Two young children in Pennsylvania were banned from talking about fracking for the rest of their lives under a gag order imposed under a settlement reached by their parents with a leading oil and gas company.

The sweeping gag order was imposed under a $750,000 settlement between the Hallowich family and Range Resources Corp, a leading oil and gas driller. It provoked outrage on Monday among environmental campaigners and free speech advocates.

The settlement, reached in 2011 but unsealed only last week, barred the Hallowichs' son and daughter, who were then aged 10 and seven, from ever discussing fracking or the Marcellus Shale, a leading producer in America's shale gas boom.

The Hallowich family had earlier accused oil and gas companies of destroying their 10-acre farm in Mount Pleasant, Pennsylvania and putting their children's health in danger. Their property was adjacent to major industrial operations: four gas wells, gas compressor stations, and a waste water pond, which the Hallowich family said contaminated their water supply and caused burning eyes, sore throats and headaches.

Gag orders – on adults – are typical in settlements reached between oil and gas operators and residents in the heart of shale gas boom in Pennsylvania. But the company lawyer's insistence on extending the lifetime gag order to the Hallowichs' children gave even the judge pause, according to the court documents.

The family gag order was a condition of the settlement. The couple told the court they agreed because they wanted to move to a new home away from the gas fields, and to raise their children in a safer environment. "We need to get the children out of there for their health and safety," the children's mother, Stephanie Hallowich, told the court.

She was still troubled by the gag order, however. "My concern is that they're minors. I'm not quite sure I fully understand. We know we're signing for silence for ever but how is this taking away our children's rights being minors now? I mean my daughter is turning seven today, my son is 10."

The children's father, Chris Hallowich, went on to tell the court it might be difficult to ensure the children's absolute silence on fracking – given that their ages and that the family lives in the middle of a shale gas boom.

"They're going to be among other children that are children of people within this industry and they're going to be around it every day of their life, that if they in turn say one of the illegal words when they're outside of our guardianship we're going to have difficulty controlling that," he said. "We can tell them, they can not say this, they can not say that, but if on the playground....."

The court transcripts were released in response to an open records request by the Pittsburgh Post Gazette, which first reported on the children's lifetime gag order. The newspaper has been fighting for the release of all documents in the Hallowich settlement.

Campaigners say the secrecy has helped the industry resist more stringent environmental and health controls – by burying evidence of water contamination and health problems associated with natural gas operations. The Hallowichs' lawyer, Peter Villari, told the court he had never seen a gag order imposed on children in his 30 years of practicing law, according to the released transcript.

During the proceedings, the attorney representing Range Resources, James Swetz, reaffirmed the company sought the gag order on the children. "I guess our position is it does apply to the whole family. We would certainly enforce it," he told the court.

Williams Gas/Laurel Mountain Midstream and MarkWest Energy were also defendants in the case.

However, once that gag order came to light, two years after the August 2011 proceedings, the company told reporters it did not agree with Swetz's comments. "We don't believe the settlement applies to children," a Range Resources spokesman told the Gazette. He went on to tell the paper that there was no evidence that the Hallowich family was affected by exposure to gas development.

• This story was amended on 5 August to include the name of James Swetz, the attorney for Range Resources.