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Contamination From Oil and Gas Production Who Pays For Cleanup?

Richard J. Denney, Jeanmarie B. Tade and Cynthia J. Thomson, Proceedings of 36th Annual Rocky Mountain Mineral Law Institute (1990)

Most, if not all, oil and gas well sites will be contaminated with crude petroleum products like fuel and lubricating oil. Site [6-3] owners and governmental authorities are beginning to clean up these contaminated properties and are trying to get the lessees of the sites or the unit operators to pay for the cleanup. This paper discusses the liability of such lessees and unit operators under applicable statutes, common law, and oilfield contracts.

The federal act imposing the broadest liability for cleanup of hazardous materials is the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA).1 Congress has exempted from the Act's definition of hazardous waste: petroleum, including crude oil or any fraction thereof which is not otherwise specifically listed or designated as a hazardous substance.2 This exclusion of petroleum from the definition of hazardous substance raises several major questions of interpretation. All petroleum naturally contains some substances (benzene, toluene, xylene, and lead) which are otherwise specifically listed, and therefore regulated as hazardous substances under CERCLA and other laws. If the presence of such naturally occurring substances negated the exemption, no petroleum would qualify under the exclusion. Assuming the result would be contrary to the intent of Congress, does the exemption apply only to petroleum th