Fracking Earthquakes |Not Covered, Insurers Say

MANHATTAN (CN) — Lloyd's of London claims in court that it doesn't owe an Oklahoma oil company insurance coverage for earthquakes said to be caused by fracking.

The plaintiffs, two underwriters at syndicates of Lloyd's of London, seek a court judgment declaring that their "site pollution liabilities policies" do not cover New Dominion LLC for five underlying lawsuits alleging the oil company's hydraulic fracture drilling, or fracking, caused severe earthquakes and property damage.

Lloyd's first issued the insurance policies to Oklahoma-based New Dominion on July 1, 2014, and again for the 2015-2016 policy year, according to a lawsuit the underwriters filed Monday in Manhattan Federal Court.

The policies provided insurance coverage for "pollution conditions discovered, or claims first made and reported" during the policy period. Pollution conditions were defined as "the discharge, dispersal, seepage, migration, release or escape of pollutants," the complaint states.

The underwriters claim that pollution conditions as defined in the policy do not cover the type of damages described in the five lawsuits against New Dominion, which were allegedly caused by fracking-induced earthquakes.

The plaintiffs seek a judgment that they have no obligation to defend, reimburse or indemnify New Dominion in the underlying actions.

"None of the allegations set forth in the complaints and/or petitions in the five actions assert that any of the alleged damages resulted from 'a pollution condition,'" Monday's lawsuit states. "Accordingly, there is no coverage for the five actions under the policies."

The underlying actions include lawsuits filed earlier this year in Oklahoma County, Pottawatomie County and Logan County, as well as a February lawsuit filed by the Sierra Club in the Western Oklahoma Federal Court. The complaints cite a direct correlation between an increase in fracking-related wastewater disposal and an increase in seismic activities in those regions of Oklahoma.

One of the underlying lawsuits is a class action claiming fracking and injection wells induced multiple earthquakes that measured higher than a 4.0 magnitude.

The underwriters are represented by Lorin Donnelly of Milber Makris Plousadis & Seiden in Woodbury, N.Y. Their case has been assigned to Judge Denise L. Cote.

A representative at New Dominion's corporate headquarters declined to comment on the pending litigation, per company policy.

According the Dallas Morning News, instances of earthquakes in Oklahoma have jumped from 50 in 2009 to more than 5,800 in 2015, the highest amount of seismic activity in the continental United States.

A group of seven environmentalist groups sued Environmental Protection Agency Administrator Gina McCarthy in May, urging the agency to update and tighten regulations on fracking, citing links to "numerous earthquakes in Arkansas, Colorado, Kansas, New Mexico, Ohio, Oklahoma, and Texas."

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