More Fracking Means More Liability by Antoinette Martin, January 28, 2013, GlobeSt.com
In the wake of several multi-million dollar settlements over pollution caused by hydraulic fracturing, including two in this state, a New York legal specialist has published an article called “Fracking Know-How” for property owners and insurers. LeClairRyan partner Michael J. Case writes in this month’s issue of Claims Management that insurance companies have major stakes on the table as fracking – and lawsuits – escalate.
Residents of Dimock received a reported $4.1 million as settlement after they sued Cabot Oil & Gas Corp., contending that their drinking water was contaminated by fracking-related methane gas. Also, Chesapeake Energy has paid $1.6 million to settle allegations of water well pollution in Bradford County. “Landowners who allow gas exploration or production activity on their property, typically through lease agreements, may be held responsible under common law for ‘dangerous conditions’on their property,” says Case in the article. Oil and gas leases often contain provisions indemnifying the landowner for claims arising from a gas company’s operations and requiring the developer to obtain liability insurance covering the landowners for claims arising from such operations, he notes. “This places the lease terms at the forefront in analyzing fracking-related liability,” the lawyer writes. … “Well operators or landowners whose liability has not been transferred in the lease documents may look to their insurers to assume their retained liability,” he says. However, he says, “the likelihood of payment under such circumstances is far from certain.” [Emphasis added]
[Refer also to:
The Assessment Review Board Reduces Methane Contaminated Property’s Taxation Value to Zero by John M. Bulman, Weirfoulds LLP, March 2, 2012
An insurance broker the property owner consulted could not obtain insurance on the house and property because of the methane. Unable to bear the costs of bringing the methane control system up to standard, the owners consulted a broker about selling the property, only to find that their real estate broker would not list the house for sale. In refusing the listing, the broker said that no one would be interested in buying the property because they would not be able to either insure or mortgage it because of the methane levels….The methane problem, it ruled, is more than a mere nuisance, posing a real hazard.