Settlement of an Oil Pipeline Leak with Contaminated Residential Property: A Case Study

  • June 21, 1999
  • • Written by: Robert A. Simons 

Summer 1999, Vol 24, No 2

Abstract: When oil pipeline leaks occur over a long period of time and a plume of petroleum product infiltrates the groundwater, it may cause contamination to drinking water wells nearby. Once this is detected, property values of affected residences can decrease markedly. This case study quantifies the price discounts in a rural Ohio neighborhood of about 100 homes. In addition to offering to buy the affected homes, the pipeline owner set forth several market- supporting inducements to other property owners in the neighborhood who wished to stay. This study also estimates how much the negotiated settlement package affects the sales price.