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Landowners who don’t want fracking on former federal land lose appeal
ANNIE YAMSON
Special to the Legal News
Published: December 6, 2016
Ohio residents who challenged fracking on former federal land recently lost their appeal in the 6th U.S. Circuit Court of Appeals.
A divided three-judge appellate panel in the federal court ruled that the Muskingum Watershed Conservancy District, a state entity responsible for flood control in eastern Ohio, did not violate the terms of a land deed with the federal government.
The case stemmed from the U.S. government’s 1949 deed of a large parcel of land in Ohio to the Muskingum Watershed Conservancy District.
The deed, according to court documents, provided that the parcel of land would revert back to the ownership of the federal government if Muskingum Watershed Conservancy District “alienated or attempted to alienate it” or if the MWCD stopped using the land for recreation, conservation or reservoir-development purposes.
But the conservancy district later sold rights to hydraulic fracturing operations on the land and three Ohio residents, Leatra Harper, Steven Jansto and Leslie Harper, filed an action in the U.S. District Court for the Northern District of Ohio.
The residents alleged that the sale of fracking rights violated the deed restrictions, triggered the reversion clause and that the MWCD could be held liable under the False Claims Act for knowingly withholding property from the federal government.
The district court dismissed the case and the circuit court’s majority came to the same conclusion in an opinion authored by Judge Danny Boggs.
“The False Claims Act imposes civil liability on any person who fraudulently — or, under certain circumstances, knowingly — deprives the United States of property,” Boggs wrote. “As the act’s name suggests, liability under the act often arises for the submission of false claims to the government.”
The FCA provides for fines and treble damages against anyone who “knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the government.”
In order to promote the enforcement of the FCA, Congress included a provision under which whistleblowers may bring civil actions on behalf of the government for violations of the act.
But in an effort to discourage opportunistic lawsuits, Congress also placed limitations on the whistleblower provision among which publicly disclosed information is exempt from suit.
Case summary states that, five years ago, when the MWCD began negotiating several lease agreements to grant private firms the right to develop subsurface oil and gas reserves on the land that it received from the U.S. government in 1949, the MWCD issued several press releases and held public hearings about the proposed leases, which local newspapers covered extensively.
“MWCD also posted the lease documents to its website, and ultimately executed several leases between 2011 and 2014,” Boggs wrote.
When the Ohio residents who opposed the fracking plans discovered the restrictions in the deed, they reasoned that MWCD’s attempt to lease fracking rights was an attempt to “alienate” the land which triggered the reversal clause and resulted in the MWCD’s improper possession of federal land.
After considering whether to involve itself in the suit brought on its behalf, the U.S. government declined to intervene.
In ruling to dismiss the case, the district court noted the public nature of the fracking leases and held that the residents’ action was barred by the FCA’s public disclosure provision.
It also ruled that the residents failed to show that the MWCD knowingly took actions to avoid an obligation to the government. The circuit court agreed.
“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 ‘acted in deliberate ignorance’ or in ‘reckless disregard’ of this fact,” Boggs wrote. “The relators have failed to satisfy this burden.
“In this case, neither the relators’ complaint nor their proposed amended complaint includes facts that show how MWCD would have known that the fracking leases violated the deed restrictions or how MWCD ‘acted in deliberate ignorance’ or in ‘reckless disregard’ of that fact.”
The majority held that the residents did not show “anything more than a possibility that MWCD acted unlawfully.”
Boggs was joined by Judge Ralph Guy to rule that the residents failed to prove that MWCD knowingly withheld property from the federal government and they affirmed the judgment of the lower court.
In her dissent, Judge Karen Moore agreed with the majority’s interpretation of statutory language but held that the residents presented sufficient factual allegations to draw a reasonable inference that MWCD knowingly avoided an obligation to the government.
The case is cited United States ex rel. Harper, et al. v. Muskingum Watershed, case No. 15-4406.