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The Landowner, Water Pollution and Oil and Gas Operations

Concerns about water can be addressed in an oil and gas lease

By Paul R. Yagelski, Esq.

 

A landowner is about to enter into an oil and gas lease or a surface use agreement with an oil and gas company and wants to protect the water supply on his  property.  What can the landowner do?

The landowner should negotiate a provision into the oil and gas lease or the surface use agreement, which would provide for testing of the landowner’s water supply and remediation by the oil and gas company should there be a material adverse effect on the landowner’s water supply due to the oil and gas company’s operations.  If a provision cannot be negotiated to protect the landowner’s water supply, there is a fallback.  There is a state law, which has been enacted for the protection of private and public water supplies should they be damaged by oil and gas operations.

The state law provision provides that a well operator who affects a public or private water supply by pollution or diminution is to restore or replace the affected water supply with an alternate source of water adequate in quantity or quality for the purposes served by the supply.  The Department of Environmental Protection is tasked with the responsibility to ensure that the quality of a restored or replaced water supply meets the standards established under Pennsylvania’s Safe Drinking Water Act or is comparable to the quality of the water supply before it was affected by the operator if the water supply exceeded those standards.

A landowner or water purveyor suffering pollution or diminution of a water supply as the result of the drilling, alteration or operation of an oil and gas well may notify the Department of Environmental Protection and request that an investigation be conducted.  Within ten days of the notification, the Department of Environmental Protection is to investigate the claim and make a determination within 45 days following notification.  If the Department of Environmental Protection finds that the pollution or diminution was caused by drilling, alternation or operation activities or if it presumes the well operator responsible for the pollution, the Department of Environmental Protection is to issue orders to the well operator necessary to assure compliance with the protection of the water supply, including orders requiring temporary replacement of the water supply where it is determined that pollution or diminution may be of limited duration. 

In the case of an unconventional well, a/k/a a Marcellus well, the state law presumes that the well operator is responsible for the pollution of the water supply if the water supply is within 2,500 feet of the unconventional vertical well bore and the pollution occurred within 12 months of the latter of completion, drilling, stimulation or alteration of the unconventional well.  If the affected water supply is within the rebuttable presumption area and the rebuttable presumption applies, the operator is to provide a temporary water supply if the water user is without a readily available alternative source of water.  The temporary water supply that is provided is to be adequate in quantity and quality for the purposes served by the supply. 

Although there exists this presumption, this presumption is rebuttable, if the well operator affirmatively proves, in the case of an unconventional well, one of the following: (i) the pollution existed prior to the drilling, stimulation or alteration activity as determined by a pre-drilling or pre-alteration survey; (ii) the landowner or water purveyor refused to allow the operator access to conduct a pre-drilling or pre-alteration survey; (iii) the water supply is not within 2,500 feet of the unconventional vertical well bore; (iv) the pollution occurred more than 12 months after completion of drilling or alteration activities; or (v) the pollution occurred as a result of a cause other than the drilling or alteration activity.

Please note that the landowner may receive written notice, usually in the form of a letter, indicating that the presumption may be void if the landowner refuses to allow the operator access to conduct a pre-drilling or pre-alteration survey.  Accordingly, if the landowner receives written notice that the oil and gas company wishes to conduct a pre-drilling or pre-alteration survey on the landowner’s land, if the landowner does not provide access to do so, the presumption may be void.  Accordingly, serious consideration should be given by the landowner to allowing the operator to come onto the landowner’s land to conduct a pre-drilling or pre-alteration survey.

Although there is state law providing for the protection of water supplies on the landowner’s land, if the landowner is about to enter into a lease or surface use agreement, provision can be made for better protection than what is provided under the state statute. For example, the state statute provides that the Department of Environmental Protection is to investigate a claim and make a determination within 45 days following notification. What happens, however, if in the meantime, the landowner’s water supply is adversely affected?  A water supply protection provision can be added to the oil and gas lease or to a surface use agreement that would require immediate investigation by the oil and gas company upon written notice from the landowner that the landowner’s water supply has been adversely affected by the oil and gas company’s activities.  The water supply protection provision can also require that the oil and gas company would be required to substitute water of a quality that is as good as or better than the landowner’s previous water supply or at least of the quality required by Pennsylvania’s Safe Drinking Water Act.  Other provisions can be built into the water supply protection paragraph that increases the protection to the landowner.

If you are about to enter into an oil and gas lease or a surface use agreement, you should contact an attorney who is proficient in oil and gas law.  This is one area that can be addressed by an oil and gas attorney.

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