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« Commissioners pipeline meeting: Eminent domain and big companies' need for flexibility | Main | Commissioners' meeting background: Pipelines, fracking and peering underneath the rock »

Commissioners' meeting background: Pipelines, fracking and peering underneath the rock

Last week I posted a statement prepared for our county commissioners regarding a pipeline under construction in Portage County. As I began outlining a report on the meeting I realized a good deal of context was needed for those not in the thick of it. Here is a bit of background.

Pipelines have traditionally been understood as carrying oil, but that has begun to change with fracking. Companies now want to use them to transport various fluids associated with that process, and in places that do not already have lots of pipelines there is a new push to construct them. As the Columbus Dispatch reported last May:

Officials of the oil and gas industry said the pipelines and the plant are safe and vital to their plans to develop Ohio’s Utica shale.

A lack of natural-gas processing, industry officials say, keeps shale wells from delivering to buyers and has slowed the pace of drilling and fracking.

So places that have been targeted for fracking are seeing a new interest in pipelines. The first step in this process is securing the land along the route, and this is also perhaps the shadiest part of the process. Pipeline companies subcontract out through what are called land men. These individuals go door to door attempting to negotiate the necessary legal agreement - and that is an exceedingly diplomatic, anodyne and generous way to describe how it sometimes works.

Land men are not governed by anything other than their scruples. Theoretically the companies paying them have requirements for conduct, but the arrangement more often seems designed for plausible deniability: Ask a pipeline company about allegations of unethical behavior and they will insist in the strongest terms that their contractors must adhere to the highest ethical standards - and usually that they’ve rarely or never had complaints about their land men.

Which is at least slightly disingenuous. After all, who can say what was discussed on someone’s doorstep? Some residents have reported being delivered contracts that were far different than the ones promised; others that they were told eminent domain (ED) was a foregone conclusion and signing the contract a mere formality. Good luck proving it, though. Unless the homeowner had the presence (and ability) to record the conversation, it would end up as he said/she said in a courtroom.

The land men basically pick off the low hanging fruit. Those reluctant to sign require a little stronger persuasion. In Portage County that has meant the pipeline company making what it has determined is a fair offer to buy the property, backed up by the threat of seizure via ED. These letters have a veneer of legal nicety, but an unmistakable subtext of menace and intimidation lurks behind them as well.

For instance, letters sent to residents say that the state of Ohio allows the company to seize the property via eminent domain - this will be a crucial topic in next week’s post - but that they would rather negotiate something agreeable to both. In other words, we can take it if we want; now let’s negotiate! (Imagine how successful those negotiations will be for the homeowner.) The good cop/bad cop routine continues as the company says it is

of the opinion that this offer is in excess of the fair market value…[W]e make this final and best offer in the hopes that the parties may be able to reach an amicable agreement and avoid unnecessary and costly litigation expenses. Please understand, however, that if you force us to commence eminent domain proceedings to acquire the easements, this offer is withdrawn.1

Basically, play ball with us or you’ll lose your land.

It should be clear just how much gumption it takes to fight a company on something like this. Most folks will be blindsided by it: There they were living their lives, not knowing they were in the way of pipeline company profits, and one day land men show up. They will generally not be knowledgeable about the laws in question nor will they have access highly specialized legal counsel. Most will be sufficiently risk averse (and sensible) to not want to risk what is likely their biggest single investment on an all-or-nothing showdown with the oil and gas industry. So they sign and get something instead of risking getting nothing.

That’s how these pipelines get created. But even though the playing field is so decidedly tilted in favor of big business, it still hasn’t been entirely cleared. More on that, and how it came up in the commissioners’ meeting, next week.


NOTES

1. I believe this short excerpt to be covered by the fair use provision of copyright law:

the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include—

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.

(Back)

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