“Energy Industry Braces For Legal Headaches Post-Harvey”
With Tropical Storm Harvey still drenching Houston and the Texas Gulf Coast, energy companies are just starting to gauge the potential legal fallout from the storm’s direct hit on the hub of the North American oil and gas industry, but experts say environmental and contractual liability will likely be major flashpoints once the deluge ends.
There are many significant contractual obligations that generally aren’t covered by a force majeure provision, said Hunter White, who chairs Thompson & Knight LLP’s energy industry group.
“It’s customary to exclude from force majeure the payment of money, for example,” White said. “The mere effect that your office is closed doesn’t necessarily provide a basis to claim force majeure.”
He also points out that most force majeure provisions protect only one party: the service provider.
“The reason they’re not performing is something that’s beyond their control,” White said. “On the other hand, the customer isn’t getting any benefit.”