Thursday, August 16, 2012

Cabot settles water law suit with residents of Dimock, Pa. Agreement marks an ending for most while some fight on

A group of residents of Dimock Pa. have agreed to a settlement with Cabot Oil & Gas related to polluted water supplies blamed on nearby Marcellus Shale drilling operations.

As reported by Laura Legere in Wednesday’s Scranton Times Tribune, Cabot has reached verbal agreements with 32 of 36 Dimock households while continuing to negotiate with remaining families. Legere cites a July 25 conference call between Cabot CEO Dan Dinges and investors. According to a transcript of that call posted by Seeking Alpha, the cost of the settlement to Cabot was immaterial. Dinges told investors:

The aggregate value of the settlements are not a material item with respect to Cabot's financial statements. Resolution of this litigation will have a very positive impact on G&A going forward due to the reduction in cost of defense.

Cabot spokesman George Stark was not immediately available for comment.

Terms of the deal were sparse because residents and the company were bound to a clause that prevents them from discussing details. It’s a quiet ending to what has been a contentious and public fight by some residents to hold Cabot accountable for pollution affecting their water wells.

Today, I spoke with several of the residents who agreed to Cabot’s terms, and who are now waiting for their checks to close the deal -- an administrative process that may take months. One third of the sum will go to attorney’s fees, and an undetermined amount to expenses. My conversations reflected a group of plaintiffs who were conflicted, battle weary, and resigned to accept the deal on the advice of their attorney, Tate J. Kunkle, of the New York-based law firm Napoli Bern Ripka Shkolnik. The new offer did not include systems to restore their well water, which was a point of regret for some of them.

It's been a battle that “sucks the life out of you,” said Victoria Switzer. “I’ll be 60 soon, and I don’t want to spend the next decade of my life going through this.” As recounted in the narrative of Under the Surface, Switzer tried unsuccessfully to resolve problems directly with Cabot by enlisting community groups and public officials. She signed on to the lawsuit as she became frustrated with the company’s unresponsiveness to residents’ requests for water. During subsequent public appearances, she coined the term “accidental activists” to sum up the situation she and her neighbors found themselves in.

That group included Ron and Jennie Carter, second generation farmers and natives of rural Susquehanna County who signed a drilling lease with Cabot in the hopes of generating retirement income. They received royalties that did that, but they didn’t anticipate losing their water well, or becoming embroiled in a consuming legal battle. “I have never been involved with attorneys before, and I hope I never will again,” said Ron Carter. “I hope when this is settled, it’s settled.”

The Carters and other Dimock residents were largely supportive of gas drilling when it began in 2008. Many became disillusioned after explosions and spills lead to problems that eventually divided the community into factions siding with and against Cabot.

Dimock represents both the dreams of Small Town USA and a loss of innocence amid the rush to embrace the lucrative promises of on-shore drilling. The town in rural northeastern Pennsylvania, just south of the border with New York state, became both a catalyst in the national anti-fracking movement, and a narrative line for books and films. In addition to Under the Surface, the stories of Dimock residents were featured from varying perspectives in works ranging from Gasland, Josh Fox’s academy award nominated movie, to Seamus McGraw’s memoir End of Country, as well as numerous magazine pieces and international news reports.

The conflict began on January 1, 2009, with the explosion of a well that supplied water to the home of Norma Fiorentino, a plumber’s widow and great grandmother. A subsequent investigation by the Pennsylvania Department of Environmental Projection found that methane was seeping from nearby drilling operations into an aquifer that supplied Norma’s well and others along the Carter Road area. Cabot contested the findings after the DEP, under Governor Ed Rendall’s administration, determined that the aquifer was permanently damaged from methane migrating from the bores of nearby gas wells. The DEP ordered Cabot to build an $11 million water pipeline to supply affected homes.

That order was lifted shortly after Tom Corbett won the gubernatorial election in November, 2011. As part of an agreement to drop the pipeline mandate, Cabot agreed to offer 19 families with excessive methane levels in their water wells twice the assessed value of their homes and a treatment system to remove the gas from their water. Some residents accepted that offer, but most declined while pursuing an independent lawsuit against Cabot filed in December of 2010. The lawsuit involved 15 families at the onset, but others joined later.

The story took a twist when the federal EPA intervened in January. The EPA began sampling water from 64 homes after the federal Agency for Toxic Substances and Disease Registry reviewed existing sampling data from Dimock wells by the Pennsylvania DEP and Cabot. The federal agency found “a possible chronic public health threat based on prolonged use of the water from at least some of these wells.” After a seven-month follow-up investigation, the EPA concluded last month that water wells supplying five of 64 homes contained elevated levels of methane, arsenic, barium, and manganese, but filters installed on the systems would eliminate health risks.

The recent settlement may mark the end of a chapter for some, but a handful of residents are resolved to continue the fight. Ray Kemble did not sign the agreement because he dislikes terms set by both his attorneys and Cabot's, according to Legere’s report. He noted that the agreement would limit what he can say publicly, adding that he would have to remove a sign in his yard that said "Make Cabot Pay."

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