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Starrh & Starrh Cotton Growners v. Aera Energy Ltd. Liab. Co.

ELR Citation: 37 ELR 20183
Nos. Nos. F047540, F048555, (Cal. App. 5th Dist., 07/20/2007)

A California appellate court reversed a lower court's award of damages in a cotton grower's suit against a neighboring oil company alleging subsurface trespass due to the migration of wastewater stemming from the company's oil production activities. The wastewater, pumped out of the deep ground in conjunction with the extracted oil, is naturally high in salts and other minerals. The wastewater migrated to an aquifer underlying the grower's property, thereby reducing subsurface water quality. A jury ultimately awarded the cotton grower $3 million in damages. The company appealed, but the lower court properly ruled that the trespass here is continuing in nature and that the grower's claim is not barred by the statute of limitations. The cotton grower also appealed, arguing that there is no evidence to support a finding that the jury's award would restore the grower's property to its original condition. The court agreed. The jury was not adequately instructed on how to calculate restoration damages. If the jury determines that damages should be awarded, it must decide how much it will cost to restore the groundwater under the grower's property to its original state and whether the restoration costs are reasonable in light of all the competing interests. The jury can deny damages if it concludes the restoration costs are unreasonable, and diminution in value may be a legitimate measure of damages where restoration costs are unreasonable. The court also held that the grower is entitled to attorney fees.