Phillip Simpson has written a detailed paper that addresses regulatory takings of mineral rights. Or more prosaically how such rights are not “taken” by local land use ordinances, despite the fracker’s fairy tales to the contrary. A mineral owners rights are actually more in jeopardy from the frackers themselves and their government allies via compulsory integration – which is privatized eminent domain courtesy of the “environmentalists” at the DEC. Will look into New York’s CI law in more detail in this post.
Here is my original post on the subject:
1. There are no instances of regulatory takings of oil and gas interests in the United States
2. New York is in the United States
3. Any questions ?
Guess what – there probably won’t be any valid takings claims on gas interests. Frackers threaten “takings” – generally to get at town board to do nothing. Which is not a stretch for some town boards that are predisposed to sell-out to frackers. . . . .the carrot and stick approach works just fine.
To prove a taking, you have to prove that you been deprived of all economic use of your property. Then the plaintiff would have to prove what they lost – in order to establish a dollar amount. Merely decreasing the value of the property (“diminution” in lawyer-talk) is insufficient to establish a takings. Loss of potential profit on a speculative well is not even on the radar. The owner has to be deprived of all beneficial use of their property. Not some use. All uses. And they have to prove what that loss was worth. Not estimate. Prove $$$. Even the pro fracking New York Farm Bureau says mineral rights are impossible to value for tax purpose, ie. worthless for tax appraisal purposes.
Let’s take two examples where Fracking Tom West threatened a takings. More or less for the purpose of making a threat. Another stunt to get press coverage ?
Anschutz v Dryden
Anschutz does not own any real property in Dryden – they leased some mineral rights on a temporary basis to prospect for gas. A leasehold interest is “personal property” – and not subject to takings claim, which apply to “real property”. Theirs was a purely speculative venture with purely speculative value – on a leasehold. They had no permits from the DEC to drill on the leased property. And had they drilled – they’d likely be dry holes – based on the results of similar test wells.
They probably were searching for Utica dry gas
Which is uneconomic during the term of their lease, so their hypothetical $ claim = zero
Dryden’s land use ordinance would preclude such shale gas industrialization = no permits
Dryden saved Anschutz the cost of some dry holes – (You’re welcome !)
Cooperstown Holstein vs Middlefield
A gas prospector leased some of Cooperstown Holstein’s mineral rights. Gastem, a gas prospector, drilled some dry holes in the neighborhood, then decamped the county. Gastem subsequently put all their leased acreage up for sale.
Cooperstown Holstein made money leasing their mineral rights to prospect for gas. Cooperstown Holstein’s mineral rights are probably worth nothing. No gas prospectors bothered to pull a permit to drill on Cooperstown Holstein’s land. These circumstances do not bode well for establishing a regulatory taking. None occurred: Cooperstown Holstein still owns its mineral rights, its land, its Holsteins, etc. The court upheld Middlefield’s zoning law to protect the town from the hazards of shale gas industrialization.
They might argue that they have been deprived of all use of their mineral rights. But they have not – they still own their mineral rights – and can use them. They just don’t have a way to safely extract the gas without causing significant environmental damage. Some day it might be safe to extract gas from those shale deposits. Until that day, would discount threats of “regulatory takings” of mineral rights, the legal term for which is “complete and utter bullshit” Courtesy of fracking blowhards like Johnny Hole Co.