Are You Feeling Gas Pains?
Increased demand for methane and natural gas extraction are adversely affecting conservation values. Hydraulic fracturing or “fracking” and forced pooling laws in many states pose challenges for land trusts and land owners alike. Below are some tips for you to think about when you review your easement drafting to ensure that clauses address state laws and all extraction methods
Two recent cases in Pennsylvania litigated the effectiveness of two conservation easements in limiting or prohibiting gas drilling. This is the beginning of a trend of landowners taking these disputes to court and testing the strength of conservation drafting. In one case, the court decided that drilling for gas was “not clearly and unambiguously prohibited by the conservation easement” and denied the easement holder’s motion to dismiss the landowner’s case to drill for natural gas on the protected property. Litigators are concerned that the easement clause did not fully conform to state laws in that case.
Yet in another case around the same time, in a different Pennsylvania court, the judge upheld a conservation easement finding that it unambiguously prohibited horizontal drilling proposed by the successor landowners, and that the purposes of the easement went beyond simply protecting the surface of the protected property.
Clearly drafting the purposes of the conservation easement is as critical as drafting the prohibition. The purposes section should connect the dots for the reader whether the judge, jury, successor landowner, or land trust personnel into the future. The purposes need to state not only what attributes the property has, but how those attributes interrelate and support each other and what makes them so critical to preserve even when powerful economic drivers or successor landowner free use of their land for permitted purposes pose significant challenges.
History of Fracking
Fracking uses large quantities of water at high pressures to fracture geological barriers to gas extraction. Combined with horizontal drilling, the use of explosives, and the addition of proprietary chemicals and particulates, fracking is now an extremely effective method of releasing gas from deposits that were previously considered unviable, such as deposits in shale, tight sand, and coal beds. Further, tax issues may arise when landowners seek to profit from property that was donated as a tax-deductible charitable contribution (as is further detailed in the guide to financial management below). See the document on forced pooling statutes below to see the rules in your state.
Developers first used modern fracking techniques in the Barnett Shale in Fort Worth, Texas. The technology was so successful that it has inspired development projects in Pennsylvania, New York, Arkansas, Tennessee, Louisiana, Colorado, and Wyoming, to name only a few. In these states, severed mineral rights that were previously considered a minimal risk to conservation may change the easement property significantly and lead to requests for amendment or extinguishment (as was seen in Hicks v. Dowd). See the maps below to see if your area is a candidate for fracking development.
Resources for Land Trusts and Land Owners
A resource collection on The Learning Center's Conservation Defense Clearinghouse assists conservation organizations to make informed decisions regarding hydrofracking and coalbed methane extraction projects on conserved property. The collection contains resources to help land trusts determine what their local development issues may be, information on legal issues related to oil and gas projects, and examples of how others have worked with these issues. These resources include:
- maps of oil and gas resources in the United States;
- a list of states with forced pooling statutes;
- notes, reports, and guides on oil and gas development; and
- recent legal cases where resource development was an issue.