Source: Ironshore Environmental, Environmental Energy Newsletter, July 2014

“Lessons Learned” Parr vs. Aruba Petroleum

A Dallas jury recently awarded $2.9 million dollars to a family that claimed serious health injuries related to Aruba Petroleum’s nearby oil and gas operations. Although the wells had been hydraulically fractured, the case concerned exposure to air pollutants associated with oil and gas activities not hydraulic fracturing fluids. Nonetheless, the verdict left many wondering whether this was an anomaly or a blueprint for future litigation.
Bob and Lisa Parr live on 40 acres outside of Decatur, Texas which is located in Wise County. In 2007 – 2009, Wise County saw significant oil and gas exploration related to the Barnett Shale. According to court documents, during this time period, approximately 70 wells were drilled within 2 miles of the Parr’s property. Aruba Petroleum operated 22 of those wells, the closest being only 791 feet away.  In 2011, the Parrs filed suit in Dallas County Court of Law No. 5 against Aruba Petroleum (along with eight other companies) claiming they suffered toxic exposure to hazardous gas emissions from oil and gas operations that led to continual sickness, annoyance, and discomfort. The Parrs provided medical evidence of elevated natural gas compounds in their blood, which appeared soon after operations began. The Parrs also kept a daily journal that documented their family’s health problems and they filed numerous complaints with the Texas Commission of Environmental Quality (TCEQ).
Also in 2011, Aruba Petroleum entered into an Agreed Order with the TCEQ in which it paid a $35,500 fine for emissions violations. The Agreed Order contained various findings and conclusions which further substantiated the Parrs’ claims. It is unclear whether this was presented to the jury.  Prior to trial, the court limited the family’s claims to nuisance. The court also limited their personal injury claims to symptoms typical of discomfort rather than disease. Thus, the plaintiffs avoided a causation analysis required in traditional toxic tort cases which would have been difficult for them to prove.
Aruba Petroleum was the only defendant at trial. The other defendants either settled or were dismissed earlier. At trial, Aruba Petroleum argued that the plaintiffs could not prove that one of its wells made them sick since there were at least 70 wells within a two-mile radius of their residence. They also claimed their wells stayed within the air quality limits set by the TCEQ and there was no proof of diminished air quality at their home following drilling.
In a 5-1 verdict, a six-person jury found that the Aruba Petroleum intentionally created a private nuisance. The jury then awarded the Parrs $2.4 million for past mental anguish, pain and suffering, and $250,000 for future pain and suffering. The Parrs were also awarded $275,000 in damages for lost property value. Since the verdict was not unanimous, the jury did not determine whether exemplary damages were also available.

Ironshore Analysis

Although the case is fact specific, there are some lessons that can be learned that might prevent similar claims in the future. First, increased activity in urban areas makes this fact scenario more likely and the low threshold of proof required by the trial court for damages might open the door to similar claims if the case is affirmed on appeal. The Parrs’ experts claimed that Aruba Petroleum failed to install vapor recovery units or vapor combustors (flares) on the wells and likewise failed to utilize green completion technology following hydraulic fracturing. Some of these techniques are now required under Federal law and could have provided Aruba Petroleum with stronger arguments in response to the plaintiffs’ claims.
Additional scrutiny is also required when an operator is facing a contemporaneous governmental enforcement proceeding. One should presume that evidence developed in the administrative proceeding will be utilized against them in subsequent litigation. Every effort should be made to limit the administrative record and if consent orders are entered the language should be carefully crafted keeping in mind that the broad statements might later be misinterpreted and applied against the company in ways not originally contemplated.
As with all cases, a plaintiff’s preferred venue should always be questioned. The trial in Dallas County Court limited the jurors to six as opposed to twelve as permitted in district court. In addition, a jury in Wise County might have been more favorable to Aruba Petroleum as a result of the significant economic benefits that the oil and gas industry has provided that area.