Feature Story by JOHN F. MuLLeN aND KiM HOLLaeNDer
Insurance Coverage and Liability
ers who sold mineral rights and residents
in production areas brought civil claims
against operators, alleging damages under several factual scenarios.
Initially, these actions focused on allegations of contamination to surrounding
land, ground, and surface water. Suspected
causes of contamination include faulty
well-casings, improper drilling, and/or
improper disposal of fracking fluids. These
plaintiffs tend to live predominantly in rural areas with private water wells said to
be contaminated with fracking chemicals.
Meanwhile, other plaintiffs allege high
quantities of non-fluid substances in their
wells as a result of the fracking activity
that caused hazardous substances, such as
methane, to migrate into the wells.
Recently, plaintiffs and their attorneys
have pursued a variety of additional allegations of injury resulting from fracking. Some plaintiffs charge that fracking
results in air pollution and excess noise,
both with regard to the drilling process
itself and compression stations employed.
Hydraulic fracturing, commonly referred to as fracking, is a drilling pro- cess used in the extraction of underground oil or natural gas trapped in hard-to-reach shale rock formations deep within the earth. The process involves well construction, acquisition of source water, well stimulation
by hydraulic fracturing (using fluids that typically contain a variety of chemicals), and
Advances in horizontal drilling technology make significant shale gas formations
newly accessible for development. As a result, natural gas production in the U.S. is at its
highest level in more than 30 years.
The rise of fracking offers the potential for a significant economic boom to the areas
with major formations containing substantial amounts of natural gas, including states
such as North Dakota, Pennsylvania, Texas, Colorado, and Louisiana. However, it is not
without controversy. As the fracking industry grows, so too do media reports and governmental investigations regarding its perceived risks. It was only a matter of time before
litigation ensued, involving those both engaged in and allegedly impacted by such activity.
This current and anticipated litigation has and will increasingly impact the property
and casualty (P&C) insurance industry, raising numerous coverage and liability issues.
This article focuses on those coverage and liability issues brought on by fracking lawsuits.
is Fracking Causing
Tremors and Sinkholes?
During the end of 2011, a number of
actions were filed alleging far more serious consequences: that fracking activity
has given rise to earthquakes resulting in
property damage. These cases are likely
related to recent scientific studies suggesting that fracking may cause earthquakes in areas that previously experienced negligible seismic activity.
experts expect still more claims to
arise, including allegations that by wearing away limestone formations, fracking
leads to ground subsidence and sinkholes. In light of recent media investigations, other claims may arise regarding
the safety of pipelines required to transport the gas extracted from fracked wells.
Liability Suits Spreading
Numerous liability suits pertaining to fracking activities have already been filed in the
state and federal courts of Pennsylvania, Texas, Arkansas, and elsewhere. Property own-
Causes of Action
Causes of action in fracking lawsuits
have been asserted under common-law