The energy industry is not new to litigation risk. Oil, gas, and even renewable energy operations are risky ventures overall, but the challenging and unique nature of the industry makes lawsuits relatively commonplace, especially if companies are not careful. Below are some mistakes companies might make that can further increase the risk for litigation.
Not keeping up with changing regulations
Strict regulations surround the energy sector, particularly in oil and gas. With the state and federal governments taking more steps to limit greenhouse gas emissions, failing to keep up with new regulations can expose your energy company to compliance issues that may lead to litigation.
Lack of regular workplace safety inspections
Poor workplace safety conditions can expose energy companies to litigation risks. Whether in the oil and gas industry or the renewable energy sector, employees face potential workplace hazards. These can include:
- Explosions and fires
- Getting caught between heavy equipment or machinery
- Exposure to dangerous chemicals
Regular inspections and safety training help keep the company compliant with the Occupational Safety and Health Administration’s regulations and safety standards.
Ambiguous contract wording
Energy companies work with a large number of individuals, companies, and even government institutions. Vague contract wording can increase your risk of disputes that may end in litigation. These disputes can be over:
- Fulfillment responsibilities
- Financial commitments
- Royalty payments
- Quality standard compliance
Poor relationship with the locals
Oil and gas companies are not the only ones that can suffer from poor public perception. Even renewable energy companies can be at odds with the locals.
A poor public relations strategy often results in a poor relationship with the locals. In turn, this can make it harder for an energy company to expand operations, launch new initiatives and more. Poor public relationships may also affect stakeholder or investor confidence, which can also lead to legal trouble.
One mistake shouldn’t lead to another
Regardless of the reason behind the dispute, there is one mistake energy companies should avoid—that is failing to seek legal counsel as soon as possible.
When a dispute arises, it is best to consult with experienced energy litigation attorneys for advice on how to proceed. Even if your company is open to a settlement, working with a skilled legal team allows the company to take a more proactive approach and be ready if the dispute goes to trial.