Court reverses verdict

Published 5:00 am Wednesday, October 23, 2002

The Mississippi Supreme Court has reversed a $2.3 millionverdict in an oil field contamination case brought by a Wisconsincouple against Chevron over drilling activity in the Brookhavenfield.

In the ruling issued last week involving a Hinds County CircuitCourt case, supreme court justices ruled that Alcus and Kay Smithof Wisconsin failed to seek relief through the Mississippi Oil andGas Board before filing a lawsuit in 1996. The ruling also citedthe couple for refusing to accept property clean up offers.

“We find that the trial court erred in allowing a jury trial asthe Smiths failed to exhaust administrative remedies before seekingrelief in the trial court,” Justice James W. Smith Jr. said in theruling. “The Smiths were required under our precedents to firstseek restoration of their property from the Mississippi Oil and GasBoard before a trial court could consider the issue and possiblyassess an appropriate measure of damages.”

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The trial was held in August 1999. The jury awarded $2.3 millionin damages but deadlocked on the issue of punitive damages.

According to the ruling, Chevron acquired a mineral lease on theBrookhaven field in 1943. In 1966, Chevron built a saltwaterfacility for use in its oil well related activity in the field.

With the intention to build their retirement home, the Smiths in1979 purchased surface rights to 55 acres of land in the Brookhavenfield. They were aware of oil and gas production, although it wasdisputed whether the saltwater facility on their land was stillactive at the time of their purchase.

At issue in the lawsuit was Naturally Occurring RadioactiveMaterial (NORM), small amounts of which can build up over time andeventually lead to radioactive levels. Saltwater is a byproduct ofoil and gas production and some of the formations in the fieldcontained NORM.

In 1990, Chevron sold its interest in the field to Florabama,which later sold its interest to COHO.

The Smiths learned through neighbors in 1994 that some of theequipment on their property may contain NORM, according to theruling. Government tests had shown that many residents’ drinkingwater had been polluted by Chevron activities.

Chevron, Florabama and COHO were named as defendants in the 1996lawsuit. The Smiths settled with Florabama for $75,000 and COHO wona summary judgment because of the Smiths’ refusal of that company’soffer to remove the saltwater facility from the property.

Supreme court justices said the legislature has designated thestate Oil and Gas Board as the agency for developing regulationsand ruling on oil field pollution matters. They said the board’scollective expertise is more suited than an average juror tounderstand regulations and environmental pollution issues.

“This court cannot allow a private landowner to pursuerestoration of his or her land in the courts of this state bysidestepping a very vital and useful agency that could help protectthe average Mississippian from the dangers of NORM pollution,” theruling said.

The Smiths’ lawsuit was one of many brought against Chevron overits oil field activity.

In another lawsuit involving approximately 1,000 plaintiffs,Chevron has reached a tentative $5.5 million agreement to settlethat case. The agreement, reached earlier this year, requires that80 percent of clients and 85 percent of property owners sign off onthe settlement.

Plaintiffs attorneys said many had agreed to the settlement andthey were continuing efforts to get others to agree. Plaintiffsattorneys have until Oct. 28 to collect the requiredsignatures.

Chevron’s clean up of the field and a testing program on thewater are also part of the settlement, plaintiffs’ attorneyssaid.