Ohio Residents Lose Fight Over Fracking Leases

(CN) – Fracking can continue in 18 Ohio counties after the Sixth Circuit ruled that leases for oil and gas reserves do not violate the state’s deed to the land.

The Muskingum Watershed Conservancy District, a political subdivision of the state also called MWCD, covers one-fifth of Ohio and was created to manage flooding and conserve water in the southeastern part of the state.

Five years ago, the district, which includes 18 Ohio counties, executed the first of several lease agreements granting private firms the right to develop oil and gas reserves on land granted by the federal government in 1949, including the right to use the controversial hydraulic fracturing, or fracking, extraction method.

Ohio residents, led by plaintiffs Leatra Harper, Leslie Harper and Steven Jansto, opposed the plan to allow fracking in the watershed.

Studies have raised serious concerns that the chemicals used in fracking wells, including bromic acid and hydrochloric acid, may contaminate groundwater and pose hazardous risks to humans and wildlife.

With legal support from the Southeastern Ohio Alliance to Save Our Water, the residents used the terms of the federal government’s deed of land against the district.

They argued that MWCD’s effort to lease fracking rights was an “attempt to alienate” the land, because it was no longer being used for recreation, conservation or reservoir development. Under the terms of the deed, the lease agreement allegedly triggered the reversion of the land back to the federal government.

However, the federal government declined to intervene in the action, and a judge dismissed the lawsuit based on the False Claims Act’s public-disclosure provision, finding the residents did not show they were original sources of the information in the leases.

The Sixth Circuit affirmed Monday that the residents have no viable challenge to the district’s fracking leases.

“The relators’ complaint must allege facts that create the inference that MWCD knew that the relevant deed restrictions required it to deliver property to the United States, or that it ‘act[ed] in deliberate ignorance’ or in ‘reckless disregard’ of this fact,” Judge Danny Boggs said, writing for the three-judge panel. “The relators have failed to satisfy this burden.”

The panel found no evidence that the district knew or should have known that its lease of mineral rights violated the 1949 deed’s restrictions.

At best, the residents may have articulated a breach of contract claim, as the district judge found, but they have no standing to assert that claim under the False Claims Act, the Sixth Circuit ruled.

“The relators’ complaints do not mention whether or how MWCD knew or should have known that it was in violation of the deed restrictions, such it knew or should have known that title to the property reverted to the United States. For this reason, the relators failed to properly plead a conversion claim, and the district court’s dismissal of that claim was not in error,” Boggs wrote.

Judge Ralph Guy Jr. joined Boggs in the majority, while Judge Karen Nelson Moore dissented.

“Given the relative simplicity of the factual basis underlying the relators’ claim, I believe that the complaint sets forth sufficient factual allegations such that we can ‘draw the reasonable inference’… that MWCD knowingly avoided an obligation to the government and knowingly converted government money or property,” Moore wrote.