Due Diligence in Sensitive Areas: How to Facilitate Project Authorization and Minimize Litigation Risks
Brett A. Sumner
Fulbright & Jaworski L.L.P., Denver, CO
The often politically charged atmosphere in which oil and gas companies must operate in the Rocky Mountains and other onshore regions in the United States often results in agencies delaying authorization for exploration and development projects, particularly those that fall within sensitive areas. These costly delays are compounded by legal challenges, or even just threats of legal challenges, brought by environmental organizations and anti-industry groups.
In order to avoid or significantly reduce these delays, technical specialists within the industry, such as geologists, geophysical seismic specialists, petroleum engineers, and landmen, must play a proactive role in performing due diligence for projects in sensitive areas. Just as a company must understand the underlying geology of a prospect, the company must also understand the regulatory and legal landscapes of the overlying surface. Specifically, these specialists must work closely with staff of state and/or federal agencies to resolve concerns and build the agency administrative record that will support the agency’s decision to authorize a project. In addition, this proactive involvement, when combined with legal counseling, can substantially facilitate faster project authorization and also minimize a company’s litigation risk with respect to reducing the chances that a court may halt a project pending resolution of any legal challenge filed, or even issue an adverse ruling against the project.
This presentation will provide a brief overview of the legal and regulatory landscapes that a company must understand when seeking to perform an exploration or development project in sensitive areas. Strategies will be discussed that companies and technical specialists can employ with applicable state or federal agencies to build a legally sufficient administrative record that will (1) facilitate efficient project approval, (2) support authorization for the project, and (3) minimize litigation risk in the event a legal challenge is filed against the project.
AAPG Search and Discovery Article #90092©2009 AAPG Rocky Mountain Section, July 9-11, 2008, Denver, Colorado