Range Wins Appeal in Suit Against Texas Landowners

Range Resources Corp. (RRC)’s lawsuit against Texas landowners who accused it of contaminating their water by hydraulic fracturing, or fracking, can’t be halted under a state law that bans litigation meant to stifle public protest, an appeals court said.

The landowners, Steven and Shyla Lipsky, sued Range in June 2011 in state court after the U.S. Environmental Protection Agency issued an administrative order saying the gas driller was responsible for contaminating their water with dangerous levels of methane and benzene, which can cause cancer. Range countersued, alleging in court papers that the couple and a consultant, Alisa Rich, conspired to persuade the EPA to intervene. The company is seeking $3 million in damages.

Rich and the Lipskys asked Judge Trey Loftin of Weatherford, Texas, to throw out the counter-suit on the ground that it violated a Texas law prohibiting so-called Strategic Lawsuits Against Public Participation, or SLAPPs. Loftin rejected that argument in February and the case was appealed.

The Texas Second District Court of Appeals in Fort Worth Aug. 23 ruled that it lacked jurisdiction to overturn Loftin’s ruling. The appeals panel said it was willing to hear a petition for mandamus, an order blocking the lower court from enforcing Loftin’s ruling.

Fracking Cases

Fracking requires the pumping of water, sand and chemicals underground to release gas.

The administration of President Barack Obama has celebrated the economic benefits of increased natural-gas production in the U.S. and the gain for chemical, refining and manufacturing plants. At the same time the EPA has moved to regulate air emissions from fracking and interceded in local water disputes between residents and gas drillers in Wyoming and Texas.

In each of those instances, the EPA has retreated, settling the case with Range Resources in Texas and agreeing to re-test water in Pavillion, Wyoming.

“I’m somewhat optimistic the court will consider our case at greater length,” Brent Rosenthal, a lawyer for the Lipskys, said in a phone interview. He said the appeals court will need to find “a clear abuse of discretion that cannot be rectified on appeal” to grant the writ of mandamus.

Matt Pitzarella, a Range spokesman, didn’t return a call for comment on the ruling.

‘A Pretext’

Range alleged in court papers the Lipsky couple and Rich engaged in a conspiracy to defame the company and used false and misleading evidence as “a pretext for getting the EPA and the media to wrongly label and prosecute Range as a polluter of the environment.”

The Lipskys shot video of methane-fueled flames shooting from a hose hooked up to their well in Parker County, Texas, and sent it to a blogger who posted it on Google Inc.’s YouTube video-sharing site. Range also alleged that they hired Rich to test their well water and alert the EPA.

Texas’s anti-SLAPP Act allows pretrial appeals only in cases where the trial court fails to make a timely ruling on a motion to dismiss, the court of appeals said in June.

Range lawyers said the law was “plain and unambiguous” when a trial judge issues a timely ruling on a motion to dismiss, as occurred in this case. They said Rich and the Lipskys shouldn’t be allowed to pursue a pretrial appeal by any avenue because they had not proven the trial court committed “a clear abuse of discretion.”

‘Defeat’ Purpose

The Lipskys argued that denying immediate review would “defeat the purpose” of anti-SLAPP rules. They asked the appeals court to hear the appeal and “direct the trial court to dismiss Range’s counterclaim.”

In the original lawsuit, Loftin ruled in January that the Lipskys had to take their complaint to the state Railroad Commission, not to the court. The EPA later settled its dispute with Fort Worth-based Range.

Loftin attracted attention in May when he promoted his rulings in the case during his run for re-election in a Republican primary. He sent flyers saying he forced the EPA to back down after the agency “using falsified evidence provided by a liberal activist environmental consultant, accused and fined a local gas driller of contaminating wells.”

The Lipskys and Rich filed a motion seeking to have Loftin removed from the case because he showed bias. Loftin, who lost his primary bid, agreed to step aside in June and another judge was assigned the case.

Shale Exploration

Range expanded into shale exploration in 2006 when it entered the Barnett Shale formation in north Texas. In the following year, the company reduced its offshore holdings to increase its focus on shale and other so-called unconventional geologic formations.

The company was one of the first energy producers to successfully harvest natural gas from the Marcellus Shale formation that stretches beneath Appalachia, according to a company history on its website.

Range almost tripled its proved reserves in the past five years to the equivalent of 842.3 million barrels of crude at the end of 2011, according to data compiled by Bloomberg. The shares climbed 0.9 percent to $66.27 yesterday in New York and have risen 7 percent this year after jumping 38 percent in 2011.

The EPA case was U.S. v. Range Production Co., 11-cv-00116, U.S. District Court, Northern District of Texas (Dallas). The case in Texas state court is Lipsky v. Durant, 11-cv-0798, 43rd District Court of Texas, Parker County.

To contact the reporter on this story: Tom Korosec in Dallas at tkorosec@sbcglobal.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net