NY Farm Bureau Supports ‘Safe & Responsible’ Drilling

But Opposes Unequal Treatment by Compulsory Integration Law

While the New York Farm Bureau supports “safe and responsible development of natural gas in a manner that protects our land and water,”¹ it is challenging several aspects of New York State’s compulsory integration law.

The industry-written law was passed in 2005 with no public hearings.  It treats property owners who willingly sign shale gas drilling leases differently from landowners who are forced into drilling units by the law.

This unequal treatment ranges from lower royalty rates, denial of a signing bonus, potentially high financial risk penalties including paying a percentage of actual well costs, and other liabilities.  The 2005 law is seen by some as legally and politically vulnerable.²

Three different pieces of legislation to amend the law are supported by the Farm Bureau:³

• Require equal royalty payments to landowners forced into a drilling unit versus current law that provides more favorable treatment to property owners willing to lease.  This bill would require royalty payments “to be equal to the highest royalty in the [drilling] unit or 18.75% at the minimum.”  (Bills S. 3659 – Sponsor:  Senator Valesky; and A. 3082 – Sponsor:  Assemblywoman Lupardo)

• Boost the amount of leased acreage required to trigger compulsory integration in a potential drilling or spacing unit to 75% – up from the current 60%.  (Bill S. 7167 – Sponsor: Senator Grisanti))

• Extend the right of landowners to cancel a signed oil or gas lease from 3 days to 5 days or a full business week.  (Bills S. 750 – Sponsor:  Senator Young; and A 6211 – Sponsor:  Assemblyman Magee)

Jeff Williams is Deputy Director & Manager of Governmental Relations for the New York Farm Bureau.  He was involved in legislative/industry discussions over the 2005 law; and he is also a member of the High-Volume Hydraulic Fracturing Advisory Panel of the New York Department of Environmental Conservation (DEC).

The 18-member panel, originally announced by the DEC in 2011, comprises industry, environmental and elected officials.⁴

Williams told me that, originally, the Farm Bureau opposed the compulsory integration bill, which caused a storm with the Assembly sponsor of the bill, William Parment.  Parment (Democrat, District 150) announced his retirement in 2010.

Williams recalls much excitement in 2005 over the Trenton Black River formation – a large “play” that could potentially bring economic benefit to New York State and landowners.  Back then, high-volume (horizontal) hydraulic fracturing was not an issue as industry was doing vertical fracturing in the state.

During the 2005 legislative negotiations over the proposed law, equalizing the royalty rate between willing and forced gas leaseholders was a nonstart for industry participants, according to Williams.  In fact, the industry threatened to leave New York State.

After some amendments to the proposed bill, the Farm Bureau changed its stance to “no position,” as noted in Williams’ letter to Richard Platkin, Counsel to Governor George Pataki at that time.

Today, the New York Farm Bureau is the primary organization pushing legislation to equalize royalties and make other changes in the compulsory integration law in order to “provide protections for landowners.”

Ashur Terwilliger is President & State Director of the NY Farm Bureau’s District 4.  He is not a fan of “taking” property rights at either the federal or the state level.  As he told me, “The most important thing on my agenda is private property rights! You pay taxes and then someone comes in and steps on your rights?!”

His personal position reflects “Farm Bureau Beliefs,” as stated on the organization’s website:  “Property rights are among the human rights essential to the preservation of individual freedom.”   http://www.nyfb.org/about_nyfb/

As Deputy Director and Manager of Governmental Relations Jeff Williams said,  “We, the Farm Bureau, definitely take umbrage at the [unequal] royalty rate” in the current law.

Links & Resources

¹ New York Farm Bureau Priority Issues for 2012  http://www.nyfb.org/legislative_affairs/subpage.cfm?ID=57

² For additional background on compulsory integration, see two previous posts on the Spectra Energy Watch website:

• Eminent Domain as Compulsory Integration: Property Owners Treated Differently – Face $$$ Penalties When Forced into Drilling Unit – Link http://www.spectraenergywatch.com/blog/?p=1674

• Myth of “Free Ride” for Landowners Forced into Drilling Units; Compulsory Integration Supporters vs. Opponents – Link: http://www.spectraenergywatch.com/blog/?p=1700

³ New York Farm Bureau Bill Memos:

• Equalize Royalty Rates, S. 3659 and A. 3082 – pdf file: NYFB S 3659, A 3082
• Increase Acreage Required for Compulsory Integration, S. 7167 – pdf file: NYFB Bill Memo S 7167
• Extend Lease Cancellation Time, S. 750 and A. 6211 – pdf file: NYFB S 750, A6211

⁴ New York State Department of Environmental Conservation High-Volume Hydraulic Fracturing Advisory Panel – Names and contact info: http://www.toxicstargeting.com/MarcellusShale/dec-fracking-panel

NOTE:  This article is cross-posted on the Accountability Central website at this link: http://www.accountability-central.com/nc/single-view-default/article/ny-farm-bureau-supports-safe-responsible-drilling-but-opposes-unequal-treatment-by-compulso/   Accountability Central is part of the Governance & Accountability Institute, Inc.