A false dichotomy

Posted 7/3/12

A resolution was recently passed in the Town of Delaware that seems innocent on the face of it—maybe even freedom-affirming. It says that “any landowner or entity that owns the rights to minerals …

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A false dichotomy

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A resolution was recently passed in the Town of Delaware that seems innocent on the face of it—maybe even freedom-affirming. It says that “any landowner or entity that owns the rights to minerals within the corporate bounds of the Town of Delaware, has the right to determine how they exercise and protect their mineral rights.”

Who could disagree with such a thing? Obviously, though it nowhere mentions natural gas drilling, it is designed to facilitate natural gas leasing, but so what? After all, it clearly implies that those who do not wish to exploit their mineral rights do not have to do so, just as those who wish to do so can.

But the resolution is disingenuous to the extent that the legal and political context within which it falls give it quite a different—indeed an opposite—de facto meaning than that which it bears on its surface. In context, it has the effect of compelling one group of property owners to do something they don’t wish to do in order to satisfy the wishes of another group. This type of argument is so common when the topic of gas drilling comes up that it is worthwhile unraveling why it doesn’t stand up.

To begin with, New York State’s compulsory integration law renders the idea that some people can chose not to give up their mineral rights null and void. In New York, if a natural gas company can claim that it has leased 60% of the land in a unit (640 acres), it can force the other landowners in the unit to supply their minerals, in the form of natural gas, to the company too. So in practice, in New York State, there is no way to support one group of landowners in doing what they want with their land without denying that right to another group.

Of course, a ban on drilling would do just that, the other way round. But it is deceptive to claim that you are adopting a resolution because you are a passionate supporter of property rights when, in fact, that very resolution undermines the property rights of many landowners—just not the ones you favor.

Also important in calculating the force of this language is that special circumstances surrounding the gas drilling issue in New York render a mere resolution, which does not have the force of a law, in this case an action likely to influence the course of events. There have recently been reports from a variety of highly placed state sources that New York State will probably not proceed to permit drilling statewide, but will focus on just those areas where there is evidence that the local populace welcomes it. Although there have been no formal statements as to what will be included in such evidence, a town board resolution would certainly be one obvious candidate. The same could be said of the language currently being discussed for inclusion in the comprehensive plan of the neighboring Town of Callicoon (see story on page 1). In this context, a resolution favorable to gas drilling amounts to a ticket for gas drilling companies—with the attendant likelihood that many local landowners will lose a portion of their property rights.

At the end of the day, the danger in this type of language is that it misrepresents the disagreement as to whether there should be gas drilling in our communities as a dispute between those who are against and those who are for private property rights—which in fact virtually everybody, on both sides, supports. Property rights are fundamental to our system, but as we have by now discussed over and over on this page, it is equally fundamental that property rights are understood in our system to be qualified by the harms that we may do our neighbors. If some people are prevented from accessing their natural gas, their property is still exactly as valuable (plus or minus other market changes) as it was before the Marcellus Shale boom got started. In contrast, if drilling contaminates the aquifer, or causes people to lose their mortgages or be unable to sell their houses because potential buyers can’t get them, some landowners will suffer absolute, devastating financial loss—not just opportunity cost.

Don’t be fooled. It is no more property-rights loving to want gas drilling than to oppose it. The real question is, how badly could drilling harm those who would prefer a ban, versus how badly a ban could harm those who wish to lease.

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