NY and Compulsory Integration – MDN Agrees with Slottje (!)

David Slottje and his wife Helen are both lawyers funded in part by the Park Foundation (in Ithaca, NY) to run around trying to convince local town boards in New York to ban hydraulic fracturing. They are, in a word, the enemies of landowner property rights. They seek to deny landowners who want to lease their land for gas drilling the right to do so.

So when MDN read an editorial (not surprisingly) in the Ithaca Journal written by David Slottje that makes reference to the rumored plan by Gov. Cuomo to allow limited drilling in five counties as being “devastating” to landowner property rights, it was a laugh-out-loud moment. The height of hypocrisy and arrogance to say landowner rights will be devastated by the very person doing the most to devastate them.

But what wasn’t so funny was that getting beyond the rank hypocrisy and looking at the substance of what Slottje wrote, MDN had to agree with his viewpoint—on this one particular issue.

What is that issue? Forced pooling, or as it’s called in New York, “compulsory integration.” It’s the concept that for every 640 acre unit of drilling (one square mile), if drillers lease at least 60% of the land in that unit, the other landowners in the unit can be forced to allow drilling under their land.

Here’s what Slottje wrote:

Many people assume that companies are legally allowed to frack only on properties where they have obtained leases and that if you do not want to allow your property to be used for fracking, or haven’t yet decided, you can stop them from doing so. But as the governor knows, this is not the case.

State law provides that fracking companies are not limited to using only property they have leased. Indeed, industry proponents concede they might not be able to drill profitably at all unless they were also allowed to invoke compulsory integration so as to be able to use the property of people who have not leased.

Compulsory integration is a two-part process. First, "spacing units" are established — essentially, the area under which the fracking company wants to drill. For Marcellus Shale wells, spacing units are anticipated to encompass 640 acres, or one square mile, each. Next comes the actual compulsory (forced) integration component. So long as a fracking company provides an un-notarized affidavit that it controls at least 384 acres within the spacing unit (being 60 percent), owners of the remaining 40 percent of the property (256 acres) are legally required to allow the driller to frack under their land.

Unbelievably, the compulsory integration law does not provide compensation for using their land to the people who are forced to participate (though they may receive royalty-type payments, depending on whether the gas company says the well was profitable).*

MDN will not win any friends with this particular post—but we believe our position is the consistent one. Slottje wants to deny landowners their right to drill. The drilling industry wants to leverage their leases and not have to “drill around” what may be a single landowner who holds out for more money, or perhaps doesn’t want to be drilled under based on personal principle and preference. That is, industry wants to force some landowners to drill.

MDN says, let anyone who wants drilling, within the guidelines established by the SGEIS, be allowed to do so. And if a landowner doesn’t want to be drilled under, that’s their right too. Property rights are sacrosanct and are guaranteed by our (now under attack and withering) Constitution.

No one should be forced to allow drilling, and no one should be forced to not allow drilling. It is the individual landowner who should be empowered to make that decision. Therefore, MDN comes down squarely against compulsory integration, and we hope that the New York legislature will fix this giant loophole.

*Ithaca Journal (Jul 2, 2012) – Guest Viewpoint: Landowners should not be compelled to drill for gas