Legacy Lawsuits and Oilfield Contamination

A legacy lawsuit refers to a lawsuit by a landowner claiming that oil and gas operations, often many decades ago, caused the property to become polluted and contaminated with hydrocarbons, produced water and other materials used in the exploration and production of oil and gas. These suits typically name every operator who ever worked at the site as defendants, regardless of when those operations took place. Legislation was enacted to attempt to balance the rights of landowners with the requirement to clean up sites. However, it has not proven effective at accomplishing that goal. These suits can cost millions and millions, not just in judgments, but to defend as the cost of securing expert witnesses often highly exceeds what one expects in a standard lawsuit. Many insurers refuse to defend these claims, claiming that the pollution exclusion in the policies precludes defense and indemnity. As such, part of handling such claims for operators, lessees, etc., is securing a review of the available insurers and making demand for defense and indemnity. There may be avenues for coverage, at least for the defense of the claims, and it is important to evaluate those avenues as soon as possible.