gas Drilling Operations (Fracking) Conference; we hope you found the program content useful. There are constant developments in this rapidly evolving area of law and science. Last week, when we met, there were several notable developments.

Binghamton Ban Invalidated

In Jeffrey v. Ryan, CA2012-001254, 2012 WL 4513348 (Table) (N.Y. Sup. Broome County), a New York trial court invalidated a City of Binghamton, New York, ordinance banning natural gas and petroleum exploration, extraction, storage and disposal activities for a period of two years. Close to one hundred municipalities in upstate New York have enacted either bans or moratoriums on fracking. The Jeffrey court agreed with two prior decisions holding that New York’s mineral resource laws do not prohibit municipal bans. Anshutz Exploration Corp. v. Town of Dryden, 35 Misc.3d 450 and Cooperstown Holstein Corp. v. Town of Middlefield, 35 Misc.3d 767. However, the Jeffrey court held that Binghamton’s ban, which included a two-year time limit — not in order to study potential fracking impacts, but apparently to make the measure more politically popular – was invalid. The court held that the ordinance was a moratorium, which under New York law, must be based upon a showing of “dire necessity,” that the ordinance is “reasonably calculated to alleviate or prevent a crisis,” and that the municipality “is taking steps to rectify the problem” – none of which had been met here. The Jeffrey decision creates pressure for New York municipalities to better and more accurately characterize their underlying rationale for anti-fracking laws. The decision also creates an opportunity for proponents of gas development to challenge such ordinances for failure to comply with different procedural requirements that apply depending on whether fracking restrictions are imposed as part of a moratorium, zoning ordinance, or exercise of police powers to protect public health and safety.

Methane Fingerprints

At the same time, the scientific debate over potential environmental effects from fracking continued. As we discussed, methane is a constituent of natural gas, and has been detected in drinking water wells in areas of gas production. Alleged methane contamination of drinking water wells has been a primary source of fracking litigation, including in Dimock, Pennsylvania. Litigants have hotly debated whether methane detected in wells is caused by fracking or can be attributed to natural sources. Last week, in response to various Freedom of Information Act requests, the US EPA released data taken earlier this year that “fingerprinted” methane from Dimock wells by measuring differing isotopes (molecules with differing atomic weights) of carbon, hydrogen and other constituents. EPA released its data without comment. Experts on both sides of the issue have come to different conclusions as to whether the fingerprint “matches” fracked gas (which could mean it has migrated upwards into drinking water wells) or has some other source. EPA will analyze this data as part of its national study of the potential environmental effects associated with fracking. A progress report on that study is scheduled to be released later this year, with the full study scheduled for release in 2014. How this scientific question of identifying the source of methane is ultimately resolved will have a significant effect on fracking litigation, and no doubt on governmental regulation of the process.

Please contact us with any future questions you may have.

Jennifer Quinn-Barabanov (conference co-chair and panelist, Jury Considerations for Your Fracking Case): jquinnba@steptoe.com

Mark Fitzsimmons (panelist, Current Litigation Strategies & Issues): mfitzsimmons@steptoe.com

Antonia B. Ianniello (panelist, Coverage Implications): aianniello@steptoe.com