West Virginia Landscape

Who Owns the Land (Part 2 of  3)

Commentary by S. Tom Bond, Resident Farmer, Lewis County, WV

Land in this country originally belonged almost entirely to individuals. The principal industry at the time was the acquisition of products of the land, won by hard labor. Experience in Europe had shown that concentrated land ownership produced inefficient use, separation of the population into different social classes, and frequent change of ownership of estates for service to the king, with little regard for best utilization of the land.

When the new United States began, the objectives were to minimize social differences among people, and to maximize the efficiency of producing goods from the use of resources, namely obtaining products of the land. Industry and trade were important, but mostly privately owned and lacking the complex legal structure of today. So both land ownership and business ownership were relatively dispersed. However, from the beginning, the government retained “eminent domain.” This was recognition that the function of a government was to regulate society to benefit all. So “ownership” is ultimately a right to operate land and pass it to ones designated heirs. The owner has “tenure,” but his or her use is for the public good.

Other arrangements are possible, of course. But, the point here is: “ownership,” as frequently thought of, is an inadequate conception. One “owns” (has tenure) land (or any other business) for his/her lifetime so long as they have a viable enterprise. When mineral extraction reduces the production of the surface it is damage not only to the present owner, in his ability to pay his debts and live well, to pay taxes, to enjoy the product of his labor, it injures future generations as well.

The unpaid for costs (including health effects and a host of other problems) of mineral extraction are referred to as “externalized costs” in economics. They have characterized mineral extraction for all history. I can show you the marks of coal mining, deep and strip mining, and I can show you the effects of early oil and gas extraction.

The previous injuries to the surface in Appalachia are huge, as everyone knows, but are relatively small in extent compared to what is coming with shale drilling. Six to ten or more acres paved out of each square mile for 100,000 square miles of Appalachia alone. Mini brownfields on many of them. Hundreds of miles of new pipeline right of way, kept cleared by spraying or brush cutting until the last gas has passed through.

This loss of productive capacity and value to the present tenants is a devastating loss. It is a loss to society, too.

If you look at aerial photographs or satellite pictures you have to be impressed with the percent of land area that already is “built up,” not having vegetative cover. If the increase in population projected occurs, still more land will be converted to accommodate it. The industrialization and one time, historically short term (probably no more than 20-25 years) use of rural land for shale drilling is a great loss to future generations.

Why is this not thought of? Shale drilling is the most hyped industry of our time, perhaps ever. It uses little labor compared to the total expenditure – it is capital intensive. The abundance of cash and the drive for additional investment make subordination of government and public opinion necessary. Corporations live in the present. The past is no lesson and the future is no worry. They hustle for immediate returns.

Most of our citizens are not aware of the need for environmental regulations, preferring amusements and taking a stance of  ”I can’t do anything about it, so why try?” The government and the business community can only see industrial development as a way forward – doing the same thing over and over and expecting different results, as Einstein said.

So the law is one-sided (as explained in my previous article) and the legal establishment is enriching itself by stretching it to the limit. Regulatory agencies and the legislature consist of people who have too much to do to spend time in study or field work, and are fully subject to the necessity to get campaign funds for the next election.

So where does that leave the public interest? Big looser! One more reckoning day ignored. One more Sword of Damocles over public interests.

Next: The final part of the series: The Extraction Syndrome

EcoWatch, July 13, 2012

National Casualty, an insurance company that operates under the umbrella of Nationwide Mutual Insurance Co., has officially become the first major insurer to announce that it won’t cover damages related to fracking operations.

According to a statement released by the company, “From an underwriting standpoint, we do not have a comfort level with the unique risks associated with the fracking process to provide coverage at a reasonable price.”

This is a major step forward for the countless Americans who are opposed to the fracking process, and to those whose health, property and livelihoods have been directly affected by contaminated drinking water and polluted air.

This could also be a major step forward in the exhausting process of getting political leaders to recognize its dangers and implement legislation to protect the public. The timing could serve New Yorkers well as Gov. Andrew Cuomo is set to make a decision soon that will determine whether or not fracking operations will be allowed to move forward in select counties.

Nationwide, an Ohio-based company, has also hopefully sent a clear message to Ohio legislators—most importantly Gov. John Kasich—who continue to accommodate the oil and gas industry at the expense of the public.

“When a company with the scope of Nationwide Insurance determines that property with fracking is too risky and too dangerous to insure, political leaders considering the practice would be wise to take heed,” said Wenonah Hauter, executive director of Food & Water Watch. “What countless families, farmers and small business owners across the nation have already figured out—that fracking just can’t be done safely—national corporations with a stake in our land are now realizing as well. Nationwide isn’t willing to risk its bottom line over fracking, and our elected leaders shouldn’t be willing to risk the health and safety of those they serve.”

According to the Associated Press, the Nationwide policy came to light when an internal memo detailing underwriting guidelines was posted on websites of upstate New York anti-fracking groups and landowner coalitions seeking gas leases. Nancy Smeltzer, a spokeswoman for Nationwide, confirmed that the memo was genuine but said it wasn’t intended for public dissemination.

The memo states: “After months of research and discussion, we have determined that the exposures presented by hydraulic fracturing are too great to ignore. Risks involved with hydraulic fracturing are now prohibited for General Liability, Commercial Auto, Motor Truck Cargo, Auto Physical Damage and Public Auto (insurance) coverage.”

It also states that “prohibited risks” apply to landowners who lease land for shale gas drilling and contractors involved in fracking operations, including those who haul water to and from drill sites; pipe and lumber haulers; and operators of bulldozers, dump trucks and other vehicles used in drill site preparation, according to the Associated Press.

In response to the leaked document, Nationwide issued this response:

Nationwide has not changed our policies or guidelines. Fracking related losses have never been a covered loss under a personal or commercial lines policy.

Nationwide’s personal and commercial lines insurance policies were not designed to provide coverage for any fracking-related risks. However, Nationwide will investigate all claims submitted by our customers that they believe are the result of damage from fracking. Every Nationwide claim is reviewed on a case-by-case basis.

Insurance works when a carrier can accurately price the coverage to match the risks. When information and claims experience are not available to fully understand the scope of a given risk, carriers aren’t able to price protection that would be fair to both the customer and the company. From an underwriting standpoint, we do not have a comfort level with the unique risks associated with the fracking process to provide coverage at a reasonable price.

Insurance is a contract and it is designed to cover certain risks. Risks like flooding and mining or drilling are not part of our contracts, and the customer should seek out an insurer that handles these customized types of insurance.

Joe Case, Nationwide Mutual Insurance Company

If Nationwide doesn’t feel comfortable with the risks of fracking operations, political leaders should take note: It’s not good business, it’s not in the interest of public health and it’s not wanted.

You can make your voice heard on the West Lawn of the U.S. Capitol, Washington, D.C. from 10 a.m. to 2 p.m. this July 28 at the nation’s largest-ever anti-fracking rally, labeled “Stop the Frack Attack.”

Visit EcoWatch’s FRACKING page for more related news on this topic.

A suit filed on Thursday and heard in Monongalia Circuit Court on Friday states that the new Morgantown City ordinance, which bans horizontal drilling with fracking, infringes on Enrout’s rights as a land and mineral owner and amounts to an unconstitutional taking and by failing to read the ordinance in its entirety, the city failed to follow its own charter, thereby invalidating the ordinance. 

The suit asks the court to void the ordinance and grant any other appropriate relief. It also requests a temporary restraining order and preliminary injunction, citing irreparable harm in halting operations already under way, as reported in the Morgantown Dominion Post on June 25^th.

Morgantown may have a small legal victory at this point. Judge Russell Clawges denied the motion for a preliminary injunction and temporary restraining order to stop the City from enforcing its law. City Attorney Steven Fanok said that won’t halt Northeast Natural Energy’s drilling at the Morgantown Industrial Park Marcellus gas well pad, but will prevent the company from fracking when drilling is complete. Fanok said Clawges merely stated that at this time, a temporary restraining order would be inappropriate.

At the hearing, Fanok said, it was explained to the court that the gas well operation wouldn’t be in violation until fracking would begin. Northeast can continue drilling until then.

Northeast President Michael John issued this statement Friday: “While we had hoped to avoid legal action, it has become apparent that the judicial system is the only recourse to protect our rights and investment in our wells in the Morgantown Industrial Park. … We are also encouraged that the court recognized that the City of Morgantown has changed the rules after we have invested more than $7 million in this project and we will seek full compensation for Morgantown’s attempt to unlawfully take our property rights.” 

(Northeast can still drill a vertical well, frack it, and produce the gas if a permit is obtained from the City, subject to a legal interpretation and ruling on the new ordinance.)