Volume XXVIII Issue 1

Congratulations to the following staff writers whose articles will be published in Volume 28 Issue 1 of the Villanova Environmental Law Journal:

Cecil the Lion: The Everlasting Impact on the Conservation and Protection of the King of the Jungle – Madison Clemens

“Just What the Doctor Ordered”: Regulating Pharmaceutical Contamination of Our Nation’s Water Supply – Phillip Harrinarine

The Lungs of Our Land: Deforestation and Climate Change’s Destructive Circular Relationship – Meghan Micciolo

Criminal Prosecution for Environmental Lawbreakers: Is it Really Working? – Christina Russo

What Does “Green” Really Mean”: How Increased Transparency and Standardization Can Grow the Green Bond Market – Kevin Talbot

Volume XXVII Issue 2

Congratulations to the following staff writers whose casenotes will be published in Volume 27 Issue 2 of the Villanova Environmental Law Journal:

Shhh: Eighth Circuit Puts Conservationists Intervenor to Bed in Quiet Title Action in North Dakota Ex Rel. Stenehjem v. United States – Matthew Arnold

There’s Something in the Water: The EHB Oversteps its Mandate and Disregards Contract Law in Robinson Coal v. Department of Environmental Protection – Ryan Duffy

Michigan v. E.P.A.: Money Matters When Deciding Whether to Regulate Power Plants – Ruby Khallouf

Sorry, Access Denied: Department of Environmental Protection v. Delaware Riverkeeper Network and the Relationship between the Public’s Right to Know and an Agency’s Right to Conceal  – Aya Samra

‘Cracks’ in the Court’s Analysis? Court Strikes Balancing Act Between Citizens’ Constitutional Rights and Government’s Exploitation of Natural Resources in Pennsylvania Envtl. Def. Fund. v. Commonwealth of Pennsylvania  – Gabriella Soreth

Oneok, Inc. v. Learjet, Inc.: The Supreme Court Narrows the Preemptive Scope of the Natural Gas Act and Extracts a Win for State Courts – Alexander Torres

Pennsylvania Courts Decline to Take a Step Toward Safer Hydraulic Fracturing

By: Danielle A.  Quinn

Imagine spending over a million dollars to build your dream home only to have your water contaminated by methane gas from a drilling operation on your neighbor’s property, a mere 1,000 feet away.[i] As a result, you are forced to house a large, unsightly, plastic container on your property to store potable, non-drinking water so your family has a water supply.[ii] This imagined scenario is the exact nightmare that a family in Susquehanna County, Pennsylvania is currently facing.

“For decades, courts have uniformly refused to find that oil and natural gas drilling and related activities are ultra hazardous or abnormally dangerous, and thus have found that such activities are not subject to strict liability under tort law.”[iii] On November 19, 2009, however, Pennsylvania was “invited to take a step which no court in the United States [had] chosen to take, and declare hydraulic fracturing to be an ultra-hazardous activity that gives rise to strict tort liability.”[iv] Unfortunately, after years of litigation, and the majority of plaintiffs settling, Judge Jones of the Middle District of Pennsylvania dismissed the plaintiffs’ claims alleging hydraulic fracturing should be subjected to strict liability for being an ultra hazardous activity.[v]

In granting the defendant’s motion for summary judgment on the strict liability claim, the court adopted, in full, the Report and Recommendation of Judge Carlson. In his report, Carlson emphasized how common fracking in Pennsylvania is now, and the economic and societal benefit of fracking. He noted “that since 2000, 649 wells have been drilled in Susquehanna County, Pennsylvania alone, 99.5% of which have been hydraulically fractured since 2009.” [vi] Furthermore, since “1859, more than 350,000 natural gas wells have been drilled in Pennsylvania.” [vii] In addition to the substantial number of wells that have been drilled, the Marcellus Shale Education and Training Center report on drilling “found that each new well drilled in the Marcellus Shale generated 30 jobs and $4 million in total output within Pennsylvania’s economy.”[viii] Carlson also analyzed the Restatements six factors to determine whether an activity is ultra hazardous or abnormally dangerous. In doing so, he determined that properly executed drilling operations, conducted in appropriate areas, coupled with the economic and community benefit outweighed the risk involved with hydraulic fracturing.[ix]

While properly drilled wells may pose little threat to neighboring properties and well water sources, Yale University conducted a study in 2012, which  surveyed 492 people in southwestern Pennsylvania and showed that 39% of people living within a mile of a well reported having upper respiratory symptoms while only 18% of those who lived further away reported similar problems.[x] Similar results were shown when asked about skin irritation.[xi] While these results appear to indicate that fracking is causing these symptoms, the authors of the study recognize that more research needs to be done to support that conclusion.[xii]

Two years after the Yale study was conducted, scientists from universities around the country studied the gas content of “113 drinking-water wells and one natural methane seep overlying the Marcellus shale in Pennsylvania, and [] 20 wells overlying the Barnett shale in Texas.”[xiii] The study analyzed the “noble gases and their isotopes in groundwater near shale gas wells.”[xiv] The data ultimately “appear[ed] to rule out gas contamination by upward migration” from where horizontal drilling or hydraulic fracturing occurred to the underground aquifer.[xv] Rather, the results showed that the gas contamination came from much shallower depths.[xvi] Thus, the researchers concluded that hydraulic fracturing is not the cause of the contamination; rather, it is caused by “well-integrity problems such as poor casing and cementing.”[xvii] Moving forward, knowing that the structural integrity is the source of the contamination, oil and gas companies may be able to focus on how to prevent groundwater contamination by drilling safer wells.

Although this is the first in-depth study to examine the issue of groundwater contamination from fracking wells, it is certainly not the last; especially with the ever growing controversy and concerns that surround the hydraulic fracturing practice. While this study was not published at the time Judge Carlson issued his report and recommendation, it strongly backs-up his position that hydraulic fracturing should not be considered an ultra hazardous activity; at least regarding groundwater contamination. But, all is not lost for the plaintiff family though because the issue of negligence is still pending before the court and studies, such as the one referenced above, will help make a stronger argument that the gas company was negligent in drilling and maintaining their well.

[i] Gina Passarella, Drilling Contamination Case Narrowed Against Cabot, The Legal Intelligencer, http://www.thelegalintelligencer.com/home/id=1202715050360?cn=20150113&pt=PM%20Legal%20Alert&src=EMC-Email&et=editorial&bu=The%20Legal%20Intelligencer&slreturn=20150016092034 (January 14, 2015) (giving background of plaintiffs situation and how groundwater contamination effected them).

[ii] Id. (explaining consequences of contaminated well water).

[iii] Ely v. Cabot Oil & Gas Corp., 38 F.Supp.3d 518, 520 (M.D. Pa. 2014) (giving history of strict liability applied to fracking).

[iv] Id. at 519. (stating Pennsylvania could set new precedent for fracking liability).

[v] See Id. at 520. (dismissing claim that fracking is ultra hazardous and thus subject to strict liability). In 2009 when the case began, there were 44 plaintiffs and two defendants in the case; today there are only 10 plaintiffs and one defendant. See Gina Passarella, supra note 1.

[vi] Id. at 523 (providing statistics about fracking in Pennsylvania and Susquehanna County).

[vii] Id. at 524 (providing statistics about fracking in Pennsylvania and Susquehanna County).

[viii] Ely, 38.F.Supp.3d 518 at 524. (giving statistics on financial impact of drilling in Pennsylvania).

[ix] See Id. at 529-33. (applying Restatements six factor test to case facts).

[x] Wendy Koch, People Near “Fracking” Wells Report Health Woes, USA Today, http://www.usatoday.com/story/money/business/2014/09/10/people-near-fracking-wells-health-symptoms/15337797/ (Sept. 10, 2014) (detailing Yale study of people’s health living near fracking wells).

[xi] Id. (noting statistics for skin irritation). “While 13% of those within a kilometer of a well said they had rashes and other skin symptoms, only 3% of those beyond 2 kilometers said the same.” Id.

[xii] Id. (suggesting results could also be caused by air contaminants, diesel exhaust from equipment, or leaks in well casings).

[xiii] Duke University, Contaminated Water in 2 States Linked to Faulty Shale Gas Wells, EurekAlert, http://www.eurekalert.org/pub_releases/2014-09/du-cwi091014.php (Sept. 15, 2014) (Explaining study conducted by scientist on groundwater contamination near wells). The study examined “eight clusters of wells — seven in Pennsylvania and one in Texas — with contamination, including increased levels of natural gas from the Marcellus shale in Pennsylvania and from shallower, intermediate layers in both states.” Id.

[xiv] Id. (explaining what gases were analyzed and their origin).

[xv] Thure E. Cerling, Noble gases identify the mechanisms of fugitive gas contamination in drinking-water wells overlying the Marcellus and Barnett Shales, Proceedings of the National Academy of Science of the United States of America, http://www.pnas.org/content/111/39/14076, (Aug. 12, 2014) (detailing study conducted on groundwater contamination of wells located in clusters around drilling sites).

[xvi] See Id. (concluding contamination source was not at depths where horizontal fracking occurred).

[xvii] For a further discussion on the results of the study, see Duke University, supra note 13.

Volume XXVII Issue 1

Congratulations to the following staff writers whose comments will be published in Volume 27 Issue 1 of the Villanova Environmental Law Journal:

Bakken Crude and the Ford Pinto of Railcars: The Growing Need For Adequate Regulation of the Transportation of Crude Oil By Rail – Evan Busteed

Caution: Hazards Ahead! How EPA’s Refusal to Classify Coal Ash as Hazardous Waste Fuels Environmental and Public Health Concerns – Brittany Daniels

Don’t Eat the Brown Snow! Utilizing Wastewater for Artificial Snow: A Slippery Slope between Protecting Skiers and Encouraging Water Reuse – Katie Duquette

Hostility Toward the Clean Power Plan: Examining Why the Power Plant Rule Faces Early Litigation and Why it Raises Key Legal Questions – Meredith Lussier

Congress, Give Renewable Energy a Fair Fight: Congress’ Passage of the Master Limited Partnerships Parity Act Would Give Renewable Energy the Financial Footing Needed To Independently Succeed – David Magagna

It’s Easy Being Green When You’re Not

By: Peter Fonash, Staffwriter

Bamboo is touted as an eco-friendly material for flooring and furniture. It is eco-friendly because it grows quickly with little need for pesticides, it can be harvested without killing the parent plant, and, as luck would have it, it is easy to maintain.[1] As a result, bamboo has seen increasing use as an “industrial raw material and substitute for wood.”[2]

Naturally, corporations are eager to capitalize on the increasing number of environmentally conscious consumers by advertising their products as ‘green’ because they are made from bamboo. For some bamboo products, like flooring and furniture, these claims are true. With “soft” bamboo products, however, like shirts and sheets, these claims are often half true or are even patently false.[3] Indeed, companies have claimed their clothing is 100% bamboo fiber when, in fact, the clothing is made out of rayon, which is a synthetic material.[4]

Much of the issue derives from the production of rayon. Rayon is “created from the cellulose found in plants and trees and processed with a harsh chemical that releases hazardous air pollutants.”[5] Any cellulose source, including bamboo, is sufficient to use in the production of rayon. While a rayon product is technically made with or from bamboo when bamboo is used as this cellulose source, it is far from 100% bamboo fiber. Notably, in contrast to the manufacture of bamboo, which can be fairly ‘green,’ manufacturing rayon uses toxic chemicals, resulting in the emission of hazardous air pollutants.[6]

In recent years, many corporations have falsely claimed their rayon products are eco-friendly because they are made from bamboo, thereby misleading consumers and opening themselves up to liability. Two instances serve as useful examples, the first in 2009 and the second in 2013. In both instances, the Federal Trade Commission (FTC) brought complaints against the participating corporations.  

In 2009, the FTC charged Jonäno, Mad Mod, and Pure Bamboo, with “deceptively labeling and advertising” some of their products as “made of bamboo fiber, when they are made of rayon.”[7] The FTC, moreover, charged these sellers with “making false and unsubstantiated ‘green’ claims that their clothing and textile products are manufactured using an environmentally friendly process, that they retain the natural antimicrobial properties of the bamboo plant, and that they are biodegradable.”[8] The FTC charged that the seller’s products were made of rayon that was made with bamboo, rather than being made from pure bamboo, and that the seller’s process for manufacturing these products was not in fact environmentally friendly.[9] The sellers, in response to the charges, settled with FTC, agreeing to “use the proper names to label and advertise the fibers in their products.”[10]

Later, in 2010, FTC sent letters to Amazon.com, Leon Max, Inc., Macy’s, and Sears warning the companies they were violating the “Textile Products Identification Act and the FTC’s ’Textile Rules’ by mislabeling and advertising products as made of bamboo.”[11] It was not until three years later, in 2013, that the four retailers finally settled with the FTC for a combined $1.26 million “for falsely labeling clothing and textiles as made of bamboo.”[12]

Although the offending corporations agreed to cease making false claims in both instances, the second instance highlights that it can take years for corporations to accept responsibility and implement the necessary changes. During the interim, consumers are vulnerable to false claims. Moreover, prior to receiving FTC warnings, corporations may be unaware that their claims are illegal. To avoid these issues, consumers and corporations alike should read FTC publications designed to help both businesses and the public navigate the purchase and sale of bamboo products.[13] This information helps consumers determine when their bamboo purchases are truly green and it guides corporations in making ‘green’ claims about their bamboo products.

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[1] See ‘Bamboo’ Fabrics, Federal Trade Commission, http://www.consumer.ftc.gov/articles/0122-bamboo-fabrics(lasted visited Mar. 30, 2014) (discussing uses of bamboo).

[2] Inga Muller and Camille Rebelo, Bamboo Worldwide, EcoPlanet Bamboo, 5, http://www.ecoplanetbamboo.net/files/bamboo_worldwide.pdf (lasted visited Mar. 30, 2014) (listing physical and environmental properties of bamboo making it exceptional resource).

[3] See ‘Bamboo’ Fabrics, supra note 1.

[4] See Four National Retailers Agree to Pay Penalties Totaling $1.26 Million for Allegedly Falsely Labeling Textiles as Made of Bamboo, While They Actually Were Rayon, Federal Trade Commission (Jan. 3, 2013), http://www.ftc.gov/news-events/press-releases/2013/01/four-national-retailers-agree-pay-penalties-totaling-126-million(charging four companies for false bamboo claims); see also FTC Charges Companies with ‘Bamboo-zling’ Consumers with False Product Claims, Federal Trade Commission (Aug. 11 2009), http://www.ftc.gov/news-events/press-releases/2009/08/ftc-charges-companies-bamboo-zling-consumers-false-product-claims (charging three companies for false bamboo claims and unsubstantiated green claims).

[5] FTC Charges Companies with ‘Bamboo-zling’, supra note 4 (explaining Rayon manufacturing process).

[6] See id. (finding further that Rayon products are not “biodegradable because they will not break down in a reasonably short time after customary disposal.”)

[7] Id. (violating Commission’s Textile Fiber Products Identification Act).

[8] Id. (explaining Rayon products are “not biodegradable because they will not break down in a reasonably short time after customary disposal.”)

[9] Id. (citing harsh chemicals used in process).

[10] FTC Charges Companies with ‘Bamboo-zling’, supra note 4 (allowing descriptions like “rayon made from bamboo”).

[11] Susana Kim, Macy’s, Sears, Amazon, Max Studio Fined for ‘Bamboozling’ Customers, ABC News (Jan. 5 2013), http://abcnews.go.com/Business/macys-sears-amazon-max-studio-fined-bamboozling-customers/story?id=18132575 (explaining mechanically processed bamboo cannot be called bamboo); see also Four National Retailers Agree to Pay Penalties Totaling $1.26 Million for Allegedly Falsely Labeling Textiles as Made of Bamboo, While They Actually Were Rayon, Federal Trade Commission (Jan. 3 2013), http://www.ftc.gov/news-events/press-releases/2013/01/four-national-retailers-agree-pay-penalties-totaling-126-million

[12] Retailers Agree to Pay Penalties, supra note 11.

[13] See ‘Bamboo’ Fabrics, supra note 1; see also Threading Your Way Through the Labeling Requirements Under the Textile and Wool Acts, Federal Trade Commission (May 2005), http://business.ftc.gov/documents/bus21-threading-your-way-through-labeling-requirements-under-textile-and-wool-acts#intro (listing laws governing bamboo labeling and sale).

Living in the Past: Are States Franchise Laws Stifling the Electric Car?

By: Marc Pugsley, Staffwriter

During the middle part of the twentieth century, a consortium led and funded by leading automobile and oil companies purchased public transit systems nationwide and converted rail and streetcar networks into bus routes, a phenomena known as “bustitution.”[i]  Although a federal court convicted the consortium for conspiring to monopolize the sale of busses, the court imposed paltry penalties, ignoring the irreversible damage that had been done from removal of the train tracks.[ii]  Presently, a similar battle wages: this time by car dealers who use outdated, archaic state franchise laws to block new market participants (i.e., competition), especially alternative, environmentally-friendly car manufactures, from selling their vehicles.  Because of these state franchise laws, one prominent electric car manufacturer, Tesla Motors, has encountered legal difficulties to sell its products in many states where consumers wish to purchase Tesla vehicles.

In the United States, nearly all states have automobile franchise laws, which mandate the separation between car manufacturers and car dealers.  Effectively, franchise laws ban manufacturers from direct sales to consumers.  Instead, manufacturers sell cars wholesale to dealers who then sell to the end-user consumers; additionally, dealers provide financing, vehicle servicing, and process vehicle recalls.  In Pennsylvania, for example, the franchise law is known as the Pennsylvania Vehicle Manufacturers, Dealers and Salespersons Act.[iii]  The Pennsylvania General Assembly stated the following purpose for the Act:

The General Assembly of this Commonwealth finds and declares that the sale of new and used motor vehicles in the Commonwealth vitally affects the general economy of the Commonwealth, the public interest and public welfare, and that in order to promote the public interest and the public welfare, and in the exercise of its police power, it is necessary to license manufacturers, dealers and salespersons of new and used motor vehicles doing business in the Commonwealth, in order to prevent frauds, impositions and other abuses upon its citizens and to protect and preserve the investments and properties of the citizens of this Commonwealth.[iv]

Unfortunately, the General Assembly’s purpose, while admirable, is outdated and is supported by car dealers under the guise of protecting the public.  Dealers, however, are acting in self-interest in the face of new entrants into the car market such as electric car manufacturer Tesla, whose founder Elon Musk also started PayPal and SpaceX.[v]

In the face of restrictive state franchise laws, Tesla seeks to innovate the car buying experience.  In many locations, Tesla places a “flagship” store at high traffic locations, like King of Prussia Mall located outside Philadelphia.  Tesla views these stores as showrooms to educate consumers, who then can purchase a Tesla online, with the transaction taking place “in California,” outside the jurisdiction of state franchise laws.  As a result, car dealers are fervently lobbying to amend existing franchise laws to encompass online sales initiated within a state, thus requiring all sales of vehicles in a state, whether in person or via the Internet, to go through authorized dealers.  Such efforts have had mixed results.  North Carolina dealers failed to compel new legislation in their favor; similarly, efforts in New York, Minnesota, and Massachusetts have failed to ban online sales, with court cases ruling in Tesla’s favor.[vi]  Tesla’s bid to obtain a dealership license in Virginia, however, failed.[vii]  Moreover, just recently New Jersey Governor Chris Christie’s administration effectively blocked Tesla direct sales in the state, an area the company believes “is important for reaching customers in the New York metro area.”[viii]

Relatedly, Texas has very strict franchise laws.  Some say these laws protect the more than 280 cities and towns home to car dealers – many of which are small towns of less than 15,000 residents and the dealerships employ a large percentage of the town’s population.[ix]  Texas prohibits Tesla from offering test drives or even quoting prices of its vehicles, therefore, Tesla stores in the lone star state are essentially galleries.  Tesla, on its site, describes the many steps needed to purchase a vehicle in Texas, as well as the arduous steps needed to service a vehicle in Texas.[x]  Tesla and Musk are pushing to avoid the uncertainty of the hodgepodge state franchise laws by preempting federal legislation to permit direct sales and servicing.

Originally, one reason for separating the manufacturers from the dealers was to protect customers in case a manufacturer went out of business.  That is, dealer networks could continue to service vehicles after a manufacturer ceases operations.  However, there are negatives to this arrangement.  First, adding an additional layer between manufacturer and consumer increases costs and decreases transparency.  Instead of Ford directly selling cars to consumers, thousands of Ford dealers nationwide independently sell Fords at varying price points.  This may be unnecessary, as consumers today are much better equipped than in the past to perform research and due diligence to make informed car buying decisions, and perhaps do not need the expertise of car dealers.  Additionally, what many of the pro-franchise law dealers’ arguments fail to consider is that dealers are not the only venue for car servicing.  Indeed, thousands of independent mechanics nationwide service cars new and old, including cars no longer being manufactured and cars from defunct companies.

Moreover, consumer protection agencies further protect consumers of products and services.  The Federal Trade Commission, for instance, is dedicated to consumer protection, and many states have similar consumer protection agencies.[xi]  Many states also have laws referred to as “lemon laws,” which protect car purchasers from faulty car purchases (known as “lemons”).

A recent publication by the American Bar Association calls the traditional car franchise system into question.[xii]  The article notes how improvements in technology, especially the Internet, have changed how we purchase many consumer items, such as groceries, music, and other goods, and also cites corporate casualties who failed to adapt to technology like Blockbuster Video and Borders.  The article asserts that the immense power car dealers wield in many states would make a blanket dismantling of state franchise laws unlikely; instead, Tesla should seek exemptions from state franchises.  Additionally, Tesla has informally explored the possibility of using franchise dealers in the future, once the company is more stable economically.

Legislators should reexamine their state’s approach to these issues.  State automobile franchise laws are not static and must evolve to reflect changing social, technological, and economic circumstances.  Historically, franchise laws might have made sense; however, outdated laws must be periodically revisited, revised, and if necessary, removed.  

Consumer protection must be balanced with freedom of choice.  Tesla does not seek the abolishment of franchise laws, but only seeks an exemption to conduct its innovative business outside the confines of entrenched, archaic franchise laws.[xiii]  In sum, consumers would not be hurt by such an exemption because they still have choices: the choice to research and choose to purchase a Tesla based on all available information and the choice to purchase any other type of vehicle under the tradition dealer framework.

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[i] The term “bustitution” is a portmanteau of “bus” and “substitution” and refers to using busses for journeys usually or historically made by train.  Bustitution can be temporary or permanent.  For an example of bustitution in the United States, see Guy Span, Paving the Way for Buses–The Great GM Streetcar Conspiracy, BayCrossings.com, http://www.baycrossings.com/Archives/2003/03_April/paving_the_way_for_buses_the_great_gm_streetcar_conspiracy.htm (last visited Jan. 31, 2014) (describing efforts of General Motors and other automotive companies to replace rail networks with rubber tired busses).  Interestingly, the dismantling of the Los Angeles Pacific Electric “Red Car” rail system was depicted as a central theme in the 1988 movie, Who Framed Roger Rabbit?

[ii] See United States v. Nat’l City Lines, 186 F.2d 562 (7th Cir. 1951) (leading case concerning intentional efforts to decimate trolley and interurban rail industry).  For more about car companies’ roles in decimating the rail industry, see 1974 statement made to the Senate Subcommittee on Antitrust and Monopoly, http://libraryarchives.metro.net/DPGTL/testimony/1974_statement_bradford_c_snell_s1167.pdf.

[iii] 63 P.S.C.A § 818.1 et. seq. (Supp. 2000) (regulating sale of automobiles).

[iv] 49 P.S.C.A § 19.1 (Supp. 2000) (stating legislative intent of Vehicle Manufacturers, Dealers and Salespersons Act within administrative regulations).

[v]   SpaceX: Leadership, SpaceX.com, http://www.spacex.com/about/leadership (last visited Mar. 10, 2014) (providing biography of Elon Musk).

[vi] Texas Says ‘No’ to Tesla-Owned Dealerships for Now, FoxNews.com (Jun. 4, 2013), http://www.foxnews.com/leisure/2013/06/04/texas-says-no-to-tesla-owned-dealerships-for-now/ (comparing Tesla’s issues in Texas with other states).

[vii] Why Did the Virginia DMV Deny Tesla Motors a Dealership License?, OpenWatch.net, https://openwatch.net/i/40/why-did-the-virginia-dmv-deny-tesla-motors-a-dea (last visited Jan. 31, 2014).  But see Joseph Lichterman, Va. Compromise Allows Tesla to Apply for Single Dealership License, Automotive News (Oct. 3, 2013), http://www.autonews.com/article/20131003/RETAIL07/131009931/# (describing agreement between Tesla and VA DMV allowing Tesla to apply for single dealer license).

[viii] Alan Ohnsman & Terrance Dopp, Tesla Stores May Be Closed After N.J. Blocks Direct Sales, Bloomberg.com (March 12, 2014), www.bloomberg.com/news/2014-03-11/tesla-stores-may-be-closed-after-n-j-blocks-direct-sales.html (quoting president of the state’s dealer association as saying “Tesla should either adjust its business model to confirm with New Jersey law or seek changes to it”).

[ix] Tesla Takes on Texas Auto Franchise Laws, statesman.com (Apr. 10, 2013), http://www.statesman.com/news/business/tesla-lobbies-to-sell-its-electric-cars-directly-t/nXHrY/ (describing Tesla’s plight against Texas franchise law).

[x] Advocacy: Texas, TeslaMotors.com, http://www.teslamotors.com/advocacy_texas (last visited Jan. 31, 2014) (asserting Texas law, specifically Tex Oc. Code Ann. § 2301.476, unjustly restricts Tesla’s ability to sell to and later serve customers).  

[xi] For a description of the Federal Trade Commission’s authority to protect consumers, see http://www.ftc.gov/about-ftc.

[xii] Roger M. Quinland, Has the Traditional Automobile Franchise System Run Out of Gas?, American Bar Association, http://www.americanbar.org/publications/franchise_lawyer/2013/summer_2013/has_traditional_automobile_franchise_system_run_out_gas.html (lasted visited Feb. 27 2014) (examining legal challenges facing auto dealer franchise laws).

[xiii] Tiffany Kalser, UPDATED: White House Petition Aims to Allow Direct Sales of Tesla Vehicles in 50 States, DailyTech.com (Jul. 2, 2013), http://www.dailytech.com/UPDATED+White+House+Petition+Aims+to+Allow+Direct+Sales+of+Tesla+Vehicles+in+50+States/article31883.htm (providing overview of Tesla’s battle to sell nationwide).

PA High Court Strikes Fracking Provision: Fracking in Pennsylvania . . . A Necessary Evil or Just Evil?

By: Marc Pugsley, Staffwriter

Recently, on December 19 2013, the Pennsylvania Supreme Court struck down a provision of a pro-fracking law enacted by the Pennsylvania Legislature in 2012.[1]  The Court ruled 4-2 that the law, known as Act 13, violated the Pennsylvania Constitution’s guarantee “to clean air and pure water, and to the preservation of natural, scenic, historic and esthetic values of the environment” because Act 13 favored the natural gas industry’s exploitation of Pennsylvania resources.[2]  The struck provision had limited the power of local municipalities to restrict drilling by setting statewide standards for drilling and prohibiting separate local zoning requirements for drilling.  Notably, a bipartisan faction of the Pennsylvania Legislature supported and approved Act 13.[3]  Nonetheless, many state legislators view the Court’s ruling favorably, calling it a “victory” for affirming local government’s ability to control development in their community.[4]

Furthermore, the ruling stands out because neighboring states with large Marcellus Shale deposits like Ohio and West Virginia each have state statutes entirely or partially preempting local zoning.[5] Environmental groups and activists applaud the rulings as a possible “watershed moment” for the people of Pennsylvania that could lead towards a complete moratorium on Marcellus Shale fracking.[6] For example, New York State, which also has Marcellus Shale deposits, is in its sixth year of a legislatively enforced statewide moratorium on Marcellus Shale drilling and fracking while the state studies the environmental impacts of fracking.[7]

In Pennsylvania and other states fracking is a hot-buttoned issue.  Marcellus Shale covers a large portion of Pennsylvania and neighboring states and contains vast quantities of natural gas, as well as petroleum-based resources.[8]  Instead of a large pool of natural gas or oil, the Marcellus Shale natural gas is embedded within the porous rock layer, requiring breaking up the rock to release the valuable natural gas.[9]

Proponents of fracking assert fracking’s economic benefits, including increased tax revenue for the state and job growth: both directly from fracking and indirectly from the economic benefits to related and associated industries locally, regionally, and nationally.[10]  Likewise, proponents stress the abundance of untapped natural gas in Marcellus Shale and other similar formations and that natural gas burns clean, is inexpensive, and can reduce domestic reliance on foreign oil.[11]  A recent Department of Energy Order asserted that Marcellus Shale has the potential to be the second largest natural gas field in the world with more than enough natural gas to meet growing domestic demands.[12]  The order further states that Marcellus Shale contains sufficient natural gas to facilitate natural gas exports that can improve the United States’ balance of payments deficit.[13]

On the other hand, parties opposed to fracking strongly contend that fracking involves significant environmental risks and consequences, lacks appropriate regulatory oversight, and the alleged economic benefits fail to consider the negative environmental externalities.[14]  Moreover, opponents state that fracking unjustly takes advantage of persons in impoverished areas to inexpensively acquire land, remove the valuable resources, and leave the location without any long term investment in the surrounding community.[15]

Although fracking often appears in newspapers or news headlines, most people are unaware of what fracking is and why fracking is a contentious issue.  Instead, most people view fracking in the same broad light that fracking is presented in the news – as “good or bad.”  Fracking is a diminutive term for hydraulic fracturing.  Hydraulic fracturing is a process to remove oil and natural gas from areas where conventional drilling techniques are ineffective.[16]  To remove natural gas from shale, first a vertical well is drilled and then subsurface horizontal wells are drilled extending from the vertical well into the shale.  Next, a solution consisting of water, sand, salts, and other chemicals (“fracturing fluids” or “pumping fluids”) are pumped into the rock formation to separate gas and oil from the rock and the gas and oil are retrieved.[17]

So, some say fracking is good while others say fracking is bad, but what laws are in play concerning natural gas?  And what are the consequences, good or bad, of these laws?  Together, federal and state laws regulate the natural gas industry.  In the energy sector, the Federal Energy Regulatory Commission oversees interstate natural gas pipeline siting and construction, as well as regulating the wholesale market for the sale of natural gas.  State agencies, like the Pennsylvania Utilities Commission, oversee and regulate intrastate natural gas pipelines, retail pricing of natural gas, and importantly, state law regulates issues concerning siting of fracking wells.  When significant economic wealth is concerned, state oversight raises the concerns of forum shopping, such that corporations will take advantage of disparate state laws and conduct business in states where the business environment is most favorable despite environmental concerns.  For example, fracking proliferates in Pennsylvania while gas deposits in the same rock formation just across the border in New York State remain untouched.

Interestingly, instead of overseeing fracking, many federal and state laws expressly exempt fracking activities from compliance with existing environmental laws.[18]  Federal law exempts oil and gas drilling and hydraulic fracking from numerous important federal environmental laws (and what many consider leading federal environmental law), including the Safe Water Drinking Act, Clean Water Act, the Emergency Planning and Community Right to Know Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation, and Liability Act (Superfund), and the Clean Air Act.[19]  Likewise, the Pennsylvania Oil and Gas Conservation Act does not apply to “[a]ny well or wells which do not penetrate the Onondaga horizon.”[20]  Essentially, this exemption expressly excludes Marcellus drilling because Marcellus Shale sits directly above the Onondaga horizon.

Despite the recent Pennsylvania Supreme Court ruling, fracking remains open for business in Pennsylvania. The legislature, the public utilities commission, and, ultimately, the courts will decide if fracking will continue in Pennsylvania and weigh fracking’s real financial benefits with fracking’s alleged negative environmental externalities.  One thing for certain is that current domestic energy policy survives on nonrenewable fossil fuels, which may play a significant role in pursuing Marcellus drilling in Pennsylvania and elsewhere, but this failure of the federal government to construct a cohesive national energy policy with an eye on the future is a discussion for another day.

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[1] Robinson Twp., Washington Cnty. v. Com., No. 63 MAP 2012, 2013 WL 6687290, at *1 (Pa. Dec. 19, 2013), available at http://www.pacourts.us/assets/opinions/Supreme/out/J-127A-D-2012oajc.pdf?cb=1 (striking provisions of Pennsylvania Act 13, which exempted drillers from local zoning ordinances).

[2] 58 P.S.C.A. §§ 2301–3504 (2012) [hereinafter “Act 13”] (prohibiting, inter alia, “any local regulation of oil and gas operations, including via environmental legislation, and requires statewide uniformity among local zoning ordinances with respect to the development of oil and gas resources”); PA Const. art. I, § 27 (“The people have a right to clean air, pure water, and to the preservation of the natural, scenic, historic and esthetic values of the environment. Pennsylvania’s public natural resources are the common property of all the people, including generations yet to come. As trustee of these resources, the Commonwealth shall conserve and maintain them for the benefit of all the people.”).

[3] Sophia Pearson, Jeff Feeley, and Mark Drajem, Pennsylvania High Court Strikes Down Part of Fracking Law, Bloomberg.com (Dec. 20, 2013), http://www.bloomberg.com/news/2013-12-19/pennsylvania-high-court-strikes-down-part-of-fracking-law.html (noting contention among state legislators concerning bill’s original enactment and subsequent judicial review).

[4] Id. (noting the importance of local governments playing a role in hydraulic fracturing siting).

[5] Associated Press of Harrisburg, Pennsylvania Supreme court strikes part of industry-friendly fracking law, THEGUARDIAN.COM (Dec. 20, 2013), http://www.theguardian.com/world/2013/dec/20/pennsylvania-supreme-court-industry-fracking-law (noting Ohio, West Virginia, and New York contain vast amounts of Marcellus Shale, but have legislated distinctly with New York specifically banning fracking).

[6] Id. (noting Pennsylvania’s neighbor to the north, New York, currently has a legislative moratorium on fracking).

[7] NY Post Editorial Board, Energy firm threatens suit over Cuomo fracking moratorium, NYPOST.COM (Dec. 7, 2013), http://nypost.com/2013/12/07/energy-firm-threatens-suit-over-cuomo-fracking-moratorium/ (describing statewide fracking moratorium). For more instances where local bans on fracking have been upheld in New York Courts, see Cooperstown Holstein Corp. v. Town of Middlefield, 943 N.Y.S.2d 722, 780 (Sup. Ct. 2012), aff’d, 964 N.Y.S.2d 431 (2013), leave to appeal granted, 21 N.Y.3d 863 (2013); see also Anschutz Exploration Corp. v. Town of Dryden, 940 N.Y.S.2d 458, 471 (Sup. Ct. 2012).

[8] See infra, note 16 (describing size and scope of Marcellus Shale).

[9] See infra, note 16 (describing process of extracting natural gas from Marcellus Shale deposits).

[10] DOE/FE Order 3331 Conditionally Granting Long-Term Multi-Contract Authorization To Export Liquefied Natural Gas By Vessel From The Cove Point LNG Terminal To Non-Free Trade Agreement Nations, September 11, 2013, available at http://energy.gov/sites/prod/files/2013/09/f2/Order%203331.pdf (providing statistical benefits of increasing natural gas production, including job growth, national deficit reduction, and corresponding tax revenue).

[11] Id. (promoting increased domestic energy policy as a national security issue).

[12] Id. (providing estimates of natural gas deposits contained within Marcellus Shale, including projections that show Marcellus alone could meet the entire United States’ natural gas needs for decades).

[13] Id. (explaining export potential of natural gas as liquefied natural gas “LNG”).

[14] Stephen G. Osborne et al., Methane contamination of drinking water accompanying gas-well drilling and hydraulic fracturing, Duke University: Center on Global Change (2011), available at http://www.pnas.org/content/early/2011/05/02/1100682108.full.pdf+html (providing scientific, technical look at negative impacts of hydraulic fracturing).

[15] But see John Harpole, Poverty and Fracking, The Denver Post (Sept. 28, 2013), http://www.denverpost.com/opinion/ci_24184876/poverty-and-fracking (contending fracking actually benefits the poor rather than takes advantage of them).

[16] For a general overview of the hydraulic fracturing process, see Energy From Shale, How Hydraulic Fracturing Works, ENERGYFROMSHALE.ORG, http://www.energyfromshale.org/hydraulic-fracturing/how-hydraulic-fracturing-works (last visited Jan. 23, 2014).

[17] See id. (demonstrating the technological process of fracking).

[18] Fracking—Federal Law: Loopholes and Exemptions, Environmental Defense Center, http://www.edcnet.org/learn/current_cases/fracking/federal_law_loopholes.html (last visited Jan. 23, 2014) (noting various fracking exemptions under federal law).

[19] 42 U.S.C. 300h(d)(1)(B)(ii) (excluding section that concerns “the underground injection of fluids or propping agents (other than diesel fuels) pursuant to hydraulic fracturing operations related to oil, gas, or geothermal production activities.”).

[20] Pennsylvania Oil and Gas Conservation Act, 58 P.S. § 403 (exempting Marcellus Shale drilling from the Act’s provisions).