Damage award in Texas pollution case raises stakes in air quality debate

Between February 2010 and July 2011, Lisa and Bob Parr filed 13 complaints about air pollution from gas and oil operations near their ranch in Wise County, Texas. Sometimes they had trouble breathing, they told the Texas Commission on Environmental Quality, or TCEQ. They also experienced nausea, nosebleeds, ringing ears and rashes.

Other families also were alarmed. Between 2008 and 2011, the TCEQ received 77 complaints from Wise County, in the Barnett Shale drilling area in North Texas. One said the odor was so powerful that the complainant "couldn't go outside," the TCEQ report said.

Frustrated and angry, the Parrs decided to sue. Their attorney warned them that lawsuits against the oil and gas industry rarely succeed. But the Parrs persisted and in April won what appears to be the first successful U.S. lawsuit alleging that toxic air emissions from oil and gas production sickened people living nearby. A Dallas County jury found that Aruba Petroleum, a privately owned company based in Plano, Texas, "intentionally created a private nuisance" that affected the family's health and awarded the Parrs almost $3 million in damages.

"When you don't have a strong regulatory system, a system to prevent what happened to this family, the only place left to turn for help is the courts," said Robert Percival, director of the University of Maryland's Environmental Law Program.

There are no assurances the verdict against Aruba will survive an appeal or lead to regulatory changes in Texas or any of the other states where people complain their health is jeopardized by gas and oil drilling. The issues are so complex that the industry, the public and policymakers may be sorting through them for years. But the potential impact extends to states like Florida, which uses natural gas to produce 60 percent of its electricity and which benefits from low shale gas prices.

Aruba has asked Judge Mark Greenberg, who presided over the Parrs' case, to reverse the jury's verdict. Greenberg is expected to hear arguments over the verdict this month.

"This case will be looked at very, very closely because it has set the stage in a way that has never been set before," said attorney Tomas Ramirez. He represents two families in similar lawsuits in the booming Eagle Ford Shale of South Texas, where emissions are raising the same alarms that have been sounding in the heavily developed Barnett Shale region the Parrs call home.

Aruba used two long-standing industry arguments in its defense: that the emissions could have come from one of its competitors' wells, and that it was in compliance with Texas environmental rules.

That those arguments failed in this case "exposes every company to more possible litigation," said Thomas McGarity, a University of Texas law school professor.

"Losing this case was not good for the industry," McGarity said. "My guess is the industry will coalesce around this case. The industry will want to stop the dam from breaking wide open. … This is where they will take a stand."

Aruba officials declined requests for interviews but released a statement though a public relations firm that said: "We contended the plaintiffs were neither harmed by the presence of our drilling operations nor was the value of their property diminished because of our natural gas development."

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In a motion to overturn the verdict, company lawyers argued "there is no evidence that Aruba engaged in any conduct intended to cause harm. Aruba's operations complied with best industry practices and met the standard for a reasonable and prudent oil and gas operator."

The Parrs' attorney, Brad Gilde, said TCEQ documents show Aruba repeatedly violated state regulations and in some cases was fined for its offenses.

There was sufficient evidence to support a jury finding that "Aruba either (1) knew an (emissions) invasion was resulting from its conduct, or (2) knew an invasion was substantially certain to result from its conduct," Gilde said in a court document.

William Anaya, a Chicago lawyer who often represents the oil and gas industry, said the Parrs' victory is an anomaly and won't set a precedent that the industry can be held responsible for dangerous emissions.

Oil and gas development is safe and heavily regulated, he said, which is why cases against the industry rarely even make it to court, much less succeed.

"I'm incredulous of the whole thing," Anaya said.

The Parrs, meanwhile, are trying to sell their 40-acre ranch, which the jury concluded had lost $275,000 in value because of the Aruba facilities. It has been on the market for two years, but so far they've had no offers. Their neighbors Christine and Tim Ruggiero also sued Aruba, but agreed to an out-of-court settlement. The Ruggieros' settlement prohibited them from talking publicly about their case.

That the case was won in Texas makes the Parrs' victory unusual. A recent investigation by InsideClimate News, the Center for Public Integrity and the Weather Channel found that Texas politicians often work hand-in-hand with the industry, regulations are lax and little is known about the risks from the toxic soup of emissions the industry releases.