Gas Drilling : Inverse Condemnation : Private vs. Public Interests


EDITORIAL

Imagine a Neandrathal  stumbling upon a luscious piece of trail-kill 30,000 years ago  and debating  whether to share it with his hungry tribe or  eat it  himself.

Would survival of the fittest have trumped  his community’s needs?  Or would he have recognized  that food (like water) was  a Neandrathal utility — a resource essential to  the tribe’s survival  —  its consumption regulated with the common weal in mind?   Would Neandrathal society have  concocted some system of head thumps to ensure  that  fortunate ones shared with the hungry many?

Long-enshrined in our societal  understanding of survival  are two fundamental concepts that we treat with varying importance depending on the situation.

  • “A chain is only as strong as its weakest link.”  (Our community prospers when it  fosters and defends  the rights and strengths of  its members.)
  • “Ask not what your country can do for you  — ask what you can do for your country.”   (The strength of our  community  depends on the responsible generosity of its members.)

Some of the wildest and most contentious cases in Supreme Court history have attempted to resolve conflicts between  individual rights and  the community’s expectation that its larger, more inclusive  interests will predominate.

In  the earliest days of our Republic, Eminent Domain was  recognized as a  tool  inherent to the Federal Government’s mandate to “defend and protect.”   For  the  “public good,”  soldiers were billeted in Colonial homes during the Revolution  but  seizure of  private lands for permanent use  was  onerous to most early Americans and the “public use” restriction in the Fifth Amendment’s Takings Clause was strictly interpreted as a  protection against such seizures.

As  our population grew  and technology created a more mobile citizenry,  public works demanded more land for  roads, bridges and railroads.  In more recent years and in response to a landscape crammed full of skyscrapers, derricks, residential and shopping mall sprawl,  eminent domain has been used to protect open space for public enjoyment.   (The “public good” in this instance being protected  from the narrower interests of a few developers.)

Of particular interest to us in the Delaware River Basin is the  legal concept of  “inverse condemnation” which we hear with increasing frequency from  property holders demanding  they be compensated  when  regulations prohibit gas drilling on their properties.  According to a Fifth Amendment Annotation,** “While [the Fifth Amendment]  established that government may take private property, with compensation, to promote the public interest, that interest also may be served by regulation of property use….‘The distinguishing characteristic between eminent domain and the police power is that the former involves the taking of property because of its need for the public use while [police power] involves the regulation of such property to prevent the use thereof in a manner that is detrimental to the public interest.’ 251 But regulation may deprive an owner of most or all beneficial use of his property and may destroy the values of the property for the purposes to which it is suited. 252 The older cases flatly denied the possibility of compensation for this diminution of property values, 253 but the Court in 1922 established as a general principle that ‘if regulation goes too far it will be recognized as a taking.”’ 254

Later, in a 2002 case,  (Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency)  The U.S. Supreme Court found that, “Moratoria on all development in Lake Tahoe Basin area for a period totaling 32 months, imposed by a regional planning agency while formulating a land use plan for the area, were not per se takings of property requiring compensation under the Takings Clause.”

In a seemingly oblique but related development,  corporations attained “personhood”  when The U. S. Supreme Court stated in  Minneapolis & St. Louis Railroad Co. v. Beckwith (1889) “…corporations are persons within the meaning of the [Due Process and Equal Protection clauses of the Fourteenth Amendment]….    We admit also… that corporations can invoke the benefits of provisions of the constitution and laws which guaranty [sic] to persons the enjoyment of property, or afford to them the means for its protection, or prohibit legislation injuriously affecting it.”   (Bold added for emphasis.)

As the trend toward  condemnation of privately held lands has become more usual,  eminent domain actions have increasingly benefited “corporate  persons” in the guise of  public interests.  This trend  occasioned public outrage in 2005,  when The Court ruled in   Kelo v. New London that  privately-held  property could be  seized by a government  and handed over to  a private corporation  for the public benefit —  while said corporation stood to reap a boatload of  profits.

I would never deny just compensation to landholders whose property is seized for the public good but as I write this,  Congress has just launched  an investigation into  gas drilling practices  and their  potential harm to the environment.   Perhaps we should await its findings before deciding that those practices are either legal or in the public interest, as NYS Senator Bonacic has contended.

In that context, NYS  Senator John  Bonacic, the Northern Wayne Property  Owners’ Association (NWPOA) and energy corporations  have  begun a campaign of hostage-taking.  In an  “Alice-Down-The-Rabbit-Hole” logical warp,  they have demanded that millions of people who depend on water from the Delaware River Basin and New York City Watershed pay  landholders NOT to risk  that water supply with a toxic soup of corporate fracking fluids.

“Bizarre-o!”  as my friend Amanda might say.  Or more elegantly,  I refer you to  Cliff Westfall’s analogy of a few days ago, “What if I decided to burn down the woods on my land, claiming it was the cheapest way to clear a field, with no concern for preventing its spread to my neighbor’s house?  Of course the government could regulate that. The bottom line is this: the government may prevent you from doing things on your property when those actions would harm public welfare.”   In further explanation of Mr. Westfall’s comparison,  please understand that  fracturing fluids  used in gas drilling are injected underground,  may travel as much as 6,000 feet and their  direction is neither predictable nor controllable…like a forest fire.

It is inconceivable  that Senator Bonacic and the NWPOA  truly believe that in our current economic crisis any governmental entity (or body of taxpayers) has the means to pay the ransom.  The national unemployment rate is blowing up in our faces.  Tax revenues are plummeting.  Small businesses are dying.  Our infrastructure is crumbling and our children are moving back home and forsaking dreams of college.  In the event NWPOA or some other organization of  lessors prevails in  a lawsuit demanding compensation for the value of their  mineral rights,  every taxpayer, student and worker who does not  benefit from gas royalties will lose.  And the sure winners?  Drilling companies who stand in the background ready to reap the  profits.

Given the latest U.S. Supreme Court decision which found in Citizens United v. Federal Election Commission —  a la George Orwell’s  Animal Farm —  that some “persons”  and their lobbyists  “are more equal than others,” we should not doubt the risk faced by our water and our Republic.

And given the evolutionary demise of Neandrathal,  I can’t help but wonder if  he decided to eat the whole thing all by himself.

Urge the Delaware River Basin Commission and the US Congress  to  enact moratoria  on drilling. It’s for the “public good”  because,  as more and more people are beginning to remember,  “We cannot drink gas  nor grow our food with it.”

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*   “…nor shall private property be taken for public use, without just compensation.”

**In general, compensation must be paid when a restriction on the use of property is so extensive that it is tantamount to confiscation of the property.

In the Mahon case, Justice Holmes for the Court, over Justice Brandeis’ vigorous dissent, held unconstitutional a state statute prohibiting subsurface mining in regions where it presented a danger of subsidence for homeowners. The homeowners had purchased by deeds which reserved to the coal companies ownership of subsurface mining rights and which held the companies harmless for damage caused by subsurface mining operations. The statute thus gave the homeowners more than they had been able to obtain through contracting, and at the same time deprived the coal companies of the entire value of their subsurface estates. The Court observed that ”[f]or practical purposes, the right to coal consists in the right to mine,” and that the statute, by making it ”commercially impracticable to mine certain coal,” had essentially ”the same effect for constitutional purposes as appropriating or destroying it.” 255 The regulation, therefore, in precluding the companies from exercising any mining rights whatever, went ”too far.” 256 However, when presented 65 years later with a very similar restriction on coal mining, the Court upheld it in Keystone Bituminous Coal Ass’n v. DeBenedictis. 257 Unlike its precursor, the Court explained, the newer law ”does not merely involve a balancing of the private economic interests of coal companies against the private interests of the surface owners.” 258 Instead, the state had identified ”important public interests” (e.g., conservation, protection of water supplies, preservation of land values for taxation) and had broadened the law to apply regardless of whether the surface and mineral estates were in separate ownership. A second factor distinguishing Keystone from Mahon, the Court explained, was the absence of proof that the new subsidence law made it ”commercially impracticable” for the coal companies to continue mining. 259 The Court rejected efforts to define separate segments of property for taking purposes–either the coal in place under protected structures, or the ”support estate” recognized under Pennsylvania law. 260 Economic impact is measured by reference to the property as a whole; consideration of the coal placed off limits to mining as merely part of a larger estate and not as a separate estate undermined the commercial impracticability argument.

In a case examining a Moratorium imposed on development in the Lake Tahoe area, the U.S. Supreme Court has decided that a moratorium on development is not necessarily a taking, and that regulatory takings cases must be decided on a case-by-case basis rather than on categorical rules, Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency, 535 U.S. 302, 122 S. Ct. 1465, 152 L. Ed. 2d 517 (U.S., Apr 23, 2002) (NO. 00-1167).  …the Court held that because the regulation was temporary, it could not constitute a categorical taking.”

DRBC Hearing On Stone Energy Draws Nearly Unanimous Opposition


I apologize for the delay in posting these notes on the February 24, 2010   Delaware River Basin Commission’s  (DRBC)  Public Hearing  at which two applications by Stone Energy were considered.  (Like most of you, we’ve been trying to find our driveway and a couple of  buried vehicles.)  For a better understanding of the comments reported here,  please  View Draft Dockets D-2009-013-1and D-2009-018-1.


All but five  speakers who addressed  Stone Energy’s  applications opposed  them.  Virtually all those opponents asked the Commission to impose a moratorium on gas drilling until the cumulative impacts of  the industry’s activities could be studied.

Small business owners testified that they were hesitant to build or expand enterprises in the Delaware River Basin for fear of  the adverse economic impacts of drilling and hydraulic fracturing.

Susan Blenkensap  stated,   “My neighbor is  a  lifelong  resident. She had  a real estate agency  for   30 years.  She closed her doors because she couldn’t, in conscience,  sell property  to   people   when the land is under threat of drilling.”

Ryan Wood-Beauchamp  was concerned about property values.  “What if we can’t sell our homes?  And what about the  FHA [Federal Housing Administration]?”  (It was an allusion to FHA rules which state,   “No existing home may be located closer than  300 feet from an active or planned drilling site.  If an operating well is located in a single family subdivision, no new or proposed house may be built within 75 feet of the operating well.”)

Jessica Corrigan owns an outdoor experience business.   “Our house burnt down,” she said.   “We don’t know what to do.   Should we rebuild  under this threat?

One landowner who has joined the Northern Wayne Property Owners’ Association  — an organization  that supports drilling and  claims to represent  80,000 leased acres — says he has not leased and lies awake at night hoping that drilling does not come to his area.

Al Benner is  contemplating developing an organic  farm but he’s “hesitant to do it. People aren’t thinking about the long term impact on our quality of  life.  We have  hundreds of summer camps.     That revenue will be wiped out  if reports surface about  benzene and toluene  in the  water up here. Drilling  could decimate this region for generations.”

Like many other speakers, Greg Schwartz, an organic vegetable farmer in the Upper Basin insisted the Commission  quantify  all  the  potential  drilling operations  in  the Basin.  “If  you don’t make a decision about the cumulative impacts,  you will abrogate your legal   responsibility  to the  Basin and that would be actionable.  I am an organic vegetable farmer.   I   rely on  biologically healthy soil.  I’m afraid  drilling will destroy  my business.  I urge  you to resist  today’s political pressure.”   (Breathing has presented information on  the  growth of organic farms nationally and in New York State.)

Bernard Handler  addressed Stone Energy’s documented  illegal activities in the Basin,  “Stone Energy has already violated the rules of the DRBC by drilling in The Basin without permission.  They were also non-responsive to the Commission’s requests to respond, ignoring letters, etc.  Now they come with hat in hand and we are  supposed to believe they are the good guys.  They have already set up a drill pad,  drilled 8350 feet,  transported toxic water out of  The Basin and buried drill cuttings underground without following the DRBC’s guidelines.”

A DRBC press release on 6/9/08 “announced that [the DRBC]  has informed Stone Energy Corporation that it will need to apply for and receive approval from the Commission before it can extract natural gas in Wayne County, Pennsylvania…”

The letter was an official statement from the DRBC that Stone Energy  had violated DRBC regulations by commencing drilling without  obtaining DRBC’s  approval.

DRBC’s own Docket No. D-D-2009-18-1 says  that Stone Energy drilled   the vertical well  on a date uncertain “between  May 9, 2008 and June 2, 2008.”   Because he DRBC’s knowledge of many of the well’s specifications is not first-hand, the Commission has been forced to rely  on  Stone Energy’s application which “indicates it  was constructed in accordance with PADEP  [Pennsylvania Department of Environmental Protection] Chapter  78 Subchapter D regulations.”  There is nothing in the Docket describing the diligence or  scope of  PADEP’s oversight of Stone Energy’s construction of the well,  the company’s  subsequent withdrawal and transport of   toxic water,  nor its burying of its drill cuttings.

Because drill cuttings are recognized as a source of toxins, The Pennsylvania Legal Code describes the  required  disposal procedure.

It is also important to note that as a matter of law,  the DRBC’s  rules supersede Pennsylvania’s Department of Environmental Protection.

According to the Docket,  on  June 6, 2008,  “the DRBC  requested that an Application for  the M1 Well Site be submitted to the Commission for review and approval.”

Four months later (December 2008) after  “Stone drilled and cased the M1 well without Commission approval,   a settlement agreement between Stone and the Commission required Stone to submit an application to the DRBC for  review and approval of the well and to  pay a fine as specified in the settlement agreement.”  According to The Upper Delaware Council’s meeting minutes from March 5, 2009,  Stone Energy paid a fine of $70,000. The well was capped before gas was extracted.  (See faulty well casings cited in Ohio house explosion.)

Finally, two months later (February 13, 2009)  “Stone submitted an application to the Commission for approval of the  existing M1 Well”  and this past Wednesday,  Mr. Handler’s outrage that the DRBC would consider granting two applications by Stone Energy was echoed over and over again by  Hearing attendees.  “After all,  how can the DRBC even consider approving  an application from a corporation which has already treated the Commission, its rules, The Basin and its environmental health with such disdain.  To even hold a hearing on the application makes the DRBC complicit in  rendering itself  ethically and, perhaps, legally irrelevant,”  said one speaker.

One man who lives within a few miles of the existing well  was overcome by emotion and was unable to complete his statement which began,   “It’s upsetting to me  how   our community’s being divided,  neighbors against neighbors.    It’s about the companies being  given leeway to run roughshod  over everybody.    I’m  not angry at my neighbors for leasing  their land. We’re all having a  tough time.  But if  you’re going to lease the land, at least accept there’s some dangers here.  I see people shaking their  heads  about proven   damage that’s happened.  At least  accept that if you lease  you’re  taking a  risk.  I’m pissed.  Taxpayers fund these corporations.”

Marian Schweighofer, founder of the Northern Wayne Property Owners’ Association and an  advocate of gas drilling and hydraulic fracturing,  supported approval of  Stone Energy’s applications.    Holding up a map of Wayne County,  she announced that her membership represents 80,000 leased acres.   She addressed  the issue of  “inverse condemnation”  which prevents  landholders from leasing their  mineral rights but does not provide them with compensation for the resultant loss of revenues and reduction in the value of their properties.   In fact, her  sentiments  have been echoed  by New York State Senator John Bonacic,  in response to New York City’s demand for a moratorium on drilling in the New York City Watershed, “Let them buy the development rights,” he says. “For those landowners who want to sell their gas rights, let the City pay the same market rate to keep the land undeveloped. We buy agricultural development rights for tracts of land we want to preserve. Let those who oppose the lawful exploration and extraction of gas in the Catskills (do the same).”

Opponents of  compensation believe Bonacic’s idea  is an open-ended scheme with a wide range of unintended consequences. For instance,  Cliff Westfall asks in a reply to Ms. Schweighofer, “What if I decided to burn down the woods on my land, claiming it was the cheapest way to clear a field, with no concern for preventing its spread to my neighbor’s house?  Of course the government could regulate that. The bottom line is this: the government may prevent you from doing things on your property when those actions would harm public welfare.”

Fracturing fluids injected underground may travel as much as 6,000 feet.  Their  direction is neither predictable nor controllable.

Although the Fifth Amendment  of the Constitution ensures against ” private property [being]  taken for public use, without just compensation,”  courts have generally supported the  common good over the pecuniary benefit of a few.  In  Penn Central Transportation Co. v. New York City,  The U.S. Supreme Court held, among other things, that  “In a wide variety of contexts, the government may execute laws or programs that adversely affect recognized economic values without its action constituting a ‘taking,’ and, in instances such as zoning laws where a state tribunal has reasonably concluded that ‘the health, safety, morals, or general welfare’ would be promoted by prohibiting particular contemplated uses of land, this Court has upheld land use regulations that destroyed or adversely affected real property interests.”  *
Sandra Folzer owns a 50 acre farm in  Tioga County and   was offered  250 thousand dollars to sign  a lease.  She refused.  “Water  is more important than gas.  I can’t drink  gas.   My neighbor  is  pushing me to sign  but fracking is not  tried  and true.  Fracking   the  shale has only been happening  since 2005.  New Mexico  has to tank in all its own water.  Aquifers are being depleted in Florida.   Mexico City is sinking because too much water is being taken from its aquifers.  Israel  buys its water from Turkey.    Remember  the Alamo?  It’s  dried up.”
One speaker said,  “Everyone talks about their rights.  They don’t talk about their responsibilities, though.”

A bus load of  residents  traveled  three hours to comment at the hearing and were adamant that the DRBC schedule additional hearings   in the Lower Delaware River Basin. “Philadelphia gets all its water from The Basin,”  was a common refrain.

Tanyette Colon  said she is a mother first and foremost.  “Norway  and  Italy are in  Pennsylvania  subsidizing  fracking efforts  but they won’t allow  it  in their own countries.  If this application is granted,  it  will  send a message to  gas companies  that it’s okay to  illegally   drill wells  because they’ll  get a slap on the hand  but ultimately get their way.   Residents  of Pennsylvania  don’t deserve it.”

Several speakers addressed  the environmental impacts of Stone Energy’s applications  on The Lackawaxen River  which  was named  “Pennsylvania’s River of the Year” by the Department of Conservation and Natural Resources.  Joe Zenes carried a picture of the proposed withdrawal site and, while waiting for the Hearing to begin,  worried what Stone Energy’s proposed minimum  5.9  cubic foot per second (cfs)  stream flow  would do to the stream.  “It’ll disappear,”  he grunted.  “It’ll be a trickle.”

David Jones who owns and operates Kittatinny Canoes,  supported Stone Energy’s  plans and suggested allowing  greater  withdrawals when the Lackawaxen is running higher. “Store it when there’s more volume.  This project is the start of something.  The world, the  country, our   area  needs this   industy.   This is our future.  It will save our area.  It’ll protect it from development.   Let’s not forget about  private property.  It’s  our right to harvest it.     Lengthy studies are a delay tactic.    Let’s  study  every single industry that takes  water from the basin.  Why just gas drilling?  I  depend on this water for my livelihood.  New York City  wastes  100  million  gallons  of water   regularly.    This withdrawal  represents   an olympic size   swimming  pool.   Dockets are approved all the time.  This   is discrimination.”

Bruce Ferguson responded to Mr. Jones’ claims  that  lengthy studies are the reason for delays.  “The [gas]  industry  is slowing down the process.  Let   studies go forward  so we can   move forward.   The  [Fracturing and Awareness of Chemicals Act]   would   restore  protections we lost in 2005.  It’s a very modest piece of legislation and it’s being fought tooth  and nail  by an  industry that simultaneously claims   fracking is  perfectly safe.”

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*Practically speaking and considering New York State’s 8.8% unemployment rate (10.4% in New York City) should taxpayers be  forced to underwrite landholder compensation for mineral rights  just as Congress launches  an investigation into  gas drilling practices  and their  potential harm to the environment?

(Inverse Condemnation is not a simple issue and Breathing would very much appreciate Ms. Schweighofer amplifying her point of view in an article  that will be published  in its entirety.  Likewise,   Mr. David Jones  and I spoke for a quarter hour or more during a break in the Hearing  and I’ve asked him to submit an article which I will publish as  written.  I think we would all benefit from their contributions to this forum. I would also like to express my appreciation to Mr. Jones for his attendance at The Light Up The Delaware River Party.  Most attendees were decidedly against drilling in The Basin and  he should be congratulated for joining us.  Kudos,  Mr. Jones!)