Thursday, March 21, 2013

Center for Sustainable Shale Development Could Help to Combat Shale Drilling Controversy

There is no doubt that shale gas drilling is controversial.  Many environmental groups have been very active in opposing the drilling techniques, such as hydraulic fracturing, that are necessary to develop shale gas.  These groups have been successful in getting fracking banned in some jurisdictions.

Amid the controversy that is inherent in shale gas drilling, several large energy companies have teamed up with environmental groups and philanthropic organizations to form the Center for Sustainable Shale Development ("CSSD").  The goal of the CSSD is to ensure safe and environmentally responsible development of shale gas in the Appalachian Basin.  In order to accomplich this mission, the CSSD has devised 15 rigorous performance standards designed to reduce the effect of shale gas on the environment.  The standards include air and climate standards, including limitations of flaring, use of "green completions", reduced engine emissions, and emissions controls on storage tanks.  The are also water performance standards that focus on maximizing water recycling, developing groundwater protection plans, closed loop drilling, well casing design, groundwater monitoring, waste water disposal, impoundment integrity, and reduced toxicity fracturing fluid.  Later in 2013, the CSSD will provide a third-party auditing service that will certify companies that meet and maintain these standards.  The CSSD also plans to devise additional standards, including safety standards. 

Perhaps the CSSD will help to quiet the controversy surrounding shale gas drilling by showing that natural gas can be extracted from shale in a safe and environmentally friendly manner.  Perhaps energy companies that make the effort to be certified by the CSSD will be subjected to less resistance from the communities where they plan to drill.  Perhaps jurisdictions who have banned fracking can be persuaded to make exceptions for those companies certified by the CSSD.  The hope from here is that, ultimately, the CSSD helps to ease fears associated with shale gas drilling so that shale gas development in the Appalachian Basin can be expanded while also ensuring that the resource is developed in the most efficient and environmentally responsible manner. 

Tuesday, March 12, 2013

West Virginia Supreme Court Decision on Liability of MSHA Inspectors Likely to Lead to Stricter Scrutiny of Mining Operations

On January 19, 2006, twelve miners became trapped inside Aracoma Coal Company’s Alma #1 coal mine in Logan County, West Virginia due to smoke and fire resulting from a belt fire inside the mine.  Ten of the miners eventually escaped the mine alive, but two of the miners, Don Bragg and Ellery Hatfield, succumbed to carbon monoxide poisoning and died.

An investigation conducted by MSHA after the accident found that attempts to extinguish the fire and contain smoke were inhibited by inadequate safety measures and that numerous violations of the Mine Safety and Health Act contributed to the cause and severity of the belt fire.  The MSHA investigation also found inadequacies in its own previous inspections of the mine.  Specifically, the investigation found that, although the mine had been cited for 95 safety violations as of late 2005, MSHA failed to issue citations for numerous other violations, failed to require the mine operator to take corrective action for such violations, and failed to follow clear agency policy regarding Section 103(i) inspections. 

Aracoma’s parent company, Massey Energy, reached settlements with the widows of Don Bragg and Ellery Hatfield as a result of the Alma #1 tragedy.  Some of its officials were also charged criminally.  But the widows’ search for retribution for the deaths of their husbands did not end with the coal company and its officials.  The widows also sued The United States of America claiming that its MSHA inspectors who were responsible for performing safety inspections at the mine were negligent in such inspections. 

The suit against the Government was brought in the United States District Court for the Southern District of West Virginia pursuant to the Federal Tort Claims Act (“FTCA”), which waives the sovereign immunity of the United States Government for torts committed by federal employees acting within the scope of their employment ‘under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred.’”  Bragg v. United States, 2013 W. Va. LEXIS 47, 9 (W. Va. 2013)  (quoting 28 U.S.C. § 1346(b)(1) (1996) (2006 ed.).). 

The District Court, upon motion of the United States, dismissed the widows’ Complaint against the Government, holding that West Virginia law would not hold a private analogue to the MSHA inspectors liable for negligent inspections of the mine resulting in the wrongful death of the miners.  The widows subsequently appealed that decision to the United States Court of Appeals for the Fourth Circuit.  In turn, the Fourth Circuit certified the following question of law to the Supreme Court of Appeals of West Virginia (“The Supreme Court of Appeals”):

Whether a private party conducting inspections of a mine and mine operator for compliance with mine safety regulations is liable for the wrongful death of a miner resulting from the private party’s negligent inspection?

The Supreme Court of Appeals answered the certified question in the affirmative in its opinion in Bragg v. United States, issued on February 5, 2013, in which the Court held that “a private inspector who inspects a work premises for the purpose of furthering the safety of employees who work on said premises owes a duty of care to those employees to conduct inspections with ordinary skill, care, and diligence commensurate with that rendered by members of his or her profession.”  Bragg, 2013 W. Va. LEXIS 47 at 29.  The decision was based upon West Virginia case law holding that the existence of a duty to third parties is based primarily upon the foreseeability that harm may result if care is not exercised.  In the Bragg case, the Court found that it was forseeable to mine inspectors that that third-party mine employees could be injured where mine inspections are performed negligently. 

The implications of the Bragg decision will reach far beyond potential liability for MSHA.  MSHA has been under fire since the Aracoma disaster and even more so since the 2010 Upper Big Branch Disaster (“UBB”) for what some perceive to be relaxed inspection practices by MSHA inspectors.  The perception after UBB is that this criticism has made MSHA inspectors much more critical during their inspections of mining operations.  Minor safety issues or alleged violations of questionable validity that might have, in the past, been ordered corrected without a citation are now being cited. Obviously, MSHA inspectors would rather be reversed in the litigation of these questionable citations than to not issue a citation and later be blamed for an accident causing serious injuries or death.  The Bragg decision certainly provides additional and, assuredly more powerful incentive, for MSHA inspectors to subject mine operators to even stricter scrutiny under the Mine Health and Safety Act.

Sunday, March 3, 2013

Latest Massey Guilty Pleas Put Advance Warnings Back in the Spotlight

On April 5, 2010, an explosion rocked Massey Energy's Upper Big Branch Mine ("UBB") in Montcoal, West Virginia.  The blast killed 29 Massey miners, making it the worst coal mine disaster in recent memory.  The disaster also spawned multiple investigations, which determined that the blast was caused, in part, by a dangerous build-up of methane gas that ignited and combined with a build-up of coal dust that perpetuated the explosion and resulting fire throughout the mine.  The investigations further determined that the safety hazards causing the explosion were the result of a conspiracy among Massey officials to make coal production a priority over safety and to conceal hazardous working conditions inside the mine. 

One of the practices allegedly used by Massey to cover up hazardous mine conditions was the provision of advanced notice to miners working underground that MSHA inspectors were going to inspect the mine.  Such a practice is a violation of 30 U.S.C. § 820(e), which  provides that "[u]nless otherwise authorized by this Act, any person who gives advance notice of any inspection to be conducted under this Act shall, upon conviction, be punished by a fine of not more than $ 1,000 or by imprisonment for not more than six months, or both." 

 Obviously, once the miners know that MSHA is on its way to the mine they can lay down rock dust (a substance used to control the combustibility of coal dust build-up) and "make things look nice", as Massey foreman Gary May recently admitted when he pled guilty to federal charges stemming, in part, from Massey's alleged scheme to provide advance notice of MSHA inspections. 

As a result of substantial criticism of its enforcement practices following UBB, including from members of Congress, MSHA has renewed its focus on advance notice.  The agency wrote dozens of citations for advance notice in the two years following UBB.  Several Massey officials have been the targets of criminal prosecutions relating, at least in part, to provision of advance notice of MSHA inspections.  The latest Massey official to plead guilty to such charges, David Hughart, indicated at his plea hearing that the conspiracy at Massey to provide advance notice of MSHA inspections was ordered from the very top official in the company.  When asked by a federal judge what officials ordered the policy of providing advanced notice, Mr. Hughart replied "the chief executive officer."  Although he did not name him, the CEO of Massey during times relevant to Mr. Hughart's plea was controversial and notorious CEO Don Blankenship.  Mr. Hughart is cooperating with the government, such that higher-ranking Massey officials, including Mr. Blankenship, could be targets of future federal prosecutions.

The guilty pleas of Mr. May and Mr. Hughart have put advance notice back in the mine safety spotlight.  There is no doubt that MSHA and federal prosecutors are focused on ensuring that miners are not tipped off to MSHA inspections so that they can cover up and conceal hazardous conditions that exist inside the mine during day-to-day operations.  It is also clear that, not only will provision of advance notice result in citations to the mine operators, but those that provide advance notice and those who order that advance notice be provided will be prosecuted to the full extent of the law.  Accordingly, coal company management and other company officials should avoid any practices that could lead to a suggestion that miners are being tipped off regarding MSHA inspections.