ENB Pub Note: This article was run on RealClear Energy by Dan Doyal, who was a guest on the Energy News Beat podcast. This is a great update on New York. We highly recommend Dan and RealClear Energy.
Finally, there’s been a counterpunch in New York’s climate politics. A father and son with mineral rights in rural Delaware County are suing the state for trespass in a case of David v. Goliath. A long shot, but there’s precedent and, well, sometimes it’s the principle that counts.
“The Woodwards purchased 164 acres of property, including the mineral rights, near Sidney, New York, in 2011. This purchase was based on informed analysis and reasonable investment-backed expectations…suggesting significant resource potential,” writes their attorney, Jeff Jennings, a land rights attorney with the Pacific Legal Foundation. “What has occurred with Marcellus rights amounts to a Fifth Amendment taking, which remains unconstitutional in our country.”
The Woodwards have precedent on their side. Their suit calls out landowner rights victories in the Supreme Court. One in particular, Pennsylvania Coal Company v. Mahon, ruled that a Fifth Amendment taking occurred when coal extraction was banned by the state. “Instead of formally taking property, the state restricted its use so heavily it was rendered worthless,” said Jennings. “In the case of New York, it cannot avoid its constitutional obligation by regulating mineral rights out of existence rather than formally condemning them through eminent domain.” Ultimately, Pennsylvania Coal Company was allowed to resume mining. Had it gone the way of eminent domain, the state would have had to pay for what it condemned.
Mary Gilstrap, executive director of the Independent Oil & Gas Association (“IOGA”) of New York, calls it “an appeasement to the environmental pressure brought by the usual suspects, those who oppose all human industrial activity of any kind on rural lands.” This goes all the way back to the Cuomo Administration’s bowing to the noise of climate activism at the cost of the greater good of the public. By banning high-rate fracking in 2015, the same type of fracking Pennsylvania uses to safely enrich landowners and the state, Cuomo set up exactly the sort of lawsuit that may finally provide a quid pro quo. That is, if you’re going to take it, you have to pay for it. That’s a big bill for a state with a childhood poverty rate reaching 25%, a New York City mayor attacking billionaires investing billions into the state, and a governor pleading with ex-residents to return so they can pay their “fair share.”
The set up on the plaintiff side is New York’s envious position, that is sitting on trillions of cubic feet of natural gas in the Marcellus and deeper Utica shale formations. Because of the size of the wells, with reserves in the billions of cubic feet each, there’s a tremendous economic argument to make. New York’s Southern Tier and Finger Lakes regions make up the core of the richest Marcellus and Utica shale reserves. Principally, activity would be centered in Chemung, Tioga, Broome, and Delaware Counties “where lease rates could reach as high as $4,000 an acre,” according to Gilstrap. “There’d be a land rush if the Woodwards prevail.”
Collectively, the core counties make up over 2,000,000 acres of land. It’s anyone’s guess how much would be leased, but the total value of lease bonuses amounts to $8 billion at $4,000 per acre. That’s only the first part of the Hochul Administration’s problem. The second, the landowner royalty, is the larger half. Assuming a 16% royalty rate, against the trillions in reserves and you’re at tens and tens of billions of dollars beyond bonus payments.
On the opposite side of the defendants is the New York Department of Environmental Conservation (the “DEC”), the front runner in raising consumer prices through prohibition. In the absence of monitoring frack activity, it’s currently busying itself broadening the definition of wetlands.
And then there’s the U.S. District Court for the Northern District of N.Y., the venue for the case, where seven of the ten judges have been appointed by Democratic presidents. Collectively, it’s going to be a rough go for the Woodwards. Years of appeals await, possibly even a final stop at the Supreme Court, all while father and son spoil in the slow drag of government crawl. But the case is rumored to be catching attention from those who think the state has gone too damned far. Should it gather backing, maybe, just maybe landowner and mineral owners in New York will get a return on their investment, and a living standard that matches their Pennsylvania neighbors’.
“Whatever environmental or policy benefits New York believes it derives from prohibiting natural gas extraction, the Woodwards’ property rights cannot be sacrificed without the state paying them just compensation,” Jennings continues in the Woodward case. It’s either allow development to proceed or pay.
Virtue signaling from the DEC has driven bad policy, born from misleading the electorate that fracking will degrade New York City’s aquifers. Not that truth has any place in this argument, but that hasn’t occurred in other states where fracking is commonplace. Apparently, the argument is that it can only happen in blue states. I’ve fracked thousands of wells over the past two decades without intrusion into aquifers. Ever. The fact is we still frack wells in New York. Granted they’re low rate, low volume jobs for a gas utility but others are fracking small vertical oil wells in Cattaraugus County. This small bit of activity, however, is nothing compared to the redefining shift shale extraction would bring in economic and quality of life gains should the courts uphold landowner rights.
Dan Doyle is the author of Of Roughnecks and Riches: A Startup in the Great American Fracking Boom.
