Law360 Guest Article: Fracking — There's Coverage For That

06/28/2013


In June 2013, Illinois passed the nation’s strictest regulations for hydraulic fracturing, a process whereby high-pressure mixtures of water, sand or gravel and chemicals are used to crack underground rock formations to release oil and natural gas. Illinois is one of many states imposing more restrictions over this controversial technology.

While fracking has been around for years, the recent, significant increase in deployment has led many environmental groups and governmental agencies to put a microscope on the practice. Earlier this year, a coalition of environmental groups sued the Bureau of Land Management over its decision to auction off public mineral rights in California. In April, the court struck a major blow against fracking, ruling that the bureau was wrong to allow energy companies to drill on the public land without first considering the environmental impacts.

The significant increase in fracking — along with the substantial increase in government investigations and civil litigation arising from fracking — brings fracking coverage issues to the forefront. Companies involved in fracking — whether directly or indirectly — must closely analyze what liabilities may arise out of fracking and the different insurance policies needed to protect them from these potential liabilities (while considering the coverage hurdles that may arise in the event of a claim).

Excerpted from Law360, June 28, 2013. To view full article, click here (subscription required).

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