Dutch Court Rules Gas Producer NAM Must Compensate Quake Zone Homeowners

By | September 2, 2015

A Dutch court ruled on Wednesday that gas producer NAM must compensate homeowners for falls in the value of their properties due to earthquakes linked to gas production at the Groningen field in the north of the Netherlands.

The ruling by the court in Assen could result in billions of euros of claims against Nederlandse Aardolie Maatschaapij (NAM), a joint venture between Shell and ExxonMobil.

The Dutch government has reduced production from the Groningen field, Europe’s largest, twice this year after the country’s Safety Board said gas companies and regulators had failed to take the danger from gas production-linked earthquakes seriously enough.

“NAM is responsible for declines in the value of real estate that lies in the area where earthquakes are caused by gas production, and that damage is eligible for compensation,” said Judge Ger Vermeulen, reading a summary of the ruling.

Vermeulen added that homeowners must claim their losses on a case-by-case basis, and that the average decline in home values attributable to their location in the earthquake zone alone appeared to be no more than “several” percent, with some suffering more and others none at all.

Hundreds of thousands of homes and buildings lie in the affected area, which covers wide swathes of the northern Netherlands.

NAM has so far set aside €1.2 billion ($1.35 billion) for compensation for damage to buildings. Estimates of the cost of compensating homeowners for lost value and strengthening buildings in the affected region are far higher.

“We are going to study the considerations carefully and consider potential further steps,” NAM spokesman Martijn Verwoerd said in a statement. “We recognize the concern of inhabitants and agree … that, in specific cases, falls in value may be caused by earthquakes.”

The company acknowledges its responsibility for damage caused by quakes, but has maintained that it should compensate homeowners only after they sell their homes at a loss.

Wednesday’s ruling specified that homeowners need not show that their property had suffered any physical damage, only that its value had been affected by its location in the quake area. It also found that homeowners could request compensation immediately, rather than waiting for a sale.

The case against NAM was brought by a group of 900 homeowners and 12 housing cooperatives.

(Reporting by Toby Sterling; Editing by Kevin Liffey)

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