Charges Against Driller Raising Industry Concern

September 17, 2013
The Legal Intelligencer

Legal Intelligencer (September 17, 2013) - Manko, Gold, Katcher & Fox partner Todd D. Kantorczyk commented on the recent criminal charges filed by state Attorney General Kathleen Kane against Exxon Mobil subsidiary XTO Energy Inc. for the September 17 edition of the Legal Intelligencer.  Excerpts are below.

...Similarly, Todd D. Kantorczyk, an environmental lawyer with Bala Cynwyd, Pa.-based Manko, Gold, Katcher & Fox, said the charges against XTO are likely to raise concern beyond the oil and gas industry to any sector whose activities have environmental effects.

While it's not unheard of for criminal and civil charges to be filed concurrently, such as in the case of the Deepwater Horizon oil spill, it is unusual for criminal charges to come after the civil matters have been resolved, Kantorczyk said.

"What you have here is a situation, as best as I can understand it, where you had an operator that felt it had essentially resolved its civil liability issue associated with some incidents that happened a couple of years ago and, notwithstanding that, you have some criminal charges filed," Kantorczyk said. "That obviously is of concern to folks we represent because, unfortunately, some of them have had to address some civil liability issues as the [Marcellus Shale] play has matured."

Like Rader, Kantorczyk said the concern for his clients is how to know when a matter is truly closed.

The looming specter of criminal charges following the resolution of civil liability issues could make it difficult for companies to move on after an incident, Kantorczyk said.

Typically, after an environmental incident occurs, a gas company will "try to establish sort of a working relationship with the public and with DEP and say, 'We can always improve our practices,'" Kantorczyk said, but added that the threat of criminal sanctions complicates that process.

"You sort of move forward, you're continuing to go and then, oh by the way, you may be subject to a pretty hefty criminal fine," Kantorczyk said.

According to Kantorczyk, where clients may have previously breathed a sigh of relief after managing to avoid criminal charges during a lengthy civil litigation process, the XTO case may now give them pause. 

Kantorczyk said typical civil settlements contain disclaimers expressly stating that any criminal liability issues are not covered under the agreement, but that language is often considered to be "boilerplate." 

In light of the charges against XTO, however, clients may need to start taking those disclaimers more seriously, Kantorczyk said.

...Kantorczyk agreed but said the XTO matter could potentially change the way clients approach civil litigation when certain incidents do occur. 

Where before, clients may have believed criminal sanctions were reserved for only the most egregious incidents, the XTO case has made the possibility slightly less remote, Kantorczyk said.

With that in mind, it may be wise in some cases to advise clients to engage the DEP and the Attorney General's Office early on in an effort to resolve both their civil and criminal liability as comprehensively as possible, Kantorczyk said.

"You want everybody in the room who has some sort of say over this," Kantorczyk said.

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