JLCNY Loses Faith in Cuomo, Initiates Lawsuit over Fracking Rules

The Joint Landowners Coalition of New York (JLCNY), a 77,000-member umbrella organization for New York landowners interested in leasing their property for natural gas drilling, announced yesterday they will move forward with a lawsuit against New York State on behalf of their members. The group has decided to litigate in light of the now expired Feb. 27 deadline to adopt new rules to allow high volume hydraulic fracturing (fracking) in the state. MDN spoke to Dan Fitzsimmons, president of the JLCNY. He commented it took Illinois 14 months to research and write new legislation for fracking, and just 8 months for new rules to be researched and adopted in Ohio. New York’s rulemaking process has now languished for more than 4 1/2 years. Enough is enough.

Feeling they are left with no other alternative, the JLCNY will select several representative plaintiffs for the lawsuit that, presuming they win, would serve as a precedent for all landowners in the state to make the same claim. The basis of the lawsuit is a legal concept called “takings.” The U.S. and New York State Constitutions both say government cannot take a citizen’s private property or deny them use of their private property without just compensation. MDN previously interviewed JLCNY attorney Scott Kurkoski about the lawsuit a few weeks ago. Watch that interview here: 77K NY Landowners Prepare Lawsuit Against DEC.

How much will New York have to pay if the landowners win? MDN has done some “back of the envelope” numbers. There’s over 1 million acres of land represented by the JLCNY. If all of that land gets leased for a low average of $3,000 per acre, that’s $3 billion. Let’s further assume New York’s acreage would produce a very conservative 10 trillion cubic feet of natural gas over the next 20 years (PA produced 2.1 Tcf last year alone). At a 17.5% royalty and at today’s low average market price of $3.50 Mcf, that’s another $6.1 billion for landowners. New York’s proposed budget for the entire state for 2013 is $142.6 billion. Although it would be painful, the state won’t go bankrupt paying a judgment if they lose the case.

The first step in the JLCNY lawsuit is to locate representative landowners. Then they’ll need money—lots of it—to complete the research, pay the lawyers and armies of paralegals, and move the case to conclusion. It won’t be short and it won’t be easy, but the JLCNY is determined and they have smart people working on their behalf.

Is the lawsuit a certainty? Almost. The concrete has been poured and is now starting to “set up.” It is possible that if State Health Commissioner Nirav Shah gets off his rear-end and files his comments on the health aspects of the DEC’s work, that DEC Commissioner Joe Martens may (a) accept the SGEIS and print it, and then (b) 10 days later issue a few initial permits for horizontal drilling and fracking—even without another public comment period. It’s very much a long shot and not likely to happen, but it is still possible. If that scenario were to happen, it might obviate the need for the JLCNY lawsuit. However, the JLCNY has lost faith in Martens and Gov. Cuomo and will now file the lawsuit as soon as they have representative plaintiffs.

Here’s yesterday’s announcement from the JLCNY:

On February 8, 2013, the Joint Landowners Coalition of New York announced that it has been laying the ground work for a lawsuit against New York State for a taking of our property rights under the United States and New York Constitutions. The JLCNY is now seeking landowner candidates to serve as plaintiffs in the action.

The JLCNY believes that New York has no intention of ever completing the SGEIS or the regulations for high volume hydraulic fracturing. After 4 ½ years, today marks another deadline missed by NY – the date to complete the HVHF regulations.

NY is clearly acting in bad faith. Ohio completed its HVHF regulations in 8 months. This week Illinois introduced House Bill 2615 — the Illinois Hydraulic Fracturing Regulatory Act—after a 14-month bi-partisan effort that involved the Attorney General’s Office, environmental groups (NRDC and the Sierra Club), industry leaders and state legislators. Illinois Governor Pat Quinn praised the bill saying it will help his state’s economy. Ironically, the “New Albany” Shale is Illinois’ target formation but it’s business as usual in Albany, NY where our leaders continue to make a mockery of the regulatory process.

President Obama said in his state of the Union address: “After years of talking about it, we are finally poised to control our own energy future. We produce more oil at home than we have in 15 years. We have doubled the distance our cars will go on a gallon of gas, and the amount of renewable energy we generate from sources like wind and solar – with tens of thousands of good, American jobs to show for it. We produce more natural gas than ever before – and nearly everyone’s energy bill is lower because of it. And over the last four years, our emissions of the dangerous carbon pollution that threatens our planet have actually fallen.”

Last week New York City Mayor Michael Bloomberg said: “It is up to the governor, but I personally have said we should be fracking, not in the watershed, but we should be fracking. … About 13,000 people get killed every year by the pollutants from coal-fired plants. … [Also, as] Boone alluded to, getting oil from outside this country is expensive and it transfers our wealth to people who are trying to destroy our lives. … Of all the things we can do, natural gas isn’t perfect, but it certainly looks like it can make this country energy-independent and reduce dramatically the pollutants going into the air,” Bloomberg said.

On February 12, 2013, DOH Commissioner Shah perpetuated the state’s bad faith conduct by suggesting that he would review two health studies that had not yet been started or funded. News of DOH’s inability to complete its work on the latest health review came even though it was revealed that its advisory panel completed its work months earlier and that last year, DOH conducted a health review and found that there are no health impacts from HVHF.

While our nation’s leaders bring us closer than ever to achieving energy independence, cleaner air and economic prosperity, NY threatens to impede our progress and deny the constitutionally guaranteed rights of NY landowners.

The lawsuit against the state will focus on claims where the failure to grant HVHF permits has deprived landowners of all economically viable uses of their real property or interfered with reasonable investment-backed expectations. While we would like to include a large number of plaintiffs in the action, the economic reality is that numerous plaintiffs would make the action too costly to prosecute. Mineral appraisals will be required for each property in the action. Accordingly, we plan to proceed with a limited number of plaintiffs to give ourselves the best opportunity to establish legal precedent in NY.

The JLCNY is seeking one plaintiff for each of the following categories:

1. Subsurface Mineral Owners

a. Property owners who purchased the sub-surface oil, gas and other minerals prior to July 23, 2008, the date Governor Patterson announced a review process to update the Generic Environmental Impact Statement applicable to HVHF.

b. The property should be in the regions where the Marcellus or Utica Shales are the primary target with few prospects for other formations such as the Herkimer or Trenton Black River.

c. The property must be located in the Susquehanna River Basin

d. Sub-surface mineral owners in Broome County are likely candidates.

2. Lessor Plaintiffs

a. Landowners under a lease with an oil and gas company where the company has applied for a Marcellus or Utica drilling permit or a permit has been withdrawn because of New York’s delay in completing the SGEIS.

b. The property should be in the regions where the Marcellus or Utica Shales are the primary target with few prospects for other formations such as the Herkimer or Trenton Black River.

c. The property must be located in the Susquehanna River Basin.

3. Subsurface Mineral Owners with Prior Wells

a. Landowners who own the sub-surface oil, gas and other minerals and who have had a prior oil and gas well drilled on their property, fully depleting formations such as the Herkimer, Oneida or Trenton Black River, leaving only the Marcellus and Utica as viable formations. Landowners with prior wells in Chenango County are potential candidates.

4. Fee Simple Owners (surface and sub-surface)

a. Fee simple owners of vacant undeveloped land, owning both the surface and sub-surface rights and purchased for oil and gas investment purposes prior to July 23, 2008.

b. The property should be located in a core Marcellus or Utica region.

c. We are looking for a property having little or no economic value in the surface. These could be properties where building or farming are impractical or where there are surface restrictions which limit surface uses, but still allow for the development of sub-surface oil and gas.

d. Properties with deed restrictions prohibiting commercial development do not qualify.

The JLCNY states that candidates who fit within one of the above categories should contact: Scott R. Kurkoski, Esq., 450 Plaza Drive, Vestal, NY 13850, 607-584-5620 or [email protected].

The JLCNY is exploring various options to fund the litigation against the state. Please do not send donations for the litigation until the JLCNY sends a specific litigation funding request. Other donations to the JLCNY are welcome.*

*Joint Landowners Coalition of New York (email received Feb 27, 2013) – JLCNY Seeks Plaintiff Candidates for its Lawsuit Against NYS