Oil & Gas: Protecting Landowners as Foxes Take Over Henhouses

Oil & Gas: Protecting Landowners as Foxes Take Over Henhouses

Although oil and gas companies might whine otherwise, much of oil and gas activity directly involving landowners has been unregulated and therefore subject to few legal restrictions outside those included in landowners’ contracts.

For most landowners, this is a state regulation issue, though for some (in this era of interstate pipelines and other oil and gas infrastructure) federal rules apply. With the new presidential administration and the abrupt reversals in policy taken by federal regulatory agencies having jurisdiction over oil and gas related matters, landowners will have even less protection than before.

These concerns arise in oil and gas rights leasing, pipeline easements and sales of parcels used by companies for compression and other production and transportation purposes.

Government Regulations Favor the Industry

Companies often advise landowners that they should not worry about things such as noise levels, odor, lighting, leaks, pressure levels, explosion hazards and the like, because those issues are fully addressed by government regulations. Nothing could be further from the truth.

At the state level, much of the “regulation” imposed on oil and gas companies appears largely in the form of evolving “recommendations” and “best management practices.” Those are not easily enforceable either by the government, or by private parties through the courts. They are an aspirational standard.

At the federal level, active steps are being taken to dismantle the already modest level of oversight provided by agencies such as Federal Energy Regulatory Commission (FERC) and the U.S. Environmental Protection Agency (EPA). Those efforts seem to be moving more toward providing a “rubber stamp” for the industry rather than looking out for interests of the public, and certainly not the interests of landowners affected directly.

Clear Limits in Contracts Offer the Best Opportunity for Protection

The best protection a landowner can have is to include clear limitations and standards in their contracts, including leases, easements and deed reservations or restrictions. That is the only way the landowner can be protected from evolving industry-friendly standards.

All these issues – sound levels, light levels, odor, construction standards, emissions and the like — can be addressed in contracts between a landowner and the developer, operator or producer dealing directly with the landowner. Those contracts can “supersede” milk-toast, evolving and nebulous or completely missing regulations, and the uncertainties of changing political winds.

Landowners should not be bashful in demanding clear restrictive language in their agreements, nor in rejecting industry-proposed clauses that would attempt to supersede those contracts through conflicting, looser subsequent laws and regulations.

It is much better safe (with a private contract, enforceable in court) than sorry.


Alan D. Wenger is a lawyer with Harrington, Hoppe & Mitchell, Ltd. His practice areas include oil and gas law, business law, and real estate and land use. He can be reached at awenger@hhmlaw.com or at (330) 744-1111.