Fracking ban for Delaware River basin heads to a showdown in federal court

More than a decade after environmentalists and landowners first formed battle lines over natural gas drilling in the Delaware River basin, the prolonged fight over fracking is finally heading to a resolution in a Scranton courtroom.

U.S. District Judge Robert D. Mariani last month set an October trial date to hear a challenge to the drilling moratorium imposed in 2010 by the Delaware River Basin Commission, the interstate agency that manages water use in the vast Delaware watershed. A Wayne County landowner group alleges that the DRBC doesn’t have jurisdiction over gas drilling.

Meanwhile, Pennsylvania Republican lawmakers, along with Damascus Township in Wayne County, filed a separate legal action in federal court last month alleging that the DRBC moratorium illegally usurps state legislators’ authority to govern natural resources. They said that the DRBC’s action amounts to an illegal taking of property and that the agency potentially owes the state for lost tax revenue and property owners for lost gas royalties.

“If the DRBC wants to act as if it’s a governmental body for regulatory purposes, then it has to take all of the obligations that come along with that status,” said Matthew H. Haverstick, a partner with the Kleinbard LLC law firm of Philadelphia, which filed the suit on behalf of State Sens. Gene Yaw (R., Lycoming) and Lisa Baker (R., Luzerne) and the Pennsylvania Republican Caucus.

The lawsuits could potentially rein in the interstate agency, which Congress created in 1961 to manage water resources in the Delaware basin. The 13,539-square-mile basin encompasses parts of Pennsylvania, New Jersey, Delaware, and New York. The governors of the four states comprise the voting members of the commission, along with a federal representative.

The court could not act soon enough for Curt Coccodrilli, head of Wayne Land & Mineral Group LLC, which sued the DRBC in 2016. His group seeks to develop shale gas wells on its 180-acre Wayne County property, which straddles the line between the Delaware and Susquehanna River basins. Their lawsuit goes to trial Oct. 18.

“It’s a shame we’ve been in this battle a dozen years,” said Coccodrilli. “Their strategy has been death by a thousand cuts.”

Maya van Rossum, the head of the Delaware Riverkeeper Network, an advocacy group that has intervened in the lawsuit, blames Coccodrilli’s group for prolonging the legal action by being “unwilling to take a rational position.”

“We are confident that in the final analysis that we are going to be victorious and that the authority of the DRBC will be vindicated and upheld, and our watershed is going to be protected,” she said. One concern is how drilling might impact the Upper Delaware between Pennsylvania and New York, which is a federal scenic and recreational river.

Judge Mariani, who was appointed by President Barack Obama to the federal bench, in 2017 initially dismissed the Wayne Land suit, saying the landowners’ drilling plan clearly was a “project” that fell under the DRBC’s jurisdiction.

But the landowner group appealed to the Third Circuit Court of Appeals in Philadelphia, which overturned Mariani’s decision in 2018. The appellate court said the definition of “project” in the DRBC’s founding compact was ambiguous, and the lower court needed to conduct fact-finding on the intent of the compact’s drafters.

The parties have exchanged thousands of pages of documents, and submitted reports and depositions from expert witnesses, but little was resolved. Mariani on Jan. 6 ruled that so many facts remain in dispute that it would be inappropriate to grant either side a summary judgment, and ordered a full trial.

The trial promises to be an extensive examination of the commission’s purpose when it was created 60 years ago to resolve disputes among dozens of federal and state agencies over stewardship of the Delaware and its tributaries.

A key issue at the time was the management of four New York City reservoirs that capture water that flows into the Delaware. The reservoirs supply about half of New York’s drinking water through aqueducts; about five million of the 13.3 million people who depend on water from the Delaware basin live outside the basin, around New York City.

The DRBC says that concerns about water pollution justify its current interest in regulating gas drilling, according to a brief filed by the DRBC’s lawyer, Kenneth J. Warren of Bryn Mawr. Even in areas where gas wells are developed and operated according to regulations, the DRBC said, “fracking activities have resulted in impairment to water resources, the environment, human health and ecosystem health.”

One of the commission’s earliest actions in the 1960s was to amend its comprehensive plan to include an interest in underground water resources, the agency said. The DRBC’s mission included evaluating “the use, interference, impairment, penetration or artificial recharge of an aquifer or of any other underground water resource.” That mandate encompasses gas drilling and fracking, it says.

But Wayne Land’s attorney, Christopher R. Nestor of the Overstreet & Nestor law firm, argued that the commission historically accepted a U.S. Army Corps of Engineers’ definition of “project” as a type of civil work constructed for the purpose of developing and managing water resources, including dams, flood control structures, and navigation improvements. Only after the Marcellus shale gas boom began did the DRBC take an interest in activities and equipment used in gas drilling, Wayne Land argued.

The DRBC regulates no other land use or industry like gas drilling, and if the language the agency uses to justify the fracking moratorium is interpreted broadly, it leads to absurd results, Nestor argued. “Every sink and every toilet in every office tower is a project and every septic system is a project,” he wrote. “Even a garden hose in a yard would be a project.”

Both sides pointed to the experience of the Susquehanna River Basin Commission, an interstate agency that governs water management in the watershed immediately to the west of the Delaware basin. The Susquehanna drains parts of three states, from its headwaters in New York state to its confluence with Chesapeake Bay in Maryland.

The Delaware River commission says the SRBC in the 1970s expressly identified oil and gas production as a “project,” including “unconventional” gas drilling that relies on extraction techniques like hydraulic fracturing. Fracking involves the injection of water and chemicals under high pressure deep underground to unlock natural gas trapped in tight geologic formations, such as shale. The process has unleashed a fossil fuel boom that has reduced energy prices, but it has attracted a fierce backlash from environmentalists.

The Wayne Land group says that although the SRBC identifies gas drilling as a “project,” it has freely permitted fracking in its area, and no gas drillers have had reason to challenge its definition of a “project.” The Susquehanna commission defers regulating the gas industry to the state, and limits its oversight to how water is consumed in fracking.

The Wayne Land group also says that the SRBC’s data undercut the Delaware River commission’s assertions about the “purported detrimental effects of natural gas development activities,” including allegations that fracking consumes untenable amounts of water.

The landowners say drilling in the Susquehanna basin has not caused “discernible impacts” on water quality -- the SRBC operates a system of sensors that continuously monitor streams. And there is no shortage of water, they say, arguing that the gas industry’s water consumption is comparable to amounts used in manufacturing or in recreational activities, and is less than a tenth of the water consumed by electric generation plants.

The DRBC imposed the fracking moratorium in 2010 but never finalized drilling regulations. In 2017, the commission changed directions and moved to draft regulations to formally ban fracking in the basin. After a series of public hearings in 2018, the commission has not yet taken a vote on the ban.

Pennsylvania Gov. Tom Wolf, fulfilling an election campaign pledge, supported the DRBC vote in 2017 to move forward on a fracking ban. “I believe this resolution preserves water quality and water supply for the residents of the watershed, and will protect this precious resource for generations to come,” he said at the time.

But Pennsylvania Republican lawmakers, who have generally been supportive of the gas industry, say it is the General Assembly’s prerogative to make laws managing the state’s resources, and those powers can’t be delegated to any other governmental body, such as the DRBC.

The lawmakers, after failing in an effort to intervene in the Wayne Land case, in January pivoted and filed a separate lawsuit in U.S. District Court in Philadelphia challenging the DRBC moratorium.

The lawmakers’ action takes a novel legal approach, arguing that the Pennsylvania Environmental Rights Amendment puts the state’s natural resources in trust for the benefit of the people, and that the senators and municipalities, as trustees, may take “reasonable steps” to prevent diminution of the trust’s assets.

The senators’ invocation of the Environmental Rights Amendment infuriated anti-drilling activists, who regard the amendment as a cherished legal mechanism for the state to protect the health and environment of Pennsylvanians, not to protect the state treasury from losses of revenue from natural resource extraction.

“It really is beyond beyond the pale,” said van Rossum of the Delaware Riverkeeper Network, who said the lawmakers were merely acting as the “henchmen” for the gas industry. “This is about greed. This is about profits.”

Some argue that in the end, the court case could be academic. It’s unclear if the Marcellus Shale in the Delaware River basin contains significant amounts of recoverable natural gas (the quality of the shale declines as drillers moved eastward). And since the inauguration of President Joe Biden, the political forces arrayed against fossil fuel extraction have picked up momentum and may reduce demand for gas in the long run.

But Republican lawmakers in Harrisburg say the legal issue extends beyond shale gas and addresses a fundamental question of states’ rights and Pennsylvania’s authority to manage its own resources. Their lawsuit says the DRBC’s moratorium subjects Pennsylvanians “to the dictates of the unelected commission on a potentially unlimited number of matters.”