Otherwise known as “forced pooling” “compulsory pooling” or “compulsory integration” all of which end in the same result: the frackers use the government to compel landowners into gas wells. In New York, the compelled landowner has three choices as to how the state pushes them into a well:
1. Head first – pay a pro-rata share of the well costs as incurred
2. Feet first – pay pro-rata cost of the well in arrears, from production, if any
3. Sideways – get the lowest royalty possible (aka the “Amish rate”)
There is no 4th choice – they cannot opt out of the well, since the government, the state “environmental” agency, the DEC, will not let you opt out. There is of course, a 4th choice not on the menu:
Compulsory integration is literally privatized eminent domain. It confers the right to force mineral rights owners into a gas well – against their will – making them either partners in the well itself, as working interest owners liable for the costs of the well and any damages it may do, or royalty interest owners – who must take the lowest royalty of any owner in the well, with no “signing bonus”. You have 21 days to make up your mind. Once a rig is on the property to drill a 2nd well, you have 48 hours to decide whether or not you are going to participate.
In this regard, the state, the DEC is functioning as a land agent – a landman (with the power of eminent domain)- for the frackers, by coercing landowners that the frackers could not sign up. The state “environmental” agency has been, in this regard, thoroughly prostituted to the frackers.
Such privatized eminent domain is courtesy of our state “environmental” agency. Not to be confused with our state minerals management agency. Which is of course, the same agency.
Why is this so important to the debate over fracking in New York ? Because New York’s Compulsory Integration law is indicative of three key facts: 1. The lobbyists write the laws. 2. The laws will not protect New Yorkers 3. The DEC functions as minerals management agency, not an environmental agency. Chesapeake’s lobbyist wrote the entire compulsory integration law. State Sen. George Winner carried the bill for the gas industry. Then the legislature passed it unanimously. And the agency that pushes landowners into wells, the DEC, is an environmental agency in name only. When it comes to fracking, the DEC functions primarily as a minerals management agency, not as an autonomous environmental agency. Environmental agencies in other states are never tasked with forcing people to participate in a gas well. Yet fracking shills tell towns “the DEC is going to protect you”. Really ? By pushing you into a fracking gas hole.
New York’s statute is one of the worst of the various state CI laws. Our pal Harry Levine, who closely reads a lot of legal documents, leases and partnership agreements in his real estate development business, has commented on New York’s compulsory integration law – that was written by Chesapeake’s lobbyist. Here’s what he came up with, with a little input from me.