Published on March 13th, 2013 | by Daniel R. Perlman0
Aera-Starrh lawsuit for pollution goes to jury
A Kern County jury began deliberating on pollution charges Friday to determine whether one of the area’s biggest oil producers should have to pay punitive damages for polluting a local nut grower’s groundwater.
Farmer Fred Starrh‘s lawsuit against Bakersfield-based Aera Energy LLC is the latest phase of a decade-old legal dispute. Aera has been found liable for the pollution and was ordered to pay nearly $9 million in compensatory damages.
In closing arguments Friday, plaintiffs’ attorney Ralph Wegis asked the jury to award Starrh‘s family tens if not hundreds of millions of dollars for willingly allowing tainted water to cross over to his Lost Hills property in a way that limited his farming opportunities.
He said some of the money should serve as punishment for Aera‘s moral failings, while some extra amount should be set as a deterrent against similar actions in the future.
“The question now is how your verdict for punishment and deterrence can stop Aera,” he said.
Aera’s lawyer, Stephen Kristovich, argued against any punitive award, saying the company did not act maliciously or oppressively in the 18 months at issue in the trial. He asserted that Starrh‘s groundwater was unsuitable for irrigation even before it was polluted by seepage from Aera’s wastewater-filled evaporation ponds, which were replaced by disposal wells in mid-2006.
“The evidence shows Aera did not believe that using the ponds was causing harm,” Kristovich said.
The high-profile case has already taken some dramatic twists. Both sides appealed a 2004 jury verdict that Aera pay Starrh $3.25 million for the benefits it got from the pollution plus $3.8 million in restoration costs. An appellate court judge reversed that decision, and in a 2009 re-trial, a local jury awarded Starrh about $8.6 million in total compensatory damages.
In a separate phase of the case, Kern County Superior Court Judge Michael Bush denied Starrh punitive damages. His decision was reversed on appeal.
Because of previous findings about Aera’s responsibility for the pollution, much of the case has revolved around the usefulness of Starrh’s native groundwater with regard to irrigation.
Kristovich recalled testimony that the area’s groundwater has long been understood to be too salty and with too much boron to work on crops, hence the farming boom that arrived with the California Aqueduct in the 1960s.
Wegis countered by referencing studies suggesting that at least 20 different crops can live on Starrh’s native groundwater.
Another big point in the lawsuit has been Aera’s use of an accounting concept known as “net present value” to make, or help make, strategic decisions.
In this case, Wegis said, Aera used net present value to determine that it was more profitable over the long run — even in the event of a jury’s award of punitive damages — to let the groundwater pollution continue. He called the practice “devoid of morals.”
Kristovich responded by saying that net present value has been just one of many criteria guiding Aera’s decisions, and that the others include environmental responsibility.
He added, “There’s nothing wrong with using economics and using that as part of your decision-making process.”
Friday’s closing arguments also revisited the central question of what damage Aera’s actions caused in the 18 months after December 2004. Kristovich said that only 43 million barrels of produced water — tainted fluid that comes up during oil production — crossed onto Starrh’s property during that time.
Considering that some 1.6 billion barrels had flowed into the groundwater before then, he argued, “It’s like adding a drop of water.”
But in his rebuttal, Wegis told the jury that Aera decided it was in its best financial interest to wait rather than stop the pollution.
Kern County Superior Court Judge J. Eric Bradshaw is presiding over the case.
Source: Bakersfield Californian “Aera-Starrh lawsuit goes to jury,” March 8, 2013.