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)
(5) J.V. Peters & Co. v. E.P.A., 767 F.2d 263 (6th Cir. 1985); U.S. v. ChemDyne Corp., 572 F. Supp. 802
surprise
are there leases that specify who’s responsible in case of contamination or damages from gas drilling? and can that put some landowners off the hook?
No. The problem arises when the operator defaults. When than happens, it does not matter what the lease says; the operator is gone; leaving the landowner on the hook to clean up the pollution.
I can see this being fair for the people who are also mineral right owners who willingly allowed drilling on their land. On the other hand, I can’t imagine any sense of fairness or liability for a property owner who said no all along, and the drillers went ahead and took his property, then contaminated it and then split.
On a slightly related note, there are thousands of ‘abandoned wells’ in PA, and shockingly enough, not one record of ownership or even affiliation can be found.
In Texas, looking through the TRRC website, the State actually budgets for ‘site clean up’ as part of it’s abandoned well program.
It is axiomatic that if something goes wrong, the operator will try to walk away from it. The first step is to put each well into a separate limited partnership or LLC so that the parent company is not exposed.
Why shouldn’t a land owner be sued for the multimillion dollar clean-up of their own land? If you allow a fracking operation onto your land you should be knowledgeable and responsible for anything that happens on your property. You should make sure that you get enough money for the gas to make a profit and also clean up the mess without loosing the profit. You don’t want to loose the farm because your stupid right?
That’s the point. It’s a crap shoot. If you lose, things can get complicated.
Are there any documented cases where a land owner who leased was actually ordered to pay for a clean up in the history of HF/HVHF? Seems like that would be public knowledge. Pro-Frackers will ask this same question Chip. Examples (with links) are always stronger than “ifs” or “could” as we all know when arguing a point with pro-gas folks. 🙂
Am not aware of any cases of CERCLA liabilities for landowners from shale gas pollution. However, that would fit the existing pattern: Landowners bear the brunt of clean-up for contaminations, spills, methane pollution. The driller does whatever they can to dodge those liabilities. The point is that if the problem is big enough, it could fall under CERCLA and when the driller skips, the “responsible” party will be the landowner.