Earthquakes: State Regulation of O&G Injection Wells Is OK Oklahoma Judge Dismisses Federal Lawsuit on Jurisdictional Grounds

On Tuesday, April 4, 2017, Judge Stephen P. Friot, United States District Court for the Western District of Oklahoma, dismissed a nationally significant lawsuit brought over earthquakes linked to oil and gas wastewater injection wells on jurisdictional grounds.  See Sierra Club v. Chesapeake Operating, LLC, et al., No. CIV-16-134-F (W.D. Okla., Order dated 4/4/2017) (unpublished), The court deferred to the expertise of the Oklahoma Corporation Commission (“OCC”), the state body governing wastewater injection wells in Oklahoma. Citing the actions and capability of the OCC, Friot concluded:

Every night, more than a million Oklahomans go to bed with reason to wonder whether they will be awakened by the muffled boom which precedes, by an instant, the shaking of the ground under their homes. Responding to earthquake activity is serious business, requiring serious regulatory action. The record in this case plainly demonstrates that the Oklahoma Corporation Commission has responded energetically to that challenge. Of equal importance, it is plain that the Oklahoma Corporate Commission has brought to bear a level of technical expertise that this court could not hope to match.  The challenge of determining what it will take to meaningfully reduce seismic activity in and near the producing areas of Oklahoma is not an exact science, but it is no longer one of the black arts.  This court is ill-equipped to outperform the Oklahoma Corporation Commission in advancing that science and putting the growing body of technical knowledge to work in the service of rational regulation.

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Proposed Colorado Legislation Would Modify the Reasonable Accommodation Doctrine

Colorado House Bill 16-1310 was introduced on March 2, 2016, by State Senator Morgan Carroll (D) and State Representative Joseph Anthony Salazar (D). Under current Colorado law, to prevail on a claim against an oil and gas operator, the surface owner must present evidence that the operator's use of the surface “materially interfered” with the surface owner's use of the surface. Colo. Rev. Stat. § 34-60-127(3)(a). The proposed legislation, however, provides that an operator is strictly liable (i.e. liable without proving fault) if the operator’s oil and gas operations (including a hydraulic fracturing treatment or reinjection operation) cause an earthquake that damages real or personal property or injures an individual. Under the bill, the plaintiff establishes a prima facie case of causation if the plaintiff shows that (1) an earthquake has occurred; (2) the earthquake damaged the plaintiff’s property or injured the plaintiff; and (3) the oil and gas operations occurred within an area that has been determined to have experienced induced seismicity by a study of induced seismicity that was independently peer-reviewed.

The proposed legislation also expands the pool of potential claimants. The current law provides a cause of action to the surface owner, while the proposed bill provides that if the liability arises from an earthquake as described above, then the owner of the property or the injured person would have a cause of action.

Currently, an action under the statute must be commenced within one year of the date of the alleged violation. Colo. Rev. Stat. § 34-60-115. The bill provides that a plaintiff would have five years after discovery of the damages or injury to file an action pursuant to this statute.

The introduction of strict liability is a substantial change to the reasonable accommodation doctrine in Colorado. The full text and status of House Bill 16-1310 may be found at: https://www.billtrack50.com/BillDetail/723088

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