110512_tompkins_trust0001.pdf (application/pdf Object)

May 19, 2011

110512_tompkins_trust0001.pdf (application/pdf Object).

Filed under Economics, Leasing Issues

CS Report of Gas Lease Termination Workshop

May 19, 2011

May 18, 2011

Landowners dispute gas lease extensions

Seminar details tactics energy companies use to extend leases beyond original durations

By CATHERINE WILDE
Staff Reporter
cwilde@cortlandstandard.net
Energy companies are employing more and more tactics to extend expiring natural gas leases, landowners learned at an informational meeting Tuesday.
County Clerk Elizabeth Larkin told a crowd of about 60 that she is rejecting hundreds of lease extension documents gas companies are attempting to file, because they lack the landowners’ signatures.
Whether the sought after extensions are valid, remains to be seen as many landowners are arguing that they do not want their leases extended.
Larkin said she will continue to reject the extensions.
“If you’re going to convey an interest in real property, real property law says that the landowner has to acknowledge the lease, has to sign the lease,” Larkin said.
But the lease extensions continue to flow into the office without the landowners’ signatures.
Larkin was part of a three-member informational panel at the Cortland County Office Building auditorium. Onondaga Nation Lawyer Joe Heath and a Virgil landowner Mike Bosetti, who successfully terminated his lease, also sat on the panel.
Some residents were surprised by what they heard, unaware until the meeting that their gas leases may not simply expire at the end of the term, and may actually provide loopholes where landowners are trapped into leases they wish to end.
One such loophole occurs when residents, seeking to terminate their leases, contact the gas companies and actually open a window for the gas companies to then extend their leases.
According to the state general obligations law, which governs how gas leases are terminated, the landowner must notify all gas companies with an interest in the land, within 30 days after a lease termination date, calling for the lease to end. But doing so opens a 30-day window for the gas company to file an affidavit in the county clerk’s office stating the lease is not terminated.
The news that a lease could be so easily extended by gas companies, came as a surprise to Homer resident Patricia Martinez de la Vega Mansilla.
Mansilla said she is trying to get out of a lease on her property that she recently acquired. Since Mansilla is not the original landowner, she had to contact the gas company with a copy of her deed to show she is the person to contact regarding the lease.
Mansilla has since responded to a “force majeure” letter to contest the company’s claim the lease is extended, but now she worries the lease will not end in December as she hopes.
“I didn’t realize they could file an affidavit with no conditions, to automatically extend the lease,” Mansilla said.
Mansilla will wait until the lease ends at the end of the year and hopes to have a legal opinion by then about whether she should send the letter within the 30-day timeframe.
Heath is awaiting an opinion from the state Attorney General about the best way to end gas leases.
“We are trying to get an opinion from the Attorney General whether it is safe to do nothing when the lease is over, or whether or not they have to take that risk,” Heath said after the meeting.
Heath detailed a list of what he calls fraudulent practices on the part of gas companies that he has brought to the attention of the state Attorney General in an attempt to get laws written that would protect landowners.
Heath pointed to the tactics gas company representatives, known as ‘landmen’, use when trying to get leases signed. For example, landmen will deny that the process of hydraulic fracturing, the method of injecting high quantities of chemically-treated water into the shale to extract gas, can increase the radioactivity of groundwater, even though that has been documented to occur, he said.
Heath also pointed to force majeure letters which the gas companies are sending out to landowners to effectively extend their leases, saying these letters are, in the opinion of many lawyers, not valid.
The force majeure letters contend that the moratorium placed on high volume hydraulic fracturing last year and endorsed by Gov. Andrew Cuomo this year, was a force outside the industry’s control that effectively ceased gas exploration. Therefore, the companies argue for a right to extend leases beyond their agreed upon termination dates.
Most in the audience Tuesday had received such letters.
Binghamton residents Jack and Sonja Stanbro, who own leased land in Cortland County, left Tuesday’s seminar planning to send a reply contesting the force majeure letter they received.
“As far as I’m concerned, we don’t have a lease because they never paid us,” Jack Stanbro said, adding Chesapeake promised him $3,000 an acre before the moratorium went into effect but he was never paid.
The Stanbros said if sending the letter through the proper channels does not end the lease, they may have to seek legal counsel.
Town of Caroline resident Edie Spaulding came to the seminar to learn more about her options for ending a lease. Spaulding said she has received a delay rental check, a check that comes close to the lease termination date that, when cashed, automatically extends the lease.
The sum is considerable, over $4,000, she said.
“Those checks will not be cashed,” Spaulding said, adding she wants “out of” the lease because her property is in the Ithaca watershed.
Heath said landowners must respond to force majeure letters, and he urges people to understand their leases are “complicated legal documents that don’t necessarily end when the date says they do.”
Heath directed people to the website for the local group Gas Drilling Awareness for Cortland County: https://gdacc.wordpress.com, which defines examples of standard lease terminology and also provides sample letters for people to use when responding to gas companies.
Bosetti said he was surprised to hear of so many different issues landowners have been faced with.

http://cortlandstandard.net/articles/05182011n.html

Filed under Leasing Issues Tagged with , , ,

Forced Pooling: When Landowners Can’t Say No to Drilling – ProPublica

May 19, 2011

Forced Pooling: When Landowners Can’t Say No to Drilling – ProPublica.

Filed under Leasing Issues, Water

The Marcellus Effect: If you don’t lease we will cut you out of production…. forever

May 9, 2011

The Marcellus Effect: If you don’t lease we will cut you out of production…. forever.

Filed under Leasing Issues Tagged with , , ,

Landowners join together to prepare for hydrofracking – Utica, NY – The Observer-Dispatch, Utica, New York

May 8, 2011 2 Comments

Landowners join together to prepare for hydrofracking – Utica, NY – The Observer-Dispatch, Utica, New York.

Landowners join together to prepare for hydrofracking

At issue: Properties in Oneida and Madison counties

Featured Business »
By BRYON ACKERMAN
Observer-Dispatch
Posted Apr 21, 2011 @ 06:41 PM
Last update Apr 21, 2011 @ 10:51 PM
Print Comment

Landowners representing more than 10,000 acres in Oneida and Madison counties have formed a partnership with a goal of allowing hydraulic fracturing to safely occur on their property.

Their land includes sections of Oneida County south of Route 5 — property in municipalities such as New Hartford, Paris, Marshall, Sangerfield, Vernon, Vernon Center and Augusta, said Brymer Humphreys, the administrator of the group.

Humphreys, a New Hartford farmer and town Planning Board member, said the landowners in the partnership are in favor of hydraulic fracturing, but they want to contract with a natural gas company that will work with them to address issues such as whether well water would be impacted.

“We believe it’s something that’s going to happen in New York, and we want to have the best control of how it’s done as we can,” Humphreys said of hydrofracking. “We’re concerned about being able to get a reliable company – have some inspections of their proceedings and have them provide outlines as far as what they have to do to protect us as landowners and our neighbors.”

Opponents of hydrofracking, however, say there is no way to guarantee it can be done safely. Issues have been raised with potential effects such as decreased property values, polluted drinking water and damaged roads from the heavy traffic involved with the drilling.

A statewide moratorium on hydrofracking is in place until at least July 1, but the state Department of Environmental Conservation review process will take longer than that to complete, DEC spokesman Michael Bopp said. No hydrofracking permits will be issued in the state until the DEC study process is done, he said.

High-volume, horizontal hydrofracking involves mixing chemicals with millions of gallons of water and pumping the mixture into wells to create fractures in rock formations to allow natural gas to be harvested.

Southern Oneida County is located above part of the Marcellus Shale, a large rock formation under the surface of the earth that has been targeted for hydrofracking in New York and other states such as Pennsylvania.

The part of the county south of Route 5 also is above the Utica Shale, which has the potential for natural gas but has not been tested for hydrofracking, said Jeff Miller, an educator at Cornell Cooperative Extension of Oneida County.

The partnership

The landowners’ group, which is called the Pine Energy Madison and Oneida Partnership, has contracted with a company called Pine Energy Management, which will represent the landowners in negotiations with natural gas drilling companies, Humphreys said.

Most people in the partnership have wells, so they’re concerned too about whether there would be effects on water and the environment, Humphreys said. That’s part of the reason for forming the group, he said.

No natural gas companies have directly approached residents in Oneida County about leases, but landowners – such as those who have signed on with Pine Energy Management – have been talking with go-between people who would help them with signing a lease, Miller said.

By forming a larger group of landowners in Oneida and Madison counties, the partnership will have greater negotiating power with natural gas companies, said Mark Wagner, the co-owner of Pine Energy Management.

The company is based in Colorado and is planning on opening an office in the Oneida-Vernon area, said Wagner, who is a petroleum engineer with 31 years of experience in the industry.

The goal is to allow the industry to move into the area for drilling, but to do so in a way that landowners are comfortable with, Wagner said. The company will help in negotiations, develop drilling plans, make sure concerns such as water and road-use are addressed and provide oversight of the drilling, he said.

“We work at the pleasure of the landowners – not the energy companies,” Wagner said.

Carleton Corey, owner of The Mum Farm on Red Hill Road in New Hartford, has concerns about hydrofracking — including whether water would be impacted.

He’s glad the landowners are working together because if they’re going to allow the practice, they should at least make sure it’s done right, he said.

So much contradictory information exists that he thinks landowners should get their water tested now, so they can measure if there are changes if drilling begins, he said.

“I don’t quite know what to believe,” he said.

Preparing and learning

The town of New Hartford has been looking into the issue of hydrofracking and is in the process of developing legislation for ordinances to regulate the practice, town Supervisor Patrick Tyksinski said.

If the town decides to allow hydrofracking, very strict rules would have to be put in place, he said. Tyksinski would consider instituting a town moratorium on hydrofracking until the issue is further reviewed, he said.

Tyksinski isn’t yet sure whether he is for or against hydrofracking, but he does have concerns about whether the drilling would affect water supplies and the potential for the drills to be abandoned if the practice becomes no longer profitable, he said. Those issues will be considered as the town develops its ordinances, he said.

“We don’t want polluted water up here in the town of New Hartford,” he said. “I don’t think any community does.”

When the state moratorium ends, the focus likely will be on parts of the state south of Oneida County because there are more expansive areas located above the Marcellus Shale, said Miller, of Cornell Cooperative Extension.

“I’m not sure we’re going to be a hotbed for activity, which is a good thing,” Miller said, adding that the county can watch what happens in other locations first. “So that we can learn from them.”

Filed under Leasing Issues Tagged with , , , , ,

The Marcellus Effect: Farce Majeure

May 4, 2011

The Marcellus Effect: Farce Majeure.

Filed under Leasing Issues

Take Action to Save State Forests

May 4, 2011

ROUSE

Take Action!

(1) Submit Written Comments on Gas Drilling in Shindagin Hollow and Danby State Forests
(2) Sign ROUSE’s Statement to Ban Hydraulic Fracturing for Shale Gas Statewide
(3) Sign Town of Caroline Petition Asking Town Board to Ban HF within the Town of Caroline
(4) Medical Professionals Sign-On Letter Opposing High Volume Hydraulic Fracturing
(5) Protest DEC’s Sacrificing of Upstate Water in Favor of Syracuse and NYC Watersheds
(6) Sign a Petition to Ban Shale Gas Drilling in New York State

Also check out the Action Steps at these websites:  NYRAD  Toxics Targeting

NOTE: The handouts on key shale gas drilling topics are now “Fact Sheets” on the “Links to Resources” page, under “Basic Gas Drilling Information.” Click here for a direct link.

(1) Submit Comments on DEC’s Forest Management
Plan that Allows Gas Drilling in Shindagin Hollow
and Danby State Forests

This is very important because it affects the future of state forests in our backyards!  Comments at the public hearing were unanimously opposed to allowing HVHF in state forests.  Now we must build on that by submitting written comments.

Please:  submit written comments (by May 14, 2011, see details below—they can be short!!!)

The Bottom Line:
Below is much information on the documents and commenting, all optional. You would be helping this cause to simply say that you don’t want leasing for gas or oil drilling in Shindagin and Danby State Forests (the “Rapid Waters Management Unit”) because you think the other uses of these forests are more important (list some), and mineral extraction will detract from these uses (you can say in what way). Links to sample comments plus a suit against DEC to force it to remove HVHF as an option in state forests are given below—we will be adding to this list as we receive comments and permission to post them.

In this fight, number of commenters on each side counts. The notice went out on landowner coalition listservs, whose members presumably will be commenting in favor of drilling in these forests

Written Comments: (by email or snail mail)
When:       By May 14, 2011 (NOTE: A week later than posted previously)
Where:     To John Clancy
(Senior Forester, Region 7, and principal author of the management plan)
NYSDEC, Division of Lands and Forests
Attn: John Clancy, 1285 Fisher Ave., Cortland, NY 13045-1090

The Details:
The DEC is developing management plans for state forests, and the draft plan for our area, including Shindagin Hollow State Forest and Danby State Forest, allows “exploration and development of oil and natural gas resources within the Unit’s State Forests.”

Last time the DEC came up with a plan to lease Shindagin (in 2006), public comment opposing it convinced them to NOT lease! This time, the stakes are higher, as gas drilling is more likely. If the forests are leased, our area might be more attractive to drilling companies, and more people might be affected by compulsory integration.

We can stop this again if a LOT of people speak out and send in written comments.
Most important is to have many people opposed, rather than a few people writing long, detailed critiques. Comments can be kept short, although it’s certainly ok if they are longer and more detailed.

Note: this is the general plan allowing them to lease; if a particular area is considered for leasing, there will be another public hearing. But, it’s important to stop this now, before it gets to the next stage.

~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*

Suit Against the DEC

On May 3, 2011, The Croton Watershed Clean Water Coalition, Inc. (CWCWC) announced that they were suing the Department of Environmental Conservation (DEC) in New York State Supreme Court to declare high-volume hydraulic fracturing in New York State Forests contrary to the New York State Constitution and applicable environmental laws. Click here to see information on the lawsuit.

~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*

Sample Comments:

Sample Comments #1
John Confer

~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*

To see the Draft Management Plan: (the “Rapid Waters DRAFT Unit Management Plan”)

1) Go to the NYS DEC web site http://www.dec.ny.gov/lands/72384.html
You can download the Plan in 4 parts from this web site.

2) Go to the Town of Danby web site http://town.danby.ny.us/Documents/RapidWatersMgmtPlan.pdf
The entire document is in one 13.3MB file.

Sections Discussing Gas Leasing/Drilling:
pp. 11-13: Gives an overview of nearby leasing in the past and present, and forest leasing in the future.
pp. 71-73: Objective 3.2: Accept Nominations to Lease Natural Gas Exploration and Development Rights while Protecting Sensitive Areas and Other Management Objectives. Tells how they plan to allow leasing.

Key Gas Drilling Provisions in Plan (pp. 71-73):

(1) Recommends drilling at 1 pad per 320 acres, but does not require this and leaves the door open for more dense drilling in the future.

(2) Sets up a hierarchy of areas within the forests, A, B, C, and D, according to their suitability for drilling. A = most suitable; D = no drilling. It says 56% of the area would be in category D if assessed today, but they don’t actually make any area assessments.

(3) Pipelines will NOT follow the hierarchy, so they could go anywhere DEC decides to allow them.

(4) New roads will be placed “in consideration of the hierarchy,” but at DEC’s discretion.

(5) pp. 119-120 give setbacks for surface disturbance from mineral extraction: 250′ from streams, wetlands, ponds, lakes, seeps, vernal pools (high water line), and recreation trails.

~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*

Info from the last round, in 2006, when leasing was shot down:

►There are insights to be gained by looking at what the Public and DEC said then, and also
you can get many good ideas of what to put in your comments:

The document Response to Public Comments: 2006 State Land Lease Sale discusses the leasing and public input process, and describes and lists the different types of comments made on both sides and responds to them. Definitely worth a skim!

For a few key notes on the 2006 Response to Public Comments document, click here.

For selected excerpts from the 2006 Response to Public Comments document, click here.

~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*

The following are listed as “stewards” of the 2 forests, in the management plan:

AANR Volunteer Stewards State Forest
Bethel Grove Bible Church Shindagin Hollow
Candor Valley Riders Snowmobile Club Shindagin Hollow
Cayuga Trails Club Danby and Shindagin Hollow
Cycle-CNY Shindagin Trail Committee Shindagin Hollow
Finger Lakes Trail Conference Danby and Shindagin Hollow
Friends of Bald Hill Danby
Spencer-Van Etten Snowbmobile Club Danby

If you know someone in one of these groups, please contact them and see if they oppose leasing and are willing to mobilize their group to help protect the forests from drilling.

To protect our local forests, we must come out in force at the April 14th meeting.

~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*

DEC ANNOUNCEMENT ABOUT THE PUBLIC MEETING:

http://www.tcgasmap.org/media/State Forest Leasing DEC Mtg Notice 4-11.pdf

~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*

Comments from Others on the 2010 NYS State Forest Management Plan:
(In late 2010, comments were accepted on this statewide document. Here are comments from Barbara Lifton, the Finger Lakes Land Trust, the Town of Danby, and others, including why gas drilling should not be done in Shindagin and Danby. The same points could be made now. See first item at this link.)

http://www.tcgasmap.org/default.asp?metatags_Action=Find(‘PID’,’49’)#Effects on Forests and Wildlife

~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*

Info on the Impacts of Gas Drilling on Forests and Wildlife:

Effects of Drilling on Wildlife, Forests, and Streams:
The following link is to a new “in press” section of the TCgasmap primer that is not yet on the web. It’s a summary of the most important info on this topic, and contains numerous references. (Ignore underlined links to other sections of the web page for now!)

http://www.tcgasmap.org/media/Wildlife Impacts for State Forest Commenting.pdf

Summaries of articles on how drilling affects wildlife and forests:

http://www.tcgasmap.org/default.asp?metatags_Action=Find(‘PID’,’49’)#Effects on Forests and Wildlife

http://www.tcgasmap.org/default.asp?metatags_Action=Find(‘PID’,’21’)#Effects on Forests and Wildlife

The effects of ground-level ozone (increased by drilling) on trees:
http://wps.prenhall.com/esm_wright_envisci_9/21/5497/1407388.cw/content/index.html
“Through its tissue-damaging effects, ozone also endangers valuable timber stands and fragile wilderness ecosystems. As a component of urban smog, ozone impairs the aesthetics of those systems and creates secondary impacts on urban and wilderness habitats. Such damage is already apparent in urban trees and in parks downwind of major cities around the world.”

Land area affected by each well pad in PA (article summary):
Johnson, Nels. November 15, 2010. “Pennsylvania Energy Impacts Assessment: Report 1: Marcellus Shale Natural Gas and Wind.” http://pa.audubon.org/PDFs/energy_analysis report.pdf
Researchers in PA took aerial photos of 242 well pads in forested areas in the Marcellus shale of Pennsylvania. They digitized the images and measured how much land was cleared for well pads, access roads, pipelines, and water impoundments. They found, on average, that 3.1 acres were cleared for each well pad, and that an additional 5.7 acres were cleared for the associated structures around that well pad (roads, etc.). Then, using well-established research that most edge effects extend at least 330 feet into a forest from the edge, they calculated the additional area disturbed indirectly as 21.2 acres per pad. Thus, each well pad disturbed at least 30 acres! Although Marcellus shale well pads are expected to eventually host 6 to 8 or more wells, these pads only hosted 2 wells, on average, so the disturbance is likely to be much greater in the future. In PA, many drillers are currently developing only a few wells per pad as they rush from pad to pad to establish activity on each lease, which allows them to keep the lease (called held by production) without paying more signing bonuses to landowners or renegotiating terms.

~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*

Excerpts from the 2011 State Forest Management Plan
Covering Shindagin Hollow and Danby State Forest

http://www.tcgasmap.org/media/State Forest Leasing 2011 Rapid Waters Plan Excerpts.pdf

~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*

(2) If you Live in NY State, Sign ROUSE’s Statement:
High-Volume Hydraulic Fracturing
should not be Permitted in NY to Extract Shale Gas.

ROUSE (Residents Opposing Unsafe Shale-Gas Extraction) is gathering signatures from all NY residents, and # acres owned from those who own land. The statement will be used to publicly counter the large number of people and acres being tallied by landowner coalitions to push drilling forward. Your name and contact info will be kept confidential upon request at the time of signing.

Click here for more information and a link to signing the statement

Filed under DEC, Leasing Issues, Official Actions--Legislation, judgments,regulation Tagged with , , , , , , ,

Lease Termination Workshop May 17, Cortland

April 27, 2011

LANDOWNER’S  GAS LEASE WORKSHOP

 

EXPERT ADVICE

 

TERMINATING A GAS LEASE

Most gas leases will not terminate automatically at expiration date unless the landowner takes action.

 

RESPONDING TO FORCE MAJEURE

Landowners need to respond to Force Majeure letters being received from gas companies.


JOE HEATH, ESQ.

ENVIRONMENTAL ATTORNEY

 

MIKE BOSETTI

LANDOWNER

(TERMINATED LEASE SUCCESSFULLY)


Betsy Larkin

Cortland County Clerk

Tuesday  May 17, 2011  7 – 9 pm

 

Cortland County Office Building Auditorium

60 Central Ave., Cortland, NY

Organized by GDACC

(GAS DRILLING AWARENESS FOR CORTLAND COUNTY)

P.O. BOX 5151, CORTLAND, NY 13045

SEE  GDACC’S WEBSITE FOR LEASE TERMINATION AND FORCE MAJEURE PACKETS:

http://www.gdacc.wordpress.com

 

Co-sponsored by:

Office of the Cortland County Clerk

Cortland County Legislature’s Ag Planning & Environment Committee

Cortland County Farm Bureau

Filed under events, Leasing Issues

Regulatory Takings By Mary Jo Long, Esq.

April 25, 2011

Banning Hydrofrackingg Is Not A “Taking” of Property

By Mary Jo Long, Esq.

As the public sentiment grows for a ban on High Volume Hydrofracking (HVHF), lawyers and others who speak for corporate profit-making opportunities in natural gas say that laws banning or limiting gas drilling is a “taking” of property.  Even some who seem to be on our side make the same claim.  This claim is groundless and misguided.  It is a scare tactic to prevent public pressure on our elected officials against HVHF.

What is the Legal Status of These Claims?

  1. All property in this country is held under the implied obligation that the owner’s use of it shall not be injurious to the community.   There is no compensation for limiting that type of use of property, and
  2. A “taking” claim does not apply if the property can be used for other purposes even if those uses are not as profitable.

Consider the Source

The claim that the government (fed, state or local) will be sued to recover the value of lost property is made by attorneys and others supporting HVHHF as a method of gas drilling.  They say that we, the taxpayers, will have to pay for the lost profits due to the government’s taking of their property.  Always bear in mind that lawyers are advocates for their clients.  When a Landowners’ Coalition lawyer claims that a ban will be a taking, that lawyer is making an argument in support of his client’s position.  Making a claim (I’m going to sue you) doesn’t mean that a lawsuit will really happen nor that a Court will agree with the argument if an actual lawsuit is filed.

What Is the Law on Taking Property  by the Government

The Fifth Amendment to the U.S. Constitution provides certain protections to persons.  Included in the protections is the phrase “nor shall private property be taken for public use without just compensation.”[i]  This is the “taking” referred to by the anti-ban people.  This obligation to compensate for taking private property only applied to the federal government until the 14th Amendment to the Constitution expanded the application to state governments as well.  Eminent domain is the term most frequently used when a government takes a piece of property: land for a public park, a public road, a public school, etc.  The owner of the land is entitled to be paid for the value of the land taken from her.   Historical evidence suggests that the original intent of the takings clause did not include mere restrictions on use.

But what if the government, say through a town zoning law or a state law, BANS gas drilling without taking over title to the property where gas companies and gas leaseholders expect to drill for gas?  Are governmental laws that restrict the use of the land by restricting a profit making opportunity a “taking” when actual ownership does not change?

The notion that one can do anything he wants on his property is not the law of the land.   The US Supreme Court has said  “all property in this country is held under the implied obligation that the owner’s use of it shall not be injurious to the community.” Mugler v. Kansas, 123 U.S. 623, 665 (1887)  This principle still remains the law of the land even as Court rulings on “takings” have muddied the waters.[ii]

A town government can use its police power[iii] and zoning/land use power to restrict and prohibit uses that it considers to be detrimental to the community.  The exercise of these powers does not constitute a “taking.”  For example, the Town of Hempstead passed a law prohibiting gravel pit from excavating below the town’s water table.  This law was upheld in Goldblatt v. Hempstead, 369 U.S. 590 (1962) as a valid use of the town’s police power.  The Supreme Court conceded that the law completely prohibited a prior use by Mr. Goldblatt who had operated a gravel pit for 30 years.  But the Court held that depriving the property of its most profitable use does not make the law unconstitutional, nor a taking.

The present case must be governed by principles that do not involve the power of eminent domain, in the exercise of which property may not be taken for public use without compensation.  A prohibition simply upon the use of property for purposes that are declared, by valid legislation, to be injurious to the health, morals, or safety of the community, cannot, in any just sense, be deemed a taking or an appropriation of property for the public benefit.  Such legislation does not disturb the owner in the control or use of his property for lawful purposes, nor restrict his right to dispose of it, but is only a declaration by the State that its use by any one, for certain forbidden purposes, is prejudicial to the public interests.” Goldblatt at p.593 quoting Mugler v. Kansas.

In 1992 the Supreme Court carved out an exception to this concept in Lucas v. S.C. Coastal Council, 505 U.S. 1003.  The Supreme Court expanded the right to be compensated when new laws deprived land of all economically beneficial use.  Although Lucas still owned the land, a lower court at trial had found that the property was rendered of zero value by the law which prohibited residential construction beyond a baseline on the beachfront.  While the Supreme Court described these as “relatively rare situations”[iv], it has encouraged litigation.  At the same time as Lucas slightly expanded the takings doctrine it also reaffirmed the principle that government does not have to pay compensation when it limits “harmful or noxious uses” of property.

It is correct that many of our prior opinions have suggested that ‘harmful or noxious uses’ of property may be proscribed by government regulation without the requirement of compensation. . . .[G]overnment may, consistent with the Takings Clause, affect property values by regulation without incurring an obligation to compensate – a reality we nowadays acknowledge explicitly with respect to the full scope of the State’s police power”[v]

The Court further acknowledged that Lucas would not be entitled to compensation even though he was deprived of all economically beneficial use if his “bundle of rights” did not include the prohibited use to begin with.[vi]  Some uses of land are not a part of the land title to begin with.  When someone owns property the owner does not have the property right to have a common law nuisance.  Government actions that abate common law nuisances are per se not takings.  The Court acknowledged there are inherent limits on landowner rights, imposed under background principles of the State’s law of property and nuisance.  Thus government can still forbid deleterious uses even to the point of total takings.

Justice Scalia, who wrote the majority opinion in Lucas, says that a “total taking” of personal property would be subject to a lower standard “by reason of the State’s traditionally high degree of control over commercial dealings”[vii]   This means that there is no claim of a taking based on a gas lease, which is personal property rather than real property, i.e. land.

Those opposing a ban on hydrofracking base their claims of a “taking” on Lucas but subsequent cases have confirmed the narrowness of the ruling in Lucas.

  • Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 535 U.S. 302 (2002) (Court said moratorium was not a regulatory taking);
  • Palazzolo v. Rhode Island, 533 U.S. 606 (2001) (part of parcel was worth $200,00, so was not a total taking);
  • Lingle v. Chevron U.S.A. 125 S. Ct. 2655 (2005) (recognized that Takings cases were inconsistent.  Tried to clarify by saying the inquiry is whether the regulation is “so onerous that its effect is tantamount to a direct appropriation or ouster” i.e. functionally equivalent to the classic taking in which government directly appropriates private property or outs the owner from his property.);
  • Gazza v. NYSDEC 89 NY 2d 603 (1999),  cert. denied. (Mere diminution in value of property, however serious, is insufficient to demonstrate a taking.)

Conclusion

  1. To make a takings argument, the following conditions apply:
    1.   A taking claim cannot be based on an interest the owner never had, e.g. the right to create a nuisance.
    2.  A taking claim does not apply if the property can be used for other purposes. i.e. the economic value has not been totally extinguished.  Just because the value of the property has been reduced does not mean the owner gets to claim his “expected” profits if he were allowed to fully exploit the property.
    3. Personal property, such as a gas lease, has even less recognition as a taking, even if it is a total taking.
  1. Property rights, as well as other rights, are limited by the neighborhood of other public interests.  The highest court in NYS said in Gernatt Asphalt Products v. Town of Sardinia, 87 N.Y.2d 668 (1996):

A municipality is not obliged to permit the exploitation of any and all natural resources within the town as a permitted use if limiting that use is a reasonable exercise of its police power to prevent damage to the rights of others and to promote the interests of the community as a whole. (at page 684)

  1. The police power of the state is the power to regulate persons and property for the purpose of securing the public health, safety, welfare, comfort, peace and prosperity of the municipality and its inhabitants.

[i] “No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a grand jury, except in cases arising in the land or naval forces, or in the militia, when in actual service in time of war or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”

[ii] In 1922 the Supreme Court ruled that the Pennsylvania legislature had overstepped the line by enacting a law forbidding people from removing coal from under other people’s houses and was held to effect a taking.  The Court said, “While property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.” Penn. Coal Co. v. Mahon, 260 U.S. 393, 415.  In 1987 the Supreme Court in Keystone Bituminous Coal Association v. DeBenedictis, 480 U.S. 470 held that a nearly identical law was not a taking.  Property is held under the implied obligation that the owner’s use of it shall not be injurious to the community.  That principle, the court held, does not require compensation whenever the state asserts its power to enforce a prohibition that is injurious to the community.  It is a question that “necessarily requires a weighing of private and public interests.” (pp. 491-492)

[iii] Police power is the power to regulated persons and property for the purpose of securing the public health, safety, welfare, comfort, peace and prosperity of the municipality and its inhabitants.  This include prevention, suppression and abatement of public nuisances, including street nuisances and air pollution, preservation of the public peace and tranquility, protection of the public health through sanitation and disposal of waste and from the harmful effects of industrial and commercial development and proper growth of the municipality through zoning.  Article IX of the NY State Constitution; Section 10 of the Municipal Home Rule Law; Section 130 of the Town Law; Section 20 of the General City Law and Section 4-412 of the Village Law.

[iv] Lucas v. South Carolina Coastal Council, at p. 1018

[v]Lucas at p. 1022-1023 citing  Penn Central Transportation Co. v. New York City,  438 U.S. 104, 125 (1978)

[vi] Lucas at p. 1027.

[vii] Lucas at 1027.

Filed under Leasing Issues Tagged with , , , ,

Attorney general asked to investigate gas lease tactics – Canton, OH – CantonRep.com

April 21, 2011

Attorney general asked to investigate gas lease tactics – Canton, OH – CantonRep.com.

Filed under Leasing Issues

← Older posts

Newer posts →