Passing the Buck on Water Contamination

On April 15, the Pennsylvania Department of Environmental Protection (DEP) issued the most significant sanctions to date against Cabot Oil & Gas, responding to the ongoing environmental crisis of water contamination in Dimock, Pa. The action came in the form of a consent order and agreement, a legal contract that was negotiated between the DEP and Cabot to address issues of compliance with the Clean Streams Law, the Oil and Gas Act, and the Solid Waste Management Act.  The April action was revised from a November 2009 agreement after Cabot failed to abide by the original terms. As a result of the April revisions, Cabot paid a $240,000 fine to the state, and the DEP will fine the company “$30,000 per month, beginning in May, until the DEP has determined the company has met its obligations,” according to the DEP press release.

“Cabot must plug three wells within 40 days [by Tuesday, May 25] that are believed to be the source of migrating gas that has contaminated groundwater and the drinking water supplies of 14 homes in the region. It must also install permanent treatment systems in those homes within 30 days [by Saturday, May 15],” the DEP press release stated. Additionally, the company’s current pending permit applications have been suspended.

The DEP barred Cabot from drilling any new wells within a nine-square-mile area in Dimock Township; however, Cabot still has a presence in the area. Since drilling is the specified limited activity, Cabot continues to maintain compressor stations and pipelines for wells that have already been drilled. Additionally, the nine-square-mile ban did not explicitly differentiate aboveground from belowground activity. Horizontal drilling and hydraulic fracturing can have a radius of anywhere between 20 feet up to 4500 feet, depending on the form of drilling. Since the DEP order did not specify where the ruling applied, Cabot could access the land within the nine-mile ban through long-radius drilling.  Since natural gas drilling can be done as far as two miles deep into the earth, there’s no way for an outside party to know the exact location of Cabot’s drilling activities under the ground.

Despite the complicated legal language of these agreements, they omit a major issue in the dispute: Who is responsible for water contamination? The DEP’s gentle language—Cabot wells “are believed to be the source of migrating gas”—implies that the toxins found in Dimock water have migrated from specific drill sites without holding Cabot directly responsible. The agreement between the DEP and Cabot outlines specific actions that Cabot must take to remedy the damages, but a clause in the April 15 revised consent order states that no other party or person has the authority to use the findings in either agreement for any other matter or proceeding. While the DEP’s statements can be used as established facts, this clause allows Cabot to escape full ownership of the problem in Dimock. However, because the DEP study has determined that 14 homes have methane and heavy metals in their water, the burden of proof has shifted to Cabot. Now the company is responsible for proving that they were not the cause of the contamination.

Cabot and other Marcellus drilling companies continue to claim that fluids and chemicals cannot migrate through the layers of earth in a path that would ever reach a water well or an aquifer. But the primary component of natural gas, methane, is present in wells throughout Dimock Township in sufficiently high quantities to explode Dimock resident Norma Fiorentino’s well and its thick concrete cover on January 1, 2009. If contaminants in fact migrate, as drilling opponents allege, the DEP’s nine-mile ban is relatively arbitrary, since it’s plausible that contaminants migrate throughout the region.

The Dimock Township water contamination supposedly occurred before November 2009, according to Dimock residents and the DEP’s original consent order and agreement. Considering that the DEP waited more than five months to respond to Cabot’s failure to deal with the contamination, it’s clear that fixing the problem or identifying the source are not priorities for the Department. To put the sanctions in perspective, the $240,000 fine is less than five percent of the $5.5 million total 2009 compensation for Cabot Chairman, President, and CEO Dan Dinges, according to the company’s 2009 Proxy Statement, released March 23.

Public Response

Because of the DEP’s casual stance toward enforcing protective environmental policy, Dimock residents banded together in an ongoing attempt to save their water. At a November 20, 2009 press conference on Carter Road, 15 Dimock families announced a lawsuit against a natural gas energy company that has done substantial drilling in the area.

The families’ attorney, Leslie Lewis, stated, “We’re here today because last evening we filed a federal complaint against Cabot Oil and Gas Corporation on behalf of 15 families on Carter Road.”

The number of families suing Cabot has since grown to 20, comprised of a total 52 plaintiffs including children, Lewis said. Lewis, an associate at Manhattan based Jacob Fuchsberg Law Firm, introduced the suit. “As a result of Cabot’s negligence, [Carter Road residents] have suffered contamination of their water, loss of property value, permanent damage to their property, loss and use of enjoyment of their life, loss of the only thing that these people had for the next generation of this community.”

The lawsuit is imperative, Lewis said, because the Carter Road residents, “did not have the faith in the company to do what was necessary to meet contractual obligations with respect to repairing any damage that’s been done.”

According to Lewis, the goal of the lawsuit is to “acquire the [environmental] remediation to the extent that it can be provided. We’re suing for compensatory damages, we’re suing for breach of contract, we’re suing for fraudulent inducement and solicitation.”

Dimock resident Lynn Senick stressed that the Carter Road residents’ decision to file suit was difficult. She argued that the locals aren’t automatically cynical about the natural gas industry. They don’t expect that the drillers might not have everyone’s best interests in mind, because the community has always been small enough that trust was easy to earn. However, in the current footloose and global economy, perpetrators of damage don’t stick around long to be held accountable.

Senick stated that it would be cheaper to buy all the land used for fracking, but that companies choose to lease because it gives them an easy escape from responsibility if the property becomes contaminated. Energy companies aren’t interested in the land itself—only the gas that they can quickly find, extract and sell.

A Tangled Web

When asked about the revised consent order and agreement, Lewis said, “the negotiations have Cabot’s footprint all over it,” because the result is too beneficial for the company. The April 15 order includes 11 of the 20 families associated with the lawsuit among the 14 affected homes that the revisions address. Because the DEP order also contains stipulations about supplying treated water to the residents (water tanks for a non-potable water source, and bottled water or treatment systems for potable water), the order has a direct impact on the lawsuit. One of the most pressing demands of the lawsuit is that Cabot fund and build a municipal water system for any contaminated water wells in Dimock Township. According to Lewis, this would require Cabot to “find a water source that’s not contaminated and build the system and pipes to get water into people’s homes.”

Finding clean water might not be such an easy task. DEP Secretary John Hanger admitted in a May 4 meeting with Dimock residents that the department does not know the extent of the contamination or how long it will take to clear.  At that same meeting, Dimock residents affected by the water contamination argued for the creation of a municipal system as a solution, and the DEP appeared receptive to the idea. Neither the DEP nor Cabot has made any clear decision on the matter to date. Lewis said that Cabot has been unreceptive to petitions for the creation of the municipal system.

As it stands, the DEP has required Cabot to install permanent water treatment systems in 14 affected homes by May 15. Lewis said the purpose of the May 4 meeting of residents and the DEP was to encourage residents to accept the proposed solution to use the same treatment company Cabot has used in the past. However, Lewis reported that three of the families with whom she works have already had these systems installed. All of them have been disconnected because they didn’t work.

Even if the in-home systems were effective, they are a temporary solution at best, according to Lewis. She pointed out that having a water treatment system in the home burdens homeowners. The systems take up a lot of space­, a significant problem for families without basements or in small homes.

Moreover, the system gives Cabot—the company that most of these families feel has lied and cheated them—direct access to their homes and property to install and maintain the water systems.

The worst-case scenario, Lewis said, would be if Cabot declared bankruptcy or closed down before establishing a long-term solution to the water contamination. Then no one will be held responsible to ensure that the families get clean water. They’ll be stuck with dirty water, the cost of maintaining and repairing complicated water treatment devices, and they’ll have no means for remediating their property or their water.