Robert Gaudet represents an elderly Louisiana landowner who is being pressured to enter into a lease to drill for oil and natural gas in Lincoln Parish through fracking, which has been used in the vicinity.  Fracking is a fairly new and successful method for finding natural gas.  However, there is some evidence it causes water pollution and even earthquakes.

Although some Louisiana lawyers who routinely handle oil and gas leases do not think there is a serious risk of earthquakes from fracking, there is some evidence that earthquakes have resulted from fracking in various locations around the world.  In Oklahoma, the American Bar Association journal recently reported there are 300 times more earthquakes, after fracking, than in the past. An HBO documentary from 2010 reported on the consequences of fracking in Pennsylvania, Colorado, and Wyoming where water wells were polluted and kitchen sink faucets caught fire.

Last week, Mr. Gaudet met with an Amsterdam personal injury lawyer, Antoinette Collignon-Smit Sibinga, who told him she once lived in Groningen, the Netherlands which never had earthquakes until, after fracking, Groningen now has many earthquakes.  An article in the Guardian describes the damages suffered by landowners in the Groningen due to earthquakes caused by the removal of natural gas.  The Groningen landowners have been offered compensation but, generally, in amounts far lower than the actual costs for them to build new houses after old structures were damaged by earthquakes.

In April 2015, a Dutch court in the Hague ordered the halting of gas production in Groningen due to earthquake concerns, according to an article published in The Globe and Mail. The Netherlands Ministry of Economic Affairs, based in the Hague, had argued to the Court that gas production caused 196 earthquakes in the region over a period of two years.  The ruling required the Dutch gas company to reduce production to a minimal level.  In a separate decision, a Dutch court, in 2014, ordered payment of $1.6 billion in compensation to landowners with damages caused by earthquakes induced by fracking, as reported in an online publication.

In Louisiana, oil companies can obtain an order from a Governor-appointed Commissioner of Conservation to drill on people’s land without their consent. The statutory justification is to prevent the “waste” of natural resources.  If a landowner refuses to enter into a lease, then the oil company can charge the landowner three times the costs for drilling (taken out of any production) as a penalty for the landowner’s refusal to enter into a lease.  Consequently, there’s immense pressure upon Louisiana landowners to enter into leases to allow fracking even though it may someday cause earthquakes.

To protect their rights, landowners have the option of refusing to enter into a lease and, if the oil company seeks a unitization order from the Commissioner, then submitting objections to the Commissioner.  The Commission is required to hear objections and may determine whether, or not, to grant an oil company’s application.  In their objections, landowners could raise the prospect of increased earthquakes as a reason for the Commission to deny any application to drill without the landowners’ consent.  According to some local lawyers in Louisiana, unitization orders (which create a “unit” of land that a company can drill on, even without the owners’ consent) are readily granted, even when they are opposed by landowners. Will the serious consequences of fracking, i.e. earthquakes, around the world change the mind of a Commissioner?  Perhaps.  Landowners can always refuse to enter into a lease and submit their objections to an oil company’s subsequent application for a unitization order.

As an alternative, landowners can insert more favorable provisions into a negotiated lease to seek protection and, in the event of harm, compensation for any damages caused by any earthquakes.  A negotiated lease can also contain provisions that require an oil company to use the highest and best practices and technologies for the prevention of earthquakes and remediation of the land.

On behalf of his client, Mr. Gaudet cooperates with co-counsel in seeking creative solutions to growing concerns about fracking including Jenik Radon (who previously represented the country of Georgia in negotiations against BP Oil and currently teaches at Columbia University) and legal counsel in Louisiana.

The land broker seeking the lease, Mark A. O’Neal & Associates, has sent Mr. Gaudet’s client numerous copies of a fine print lease devoid of important legal clauses (e.g. indemnification provision, damages clause) and offered a percentage of royalties; $1 per long ton for sulphur, and just 10 cents/barrel of water.  The broker attached a “draft check” in the hopes that Mr. Gaudet’s client would cash it and, thereby, become bound by the fine print devoid of legal protections, which many landowners sign with little or no revisions.  At one point, the broker told Mr. Gaudet there was no risk of earthquakes due to fracking in Louisiana.