I’ve seen some discussion, but what is the liability of a mineral owner if an operator fails to plug a well or causes an environmental problem in Colorado? I’m looking to lease some inherited rights but it’s not enough to want me to accept any liability. I have no problem just ignoring the lease proposal.
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There are all kinds of hidden liabilities to health and property values. Really, in some ways it’s not worth it unless you live away from it; then it’s just a general nuisance. I know it can mess up your taxes. Requires more accounting forms. And it could well be a dry hole for whatever reason.
They can still drill without you signing a lease. Might as well negotiate your lease while you still can.
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In general, the operator and working interest owners are liable. They can get insurance to cover that aspect. You can specify in the lease language that you accept no liability for damages. Get an attorney to help with the proper wording.
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Thanks for taking the time to reply. Being new to this, I’m most interested in finding out what my long-term liability is when I sign a lease. I know operators have a lot of oversight, but I also know they sometimes go out of business. Could a mineral owner be held liable for problems, or for an operator walking away without properly terminating the well? Might be a dumb question, but I’m facing a lease deadline with nobody to talk to. I don’t live in the same state, so no lawyer around here will talk to me. There’s a lot to all this.
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Like MB says. Get it in the lease that you can assume no liability for anything at any time. Ever. From what I’ve seen the oil company lease bonuses barely cover the actual value of the land they tie up and have you betting on making a well to get that royalty oil. Don’t let them make you gamble with them. It may be a non-producer. Get it upfront.
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They can drill but they can’t make you gamble on a dry hole. Make it hurt.
The innocent landowner defense is pretty solid. Unless you are participating in the well, the liability of the landowner is minimal.
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You are participating as the lease owner.
No one involved is innocent. None of it would have happened without the lease agreement. You can assume several pollution and nuisance laws are being violated. Adjacent landowners can certainly sue.
This is not the general interpretation or application of oil and gas law, at least with respect to most states. Can you provide some context such as specific legislation or case law?
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You are not participating in the well merely by leasing. The CERCLA law is explicit about the “innocent landowner defense” Third Party Defenses/Innocent Landowners | US EPA
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No, I can only write in that landowner cannot be responsible for anything of any nature at any time by anyone. Forever. Operator will indemnify landowner and schedule landowner as named insured on an umbrella policy against any and all claims whatsoever. Forever. Any lapse in coverage voids any surface or mineral or right of way contract. Operator rep initial here and here. Take picture of signed agreement.
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I can show a jury otherwise. Who benefits
Again. I can show a jury otherwise
Use the oil company attorney. If there’s any problems you can let them fight it out.
There is follow-on liability like pollution and land value depreciation. Let them drill one well then if it comes in good you can make terms on second attempt.
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