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Ohio Law Allows Energy Companies to Force Landowners Into Leases

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Jos Miller, a neighbor of Patrick Hunkler, signed a lease with Chesapeake Energy, but felt he was taken advantage of by the company. Photo: Julie Grant

Deciding what happens on private property might seem like a basic right. But when it comes to fracking, Ohio and other oil and gas-producing states have laws that can force landowners to lease their underground mineral rights to energy companies.

That’s what happened to Patrick Hunkler and his wife, Jean Backs. It began in 2010 when a landman for an energy company knocked on their door.

Hunkler didn’t know much about fracking then. The landman offered them $137 an acre for the mineral rights under their 21 acres in Belmont County, in eastern Ohio. 

“$137 dollars, that’s probably the closest I ever came to signing a lease,” he said. 

But they held out. By 2014, they were offered $8,500 an acre.

Concerns for Water

Jean Backs was getting ready to retire. After 30 years working for the Ohio Department of Natural Resources (ODNR), the money might have been nice. But, she worried about the millions of gallons of water used to frack each well, and the waste it creates.

Patrick Hunkler and Jean Backs get drinking water for their house from spring water collected in this cistern. They are concerned that fracking could impact their water. Photo: Julie Grant

“My big concern about signing a lease would be where’s that water going to come from and then what will happen to it when they’re finished,” she explained. “You can’t know that at the time that you signed a lease.”

But still, her husband, who had built a solar-powered house with recycled materials, was open to the idea. But he wanted a way to assure a lease would take into consideration his environmental concerns, including the bright lights used at well pads.

“This is a beautiful dark sky out here,” he said. “If there is a well pad down the road, it’s just like Hollywood.”

And landmen pursued Hunkler and Backs like celebrities, making hundreds of calls to the family.

“We would express our environmental concern, the only thing that they could offer us was money – a price per acre, and royalties,” he said. 

But making money wasn’t as important to the family as protecting their environment. They say landmen called them foolish. They went as far as following them on vacation, even threatening to bring the sheriff over to force them to sign.

Backs said she felt harassed. 

Then in 2017, they got a notice from ODNR that Chesapeake Energy was seeking to unitize their property. That meant the state could force the family to sign a lease under state law.

Chesapeake declined an interview.

An Old Ohio Law Meets Fracking

Heidi Robertson, is the Steven W. Percy distinguished professor of law at Cleveland Marshall College of Law and a professor of environmental studies at Cleveland State University. Photo courtesy of Patricia Donovan

“We normally think of the rights of the landowner as being things like the right to decide what’s done with your land. Or what’s not done with your land,” explains Heidi Robertson, a professor of law and environmental studies at Cleveland State University. She published a law review article in 2018 about Ohio’s unitization law.

The law, passed in 1965, was to ensure the efficient extraction of oil and gas. Before, landowners used to set up wells all over their land, without regard to their neighbors. But, too many wells so close together adversely affected the underground pressure that allowed the oil and gas to be extracted. 

So the law requires the land for a well to be a certain size and shape.  For shallow wells, that was an acre. 

The law didn’t get much use until the fracking boom. Nowadays, wells snake horizontally for miles, deep beneath the ground. According to industry experts, most land units in Ohio today range from 300 to 1,100 acres. 

Robertson says one unit of land can have hundreds of different landowners.

“Then you have to have the agreement of all of the landowners in order to cobble together the rights to drill,” she said. 

The problem for energy companies and for people who want to lease their land comes when other landowners in the unit, like Patrick Hunkler and Jean Backs, say no to drilling.

“It’s almost like a veto, a single landowner being able to veto the ability of all the surrounding landowners to drill,” Robertson said. 

Under the law, if a company gets 65-percent of landowners in a unit to agree to lease their mineral rights, it can apply to the state to unitize the rest, forcing dissenting landowners into leases. 

Since 2011, the chief of ODNR’s Division of Oil and Gas Resources Management has approved 144 forced unitizations.

Voluntary Leases?

Energy companies offer upfront bonus payments and royalties as a carrot to get landowners to sign leases. Robertson says the unitization law also gives companies’ landmen a stick.

“They come in and say things like’ we’re offering you X amount of money.’ They’ll, in fact, say if you refuse to quote volunteer you’ll be forced through this administrative process through the state, and it will cost you more.”

Still, energy companies try to avoid unitization, because the state fees, $10,000 to unitize a landowner and attorneys fees can add up. ODNR also requires continued efforts to negotiate with holdout landowners. 

One of Hunkler’s neighbors who leased his land to Chesapeake was pleased with it. The signing bonus meant he could take time off work for his back surgery.

But down the road, Jos Miller said he would have been better off without leasing to Chesapeake. He’s an Amish farmer with horses and sheep, and seven children. He teared up when describing what happened. He said he shouldn’t have admitted to the landman that he couldn’t read or write. 

“I was desperate,” he said.  

Miller leased his 170 acres for $50 an acre. But he later found some of his neighbors were getting as much as $6,000 per acre. 

“I like to be fair so but I guess the world don’t work that way anymore,” he said. “It’s whoever got the most who’s the smartest to wiggle it around.”

A Columbus Hearing

Unitization hearings at Division of Oil and Gas Resources take place in Columbus. The state has never ruled against a request to unitize.

When companies can’t get landowners to sign leases, they can ask the state to step in. 

Every month, the Division holds multiple unitization hearings like one in Columbus on May 15. Ascent Resources applied to unitize landowners who have refused to sign a lease. The company brought a geologist, an engineer and a landman to testify, along with a slew of attorneys. 

At the hearing, in front of ODNR staff, the landman details efforts to locate unleased landowners, and get them to sign. The company engineer testified that Ascent’s project is a $20 million dollar investment. Without those last, unleased tracts of land, the company would lose the ability to collect enough gas for the project to be financially viable.

“That would likely be the difference between what we would pursue vs what we would not pursue,” testified Ascent Reservoir Engineer Taylor Henderson. 

The profitability of the project is the only factor the state can consider in unitization hearing. 

Ascent’s lawyers declined to comment.

Profits over Landowner Rights?

Megan Hunter, of Fair Shake Environmental Legal Services in Akron, who represented the Hunklers in their case, calls the law unjust.

“I think you have constitutional problems where the reason you’re taking it is because it’s more profitable than not for a private company to develop those resources. So at that point you’re not doing an evaluation of whether there is a public benefit.”

At Chesapeake’s unitization hearings against his family, Patrick Hunkler asked the state to also consider his environmental concerns. But transcripts from the hearing confirm that ODNR told him they had no authority to do that.

“Hey ODNR, we have concerns about our natural resources. Who can we talk to? They didn’t listen to us in the hearing,” he said.

Mark Bruce, administrative officer with ODNR, counters that the unitization process does allow for citizens to comment.

“Mineral owners have an opportunity to be heard verbally or in writing during the process and their comments are always considered,” said Bruce. 

The state has never ruled against an energy company in a unitization hearing. According to Bruce, that’s because companies only apply once they’ve met the state’s requirements.

“The law specifically states that the division must issue an order if the applicant meets the criteria defined by the Ohio General Assembly,” he said. 

Hunter says the unitization law has been updated numerous times since the fracking boom to favor energy companies over landowners.

“It is just so clear that [the company] is really well represented and the government is often aligned with them in these administrative forums and the citizen is left to fend for themselves,” she said.

The sign at the well pad that Chesapeake Energy built near Patrick Hunkler's house. Photo: Julie Grant
Chesapeake Energy built a well pad, but never drilled a well. The landowners are now waiting to see what happens next. Photo: Julie Grant

ODNR did issue orders for Chesapeake to unitize Hunkler’s property. But after constructing the well pad nearby, the company abruptly sold all its Ohio assets and the unitizations were dissolved. 

Now, Hunkler and Backs, along with their neighbors, wonder what will happen with the next company.

This article was originally published by the Allegheny Front. It is part of the series, “Who’s listening?” examining claims made by Ohio residents, and how state regulators have responded, supported by the Fund for Investigative Journalism and the Sears-Swetland Family Foundation.

This story was updated on July 31, 2019 to include comments from Ohio Department of Natural Resources, which were provided after the article was originally published. 

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Portal 31: How a Closed Mine Opened New Prospects for One Coal Town

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Devin Mefford emerges from Portal 31. Photo: Brittany Patterson/OVR

This article was originally published by the Ohio Valley ReSource.

Devin Mefford is sitting in the squat metal buggy of a modified mantrip, the train-like shuttle coal miners use to travel underground. Mefford is dressed for work, in a hardhat and a navy shirt and pants with lime green reflective stripes.

It’s a uniform his father and grandfather — both Kentucky coal miners — would be familiar with.

Mefford does go into a mine every day, but not for the coal. He’s the tour guide at Portal 31, a train ride through a once-operational coal mine in Harlan County.

“People are amazed,” the 21-year-old says, gesturing to the dark mine entrance behind him.

Portal 31 tour guide Devin Mefford. Photo: Brittany Patterson/OVR

Portal 31 first opened in 1917. A subsidiary of U.S. Steel operated the mine and built the nearby community of Lynch, which was at the time the world’s largest coal camp. At its height, 10,000 people lived in the community, including a diverse immigrant population from more than 30 countries.

When it closed its doors in 1963, Portal 31 had produced more than 120 million tons of coal. More than 40 years later, in 2009, the mine reopened — this time to tourists.

For 35 minutes visitors ride the rail cars, often in pitch darkness, on a journey not just through the mine, but back in time. The drawling voice of an actor playing a miner named Mike Mackenzie, or Mac, narrates.

“We’re going to visit the miners and see how it’s changed over the years,” he says. “First stop, 1919.”

An animatronic miner materializes out of the darkness. Another actor gives voice to an Italian immigrant named Joseph, who recounts what it was like for the thousands of people who came to work in the mines in the early 1900s. Next to his lifelike form is a robotic mule and chirping canary.

“The mine she’s cool and safe,” he says. “You will see to that won’t you cantante. As long as I can hear your song I know I’m safe.”

Visitors hear what it was like to mine for coal before and after mechanization. They also learn about Harlan County’s bloody conflicts over union organizing.

“This is a story that never needs to die. It’s a story that needs to be told,” Nick Sturgill, director of Portal 31 said. “People need to understand what these guys went through, but they also need to understand how prosperous a place this was at one time — what coal not only did for this city, but for this region, for this country, for this entire world.”

He said about 5,000 visitors from around the world take the ride under Black Mountain each year. It’s a bright spot for Lynch, which today is home to just a few hundred residents.

Like many former mining communities, in recent years Lynch and neighboring towns have turned their sights on attracting tourists. It’s often a costly endeavor, but in recent years the federal government has expanded its support for repurposing old mine lands as new economic engines, including to draw new visitors.

Federal Role

Portal 31 was part of that effort. In 2018, the attraction was awarded a $2.55 million Abandoned Mine Land Pilot grant. The funding will be used to update the ride as well as nearby historic buildings for use as retail and office space. Some of the money is slated to go to a new parking lot and scenic overlook at nearby Black Mountain.

“The main outlook on the AML grant is to really just be a shot in the arm for all of Lynch as well as Harlan County,” Sturgill said.

Central Appalachia has thousands of acres of abandoned mine sites that can threaten local economies and people’s health and safety. In 1977, Congress created the Abandoned Mine Land Reclamation Program to clean them up. The funds come from fees paid by active coal mine operators on each ton of coal mined. The fee and authorization of the AML Program is set to expire in 2021 without Congressional action.

The AML Program chiefly provides funding for reclamation.  In the last five years, federal support has grown for a slightly different approach — going beyond merely sealing mine portals and treating polluted water to supporting projects that could grow local economies.

The Appalachian Regional Commission in 2015 began investing in coal-impacted communities through Partnerships for Opportunity and Workforce and Economic Revitalization, or POWER Initiative. Congress appropriated money from the U.S. Treasury to create the AML Pilot program in 2016, aimed at not only boosting reclamation work in the highest-need Appalachian states, but promoting projects that spur economic development and growth on abandoned mine lands.

“There’s significant economic benefits that communities can get from embracing mine reclamation,” said Joey James, with the Reclaiming Appalachia Coalition, which advocates for sustainable reclamation investment. “There’s also opportunities to repower some of these sites that were once the lifeblood of these communities.”

James, who is a senior strategist at West Virginia-based Downstream Strategies, said projects with federal backing can attract other investors looking to make an impact.

“While these federal programs are really, really important, and we need to have them, I think what the AML Pilot program does is it offers an opportunity to develop enterprises on former mine sites that might pull private capital and create models for redeveloping and reusing mine sites that won’t rely entirely on federal funding,” he said.

Another federal proposal, the RECLAIM Act, would accelerate reclamation of abandoned mine land by dispersing $1 billion of Abandoned Mine Land funds over a 5-year period with an eye toward economic development. That bill has not been passed by Congress despite bipartisan support.

Critics argue the millions poured into these programs have failed to produce the desired outcomes. Some efforts planting lavender or apple trees on old strip mines have floundered. James said it’s important to objectively assess the effectiveness of projects receiving federal funding.

“If states are investing in projects that aren’t providing that opportunity in the future, we need to think of how we can be better,” he said.

Growing Pride

Back inside Portal 31, the mantrip snakes its way back toward daylight.

A group of visitors from South Carolina is milling around in the small gift shop. They’re visiting the area on a mission trip. A gaggle of middle school-aged kids excitedly share what they learned.

“We learned how difficult it was and how dangerous it is for them,” one says. Another adds his amazement that Portal 31 holds the record for most coal mined in a single day — a record set in 1923.

A scene from inside Portal 31. Photo: Brittany Patterson/OVR

Mefford, the guide, takes questions at the end of the tour. He says the most common one he’s asked is if coal is coming back.

“In all honesty, coal mining is a thing of the past, and it’s sad to say that for small towns like mine,” he says.

But he adds that makes Portal 31, and federal investment into both preserving and showcasing Kentucky’s coal heritage, even more important.

“Every person in this community deserves to have something to be proud of, and that’s what we do here,” he said.

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Report: Mine Reclamation Done Well Could Be Catalyst For Regional ‘Just Transition’

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A patch of miscanthus towers above other grasses on the former mine site. Photo: Brittany Patterson/Ohio Valley ReSource

A new report by a group of regional advocacy organizations argues reclaiming abandoned mine lands could be a key factor in Appalachia’s transition from coal.

In its second annual report, released Thursday, the Reclaiming Appalachia Coalition, highlighted 19 reclamation projects in West Virginia, Ohio, Virginia and Kentucky. They run the gamut from installing solar on abandoned mine lands to boosting outdoor recreation opportunities like biking and hiking trails. 

“Although funding streams may change, the idea and the need for a restoration economy is not going away,” said Joey James, with Downstream Strategies. “We’re excited to work within a growing community of practice to accelerate the adoption of innovative approaches to land restoration and redevelopment that contribute meaningfully to the region’s economy.”

The group’s goal is to support and promote innovative reclamation projects — projects that can be replicated, involve local communities, and are financially viable after grant funding runs out. 

“We see this limited pot of money is available for innovative land reuse, and we want to ensure those dollars are efficiently and effectively spent,” James said. 

The new report, “A New Horizon: Innovative Reclamation for a Just Transition,” includes both new projects and projects that recently were awarded state and federal funding, including a combined $15.8 million in federal Abandoned Mine Land Pilot program funding.

In West Virginia, one new project slated to be built near old mine lands would turn food waste from West Virginia University into compost. The facility would employ those in recovery from substance use addiction. The project is slated to cost more than $3 million, but developers estimate would bring more than $7 million in economic impact — $2.4 million in payroll alone — and employ 54 people across multiple sectors. 

The group said reauthorization of the Abandoned Mine Land (AML) program, administered by the Office of Surface Mining Reclamation and Enforcement, is critical to continue this work. It also advocates for more oversight of projects. 

“As the first AML Pilot projects move from these big check moments, to construction and then on to operation, we across the region need to objectively assess the effectiveness of projects that are receiving this very limited funding and intervene where necessary, both within individual projects and organizations that are receiving money,” James said. 

The group expects to begin collecting data on economic impact of some funded projects beginning next year. 

The coalition’s members include Appalachian Voices in Virginia, Appalachian Citizens’ Law Center in Kentucky, Coalfield Development Corporation in West Virginia, Rural Action in Ohio, and Downstream Strategies, based in West Virginia.

This article was originally published by West Virginia Public Broadcasting.

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Trump Visits Shell Plastics Facility, Touts Petrochemical Future For Appalachia

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President Trump speaks to workers at a Shell facility in Pennsylvania. Photo: Via White House video of event

This article was originally published by the Ohio Valley ReSource.

President Donald Trump Tuesday toured Shell Chemical’s soon-to-be completed ethane cracker complex in Monaca, Pennsylvania, to tout his administration’s commitment to expanding energy production. The facility is part of what industry boosters hope will be a new plastics and chemical manufacturing base in the upper Ohio Valley, but many residents here worry about the heat-trapping gases and plastic waste such an industry would produce.

Speaking to a crowd of a few thousand construction workers, Trump said investment in plastics and other petrochemical plants in the Ohio Valley could greatly benefit the region. He touted the vast reserves of natural gas and natural gas liquids contained in the Marcellus Shale, which extends throughout much of the Appalachian basin.

“This is an incredible region; you’re sitting on top of something special,” Trump said in a wide-ranging, and at times rambling, speech. “It’s all fueled by the greatest treasure on the planet, American energy, and we don’t want people taking that away from us.”

The Shell facility, located about 30 miles northwest of Pittsburgh, will use extremely high temperatures to convert natural gas liquids, including ethane, from the Marcellus Shale into smaller molecules used in plastics and chemical manufacturing.

Once completed, the facility will include an ethylene cracker and polyethylene production complex slated to produce 1.6 million tons of ethylene each year and permanently employ about 600 workers, according to the company.

In his speech, Trump noted additional investments are being made in Ohio to build out the region’s petrochemical industry.

“This is just the beginning,” Trump said. “My administration is clearing the way for other massive multi-billion dollar investments.”

Thailand-based PTT Global Chemical and partner South Korea’s Daelim Industrial Co. is in the permitting process for a cracker plant in Belmont County, Ohio, across the Ohio River from West Virginia.

Pollution Concerns

Outside the Shell facility protesters boycotted the president’s visit.

Environmental and public health groups argue cracker plants are huge pollution emitters that threaten the climate, environment, and the health of residents living in the region. Investment into plastics manufacturing in the Ohio Valley comes at a time when some municipalities and countries are banning single-use plastics due to environmental concerns.

“The scheme for a petrochemical hub in the Ohio Valley is yesterday’s answer to today’s problems, and it ignores tomorrow’s crises,” Mary Wildfire, a West Virginia resident and volunteer with the Ohio Valley Environmental Coalition, said in a press release. “It ignores the rapidly increasing problem of plastic waste choking our oceans and infiltrating our bodies—and the rapidly increasing movement away from plastic. And it ignores the steady movement toward cleaner, sustainable energy sources like wind and solar.”

Shell’s Beaver County facility is permitted to release up to 2.25 million tons of greenhouse gas pollution annually, or the equivalent of the emissions from nearly 480,000 cars.

A report released earlier this year by a coalition of environmental groups estimates production and incineration of plastic in 2019 will add more than 850 million metric tons of greenhouse gases to the atmosphere, or equal to the pollution of building 189 new coal-fired power plants.

That figure will rise substantially over the next few decades as the demand for single-use plastic continues to grow, the report finds. By 2050, emissions from the entire plastics life cycle could account for as much as 14 percent of the earth’s entire remaining carbon budget.

A cracker plant converts natural gas constituents into manufacturing products. Graphic: Alexandra Kanik/Ohio Valley ReSource

“A Petrochemical Renaissance”

Trump’s visit comes weeks after a top Department of Energy official testified in front of members of the West Virginia Legislature that the federal government is prioritizing expanding the petrochemical industry in Appalachia.

“Federal efforts are strong and continue to gain momentum,” Steven Winberg, DOE’s assistant secretary for fossil energy, told the Joint Committee on Natural Gas Development. “We also recognize that others are doing a lot and we believe that together we can make this Appalachian petrochemical renaissance happen for the benefit of the industry, the region and the country.”

Winberg urged West Virginia lawmakers to invest in preparing sites for possible cracker development, characterizing them as “anchor facilities.”

The region’s third cracker plant, proposed for Parkersburg, West Virginia, may be in doubt. Michael Graney, executive director of the West Virginia Development Office, told lawmakers that developer Braskem has pulled out of the project.

Another key component to attracting plastics and petrochemical manufacturing to the Ohio Valley is creating storage for natural gas liquids. Officials in the region have been working on the so-called Appalachian Storage and Trading Hub for nearly a decade.

The hub cleared its first major hurdle last year when it got approval for the first of two phases for a $1.9 billion U.S. Department of Energy loan.

Earlier this year, a coalition of more than 100 advocacy groups led by Food & Water Watch sent a letter to the chair of the House Appropriations Committee challenging whether it’s legal for DOE to grant a federal loan guarantee to the fossil-fuel-based project.

In June, the U.S. House of Representatives approved an amendment to an appropriations bill that would clarify that DOE could only grant loans for “clean energy projects.” The measure has not been taken up by the U.S. Senate.

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