Climate change: Get ready or get sued

Climate change: Get ready or get sued.

Nationwide’s Fracking Policy Puts NY Farm Bureau in Awkward Spot | Politics on the Hudson

Nationwide’s Fracking Policy Puts NY Farm Bureau in Awkward Spot | Politics on the Hudson.

US insurer won’t cover gas drill fracking exposure

The implications of this are HUGE and there can be little doubt that the gas industry is preparing a robust response (based on more deception and mis-information) concerning the “true” risks associated with fracking.  This is an opportunity to turn up the heat and change the debate to include concerns arising from insurers, who are not likely to be “radical environmentalists”.  If too risky for nationwide (who is on YOUR side), then what about YOUR community???????
US insurer won’t cover gas drill fracking exposure
Nationwide Mutual Insurance Co. has become the first major insurance company to say it won’t cover damage related to a gas drilling process that blasts chemical-laden water deep into the ground. The Columbus, Ohio-based company’s personal and commercial policies “were not designed to cover” risk from the drilling process, called hydraulic fracturing, or fracking, Nationwide spokeswoman Nancy Smeltzer said Thursday.


Nationwide, a major insurer, won’t cover gas hydrofracking exposure
Kingston Daily Freeman
The Kingston Daily Freeman is your source for all Hudson Valley 24-hour breaking news, local news, sports, entertainment and more. View daily weather updates, watch videos and photos. Keep up with Kingston’s News and Kingston local Sports.
See all stories on this topic »
Insurer: No shale gas coverage
Albany Times Union
The state Department of Environmental Conservation is weighing proposed rules that would allow hydrofracking to begin in the Marcellus Shale, a gas-rich underground formation that runs through the southern part of the state from Buffalo, through the
See all stories on this topic »
Nationwide Won’t Cover Fracking Losses
Hydrofracking is again in the news, but for a reason that hasn’t been much discussed during the usual debates about the controversial drilling process. This time it concerns insurance. Fox 40…
See all stories on this topic »

Fracking in the Marcellus Shale: Contractual Risk Transfer and Insurance Issues for Property Owners and Municipalities


The debate over how to best balance concerns for the environment with the desire to increase our nation’s energy independence is currently raging on in small town borough council meetings and the state and federal legislatures. The debate is fueled by ever escalating estimates of the amount of recoverable natural gas in shale formations across Pennsylvania, New York, West Virginia, Maryland, Ohio, Virginia, and New Jersey and the potential consequences of the methods used to extract the gas. According to the Associated Press, over 3,000 new natural gas wells utilizing hydraulic fracturing, or “fracking,” have cropped up across rural Pennsylvania in the Marcellus Shale since 2005. With tens of thousands of additional wells planned, and enthusiastic projections of natural gas abundance in the adjacent Utica and Upper Devonian Shales, fracking activities are going to expand exponentially. As with any novel science, the only thing more certain than the controversy it stirs will be the claims and lawsuits that result. Indeed, a myriad of lawsuits seeking personal injury and property damage resulting from Marcellus Shale drilling have already been filed in courts throughout the region.

Despite assurances that the process of fracking is clean and safe, it is nevertheless imperative that municipalities, property owners, and mineral rights owners evaluate how to best protect themselves from the gambit of fracking-related claims and litigation, which will include everything from on the job injuries to environmental contamination. Other than campaign statements made by Pennsylvania’s Governor Tom Corbett – who proclaimed that state regulation should require drilling companies to maintain adequate insurance – there has been surprisingly little discussion of the role that insurance and contractual risk transfer can play in protecting municipalities and property owners from these claims.

While every situation is unique, here are some considerations for property owners and municipalities when evaluating whether they are adequately protected for claims arising out of fracking:

Contractual Indemnity Provisions

Many Marcellus Shale oil and gas leases contain boilerplate indemnity provisions in which the gas company promises to indemnify and hold harmless the property owner in the event of a claim. However, when you drill down to the details, these provisions may be offering property owners a false sense of security.

First, an indemnification provision is only as good as the party agreeing to provide the indemnification. Property owners and municipalities need to investigate the financial solvency of the entity signing the oil and gas lease or applying for the oil and gas permit, particularly where larger corporations are using LLCs and subsidiaries to enter into these legal contracts.

Second, in order to ensure that you have adequate protection in the event you are personally tied to allegations of negligence or wrongdoing, the indemnification provision should be as broad as allowable under applicable law. These indemnification provisions should include language indemnifying you for your own acts of negligence where such indemnity is not otherwise against public policy.

Additional Insured Provision

Shockingly, many oil and gas leases contain no provision requiring any type of insurance on the part of the companies engaging in the drilling. Property owners should require that they be named as an additional insured on all insurance policies of the oil and gas company, as well as on the insurance policies of any contractor that comes onto the property for any purpose related to the drilling.

In addition, simply asking to be listed as an additional insured is not enough. Property owners (and municipalities who require additional insured status as part of permitting) should keep in mind that not all additional insured provisions in insurance policies are the same. If left to the insurance company to choose, undoubtedly the insurance company will utilize as narrow an additional insured provision as possible. For the greatest protection, the additional insured provision in the oil and gas lease should specify the scope of the coverage for the additional insured.

Property owner should also investigate the scope of coverage contained in the oil and gas company’s insurance policies. By way of example, most commercial general liability policies contain pollution exclusions, which insurance companies will undoubtedly rely upon to exclude coverage for the discharge of any “pollutant”. Oil and gas companies and companies involved in drilling can and should carry specialty insurance for their operation that do not contain exclusions for pollution liability or contain only limited pollution exclusions. Property owners and municipalities should be aware that this specialized coverage is available; otherwise they may be arguing with the insurance company over coverage under a policy with a pollution exclusion.

Similarly, property owners and municipalities should be aware that many companies involved in oil and gas drilling have policies written on a “claims-made” basis. Claims-made policies generally are triggered when the claim is made by a third-party. In contrast, “occurrence” based policies general provide coverage for claims that take place at least, in part, during the policy period. For property owners and municipalities, the concern with “claims-made” policies is that they may not provide any coverage if the damage does not manifest itself until years later, which is often the case with environmental contamination.

Finally, insurance coverage is in many cases only as good as the limits and deductible or self- insured retention associated with that policy. In both of these instances, the property owner or municipality should dictate the terms of coverage acceptable to them.

One last word of caution – property owners and municipalities should not rely upon Certificates of Insurance as evidence of compliance with insurance provisions of a contract, or as evidence of compliance with permitting requirements. Certificates of Insurance may not be binding on an insurance company and often contain limited and incorrect information. The only way for a property owner or municipality to make sure the insurance policies meet either the contractual or permitting requirements is to obtain, and fully review, copies of the actual policies.

Claims Handling

In the event of a potential claim, property owners and municipalities need to be vigilant in making sure that timely notice of a claim or potential claim is provided to under every potentially applicable insurance policy. In no instance should the property owner or municipality rely on the gas company or contractor to give notice on their behalf. Even if you do not have all the particulars of your claim, give notice immediately, you can always supplement the notice later.

While landowners and municipalities may not be able to avoid fracking-related liability completely, by following these guidelines and turning to insurance recovery professionals when necessary, they can nevertheless minimize their uninsured exposure.

This article is part of the summer edition of Offit Kurman’s quarterly Insurance Recovery Advisor. You can download the full Advisor here.

Michael Conley is a Principal at Offit Kurman and Chair of the firm’s Insurance Recovery practice. Mr. Conley is a frequent speaker on insurance recovery and fracking issues. He can be reached at 267.338.1317 or

Meghan K. Finnerty is an Associate at Offit Kurman and a member of the Insurance Recovery practice. Ms. Finnerty’s practice includes a focus on insurance recovery for environmental issues. She can be reached at 267.338.1322 or

U.S. GAO – Oil and Gas Bonds: BLM Needs a Comprehensive Strategy to Better Manage Potential Oil and Gas Well Liability

U.S. GAO – Oil and Gas Bonds: BLM Needs a Comprehensive Strategy to Better Manage Potential Oil and Gas Well Liability.

In court, PG&E deflects blame for San Bruno blast

In court, PG&E deflects blame for San Bruno blast.

In court, PG&E deflects blame for San Bruno Blast July 12/2011

Hydrofracking leases may violate fine print on mortgages, title insurance

Hydrofracking leases may violate fine print on mortgages, title insurance.

Gas Houses

Hydrofracking drilling leases may violate fine print on mortgages, title insurance

Homeowners who lease their drilling rights to the oil and gas industry for hydrofracking may no longer be covered by their title insurance.

[+] Enlarge

By Susan Arbetter

A group of Tompkins County residents believe they have found a troubling new consequence of “hydrofracking” gas drilling in New York—not environmental but financial.

Reading the fine print on residential mortgage and title insurance requirements, they found many New York properties have tight technical restrictions on the size and location of drilling structures.

That means homeowners who lease their drilling rights to the oil and gas industry for hydrofracking may no longer be covered by their title insurance. They may not be able to take out second mortgages on their properties. In the worst case, they may not even be able to sell their land as long as a drilling lease is in effect.

“Economic development is expected to be the upside of this activity,” said Carol Chock, a Tompkins County legislator who headed a local committee reviewing how gas drilling would affect property assessments.

“The understanding is that if we’re willing to take the risk, the reward will be economic,” Chock said. “But are we sure that’s true?”

Gas drillers say the worry is overblown, but it has made its way to the governor’s office.

Assembly Member Barbara Lifton arranged for Chock, two local mortgage lenders and a real estate agent to meet in Albany last month with three aides to Gov. Andrew Cuomo—Anthony Giardina, Jim Malatras and Tom Congdon—as well as with officials from the Department of Environmental Conservation (DEC).

The DEC is scheduled to release a detailed blueprint for gas drilling in New York by July 1, but the Cuomo administration has not said whether land financing will be addressed.

While landowners in economically depressed regions across the state are generally open to leasing their drilling rights, the Assembly recently passed a year-long moratorium on the controversial practice, because they fear hydrofracking will contaminate the water supply.

“Natural gas locked within the Marcellus Shale isn’t going anywhere. We’re not going to lose it,” Speaker Sheldon Silver said last week. “There’s too much at stake not to err on the side of caution.”

Though the shale isn’t going anywhere, cash-strapped New Yorkers in struggling areas of the state are going bankrupt. Some are going into foreclosure. Others are hanging onto their homes a month at a time, waiting for the state to allow drilling.

This friction between upstaters who support and oppose fracking is on vivid display in Tompkins County, home to the city of Ithaca, one of the only growth hubs in a region marked by poverty. Ithaca has insulated itself from its neighbors’ economic problems with the help of its 25,000 college students. Yet like the conservative farming communities that border Tompkins County, Ithaca sits atop 500 trillion cubic feet of natural gas.

Tompkins County discovered the potential mortgage and insurance pitfalls of hydrofracking after it formed a task force last winter to consider the impact of gas drilling.

At Chock’s request, Gregory May, the vice president of residential mortgage lending at Tompkins Trust Company, began digging into the assessment and valuation issues. His four-page report, issued in March, stunned county officials.

One problem he found: New York environmental regulations require a 100-foot setback between a drill and any dwelling. But the secondary mortgage market, including Fannie Mae, Freddie Mac and the State of New York Mortgage Agency, requires a 200-foot separation.

If a setback falls short of 200 feet, May wrote, a prospective buyer may not be able to get financing, and sellers may find fewer purchasers for their land.

Another problem: To qualify for title insurance, properties with gas leases in New York must not be used for any commercial purpose, have structures taller than 35 feet or store gas-drilling equipment on site.

If a property owner or a gas company that has leased the owner’s drilling rights violates those terms, May wrote, the title insurance on that land could be invalidated—blocking a homeowner from taking out a home-equity line of credit.

“The inability to sell loans to the national secondary market could potentially impact property values because of the lack of competitive mortgage financing available in the marketplace,” he wrote.

The Independent Oil and Gas Association of New York, which represents drillers, calls that fearmongering. Randy Hansen, a spokesperson for the group, said no permanent gas-drilling structures are taller than one story, and he believes 200-foot setbacks are standard on most New York leases.

“I think common sense needs to be brought to bear in interpreting these regulations,” Hansen said.

There is no way to easily check setbacks and other provisions, because drillers aren’t required to file the full terms of a lease publicly. Tompkins Trust Company’s law firm, however, says it has seen plenty of problems caused by lease requirements—and that homeowners affected by them are simply stuck.
“If the gas companies would simply terminate a homeowner’s lease on request, or release the surface rights, this wouldn’t be an issue,” said Randy Marcus, a partner at Barney, Grossman, Dubow, Marcus & Orkin, which specializes in real estate transactions and finance. “The gas companies are absolutely intractable. They want to hang onto these leases.”

The state mortgage agency declined to comment, saying it is reviewing the potential problems. But as lawmakers become aware of the issue, nearby landowners who want to tap into gas-lease revenue are becoming impatient.

Said Bradd Vickers, president of the nearby Chenango County Farm Bureau: “We have faith in the DEC.”

Susan Arbetter reports from the Capitol in Albany for Central New York’s PBS station, WCNY in Syracuse. She hosts a daily live radio show, “The Capitol Pressroom,” and produces “The Capitol Report,” broadcast daily on television across New York State.



Wednesday, April 20th, 2011
2:00 – 3:30 PM ET


Emily A. Collins, Assistant Clinical Professor of Law, University of Pittsburgh, Pittsburgh, PA
Michael Conley, Esq., Offit Kurman, Philadelphia, PA
Michael J. Naughton, Esq., Wilson Elser Moskowitz Edelman & Dicker LLP, NJ
Carl J. Pernicone, Esq., Wilson Elser Moskowitz Edelman & Dicker LLP, New York, NY
Radisav D. Vidic, Ph.D., P.E., William Kepler Whiteford Professor of Environmental Engineering and Chairman of the Department of Civil and Environmental Engineering at the Swanson School of Engineering, University of Pittsburgh, Pittsburg, PA

Agenda Topics to be covered:

Overview & Background of Hydrofracking & the Marcellus Shale 
Categories of Plaintiffs 
Theories of Liability: Statutory
Theories of Liability
Insurance Coverage Issues


Cost: $129, unlimited listeners. Includes 1 CLE for 1 listener (Additional CLE credits $25 each).

CLE Credit: 1.5-2.0 CLE credits, depending on state requirements.

Applications are being made to all CLE states as requested by attendees.

Speaker Bios:

Emily A. Collins, Assistant Clinical Professor of Law, University of Pittsburgh
Pittsburgh, PA

Emily Collins joined the Pitt Law Faculty in 2008 as a Clinical Assistant Professor and Supervising Attorney of the Environmental Law Clinic.   Professor Collins comes to Pitt Law from the Office of Public Interest Counsel of the Texas Commission on Environmental Quality, where she served as a state-employed public interest environmental attorney in the areas of water quality, water rights, air quality, solid waste disposal, low-level radioactive waste disposal, remediation, and wastewater rates.

Drawing on her public interest practice and education at the Pace Environmental Litigation Clinic and the Gallatin School of New York University, Professor Collins has designed an interdisciplinary clinic that teaches students to work effectively in cross-disciplinary teams that provide legal and technical assistance to groups and individuals with environmental and community health concerns in Western Pennsylvania.

Michael Conley, Esq., Offit Kurman
Philadelphia, PA

Mr. Conley is the Chair of the Firm’s new Insurance Recovery Group in its Philadelphia office and a Principal in the Labor & Employment and Litigation Department.

Mr. Conley’s broad legal experience includes insurance coverage litigation, labor and employment law and general litigation. He represents policyholders with claims against insurance companies. His insurance coverage law experience includes handling coverage actions on behalf of insureds relating to bad faith claims, defense obligations, law and ordinance exclusions, breach of health insurance contract, crime coverage, employment liability coverage and coverage for asbestos-related claims and environmental liability.

Mr. Conley’s commercial litigation experience includes representing clients in cases involving breach of contract, abuse of process, trademark infringement, unfair trade practices and collections. For companies facing labor and employment law claims, Mr. Conley has handled issues involving collective bargaining throughout the US with various unions; over 100 labor arbitrations; appearances before the NLRB; and successful defense of union certification elections.

Mr. Conley regularly counsels companies on a variety of business matters and his experience includes contract drafting and negotiations on behalf of US-based clients for work in US, Europe, Middle East, South America and India; business acquisitions; ICC Arbitrations in Europe; environmental law issues; business formation; and MSHA and OSHA matters.

Michael J. Naughton, Esq., Wilson Elser Moskowitz Edelman & Dicker LLP
New Jersey

Michael J. Naughton is a Partner in the New Jersey office and the chair of the firm’s Environmental & Energy Regulatory & Compliance Group. He has represented clients in hundreds of environmental regulatory and permitting matters involving federal and state environmental laws and regulations throughout the United States.

Michael has been representing corporations and individual clients in real estate transactions, environmental litigation and regulatory compliance matters for more than 27 years. He has litigated numerous environmental cases involving various claims, including natural resource damage claims throughout the United States. Michael maintains a national CERCLA practice and routinely appears before the U.S. Environmental Protection Agency, the New Jersey Department of Environmental Protection, New Jersey Office of Administrative Law and the New York Department of Environmental Conservation.

In addition, Michael also advises clients in brownfield cleanups and redevelopment of contaminated properties. This part of his legal practice focuses on matters of due diligence and contractual allocation of environmental risks in transactions, disclosure laws and obligations concerning environmental conditions on real property, securing environmental insurance products to protect the firm’s clients against cleanup cost overruns and pollution legal liability, permit requirements under state and federal regulatory laws.

He also has experience in the handling of energy and infrastructure projects, climate change and sustainability matters. Michael has the ability to represent clients engaged in or considering business ventures in emerging green energy fields such as solar, wind, geothermal, cogeneration, biofuels and biomass. He also has experience in many aspects of energy management. He interfaces with consultants involved in energy efficiency analysis, energy master planning, and procurement of energy and alternative energy sources. Also, as a sub-set of the firm’s environmental permitting services, he assists consultants and engineers in the performance evaluations of a facility’s greenhouse gas (GHG) profile.

Michael has been appointed as a Special Environmental Mediator for the United States Bankruptcy Court for the District of New Jersey. He has also served as a Director of the Environmental Law Section for the New Jersey State Bar. Michael is a frequent lecturer and has written extensively on environmental law and regulatory issues.

Carl J. Pernicone, Esq., Wilson Elser Moskowitz Edelman & Dicker LLP
New York, NY

Carl J. Pernicone is a Partner in the New York office and is a co-founder and Co-Chair of the firm’s Insurance Practice Team.  Carl focuses his practice in the area of insurance and reinsurance coverage issues arising in complex, high exposure matters.

Much of Carl’s work concentrates on coverage disputes arising from so-called “long-tail injury” claims―such as those involving asbestos, lead, silica, workplace chemical exposure, and environmental liability.  More recently, he has become involved in addressing the coverage implications in the emerging area of Climate Change liability.

For more than two decades, Carl has represented insurers across the country as counsel of record in complex, high exposure suits in state and federal courts. In addition, he has extensive experience in analyzing coverage; issuing coverage opinions; preparing reservation of rights and disclaimer letters; drafting policy wording; and drafting insurance coverage settlement agreements policy “buyback” agreements. Carl also regularly lectures and writes on topical coverage decisions and emerging coverage issues. In addition, he manages the firm’s National Attorney Training program and chairs its Associate Professional Training and Development Committee.

Carl has been named to SuperLawyers’ Magazine’s 2009 and 2010 lists of the top Insurance Practices attorneys in the Metro New York area.

Radisav D. Vidic, Ph.D., P.E., William Kepler Whiteford Professor of Environmental Engineering and Chairman of the Department of Civil and Environmental Engineering at the Swanson School of Engineering, University of Pittsburgh
Pittsburg, PA

Dr. Vidic holds a BS in Civil Engineering from the University of Belgrade (1987) and received his graduate education in Civil and Environmental Engineering from the University of Illinois (M.S., 1989) and University of Cincinnati (Ph.D., 1992). His research efforts focus on advancing the applications of surface science by providing fundamental understanding of molecular-level interactions at interfaces, development of novel physical/chemical water treatment technologies, water management for Marcellus shale development, and reuse of impaired waters for cooling systems in coal-fired power plants. Dr. Vidic published over 150 journal papers and conference proceedings on these topics. He received 2000 Professional Research Award from the Pennsylvania Water Environment Federation for his research accomplishments and dedication to the profession, was a Fulbright Scholar in 2003/04 and a was elected by the Pittsburgh section of American Society of Civil Engineers as 2008 Professor of the Year. In February 2011, he was selected by the Pittsburgh Post Gazette as one of the top 10 people shaping the Marcellus shale debate in Pennsylvania.

Enbridge denies responsibility for oil spill | Michigan Messenger

Enbridge denies responsibility for oil spill | Michigan Messenger.

Enbridge denies responsibility for oil spill

Refuses to pay some claims of property damage, business loss, health problems
By Eartha Jane Melzer | 01.31.11 | 8:22 am

Despite public promises to compensate residents for losses associated with the summer oil spill, in Calhoun county court Enbridge is arguing that it is not legally liable for damages from the spill.

Last July a pipeline rupture on Enbridge’s 6B pipeline spilled an estimated million gallons of Canadian tar sands crude into the Kalamazoo River system. The oil traveled 30 miles down the rain-swollen river, coating the floodplain.

Officials declared a state of emergency, recommended evacuation because of unsafe levels of benzene in the air, and closed the Kalamazoo River to all activity by the public.

In numerous public statements Enbridge CEO Pat Daniels apologized for the spill and promised to take responsibility for the cleanup and address the needs of the affected people and businesses.

But six months after the spill, the river remains closed and some residents have not been able to get compensation through the claims process set up by the company.

Attorney Bill Mayhall represents 10 households in Marshall and Battle Creek that were not able to find satisfactory arrangements with the pipeline company for property damages and health issues such as headaches, nausea, vomiting, and respiratory issues.

These clients are accusing Enbridge of nuisance and negligence for failing to adequately maintain its pipeline and are seeking damages in Calhoun Circuit Court.

Enbridge is fighting the claims. The company has retained Dickinson Wright attorneys Kathleen Lang and Edward Pappas — the same team that is defending Dow Chemical against a class action suit over dioxin contamination in the Saginaw River watershed — and its answer to the legal claims sounds very different from the friendly promises offered by Daniels at community forums.

In the days after the spill Enbridge representatives went door to door promising that they would pay for spill damages, Mayhall said.

“Now they want us to prove that they are responsible for the spill.”

Enbridge argues that it cannot be held liable for the oil spill because it has followed all relevant laws, regulations and industry standards and the damage was not foreseeable.

The company also argues that the charges against it are improper “because federal, state and/or local authorities and agencies have mandated, directed, approved and/or ratified the alleged actions or omissions.”

And though Enbridge repeatedly told residents it would pay all legitimate expenses, in filings with the Calhoun court the company says:

“The statements at issue, that were made in Defendants’ press releases and brochure, were mere expressions of intention, not offers.”

The owners of the Play Care Learning Center in Marshall are suing Enbridge for interfering with their daycare business, which was located a half mile from the spill site.

Play Care, represented attorney Donnelly Hadden, says that they were forced to close their business when parents pulled their kids out of care because of the air pollution from the spill.

Play Care argues that Enbridge failed to maintain its pipeline and failed to adequately protect them against a long list of chemicals related to the contamination.

In an answer to this lawsuit Enbridge argues that the day care center can’t know what chemicals it was exposed to because no one knows what chemicals were released during the oil spill.

“Defendants state that different types of oil contain different constituents and substances in varying quantities and that the investigation of the nature and extent of the crude oil discharged is ongoing,” the response said.

“It is time for Enbridge to state in court if they really meant what they said to those injured by the spill,” said Mayhall, “or whether their statements to pay legitimate damages were simply a public relations ploy to calm community anger.”

Enbridge Spokeswoman Terri Larson said that the company “remains committed to paying all non-fraudulent claims that are directly related to the incident.”

A schedule for the cases is expected to be set at a conference on March 7.


Napoli Bern Ripka & Associates, LLP Views Cabot Oil’s Use Of DEP Consent Order As Improper

Napoli Bern Ripka & Associates, LLP Views Cabot Oil’s Use Of DEP Consent Order As Improper.

Cabot and its attorneys have attempted to use a consent order entered with the Pennsylvania Department of Environmental Protection (DEP) to allegedly mislead their clients into waiving their rights to continue the litigation.