By Laurel Brubaker Calkins
(Bloomberg) –- Oklahoma’s Supreme Court said New Dominion LLC can be sued for damage caused by an earthquake that a woman blames on disposal wells tied to fracking, in what may be the first such case to head to a jury trial.
Sandra Ladra sued New Dominion and Spess Oil Co. for injuries suffered to her knees and legs in November 2011, when a 5.0 magnitude earthquake struck near her home in central Oklahoma. She said the tremor caused the rock facing on her two-story fireplace and chimney to fall into the living room, where she was watching television with her family.
Oklahoma, a region not known for seismic activity, has experienced a rash of earthquakes since 2009, the same year area oil companies began using hydraulic fracturing, or fracking, to shatter deep rock layers to extract oil and gas. Fracked wells produce large quantities of wastewater, which drilling companies inject into ultra-deep disposal wells, which critics blame for causing earthquakes.
Richard Andrews, Oklahoma’s state geologist, published a study in April concluding it’s “very likely” the 600-fold increase in earthquake activity experienced in some parts of the state was triggered by the injection of wastewater in disposal wells rather than by the fracking activity itself.
Oklahoma’s earthquake rate has increased from 1.5 temblors a year before 2008 to an average rate of 2.5 a day, Andrews said in the April 21 report.
Since 2011, more than 20 lawsuits have been filed against companies including BHP Billiton Ltd., Chesapeake Energy Corp., Royal Dutch Shell Plc and Sunoco Logistics Partners LP that allege underground injection activities caused earthquakes in Arkansas and Texas, according to a tally of cases compiled by Bloomberg Intelligence.
A July 2014 study published in the journal Science found that four high-volume disposal wells owned by New Dominion on the outskirts of Oklahoma City may have accounted for 20 percent of all seismic activity in the central U.S. from 2008 to 2013.
David J. Chernicky, chairman and founder of New Dominion, has said the evidence tying underground wells to earthquakes is unreliable. He was dismissive of Ladra’s lawsuit in an interview this year and expressed confidence New Dominion will prevail.
“I deal with science,” he said. “That’s what this will come down to. Is it about science? Or is it about emotion?”
New Dominion, based in Tulsa, and Spess Oil didn’t immediately respond to phone messages seeking comment on the suit. Robert Gum, New Dominion’s lawyer, also didn’t immediately return a call seeking comment.
“Decades of scientific research have demonstrated that induced seismicity only occurs under specific and rare circumstances,” Steve Everley, a spokesman for Energy In Depth, a research program funded by the Independent Petroleum Association of America, said in an e-mail Wednesday.
Everley said the industry disputes links between quakes and the wastewater wells, which have been used in that region for a generation.
“Underground wastewater injection has been safely occurring in Oklahoma and across the country for at least a century, and produced water volumes were higher in Oklahoma in the 1980s than they are today,” he said.
The legal fight over fracking-related activities and earthquakes in Oklahoma now includes Harold Hamm, the chief executive officer of Continental Resources Inc. Hamm filed a state court defamation lawsuit Friday against a man who accused him in a Facebook posting of trying to “squelch” a study on the state’s earthquakes, according to a complaint.
In Ladra’s case, the Oklahoma Supreme Court reversed a trial court’s ruling that the Oklahoma Corporation Commission, which regulates the energy industry, has exclusive jurisdiction over cases concerning oil and gas operations.
The regulatory body “is without authority to hear and determine disputes between two or more private persons or entities in which the public interest is not involved,” the high court said in its decision Tuesday.
Stating that a public-rights dispute “must arise between government and others,” the court found the commission “is without the authority to entertain a suit for damages.” It ordered the state district court to proceed to weigh the merits of Ladra’s argument.
Her lawsuit is the first of its kind headed toward a jury trial, according to a lawyer for Ladra.
Scott Poynter, a spokesman for the injured woman and her attorney, said Ladra’s case will “be stuck for a while” if the oil companies ask the court for reconsideration. Similar cases in Arkansas and Texas didn’t make it as far as jury trials, he said.
“People like to say these cases are about fracking, but it’s about a byproduct of fracking,” he said Tuesday in a phone interview.
Poynter said Ladra, 64, has been told she may need knee-replacement surgery.
The case is Ladra v. New Dominion LLC, SD-113396, Supreme Court of the State of Oklahoma (Oklahoma City).