Resistance to Gas Pipelines Spreading / Public News Service
March 23, 2015
Resistance to Gas Pipelines Spreading / Public News Service.
Things you need to know about dealing with pipeline companies
July 8, 2013
From: Mike Bernhard <mikebernhard@frontiernet.net>
Date: Mon, Jul 8, 2013 at 9:57 AM
Subject: Emkey gas pipeline
Date: Mon, Jul 8, 2013 at 9:57 AM
Subject: Emkey gas pipeline
Friends and neighbors:
Surveying has begun for the Emkey pipeline that will interconnect the east-to-west pipelines below and above Chenango County. This phase will involve a transmission line from Preston through Smithville, Oxford, Coventry and Oxford, as well as Colesville in Broome County (map attached). As in the case of the “Constitution” pipeline project – which runs through Afton as well as Broome and Delaware Counties- local pipeline shills are lying about the effect of these transmission lines, which will increase the likelihood of hydrofracking in these and adjacent towns, with all of fracking’s infrastructure of unregulated gathering lines and compression stations.
Together with the Compulsory Integration of unleased properties into Drilling Units, Eminent Domain provides a tool for gascorps to leverage the acquiescence of a few large (often non-resident) landowners into a public policy that favors irresponsible corporations (and to a lesser extent, those large landowners) at the expense of residents with modest properties.
If you are in the path of the pipeline, the attached letter from Bob Lidsky (copied below) deserves your careful reading. Even if you are not directly in the path of the pipeline, you should understand the pressures that gascorp brings to bear on our neighbors in the line-of-fire, and be ready to support whatever resistance they can offer. To learn from the resistance to the “Constitution” pipeline, see http://www.stopthepipeline.org/.
Please forward widely. And stay in touch.
I own land, directly in the path of the proposed Constitution Pipeline. The
property is quite hilly and has beautiful views. There is one small area near
the top, which has a gradual enough slope to build a home.
Last December, Constitution asked for permission to survey. Their map
shows the pipeline running directly through the only area suitable for
building, siting a septic field, driveway and home. I realized that the pipeline
if built would render my property, un-buildable, un-mortgage-able, uninsurable, and nearly worthless.
I Joined Stop The Pipeline and refused permission to survey. Over the next
few months I learned a lot about Williams, Constitution, FERC, and the
politics of pipelines and eminent domain.
Then I received Constitution�s offer for their completely one-sided right of
way agreement. They say their limited-time initial offer is for 3 times the
value of the right of way. Yet it represents only 15% of the value of the
land. Their terms are ominous- a virtual minefield of legal traps. And
attached is a thinly veiled, threatening letter explaining that if I do not agree
they will take the right of way, against my wishes, by using Eminent
Domain.
SIGN-OR ELSE! What should I do?
There is no way I can or would agree. There is no way I would sign any
contract to do business with them.
I know that legally, the situation is out of my control and that they can take
their easement under federal law by utilizing eminent domain.
Their tactics attempted to make me feel helpless, and, for a while I did,
dealing with a depressing, seemingly hopeless, situation. But joining STP
helped me realize that by resisting collectively, we have a good chance of
stopping them. That was when I started to investigate and learn about what
actually happens in Eminent Domain.
Rather then simply stonewall; to refuse to sign, I decided to fight, to take
them on face-to face. So I met with the Right of Way agent for Constitution.
First we discussed the survey. Having previously denied permission I asked
how the survey was performed because in the legend it used the words
“field survey”. The agent knew that I had denied permission. I asked him if
they were illegally on my land and he said that the survey was done
virtually, using GPS coordinates from the tax map. I did not believe him, as
there were numerous sightings of surveyors by my neighbors.
I told him that he was ruining my investment. He did not argue that the
amount offered would be an insignificant fraction of the amount the property
would depreciate. He said emphatically, that the price was firm and they
would not negotiate. They do not pay more, or buy the entire parcel under
any circumstances.
I told him the route ran right through the only place on the property where I
could site a home. He replied that the route is non-negotiable.
We discussed their right in the proposed contract to cross my property to
gain access to the right of way. He denied that. I told him that he was being
misleading, showing him the access clause in the proposed agreement. He
said it wasn’t true. I told him the contract rules, not what he says. He
implied it could be negotiated.
We discussed the planned access road just to the north of my property line.
He said that permission for this was not yet granted. This is conjecture, but
I got the impression he was having a hard time getting people to sign, not
just next door, but also with others.
I brought up the prepayment for future damages clause. He said they would
pay all costs and I said that�s not true� just read the contract. He replied
that Constitution would hold me harmless. I countered with Constitution�s
right to sell or assign to anyone. Who will be the responsible party?
This led to the question of insolvency or failure or bankruptcy of
Constitution. I told him I was not going to accept this “Pandora�s Box” of
legal pitfalls at any price. His answer was to say he would check this out
with some higher-ups and get back to me. He has not contacted me.
Unfortunately I forgot to mention the inability of a landowner to get a
mortgage when an interstate high-pressure pipeline is nearby a potential
structure.
I brought up liability and insurance issues. I told him I would never sign
because by signing I was buying into an unending liability for damages by
becoming his partner in a commercial- industrial operation. I would always
have an increased insurance cost and would have to carry huge & expensive
limits for liability, if the property was insurable at all. He gave no response.
I left the most important for last. We discussed eminent domain. He said
they were reluctant to use it but then openly threatened that they would
absolutely use it if I didn’t come around and sign.
I think I shocked him when I told him my best course of action was to have
him TAKE the right of way from me by eminent domain! The court would still
award me something, but more important, I would have no liability. He said
nothing. He had no answer. He said he would get back to me. He never has.
I think this discussion of asking him to take me by Eminent Domain set him
aback. He seemed unprepared. I think he was used to forcing landowners to
sign using the Eminent Domain club. Constitution uses Eminent Domain as a
bargaining tool, but it can be put to good use against them.
Here is my laypersons view:
IF I SIGN:
1) I give away my right to sue.
2) I enter into a business deal with unknown future liabilities.
3) I have continuing extra insurance expense.
BY TELLING THEM to TAKE MY LAND:
1) Only gas can be transported, no tar sands or other liquids.
2) No future pipelines or other utilities will be allowed.
3) We gain political power when significant numbers of landowners refuse to
sign.
5) FERC�s mandate is to listen to landowners.
6) They lose their bargaining tool when eminent domain is seen as better for
me.
7) I still get paid something,
8) I have no liability,
9) I preserve my right to sue them later, in a class action for a taking of my
land,
Only the landowners can stop Constitution. WE have the power. Hundreds of
landowners have to welcome eminent domain as the best option, and as the
only way to prevail. I know there are many other landowners who believe
this. Please start expressing it in public now, in order to grow the
movement.
To stop them, we need to refuse signing, and to threaten a class action
lawsuit for the full value of our property, presenting them with a huge
political and financial problem.
Make this public! Make them walk away! ONLY by refusing to sign can we
win. It is your active resistance that will prevail. This can be done. We must
hit them where it hurts.
TELL THEM TO TAKE THAT EASEMENT BY EMINENT DOMAIN.
Robert Lidsky,
Andes, NY
July 8, 2013
Re-cycling Drilling Waste in PA
July 25, 2011
In response to the barrage of criticism about frack waste disposal and/or treatment, the industry now says it will “recycle” all water used in hydrofracking. Recycling is a nice green word and sounds benign. But the quote below shows otherwise. It is taken from an interview with David Bohlander. a highly respected accountant and business consultant in Pennsylvania. His farm has been in his family for 150 years.
The interview was posted on another list on July 19. After the quoted section I have attached the entire interview.
Jim Weiss
The intention is to refrack over and over the same drilled wells. They are now claiming there is 60 years of gas here. Simultaneously, although not on all pads, they use the pads for other things such as equipment storage, frack water storage, and the worst: frack water recycling which we have three in our neighborhood and 2 are 10 year permits (one is in the review process, 9 days to go). These are REGIONAL frack water recycling operations bringing in dirty radioactive brine from 15 miles away or more, operating 24/7 with extensive noise, lights and traffic.
RE: frack water recycling: They power huge lights that light of the pads for the whole night. They don’t use street electric but generators which contribute to the noise. The trucks have large pumps that due to the volume of 5200 gallons per truck are large motors, the trucks endlessly are using their backup safety beepers, horns for instructions to the ground crew, etc. The three sites in our neighborhood will generate 800 trucks a day, 1600 with return trip passes.
Complete Interview:
1. Pollution of your well (two wells?). How did this show up?
[Bohlander] We have two wells on the farm (190 acres). We had a detailed baseline water testing done on both before any of the gas activity happened in our area. We subsequently have had another 6 or so tests done on these wells. It is crucial to have certified baseline testing done prior to any activity by gas companies or they will claim there is no proof they are the cause and argue it was a pre-existing condition. We also retained a very competent hydrologist (who has the gas company clients) who was the plaintiffs hydrologist in the Dimock, PA contamination (highlighted in the movie Gasland). The well for the barn/and original farmhouse was so contaminated with methane they thought it would explode so the well pump was disconnected for six months and water was trucked in by the gas companies for the animals, and spring water for the humans!
2. The operations end up being more extensive than anticipated. The “pads” are large, and end up being used for other operations.
[Bohlander] Gas companies are major deceivers. They do this many ways. One is using land agents that are not their employees so that they can claim “we never said that ..they did”
Most all the neighbors were told that the gas wells would be drilled, it would take 3 months or so, and then land would be restored to earlier state. In reality this is what happens. They excavate a pad obliterating the natural terrain, hauling in 100’s of trucks of stone, gravel, etc. Once the pad is completed, they only drill 2-4 actual gas wells of what ultimately are likely going to be 12 or so on that pad. They may not frack the drilled wells immediately, but wait sometimes a year. The intention is to refrack over and over the same drilled wells. They are now claiming there is 60 years of gas here. Simultaneously, although not on all pads, they use the pads for other things such as equipment storage, frack water storage, and the worst: frack water recycling which we have three in our neighborhood and 2 are 10 year permits (one is in the review process, 9 days to go). These are REGIONAL frack water recycling operations bringing in dirty radioactive brine from 15 miles away or more, operating 24/7 with extensive noise, lights and traffic. DEP is way behind on enforcement. The neighbors are the enforcers, but it is David vs. Goliath (the gas companies). After four years now, I have not seen one well pad restored back to the original state. The stated plan by the gas companies is that there will be one well pad every 50 acres. If the well pad is 10 acres, 20% of our surface land area will be a perpetual well pad.
3. Extensive light pollution due to 24/7 operation.
[Bohlander] RE: frack water recycling: They power huge lights that light of the pads for the whole night. They don’t use street electric but generators which contribute to the noise. The trucks have large pumps that due to the volume of 5200 gallons per truck are large motors, the trucks endlessly are using their backup safety beepers, horns for instructions to the ground crew, etc. The three sites in our neighborhood will generate 800 trucks a day, 1600 with return trip passes.
The gas drilling when it goes on makes it almost impossible to sleep. 24/7, 7 days a week.
4. Extensive trucking.
[Bohlander] The gas companies make new roads over smaller older roads to accommodate their extensive traffic. The state allows them to exceed the weight limit of the road by paying some fee or posting a bond. The small country road in front of our farm is now elevated 3 feet in the air from normal ground level. Certain roads are used as main arterial roads after they have been rebuilt –this happened to ours. The trucks are hauling huge amounts of gravel, fill, fresh water for fracking and the dirty brine water out, as well as all the equipment for the drilling process. Each well on the pad uses 5 million gallons of water. 60% flows back and is recycled, but removed from the site. Our road was destroyed initially and impassible. The gas companies then closed 10 mile stretches of the road for months at a time as they began rebuilding it. One landowner could only get to and from his property with a four wheeler.
5. Feel free to add any other relevant details.
[Bohlander] The gas companies have a very systematic playbook from the years of operating and polluting Colorado, Wyoming, Texas, etc. They have two sides: a friendly neighborly “give $35K to the fire company” and then a ruthless no holds barred side. 3 times they threatened that in 24 hours they were going to stop trucking in water for the cows in our barn unless we agreed to things. These things include non-disclosure agreements, consent not to sue, etc. Read the book Collateral Damage. A lot of good environmental activist groups with websites and a lot of info. Many have been to our house. We were one of the first contaminated sites in this region from the drilling.
The public does not have any idea how bad the permanent environmental contamination is going to be. There has been major barium and radiation poisoning with some already. One not far from us is a 13 year old girl with barium poisoning. One of our immediate neighbors’ daughters is having clumps of hair fall out and his dog got sick and parakeet died from drinking his well water. He abuts one of the frack water recycling sites.
Air pollution is the sleeping giant. Each well pad on an ongoing basis emits things into the air (like toluene) as the gas goes through a preliminary filtering process at the well pad. The absolutely worst are the gas compression stations for both noise and air pollution.
As you may know, the gas drilling is exempt from the Clean Water Act — we actually are more apt to be fined if manure is spread on the road, than these major infractions the gas company are doing. The environmental enforcement agencies only slap their wrists with fines. Cost of doing business to gas companies –easier to just pay the fine.
—
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?
- 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
- 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
- To make a takings argument, the following conditions apply:
- A taking claim cannot be based on an interest the owner never had, e.g. the right to create a nuisance.
- 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.
- Personal property, such as a gas lease, has even less recognition as a taking, even if it is a total taking.
- 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)
- 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.
United States, Energy & Natural Resources, Superior Court Interprets Oil and Gas Lease in Favor of Landowners – Schnader Harrison Segal & Lewis LLP – 03/03/2011, Energy Law, Oil, Gas & Electricity
March 5, 2011
United States: Superior Court Interprets Oil and Gas Lease in Favor of Landowners
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03 March 2011
Article by Keith E. Whitson 
and Levi E. Jones
and Levi E. Jones With the recent increase in activity in the oil and gas industry in Pennsylvania, disputes between developers and landowners over the interpretation of oil and gas leases are inevitable. In its most recent opinion on the subject, the Pennsylvania Superior Court held that landowners properly terminated leases where the developer had not commenced drilling by the end of the primary term of the lease. In so holding, the Court concluded that continued delay rental payments after expiration of the primary term did not extend the term of the lease.
In Hite v. Falcon Partners, et al., 2011 WL 9632 (January 4, 2011), the landowners had entered leases with a developer in December 2002 and October 2003. The leases contained the following provision, which identified a primary term and also incorporated a traditional habendum clause (providing that lease term continues “so long thereafter” as oil or gas is produced) and a delay rental clause:
3. Term. Lessee has the right to enter upon the Property to drill for oil and gas at any time withinone [sic] (1) year from the date hereof and as long thereafter as oil or gas or either of them is produced from the Property, or as operations continue for the production of oil or gas, or as Lessee shall continue to pay Lessors two ($2.00) dollars per acre as delayed rentals, or until all oil and gas has been removed from the Property, whichever shall last occur.
Drilling never commenced on the property; instead, the developer (and its assignees) continued to pay delay rentals to the landowners for a period of five years. After obtaining offers from other developers and complying with the right of renewal clauses in the leases, the landowners declared that the leases were terminated.
The Court first reviewed the history of oil and gas lease interpretation in Pennsylvania stretching back to the 19th century. In reviewing this history, the Court concluded that delay rental provisions “have a well settled meaning” — that is, to provide something to the landowner in lieu of royalties from production. The Court further found that these clauses “typically” are concerned with the primary term of the lease only, and it reviewed all of the reasons why such clauses typically are restricted to a lease’s primary term. Historically, the delay rentals clause was developed not only to provide some compensation to the landowner, but also to limit the period in which drilling may be delayed. If delay rentals could be used to extend a lease indefinitely, the lease essentially would be a “no term” lease and may unreasonably restrict the landowner’s ability to use or transfer the land.
Based on this history, the Court concluded, “[t]o find as Falcon urges, that it may pay delay rental indefinitely, thereby denying Plaintiffs the opportunity to reap the financial benefits of actual production, would be contrary to the decisions of our Courts, at odds with the presumed intention of the parties in executing the leases in the first place, and in stark contrast to the clear opinion of the courts of Pennsylvania that the obligation to pay delay rentals is intended to ‘spur the lessee toward development.'”
Although the Court based its decision on a long line of cases interpreting oil and gas leases, the clause at issue in this case was not a typical clause. The standard oil and gas lease has been modified many times over the years, but most modern leases include habendum and delay rental clauses that are separate and apart from the clause which defines the primary term of the lease. In this case, all these clauses were combined into one “term” clause. As a result of this structure, the lease could have been interpreted in a different manner. In particular, the Court could have found that, because the delay rental clause was included in the same clause that defined the primary term, the parties intended for the delay rentals to extend the primary term.
Interestingly, the Court stated that the unusual lease language compelled its decision: “Specifically, the language pertaining to the one year primary term and the delay rental due on an annual basis, used in conjunction, is not typical, and, as we will explain, require us to affirm the lower court’s summary judgment in Plaintiffs’ favor.” To the contrary, however, the Court’s decision appears to be based not on the specific language of the lease, but on the historical interpretation of oil and gas leases generally. Even if the Court focused on the specific language at issue, it would have been very reluctant to issue a ruling that would allow a developer to extend the primary term indefinitely, at least absent the clear intent of the parties.
This decision suggests that the courts may focus less on the specific language of a particular lease and more on the principles underlying the development of modern oil and gas leases. While this may provide more consistency for landowners and the oil and gas industry, it may make it more difficult to deviate from standard lease constructions unless the parties’ intentions are spelled out clearly in the lease.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
GDACC 
