Source: http://www.lexology.com, April 25, 2014
Audrey Momanaee, Gardere Wynne Sewell LLP
On April 22, in what is being called the “first fracking trial,” five of six jurors in Dallas County agreed with Plaintiffs, Lisa and Robert “Bob” Parr, finding that Aruba Petroleum, which began drilling operations in 2008, within about a mile and a half of their property “intentionally created a private nuisance.” The jury awarded $2.25 Million in physical pain and suffering and $400,000 in mental anguish to the Parrs and their daughter, along with $275,000 in lost value of their property.
In the case, the Parrs alleged that hazardous gasses, emitted from Aruba’s exploration and production activities as well as fumes from equipment, noise and lights caused numerous health problems, including nose bleeds, skin and breathing problems, and the loss of the enjoyment of their home. Aruba argued that there was no showing of causation and that the company had complied with air quality and drilling safety standards set by the Texas Commission on Environmental Quality and the Texas Railroad Commission.
The Court specifically instructed the jury “that a nuisance, if it exists, is not excused by the fact that it arises from the conduct of an operation that is in itself lawful or useful.” Aruba’s reliance on compliance with air quality and drilling safety standards was thus no defense to the nuisance claim. Those in the oil and gas industry should take note, because full compliance may be no defense to multi-million dollar claims for damages.
The decision is also being questioned because of the tenuous causation showing, and there is an expectation that it will likely be appealed. The decision, and the lawsuits and potential plaintiffs it might create and embolden, however,are an important consideration in the business and risk assessment by those in the oil and gas industry.