Man-made Earthquakes In the Netherlands and USA: A Comparison of Solutions to the Problem
Much of what we’ve discussed in this class, and indeed is discussed in the international legal arena, in relation to climate change deals with atmospheric effects caused by emissions and energy usage. In recent years, though, a new environmental effect has been linked to human energy consumption. Just as CO2 emissions contribute to the warming of the atmosphere, deep-well injections relating to natural gas and oil production have been shown to cause earthquakes. Much of these man-made earthquakes have occurred here in the Netherlands and in the midwestern United States. Coincidentally, I have lived in both of these places — being born and raised in Texas and Oklahoma and living in the Netherlands for the past 4 months. Because of this little bit of first-hand insight, I thought it would be useful to compare each country’s reaction to this newly recognized problem. In doing so, I think one can gain an insight into the broader climate policy of each county and the underlying reasons for such a policy.
The Dutch Response
Most of the earthquakes experienced in the Netherlands have been in the northernmost parts of the country in the Groningen gas field. The Groningen field is the largest in Europe and the 10th largest in the world. Since it began production in 1959 the field has produced more than 1,700 billion cubic meters of natural gas. Operated by the Nederlandse Aardolie Maatschappij BV (NAM), a joint venture between Royal Dutch Shell and ExxonMobil with each company owning a 50% share, it is estimated that the field earns roughly 1 million euro per hour. This money is not just pocketed by the corporations themselves. The Dutch government takes a sizable portion of the profits too as it owns a 40% share of NAM’s parent company.
While the Groningen gas field has been a boon, economically speaking, for the Netherlands, it has come at a cost. Experts suggest the pumping of the Groningen field has deflated a porous gas-bearing reservoir deep below the surface, which has in turn led to a buildup of pressure along a fault zone that is periodically released in sudden jolts that cause small earthquakes. These earthquakes began in the area around the late 1980’s or early 1990’s. Since that time, it is estimated that over 1,000 quakes have hit the region in increasing intensity. On top of the incredible frequency with which they occur, the relatively shallow focus of the earthquakes combined with the presence of a unique type of soft clay in the area means that low magnitude quakes in Groningen do considerably more damage than their numbers on the Richter scale would suggest.
Unsurprisingly, for the first two decades or so of these earthquakes, NAM sought to deny the causal link between their drilling operations and the tremors in Groningen. The government too, with an economic incentive to keep gas production high, seemed to look the other way at the damage the drilling was causing. A report by the Dutch safety board in 2015 found that a correlation between gas extraction and earthquakes was clear since 1993, but “risks to residents were not recognised” until 2013.
For all of the blame that can be placed on the Dutch government for not acting sooner, the response to this problem in recent years has been swift and impactful. In January of 2014, the Dutch Minister of Economic Affairs announced a plan to cut production in the region by 80% from 2014 to 2016. This already large cut was deepened further in 2015. The government slashed production to 30 billion cubic meters for the year, substantially lower than a previous target of 39.4 billion cubic meters. On June 24, 2016, following a recommendation from the Dutch National Mines Inspectorate, Dutch authorities decided to lower the cap even further to 24 billion cubic meters per year for the next five years. These reductions in output have cut Dutch state income by roughly 600 million euros in 2014, 700 million in 2015 and 1 billion euros in 2016 at a time when it is already struggling to meet the European Union’s budget deficit targets.
As evidenced, the government of the Netherlands has decreased production substantially in the Groningen field to make the area safer for its residents. On top of this, several avenues have been provided to those residents so to be compensated for the damages they’ve suffered. NAM has acknowledged responsibility for a rise in earthquakes in the area and set aside €1.2 billion for Groningen’s residents — €850 million is being used for damage prevention and repairs to homes and infrastructure while another €180 million has been made available for measures to boost quality of life in the region and improve regional economic perspectives.
What’s more, a Dutch court recently ruled in a case against NAM brought by 900 Groningen homeowners that the energy conglomerate must compensate the homeowners for loss of value to their property. The court even went so far as to specify that homeowners need not show their property had suffered any physical damage, only that its value had been affected by its location in the quake area. With the plaintiffs estimating that over 100,000 properties had been affected by the quakes, the bill that NAM ultimately has to pay could stretch to €5 billion.
The American Response
The epicenter of these American man-made earthquakes is Oklahoma. As someone who attended college at the University of Oklahoma, I can attest to the exponential rise in earthquakes in the state first-hand. From 2000 to 2008 there were 14 earthquakes of magnitude 3.0 or higher in the state. From 2009 to 2015 there were 1,529. In fact, according to a spokesman from the Oklahoma Corporation Commission (OCC), which oversees the state’s oil and gas industry, Oklahoma now has the unenvious title of earthquake capital of the world.
Scientific studies attribute the rise in earthquakes to the injection of wastewater produced during oil extraction deep into the ground. Like the Dutch, the Oklahoma government was not quick to respond to the problem — the United States Geological Survey (USGS) has allegedly been aware since 1969 of the relationship between pressurized fluid injection and seismic activity. Unlike the Dutch though, Oklahoma has done little to try and stop the earthquakes in recent years.
As in the Netherlands, the Oklahoma government receives a substantial portion of its budget from energy companies. More than 7 percent of state revenues in 2014 came from production taxes from oil and gas companies. And, the energy industry (with one in five jobs in the state related to it) contributes far more than that to the government in corporate and individual income taxes. So, while neighboring states like Arkansas have instituted a moratorium on disposal wells in the most sensitive areas, Oklahoma has been reluctant to halt production in an industry that is so important to the state’s economy. Action has been taken in recent months though. In the aftermath of a 5.6 magnitude earthquake in September, state regulators in Oklahoma ordered the shutdown of 37 disposal wells over a 725-square mile area.
Oklahoma is also behind the Netherlands in providing avenues for earthquake victims to be compensated for damages to themselves and their property. Energy companies have not acknowledged responsibility for the earthquakes. This means most residents who experience earthquake damage end up paying out of pocket because deductibles for earthquake insurance are often 20% of a home’s value. “Out of about 100 claims filed for earthquake damage in Oklahoma in 2014, only eight were paid, according to the Oklahoma Insurance Commissioner.”
The courts in Oklahoma may be following their Dutch counterpart’s lead. In 2015 the Oklahoma Supreme Court ruled that a tort lawsuit against several energy companies for personal injuries and property damage caused by an earthquake could be heard in court. Before this ruling, the Oklahoma Corporate Commission was deemed to have exclusive jurisdiction for damage claims relating to oil and gas activity. While the case is a breakthrough of sorts, and has allowed other class-actions suits against oil companies to move forward as well, it is unlikely to be successful.
Because these lawsuits in Oklahoma allege a tort, they must prove several things, most notably a duty of care and causation. The recency of this earthquake phenomenon makes it difficult for plaintiffs in Oklahoma to argue that their damages were foreseeable to energy companies at the time, such that that they owed a duty of care. Even more difficult for plaintiffs is the task of showing causality. While science has come a long way in showing the link between deep well injection and earthquakes, it is still imprecise. Thus, even if plaintiffs can prove that injection well activity caused the earthquake leading to their damages, it will be extremely difficult to prove that it was caused by activity from a specific well that is run by a specific company.
While these man-made earthquakes sprouting up across the globe are not instances of climate change per se, they do serve as examples of how human energy consumption and production negatively affect the Earth. The respective responses of the Netherlands and Oklahoma governments to this issue pretty much mirror their reactions to climate change as well.
The Netherlands has been famously progressive in its climate policy. The Dutch government provides over €3.5 billion worth of subsidies each year to businesses producing renewable energy, plans to run all trains on wind power by 2018, and hopes to ban the sale of gas-fueled cars by 2025. The US, especially in midwestern states like Oklahoma, on the other hand, has been far less proactive. And, with the election of Donald Trump, who won largely because of enormous support in these states, this regional climate policy is likely to become national climate policy in the next four years.
Perhaps the biggest reason for the lack of effort in combatting climate change by this American demographic is a disbelief in its existence or or a downplaying of its severity. This is the calling card of Trump’s pick to head the Environmental Protection Agency, Myron Ebell. This is not the case for man-made earthquakes though. The United States Geological Survey and the Oklahoma Geological Survey both agree that these earthquakes are undoubtedly induced by human activity.
It seems that lawmakers in Oklahoma and throughout the midwest, though, are unwilling to take steps to better protect the environment if they come at too high an economic cost. Halting deep well injection would cost energy companies money, people their jobs, and the state valuable income. These ramifications are just as present in the Netherlands, but, as discussed above, that has not stopped the Dutch government and courts from taking major steps to alleviate the effects of these man-made earthquakes. From a broad climate policy view, it seems that the Netherlands places a higher priority on the moral and ethical aspects of global warming, while the United States looks at it through the prism of economic costs.
There are other reasons for this discrepancy in climate policy as well. Culturally the Dutch seem less prone to excess in all forms, including energy usage. The same certainly cannot be said for Americans. Too, there is a hint of self-survival for the Dutch as the low lying country is especially susceptible to impending rising sea levels.
While this blogpost might seem to paint Americans as the bad guys, this is not the goal. Their stance has merit because any good climate policy should seek to ensure that the changes being made do not adversely affect the economy too much. The goal of this post is to point to the hypocrisy in the new administration’s climate denial approach. Those against sweeping climate policy reform may say they are against it because climate change doesn’t exist, but the real reason is because they think it would be too costly to admit that it does. This is seen in Oklahoma as the government acknowledged the link between human activity and earthquakes but its reaction was the same as it is to climate change. They simply viewed reforms to combat the problem as too economically costly.
All in all, there are many considerations that come in to play when crafting any kind of law or policy, whether they be political, ethical, moral, or economic. As evidenced above, this is the case with climate law and policy on both sides of the Atlantic. The major difference between Americans and the Dutch on the subject of climate change law is which considerations are given more weight.