Economics / International Business

Who Should Take the Blame?

Four years ago, the town of Prague, Oklahoma was devastated by a series of earthquakes, which were later linked to an increase in fracking in the area. Fracking is the process of fracturing rocks by injecting wastewater, produced by hydraulic fracturing, into wells which releases gas and oil which can then be extracted. Fracking is controversial due to the potential risks that it may cause, including an increase in earthquakes. The discovery of this connection caused a resident to sue an oil and gas company that practiced fracking in the area, accusing them of causing the earthquake which resulted in her injuries. The Supreme Court approved the case and allowed additional lawsuits to come forward, for which the state courts must decide if the companies should be held accountable.

fracking

Although fracking has been shown to trigger earthquakes, not everyone agrees on how to assign blame. Many argue that since the act of disposing of the waste water from fracking has been shown to cause earthquakes, the companies should be held liable. The regulation currently in place for determining liability forces courts to decide “whether there is a high risk of harm, whether it is likely that the harm will be great, and whether the harm can be eliminated by reasonable conduct” (Watson). Many people believe that the harm is great, due to the major increase in earthquakes in surrounding areas. Additionally, since fracking is still a relatively new practice, scientists have not yet determined which injection sites will pose risks and do not know how to eliminate the risks. Therefore, the oil and gas companies should take responsibility.

On the other hand, even though there is a link between the two, many believe not enough research has been done on the details of the connection yet, to be able to assign any blame. Catrina Rorke, a director of energy policy, states that allowing the courts to end oil and gas operations “that promote economic growth and enhanced energy security,” is not a good idea. She proposes limited state action to identify practices to reduce and ultimately end earthquake risk in a way that is more efficient than mass lawsuits.

While both sides agree that there is a strong correlation between fracking and earthquakes, the suggested ways to deal with the situation contrast starkly. Deciding whether the companies should be held liable for the damages of the earthquakes or not, and to what extent, is not a simple choice and is in fact very hard to regulate due to the complexity of the situation.

This situation is one of many in which gray areas in regulation have been exposed. Is it possible to force oil and gas companies to pay for earthquake damages, or can they argue that their practices have not directly caused the earthquake and that there is insufficient research to prove so on the matter? Will this decision lead to a change in current regulation or even the creation of a new law to help assign responsibility?

When attempting to make decisions on ethical issues, such as this, there are a several common frameworks that have been developed to help reach a conclusion. One way to view the situation, is through a utilitarian lens, which looks at the outcomes of the situation. John Stuart Mill discovered this ethical perspective, which suggests that an action is right if it maximizes happiness, or has positive effects. One could conclude that since there were cases of injuries and damages, negative effects, the case should be taken to the courts.

A deontological frame, defined by the philosopher, Immanuel Kant, would view actions through moral principles to decide whether an action is morally good. Kant suggested to follow universal laws such as “Do no harm.” Therefore one would probably decide to help the people affected by the earthquakes simply because the action of fracking that caused the earthquakes was morally bad and caused harm to the community. A classic example of making a decision based on moral principles, is Aaron Feuerstein, the former CEO of Malden Mills, who after a massive fire that destroyed one of the mills, made the decision to rebuild the mill and compensate all of the workers by paying their full salaries for two months. He made this decision because it was the right thing to do, and he was committed to helping the employees.

The justice frame, defined by John Rawls, requires decisions based on equality and fairness and asks for a veil of ignorance wherein the decision-maker does not know where he/she would stand in the situation. Thus one would help the least fortunate first, the victims of the earthquakes, by compensating them for damages and injuries.

In this instance, I support using the justice frame. If the courts utilize this frame, a new law or change to current regulation would be passed causing the oil and gas companies to take responsibility for the damages from the side effects of fracking. The current regulation for determining liability should be amended and the language should be clarified, improve the rules outlined in the law and assign blame to a party, which will help solve the current situation and set a precedent for potential future issues. Since the reports of earthquakes have skyrocketed in the past few years in areas where fracking is being practiced, someone must take the blame, and oil and gas companies are the obvious target. This regulation would most likely cause companies to slow or even put a halt to their fracking operations. Despite the possible economic distress that the regulation would cause, saving lives takes precedence.

Marialice Skabardonis

Works Cited

Brooks, Leonard J. and Dunn, Paul. Business and Professional Ethics for Directors, Executives

and Accountants. Toronto: Cengage Learning, 2014. Print.

“Fracking.” Investopedia. Investopedia, n.d. Web. 15 Nov 2015.

<http://www.investopedia.com/terms/f/fracking.asp&gt;.

Leung, Rebecca. “The Mensch of Malden Mills.” CBS News. CBS Interactive Inc, 3 Jul 2003.

Web. 15 Nov 2015. <http://www.cbsnews.com/news/the-mensch-of-malden-mills/&gt;.

Rorke, Catrina and Watson, Blake. “Should Oil Firms Be Held Liable In Earthquake Lawsuits?”

The Wall Street Journal. Dow Jones & Company, 15 Nov 2015. Web. 15 Nov. 2015. <http://www.wsj.com/articles/should-oil-firms-be-held-liable-in-earthquake-lawsuits-1447643517&gt;.

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