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Dutch Court Says Gas Producer Must Compensate Homeowners in Quake Zone

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Screen Shot 2015-09-02 at 14.32.29By REUTERS SEPT. 2, 2015

AMSTERDAM — A court in the Netherlands ruled on Wednesday that a natural gas company, a joint venture by Royal Dutch Shell and Exxon Mobil, must compensate homeowners for declines in the value of their properties because of earthquakes linked to production at the Groningen field.

The ruling by the court in Assen could result in billions of euros of claims against the venture, known as NAM. Hundreds of thousands of homes and buildings lie in the affected area, which covers wide parts of the northern Netherlands.

The Netherlands has twice this year reduced production from the Groningen field, Europe’s largest, after the Dutch Safety Board, a government-financed but independent organization, 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 the judge, Ger Vermeulen, reading a summary of the ruling.

The judge 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” percentage points, with some suffering a bigger drop and others none at all.

NAM has so far set aside 1.2 billion euros, or about $1.35 billion, to compensate for damage to buildings. But 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,” Martijn Verwoerd, a NAM spokesman, said in a statement. “We recognize the concern of inhabitants,” he said, adding that the company agreed that in some cases, earthquakes may reduce the value of homes.

The company has acknowledged responsibility for damage caused by the quakes, but has maintained that it should compensate homeowners only if they sell their houses at a loss.

The court 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.

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