In light of the adverse effects the storm, floods and tornadoes will have on oil and gas production, transportation and processing operations, we offer several bits of advice:

Force majeure

Winds and floods are among the very reasons for the seldom-invoked force majeure provisions of your oil and gas leases, operating agreements, transportation agreements and other contracts. If your operations are affected by the storm, study your contracts and be mindful of what you will need to do and when in order to invoke the protections force majeure clauses offer.

Environmental concerns. Special thanks to environmental lawyer Cindy Bishop

• Debris from a declared disaster – Request approval from Texas Commission on Environmental Quality (TCEQ Form 20660) so you can temporarily stockpile debris on-site to avoid classification of the debris as a solid waste. (We are NOT suggesting that you submit this form without competent legal advice.)
• Did shutting down your facility cause unauthorized air emissions in excess of the reportable quantity?  Normally, notice must be given to the regional TCEQ office at least 10 days before the shutdown, but TCEQ waives this requirement if the shutdown is related to a hurricane.  Regardless, a final report must be provided to TCEQ within two weeks after startup.
• Repairs to equipment that is covered by an air permit may require notice to the TCEQ regional office within 30 days of commencement of the repairs.
• If your wastewater treatment plant is damaged, you may not need a permit amendment or authorization to repair it.
• Unauthorized discharges to Texas waters as a result of an act of God are not considered violations by TCEQ; however, TCEQ requires notice of an accidental discharge or spill resulting from a hurricane as soon as it is safe and feasible to report after discovery of the release.

Write it down

It is generally good practice to document for your files the existence of any force majeure situation or any impact on the environment from releases or damage resulting from the hurricane.  Contemporaneous documentation prevents confusion in a subsequent dispute with a counter-party (your lessor, for example) or TCEQ inspection.

Insurance claims. This one is time sensitive!

Texas House Bill 1774 governs “force of nature”-related insurance claims and will go into effect on September 1.The Bill alters notice requirements and potential recovery available on insurance claims and lawsuits asserted after September 1, 2017.

The Bill does not affect claims covered through the federal government’s National Flood Insurance Program and the Texas Windstorm Insurance Association, which largely provides insurance coverage in coastal areas. If you anticipate bringing a new claim you may want to check your current policies. And consult counsel if you have a prior unresolved force-of-nature claim and have not filed suit.

Media coverage of the law has been confusing. Here is a Gray Reed legal alert  explaining it.

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