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Ohio Law Favors Energy Development Over Private Property Rights

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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.

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. 

Around the Hunklers, one neighbor who leased his land to Chesapeake was fine 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. 

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.

Chesapeake declined an interview.

Hunter says the process is stacked against landowners. The state has never ruled against an energy company in a unitization hearing. 

“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.

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Study Finds Thousands Live Near Underground Natural Gas Storage Wells

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In this Dec. 9, 2015, pool file photo, crews work on stopping a gas leak at a relief well at the Aliso Canyon facility above the Porter Ranch area of Los Angeles. Photo: Dean Musgrove, Associated Press

Thousands of Ohio, Pennsylvania and West Virginia residents live within one city block of highly pressurized underground natural gas storage wells, according to new research from Harvard University.

The study, published this week in the journal Environmental Health, found more than 20,000 homes and an estimated 53,000 people across six states are living within 650 feet of an underground gas storage well. 

“Our results were somewhat surprising in that a lot of these wells are in residential suburban areas, which in terms of the entire natural gas supply chain is definitely a unique kind of land use conflict,” said Drew Michanowicz, a research associate at the Center for Climate, Health and Global Environment at the Harvard T.H. Chan School of Public Health and lead author of the study. 

To store natural gas, companies often inject natural gas into repurposed decades-old oil and gas wells. The practice gained national attention in 2015, when a well in Aliso Canyon, California, failed, leaking natural gas for 118 days. Nearby residents were evacuated and reported suffering from headaches, nosebleeds and rashes. 

The leak released almost 100,000 metric tons of the potent greenhouse gas methane into the atmosphere, equivalent to the emissions created by 530,000 cars in a year. 

Following the Aliso Canyon disaster, the Harvard team in 2017 set out to map the location of natural gas storage wells. 

The new study aims to show what the consequences to human life would look like if another Aliso Canyon-type disaster were to occur. Residents living near underground storage facilities are at risk of possible explosions and exposure to chemicals contained in natural gas. 

“We wanted to know where are the potential worst-case scenarios if something were to go wrong,” Michanowicz said. “ So, where do the most people live? Who’s the most vulnerable?”

Researchers used a combination of census data, satellite data, land use data and addresses to pinpoint homes located near more than 9,000 underground gas storage wells in Ohio, Pennsylvania, West Virginia, New York, Michigan and California. Their mapping model estimates 10,000 more people live near underground natural gas storage wells than previous models found. 

Michanowicz said one of the most striking findings is that in many instances, underground gas storage wells are located within “setback” zones. Many states have laws that set limits on how close industrial activity can occur to homes. 

Companies often use older wells built before setback laws were put in place to store natural gas. In West Virginia, the study found half of the state’s underground storage facilities have at least one well that is near at least one home within the state’s 200-foot setback zone. 

Overall, the researchers found across the six states that 41 percent of underground storage wells are located within one city block of at least one home.

In Ohio, more than half of the state’s underground storage wells are located within one block of a residence affected an estimated 12,000 Ohio homes and over 30,000 residents.

This article was originally published by West Virginia Public Broadcasting.

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Renewable Energy Outpaces Coal For First Time in the U.S.

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In this Oct. 5, 2015 photo, Danny Ferguson, 41, right, and Jason Warrix, 22, rear, learn solar panel installation from instructor Kelly Larson on the roof of the Coalfield Development Corporation during a class in Huntington, W.Va. (AP Photo/David Goldman)

For the first time in the United States, renewable energy, including solar, wind and hydropower generated more electricity than coal, a trend the federal U.S. Energy Information Administration forecasts will continue. 

According to data from the EIA released this month, in April 2019, electricity generated by renewables outpaced coal by more than 8,000 megawatt-hours, equivalent to what 11 of the most efficient coal power plants create each year.

This year, the agency forecasts solar, wind and hydropower will produce 18 percent of the country’s electricity. Coal’s share of power production will average 24 percent, down three points from last year. Last year, U.S. coal consumption reached a nearly 40-year low. 

West Virginia University Law Professor Jamie Van Nostrand said technology is driving down the cost of renewable energy faster than analysts expected. 

“Wind turbines continue to get more efficient, solar panels are more efficient and cost-effective, and I think the biggest breakthrough has been with storage, grid-scale storage,” he said. “It’s staggering how quickly with renewables the prices are coming down and how cost-effective they’ve become.”

Van Nostrand, who also directs WVU’s Center for Energy and Sustainable Development, added that West Virginia policy has not kept pace. He pointed out that the state does not have a comprehensive statewide energy plan or Renewable Portfolio Standard that might incentivize, or at least recognize, the growing benefits of renewables. Furthermore, West Virginia does not allow third-party ownership of renewable energy, also called Power Purchase Agreements.

“All the other states are taking advantage of both the low electricity rates, and the jobs that go along with clean energy,” he added. “And we are totally missing that in West Virginia.”

Power prices in West Virginia have risen faster than any other state in the nation over the last decade.  

This article was originally published by West Virginia Public Broadcasting.

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Appalachian Environmental Groups to Sue for Coal, Chloride Pollution

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Jeff Young, Ohio Valley ReSource

The Sierra Club and a coalition of West Virginia-based environmental groups took the first step Tuesday toward taking legal action against companies operating 15 coal facilities and one chloride plant in West Virginia and Pennsylvania for violating the Clean Water Act and the Surface Mining Control and Reclamation Act.

The nine companies, which include Murray Energy, Bluestone Coal and Consol, operate coal mines, coal preparation and processing facilities, a power plant and a chloride plant across West Virginia.

Environmental groups said they sent “notice of intent to sue” letters with the companies, West Virginia Department of Environmental Protection and United States Environmental Protection Agency. The notices allege self-reported data, by the facilities to state and federal regulators, show an ongoing pattern of pollution discharges that violate federal permits. According to the letters by environmental groups, in some cases, these levels are hundreds of times above what is legally allowed.

For example, the groups allege one facility, the Harrison County Coal Mine, operated by Murray Energy, is discharging 220 times its permitted limit of aluminum.

A spokesperson for Murray Energy said as of Tuesday afternoon it had not yet received the letter and does not comment on threatened or pending litigation.

The “notice of intent” letters give operators 60-days notice. Environmental groups said if they fix the problems, or if state or federal environmental regulators take action, they would not file in court. If not, the advocacy groups said they will pursue legal action in federal court.

Representatives for the other companies named in the letters, which include Southern Land, LLC, Lexington Coal Co, American Bituminous Power Partners, Mepco Inc., Black Castle Mining Company and Eagle Natrium LLC, did not immediately respond to requests for comment.

This article was originally published by West Virginia Public Broadcasting.

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