Who Hijacked Our Country

Friday, October 05, 2012

Chesapeake Energy Corp.: How to Use Eminent Domain WITHOUT Paying the Property Owners

When the government uses Eminent Domain to condemn your property, the one bright spot is that you get paid market value for your property that the government has “bought” from you.

But now, Chesapeake Energy Corp. has found a way to use the government’s power of Eminent Domain, but without that pesky little detail about paying the landowner whose property they’ve just seized.

Here is the exact scenario that’s been playing again and again in Texas:

Chesapeake Energy Corp. will offer money to a landowner for permission to drill for natural gas — i.e. hydraulic fracturing or fracking — underneath this person’s property.  The property owner refuses.  So Chesapeake Energy Corp. goes groveling to a Texas state agency for permission to drill on this person’s property.  Permission is granted.

And on top of that, Chesapeake doesn’t even have to pay the money that was originally offered to the property owner.

For some odd reason, the Far Right isn’t screaming in unison about “Property Rights!” and “Government Land Grab!”

The linked article is long and detailed, but it’s well worth reading and bookmarking.  Just what we all need — something else to seethe about.

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Blogger jim marquis said...

Classic Republican hypocrisy.

October 5, 2012 at 5:32 PM  
Blogger jadedj said...

It is called Free Enterprise, my friend. Is this a great cuntry, or what?

Oh, and my seething level has now been exceeded...oozing out of my fracked ears

October 6, 2012 at 6:40 AM  
Blogger Mr. Charleston said...

The is one of those slight of hand ripoffs that have been around for years. (At least a hundred years.)
Here it is: You do not own the mineral rights under your property. Nor water rights either under or on your property.
That's it. That's the entire ripoff. And it's law in all 50 states. Something done by big oil back in the day so that they can horizontal drill under your property whether you like it or not. Ain't it grand?

October 6, 2012 at 8:15 AM  
Blogger BadTux said...

Actually, Mr. Charleston, in Texas you *do* own mineral rights and water rights under your land. And if Chesapeake ever drills under your land, you're entitled to a portion of the proceeds the oil company gets for selling those minerals. What Chesapeake is doing is using drilling leases to lock out other vendors, then selling the pool to someone else to drill. What Chesapeake is doing is, when someone objects and won't lease the mineral rights, simply saying "Okay, so we won't lease the mineral rights" but using the Railroad Board to get exclusive right to drill those mineral rights anyhow.

I was recently faced with a similar situation in Louisiana when a landman approached me for rights to run a pipeline across my property. I looked up the Louisiana law and if I don't sign the right-of-way agreement, the landman has the ability under Louisiana law to file an eminent domain lawsuit against me and simply seize the pipeline right-of-way paying me only the per-acre value of the right-of-way land. The landman was offering four times what the land underlying the right-of-way was worth, based on per-acre comparables that I checked out in the surrounding area. I signed. I didn't have much choice but to sign. I could have delayed the pipeline by a few months by fighting the eminent domain lawsuit, but that's it -- the pipeline was going to be built, and it was going to be built across my land, and Louisiana law was completely behind the landman in this instance. The only reason the landman paid me more than the land was worth was because the lawyer fees for filing the eminent domain lawsuit would have been more than what he paid me, so... well. So it goes. The oil and gas companies truly have bought the law lock, stock, and barrel (of oil).

The takeaway: If a landman approaches you and offers you more than the per-acre value for rights to your land, you can string him out a bit and get a bit more (that's what I did, I ended up around $4K/acre more by stringing it out), but he *will* get those rights, period. So work the system for what you can but know he's going to get those rights so you might as well get some money out of it up front, not when someone drills...

- Badtux the Oil-and-gas Penguin

October 6, 2012 at 4:51 PM  
Blogger S.W. Anderson said...

This is infuriating, and it's wrong. Perfect example of what big-money interests like the energy industry can buy with campaign donations, lobbying and, when they think nobody's looking, flat-out bribery.

Texas, Louisiana, Arkansas and Oklahoma public officials are basically energy industry agents. Sen. James Inhofe of Oklahoma and Rep. Michael Burgess of Texas, both Republicans, are perfect examples.

If someone or a few someones with different ideas manage to get elected and start making trouble, multi-billion-dollar companies show them what the power of their money and influence can do.

As for state and local officials, all most of them are interested in when it comes to the energy industry and its practices is jobs and tax revenues. One or a few property owners with little money and no political clout, unfortunately, don't stand a chance.

October 7, 2012 at 12:05 AM  
Blogger Tom Harper said...

Jim: Yup, typical.

jadedj: Ah, free enterprise. And Jesus said "get the fuck out of my way and let me frack."

Mr. C: That's pretty grim, but it makes perfect sense.

BT: Thanks for the info. It's good to know how to work the system, for when this situation rears its head (which is quite often apparently).

SW: You're right -- infuriating and wrong. Large industries pretty much own the government, and that blunt truth comes crashing home in cases like this.

October 7, 2012 at 1:26 PM  
Blogger BadTux said...

On the other hand, the vast majority of Americans fully support fracking anywhere and everywhere if it means low natural gas prices for them and their electrical utility, and in a democracy a minority of landowners who don't want fracking near their property aren't going to stop it, period. Yes, the government is in the pay of the corporations, but in this case, at least, the corporations have the vast majority of Americans behind them. As I repeatedly point out, a minority enforcing their will upon a majority can only be done at gunpoint, and we have a word for such a notion: tyranny. As much as I find it distasteful that this pipeline on my property is going to ruin a seasonal spring (that they got past environmental review by surveying the land in the *summer* when the spring is dry), I find the notion that a minority can impose their will upon the majority even more distasteful...

-- Badtux the Contrarian Penguin

October 7, 2012 at 1:52 PM  

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