Landowners can be liable for clean up of pollution from a drilling /fracking operation – and get stuck with the bill when the fracker skips. So add that to the list of contingent liabilities that a landowner faces: mortgage default, mechanics liens, tax liens, sue the operator to clean up the mess and then get the bill for the fracking clean up :
“Congress enacted the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”, also known as “Superfund”) in 1980 to help clean up sites that have been contaminated with hazardous substances. The government can clean the contaminated sites and then use CERCLA to force the parties responsible for the contamination to pay back the costs.
CERCLA can require payment from a very broad range of “potentially responsible parties,” including the owner or operator of a “facility” and the person who owned or operated a facility during which time the disposal of a hazardous substance occurred.(1) The term “facility” is defined as “any site or area where a hazardous substance has . . .come to be located”.(2) This has been interpreted by courts to include a the whole area around the contamination that had the same general function (3)—probably at least an entire well pad in the case of an oil and gas operation.
42 U.S.C. § 9601(14) exempts oil and gas drilling from regulation under CERCLA. It does not, however, exempt any materials that have been mixed with petroleum or natural gas, waste products from natural gas drilling operations, or chemicals brought in for use in such operations. See, for example, United States v. Gurley, 43 F.3d 1188, 1199 (8th Cir.1994)
If the pollution on the site qualifies for CERCLA, the government could come in and clean it up. Then it would look for potentially responsible parties to pay them back under CERCLA. Even though the landowner doesn’t handle the (fracking) chemicals or drill the well, they are the “owner” of an “area where a hazardous substance has . . . come to be located”. That is enough to make them a potentially responsible party under CERCLA.
CERCLA provides for strict liability for any potentially responsible party, without regard to who actually caused the contamination. (4) CERCLA also provides that all of the potentially responsible parties are held jointly and severally liable for the contamination—this means that the government can put the whole bill on any one responsible party and leave it to them to settle the allocation amongst the other parties. (5) This means that if the companies that caused the contamination have been dissolved (gone bankrupt, etc.), the landowner could be the only potentially responsible party left, and they would have to pay the entire bill. ”
The contingent liability to clean up pollution is not something that can be avoided in the lease. Since, by definition, the landowner would not become responsible unless the driller defaulted – at which point the lease with the driller would not matter – the landowner is left holding the bag.
(1) 42 U.S.C. § 9607(a)(1) and (2)
(2) 42 U.S.C. § 9601(9)(B)
(3) See United States v. Twp. of Brighton, 153 F.3d 307, 312-13 (6th Cir.1998).
(4) State of N.Y. v. Shore Realty Corp., 759 F.2d 1032, 1042 (2d Cir.1985)