Appalachian Basin

Cuomo’s Choice: Blue Collars or Blue Bloods?

It seems Governor Cuomo has decided to sell out Upstate New York and its workers by putting natural gas development on hold. Reports claim Robert F. Kennedy, Jr. convinced Cuomo the health risk was too great and he should await the results of a Pennsylvania health study for which there is no scheduled deliverable.  It suggests there is a lot more to the story and, of course, there is.

Governor Cuomo didn’t put his former brother-in-law on the Hydraulic Fracturing Advisory Committee out of familial obligations and he’s not listening to him now for anything other than strictly political reasons.  RFK, Jr. is simply a convenient mouthpiece on which to blame a delay engineered by others.  There are two plausible explanations for the delay; one is a matter of speculation by many folks and the other is a more likely scenario based on the actions of the Governor as opposed to his words.

Cuomo, it appears to many, is afraid to make a decision because it might interfere with his run for the White House in 2016. Numerous reporters have recently suggested this is at the root of his wavering.  Interestingly, I received an e-mail from a supporter in the know back in September 2012 suggesting the New York State Department of Health would be the fall guy for a strategy of delaying any decision until after the Governor’s 2014 reelection, when he wants to roll up a big majority in the state to launch his Presidential bid immediately thereafter.  Of course, in New York this requires he not alienate any of the environmental special interests who are part of his natural constituency.  So far, everything that supporter predicted has been falling in place and, therefore, this has to be viewed as a credible explanation and very possibly part of the Cuomo thinking.

Still, does a governor trying to establish a record on which to appeal to a national audience and who has to demonstrate economic leadership, surrender policy to the extremist environmental views of his ex-brother-in-law, a man of highly questionable authenticity on the issue?  Deferring to such an individual is hardly the ticket to that kind of reputation.  There has to be a better explanation, and there is.  The Governor’s political dilemma is being exploited by some extremely powerful special interests – New York’s blue bloods – and the result is potentially devastating to the hopes of blue collar New Yorkers who desperately need help.

First, let’s dispense with the false narrative about waiting on a Pennsylvania health study.  That “study” is actually a data collection project and there are no scheduled deliverables in the way of reports.  Moreover, despite the repeated attempts to sell this as a Marcellus Shale health study, it is not specifically targeted at the industry.  When representatives of the Geisinger, Guthrie and Susquehanna health systems and the natural gas industry sat down in November to discuss the project, in fact, there were repeated assurances it would be a “collection of data looking at the population in general.”  A careful reading of the Degenstein Foundation’s grant announcement confirms this, as these excerpts verify (emphasis added):

The majority of the funds from the grant will be used to underwrite growth of the necessary data-gathering infrastructure. Funds will also be utilized to help develop strategic studies of the data gathered. Additional institutional partners are anticipated to help fund this effort….

Guthrie Health and Susquehanna Health will collaborate with Geisinger in the planning and execution of the study, including the development of a health surveillance network intended to capture, assess and report on the patient-level data secured by Geisinger, Guthrie and Susquehanna via electronic health record, and make this data available for research purposes. The goal is to create a cross-disciplinary, integrated, and sharable repository of data on environmental exposures, health outcomes, and community impacts of Marcellus shale drilling – the first systematic longitudinal study to do so. Some of the potential health effects that are likely to be investigated first include asthma, trauma and cardiovascular disease. Preliminary results of data analysis may be released within the next year, while other aspects of the research will unfold over five, 10 or 20 years.

The project depends upon securing other sources of funding and notice there is no schedule for producing any reports whatsoever other than a vague suggestion some “preliminary results of data analysis” might be released within the year.

So, what we have is an information-gathering effort with incomplete funding that is proceeding on a hope and prayer with the goal of establishing a database of information for future research, primarily by others, that may not produce any definitive results for a decade. Meanwhile, we already have several studies and analyses completed by others, including New York State’s own Department of Health (DOH), indicating there are no significant health issues and every indication the economic development of the region via natural gas extraction will lead to improved health outcomes.

Any suggestion this work is an appropriate prerequisite for action by New York, therefore, is nothing more than a lame, but convenient, excuse.  Given the nature of the Geisinger project, there is no chance whatsoever of there ever being a conclusion, which is, of course, precisely what a politician hoping to ride a fence into the sunset would want, isn’t it?  Multiple players will be analyzing the data in different ways for decades, always ending with the academic trademark recommendation for further research.  It will be the precautionary principle on steroids, otherwise known as public policy paralysis, despite a wheelbarrow full of evidence it is safe to proceed, as DOH concluded a year ago in a suppressed report.

If non-issues connected with health are but a convenient excuse, and they most definitely are, what is the cause for delay?  Well, the first clue is the name of the person who leaked this story about RFK, Jr. and Cuomo.  It was, apparently, RFK, Jr. himself and he is quoted at the end of the story complementing Cuomo for doing what is supposedly the hard task of delaying decision, setting up the narrative for the entire story.  Cuomo has subsequently denied any such conversations took place, and no one denies nice things said about them unless the party saying them is trying to set them up, which, it would seem, is exactly what RFK, Jr. is doing – trying to embarrass Cuomo into doing what he wants.


Robert F. Kennedy, Jr.

What does RFK, Jr. want?  His shifting positions on natural gas, wind and other matters might indicate this is difficult to know but, of course, we do know because he was put on the governor’s hydraulic fracturing advisory committee (a fact missing from most stories on this matter) along with two senior attorneys from the Natural Resources Defense Council.  Kennedy, too, is a former senior attorney for NRDC, meaning three senior attorneys from one organization ended up on a committee of 13 (later expanded) to advise the governor on hydraulic fracturing.  How is that possible?  Asking any attorney for advice on petroleum engineering is a bit strange, but asking for help from three of them from a single entity?  That suggests the NRDC has an unusual stake in the matter and unusual power, which, of course, it does.

The NRDC, in fact, is also represented by the individual who these three NRDC attorneys are supposed to advise; Joe Martens, the DEC Commissioner.  Martens was President of the Open Space Institute when selected as Commissioner and, of course, was a founder of the Catskill Mountainkeeper, both organizations, along with NRDC, were created by John Adams, a close associate of the Rockefeller family and its mega land interests in the Catskills.  Adams’ son, Ramsey, of course, is the Catskill Mountainkeeper in the flesh and received his salary from the Open Space Institute until the Mountainkeeper constituted itself as a separate non-profit corporation.  The elder Adams also simultaneously served on the boards of the Mountainkeeper, the Riverkeeper, the Open Space Institute and NRDC.

So, not even counting the other natural gas opponents on the committee, there were effectively four top level NRDC representatives dominating any policy discussions.  And, that’s not even counting other friends of NRDC on the committee, friends such as: Robert Hallman of the NY League of Conservation Voters (where Kennedy, NRDC founder John Adams and other NRDC/OSI leaders serve as Directors and who curiously resigned as a Cuomo advisor amidst all this controversy); Mark Brownstein of  Environmental Defense Fund (where OSI Executive Director Christopher Elliman sits on the Advisory Board); Robert Moore of Environmental Advocates which proudly advertises itself as part of the “The Clean Water Not Dirty Drilling team” that also includes Catskill Mountainkeeper and NRDC.  Altogether, they still account for half the committee, even after it was expanded to supposedly achieve more balance.

The pervasive influence of the NRDC on this issue within New York is very evident from this table depicting current and former associations of key representatives of NRDC, the Open Space Institute and their sister organizations (click on image or here for pdf version):

Screen Shot 2013-03-11 at 7.02.09 PM

This table only begins to describe the interlocking relationships among these individuals and organizations or the ties that exist between them and Governor Cuomo, not to mention Attorney General Schneiderman.  Notwithstanding these relationships, they are only a start to the explanation for what is taking place.  Truly understanding it requires a visit to Lew Beach, New York, where the counties of Delaware, Sullivan and Ulster come together and many of these folks own land, along with other friends in high places (e.g., CBS News anchor Dan Rather).  The place might be described as high society in the hinterlands.

John Hamilton Adams, founder of NRDC, is from there and he introduced Laurance Rockefeller, Jr. to the area long ago.  The Rockefellers have long been funders of the NRDC, of course, so this was only a natural extension of that relationship.  The story is told in this New York Times article, relevant excerpts of which follow:

Mr. Rockefeller is the guiding force behind a development named Beaverkill Falls – 36 homesites with more than a dozen houses in place, an inn that acts as a focal point and clubhouse, tennis courts, skiing and hiking trails and, above all, rights to fish the Beaverkill. The development is on 645 acres and may be the forerunner of several others in the area since Mr. Rockefeller has purchased about 5,000 acres in the region.

”I regard our actions as the most economical way to recycle the land back as closely as possible to what it had been a century ago,” Mr. Rockefeller said. In effect, he and like-minded friends have been engaged in an unusual form of private rezoning. They have been putting strict environmental covenants on their land, and he has been assembling old farms and small holdings into larger tracts and then dividing the land into homesites that he sells after imposing covenants restricting the uses of the property.

The land recycling effort at the extreme western end of Catskill State Park apparently is the only major project of its kind in the Northeast. The only town is the hamlet of Lew Beach, 100 air miles and a three-hour drive from midtown Manhattan.

Mr. Rockefeller, who is an environmental lawyer, said he first went to the Beaverkill about a dozen years ago as the guest of John H. Adams. Mr. Adams owns a farm in the valley and is the executive director of the Natural Resources Defense Council, a law firm that specializes in conservation.


While a ”peaceful valley” is indeed emerging again, so too is one of the most environmentally conscious land projects in the northeastern United States. The development has attracted such names as Mr. Rather, Federal Judge John M. Walker Jr. and Seymour Schweber, the electronics entrepreneur, as well as lawyers, conservationists and, as Mr. Rockefeller put it, ”several journalists whose faces do not grace the Evening News.”

”My house in the Beaverkill is the only bit of privacy that I have left,” said Mr. Rather through a CBS network spokesman, declining to discuss his acquisition further.

More forthcoming, however, was Benjamin Wolkowitz, an officer in a Wall Street investment house who lives in suburban New Jersey. He said he and his wife, Lois, purchased a homesite there because ”it’s like buying into a land bank.”


‘But the valley seems to be evolving into a beautiful park for rich people in which you have the wealthy and the people who wait on them,” Mr. Wulff went on. ”Improving the area is all to the good, but land values and taxes have gone up and the average man can’t afford to live here.”

Others were more blunt, objecting to this characterization of the area and the value of the gentrification instigated by Rockefeller:

But rural blight caught up with the 25-mile-long Ulster County valley several decades ago as farming petered out, mobile homes and shacks proliferated on tiny plots and the area seemed headed toward the same sort of economic, social and esthetic disintegration that beset much of Appalachia.

Dan Rather’s comment about the desire for privacy and the investment banker’s joy at “buying into a land bank” say a great deal about the motives for the Rockefeller and NRDC’s involvement in the Catskills.  They have been busy establishing a secluded preserve for their own enjoyment for a quarter-century now.  Being able to empty out the area of mobile homes and shacks and buy up property inexpensively is integral to the project.  The potential bonuses and royalties associated with natural gas leases on properties owned by locals, by contrast, threatens the project.

Also integral to the effort are the complex relationships among the various entities detailed above, as well the State of New York, the Beaverkill Mountain Corp., the Beaverkill Valley Land Trust and its Johnson Hill Associates, Inc. subsidiary.  Land is routinely swapped among them, with sales to the state in some instances at premium prices (see excerpt below from 2008 financial statements of Open Space Institute), while, in others, the state is brought in to help finance the acquisitions, as when a $25 million loan was made from the Empire State Development (funds typically reserved for job creation) to the Open Space Institute in 2007.  The stock of Johnson Hill Associates and certain properties owned by the Beaverkill Land Trust were also pledged as collateral for a loan from the Laurance Rockefeller, Sr. estate, which is just one example of the interlocking relationships among all these parties.   One might even say it’s the Standard Oil trust reborn.

Screen Shot 2013-03-13 at 8.32.04 AM

It’s all legitimate conservation on one level, of course, but just so happens, in many cases, to also preserve the land around the homes of the principals, creating that “land bank” in the Catskills and the seclusion they all desire, free of all that “rural blight.”

But, that’s the rub, isn’t it?  The NRDC and friends aren’t really engaged in a battle against natural gas, but, rather, a strategy of keeping it out of the Catskills where it might interfere with their own plans for that land bank.  Emptying out the Catskills and lowering property values is what works for them, after all, and they have the power to intimidate everyone from the supervisors of Catskill towns who dare to pass pro-gas resolutions (by coordinating an attack on them in cooperation with the Attorney General’s office) to the Governor himself.

It doesn’t work so well for residents who must somehow earn a living and pay the taxes on what they own, though.  While RFK, Jr. pretends to represent them and mouth concern about their health as he does the bidding of the NRDC, they know their health is inextricably linked to economic development.  That’s why landowners, union members and other blue collar workers favor natural gas development – overwhelmingly so.  Meanwhile, the NRDC gives its imprimatur to natural gas development in Illinois.  That’s no threat to their Catskill plans, of course.  The double-standard reveals everything about their motives and what’s going on in New York and it has nothing, nothing whatsoever, to do with health or Geisinger’s endless study.  RFK, Jr., in fact, probably advanced that theory on his own to leverage his ex-brother-in-law in the NRDC direction.

It’s a sad state of affairs.  The Governor is subjecting the welfare of middle-class landowners and union members to the whims of some of America’s wealthiest households by letting NRDC and friends dominate a hand-picked advisory committee and a decision-making process.  Worse, while this is taking place a legislatively mandated and balanced advisory committee required under Section 23-0311 of the New York State Environmental Conservation Law has been ignored, the terms of members being allowed to expire with no replacements made, as if it no longer existed or was required.  The legislation specifically provides that:

The commissioner shall seek the views of the board on matters within their scope of concern and shall specifically request the board’s participation at an early developmental stage of any new rules, regulations and policies being contemplated or developed. In addition to such other duties as the commissioner may suggest or the board on its own volition may choose to undertake, the board shall:

a. Review and comment on the criteria to be used by the department in selecting abandoned wells for plugging or replugging.

b. Review and comment on proposed rules and regulations and department activities affecting the industry.

c. Recommend to the governor, the commissioner, and other state agencies program directions or modifications related to the development, operation, and regulation of the oil, gas, and solution mining industry.

None of this is being done, of course, while RFK, Jr. and his other NRDC friends continue to manipulate the situation from their perch on a committee created by a governor who can’t seem to make up his mind.  Sooner or later, though, he will have to decide and it will a choice between the blue collars and the blue bloods. The future of rural New York depends upon who he chooses.

  • Bill
    Posted at 09:22h, 14 March Reply

    I’m wondering how all this sits with the traditional base of the Democratic Party – the labor unions that are being screwed out of jobs… Despite the claims of “New York is open for business”, the unemployment rate here is increasing and is higher than the national average. Drilling would provide jobs for welders, pipefitters, truckers, construction workers and other traditionally union shops, as well as more skilled jobs long-term in training, accounting, monitoring, well and pipeline services, etc. I know that some of the unions have supported rallys in Albany; I wonder if they will continue to support a governor who has turned his back on those who helped elect him.

  • Marcellus & Utica Shale Story Links: Thu, Mar 14, 2013 | Marcellus Drilling News
    Posted at 09:45h, 14 March Reply

    […] Cuomo’s Choice: Blue Collars or Blue Bloods? Energy in Depth – NMI It seems Governor Cuomo has decided to sell out Upstate New York and its workers by putting natural gas development on hold. Reports claim Robert F. Kennedy, Jr. convinced Cuomo the health risk was too great and he should await the results of a Pennsylvania health study for which there is no scheduled deliverable. It suggests there is a lot more to the story and, of course, there is. […]

  • Donald Roessler
    Posted at 12:51h, 14 March Reply

    According to this article posted March 11 2013 from The-, New York’s health commisioner is not going to wait for any health studies to be done before he makes his recommendation. Here is a quote from the article:

    “New York’s health commissioner said Monday he never intended to wait for completion of any of the pending gas drilling studies, which could take years, and instead plans a recommendation to the governor “in weeks” on whether the state should approve hydraulic fracturing.”

    And this quote from Cuomo in the article says:

    “Nobody ever said that we were waiting for the studies to be finished,” Cuomo said Monday. “The Department of Health was going to be looking at those studies and see if there was anything constructive in those studies.”

    Also here is another quote from the article from the Health commissioner:

    “I anticipate we will be done in the next few weeks,” Shah told reporters at Cuomo’s news conference Monday. He said he sees no scenario in which New York would delay a decision for the final results of the studies.”

    Read More At:

    • Ed Leighton
      Posted at 14:38h, 14 March Reply

      The history speaks for itself. Wait for a decision or action “in a few weeks”. Then another reason or excuse for delay. Fool me once, shame on you, fool me twice, shame on me. This “few weeks” mantra has been going on for a few YEARS! We have been fools for the last time. JLCNY is proceeding with the takings lawsuit. Its about time.

  • Geoff
    Posted at 13:16h, 14 March Reply

    “They have been busy establishing a secluded preserve for their own enjoyment for a quarter-century now.”

    Why do you hate success and engage in class-warfare? These people are job-creators and deserve everything they have earned. If they have the money and want to turn parts of New York in to their private playground, good for them!

    • Tom Shepstone
      Posted at 13:54h, 14 March Reply

      Yes, good for them. Now, if they’d just stop trying to keep other people from doing the same thing. Enough of this last man in, close the door stuff!

    • Julie
      Posted at 16:29h, 17 March Reply

      Yeah, good for them. So they can do what they want with their land (preserve it–and develop it for more rich people to buy homes on), but us landowners can’t lease because they’ve seen fit to delay and stop drilling. All the other private landowners who do want to lease their land, have no say in the matter, right? We can’t do anything we want to b/c some rich developers want to preserve their land and hold the rest of the state hostage to poverty? I’d like to be able to improve my property too, with lease money…I’d like to be able to afford health insurance with lease money, but I can’t. (And next year, the federal government will penalize me for it on my taxes). I’d like to be able to help my kids afford things other kids have, but I can’t….So good for them. They have succeeded in keeping the poor in poverty while they flourish in their riches.

      • Geoff
        Posted at 07:58h, 19 March Reply

        So what, how about you take some personal responsibility? You have every right to engage in the political process, same as anyone else. The wealthy may have greater resources to draw on but that’s because they have earned it. All I hear is class warfare.

        Leave the job-creators alone to enjoy the fruits of their labor. If others have been too lazy or addicted to welfare to go out and succeed, how is that the problem of those who have?

        • Tom Shepstone
          Posted at 08:05h, 19 March Reply

          There is no problem with wealth and no problem with wealthy folks using their resources. It should simply be done in the sunlight.

          • Geoff
            Posted at 15:34h, 19 March

            Have they broken any laws? If not, they have no further responsibilities.

  • Kjell
    Posted at 15:40h, 14 March Reply

    How long, research on the health part that fracturing may result.
    Their government has had a program for almost 5 years, unless it can show the disease or other health-related injury is the origin of today’s fracturing of methods.
    The world goes on and when we do not talk about the methods they practiced at 50-60 century.
    I come from one of the world’s richest countries, which have built minds fortune in oil and gas, and got most of the inhabitants workplaces.
    How can you let your governor (which from the outside seems like he’d rather bet on a position in the Senate), listen to Robert J Kennedy or Yoko Ono and other celebrities who have never been in proper work but lived on celebrity status.
    The world metropolis, NY, is about to go bankrupt … you are not aware of how much financial debt your state have?
    You have not even separate power supply unit to natural crisis.
    Their governor said that NY was focusing on gameplay to bring up the economy during his last annual address
    Who will get to play with you … people from Brooklyn or maybe wealthy Chinese.
    Only to see that China buys their entire metropolis when it is driven into the ditch.
    Not to be rude but I grew up in a democratic country, and only wish that you prick your finger in the soil … and see the reality of their state’s economy.
    Initiation of fracture will provide 200,000 workplaces promptly and steadily increase over a 30 year perspiktiv .. and think of wealth and prosperity and education provided.
    My country is the world’s largest producer of oil and gas installations,. (Platforms are the most over 300 meters high but nevertheless hardly pollutes the environment)
    It’s clean mode hight tech equipment, and therefore should inhabitants of the state NY, think of the youth and the progress it has on their education to invent accessories are saving the environment.
    Without money and research that stagnate their development of the state, also to improve the environment globally.
    You must not let the extreme environmental activists and celebrities destroy their city, so it is like ghost town Detroit.
    Their former President Bill Clinton, was just in my country, and received money for his fund.
    How could we give him money …ask yourself ..

    • Tom Shepstone
      Posted at 17:56h, 14 March Reply

      Where are you from?

  • Josh S.
    Posted at 20:49h, 14 March Reply

    The landowners who want gas development need to start exerting more pressure – file a class action takings claim in federal district court immediately!

    If New York won’t allow for the development of mineral rights, then the state (taxpayers) will have to pay the landowners what they would have gotten from the private for profit gas companies. There goes all that additional revenue that Cuomo was counting on from expanded gaming taxes. Or maybe they can just tax Ono, Ruffalo, Kennedy, Fox, Rather, Lennon, et. al. at something like 85% to cover such payments.

    James Riddle Hoffa, International Brotherhood of Teamsters, once said that you should “never trust a Kennedy.” Hoffa was right.

    –Josh S., Esq.

    • fred jones
      Posted at 13:57h, 15 March Reply

      Josh, can you give me a ball park figure on a speculative mineral deposit that hasn’t been tapped yet? And can that estimate be considered a taxable asset on someones property assessment before a well is even drilled and we know what’s under the property in the reserve, if there’s even any NG there? Before I am forced to pay some “would have gotten” tax, I would kind of like to know. Thanks……

      Fred J.

      • Ed Leighton
        Posted at 11:43h, 16 March Reply

        billions, yes, with a B

        • fred jones
          Posted at 07:08h, 18 March Reply

          Prove it Ed.

      • Julie
        Posted at 16:40h, 17 March Reply

        Hey Fred,
        Why don’t you ask the Town of Vestal who reassessed in July 2008 and shifted the tax burden to landowners based on increased vacant land purchase prices? I believe the average vacant land value they used was $3000/acre based on the average of about 15 purchase parcels of vacant land whose buyers were speculating on drilling…my taxes doubled (they tried to quadruple ours but b/c my house is in such bad shape, it was only doubled when I fought it). Those of us who want to lease have lost out on a complete lease term. So in dollars, I’ll translate for you, $5500 an acre was the last sign on bonus near me. We have 34 acres. That’s $187,000 pretax my family missed out on since Paterson enacted the “de facto moratorium” and Cuomo has perpetuated it.

        • fred jones
          Posted at 06:07h, 18 March Reply

          Julie, I just paid $3000 and acre for vacant land where I live with no NG leases on it. That’s what land is going for in my neck of the woods. What’s under it in the form of NG is a mystery, plain and simple. I’m not saying life is fair, but I’ll be damned if I’m going to pay a reward for pure speculation. Where are my rights here? I feel for all you folks who feel your rights have been taken away, if you read my posts, you’ll understand my compassion, but making everyone pay for some takings that might or might not be under your property makes my blood boil.

    • Josh S.
      Posted at 22:47h, 15 March Reply

      @fred jones –

      In such a situation, it would undoubtedly result in what we call a ‘battle of the experts’ in court. However, the court would have to accept a factually comparable scenario as highly persuasive evidence working in favor of meeting a preponderance of the evidence burden of proof. In this case, the landowners could use Marcellus production in PA for their comparable basis. Given that such a close factually comparable scenario exists in the reality of the situation, the Court would be obligated to show deference to those comparables over any opinionated expert testimony offered from either side. In the end, the state would end up having to pay no matter what – the only question would be how much that bill would be.

      Of course, that’s assuming that our federal and NY’s Constitution is still respected by the judges currently occupying the benches in the respective courts at issue here. Any other result would mean the end of private ownership of mineral rights tied to private property ownership. Instead we’d end up with something comparable to the Commonwealth of Nations, where the queen (or ruling monarch at the time) owns and decides the fate of all mineral rights, as opposed to the private land owner.

      As an American who believes in the sanctity and founding principles of respect and deference to private property ownership and rights, the thought that such a takings claim could possibly fail, because of political or ideological bents of those in power, personally scares the living hell out of me. Basically, we’d cease to be America – or at least what America is supposed to have stood for. And in the end, we’d up just like the system of government that our founders fled from and revolted against in seeking freedom and autonomy.

      Precedent case law dictates that minerals extracted from a property are only considered taxable assets of the property upon actual extraction, as they are legally deemed worthless, for tax purposes, until such time that extraction occurs.

      Of course, the government can avoid all this by simply lifting the moratorium and allowing the landowners to develop their mineral rights privately, as the US and New York Constitutions guarantee. But if the state is going to prevent the development of the property owners’ mineral rights, then a Constitutional taking has occurred and the land owners are Constitutionally obligated to fair (market rate) compensation from the government.

      It just sucks that it would be the taxpayers that would get stuck with the bill, all because of a purely political decision made by a relative few – especially when there’s a private industry willing to develop and pay for those minerals. Wouldn’t it be fairer if only those who were preventing the private development of mineral rights would have to payout on a proper and successful takings claim, as opposed to punishing all the taxpayers of the state?

      I hope that this response addresses your concerns.

      –Josh S., Esq.

      • fred jones
        Posted at 06:00h, 18 March Reply

        Thanks Josh…….but sadly, I’m not buying it my good friend. We are talking purely speculation here and you cannot assess a price to a bet. If that were the case, the Gov. would charge me and the lovely wife, a pre-tax on all our possible winnings every time we go to Turning Stone 🙂 As it usually turns out, the House wins. It seems logical, that in order to award any “damages” you have to prove some known reserve of NG that the lessee owns so a value can be affixed. You cannot use PA as a viable example, as even in PA, there have been dry wells during wildcat drilling ventures and yes, some gushers, but it is a crap shoot. Plus how much NG is actually under NYS is very sketchy at best, even EID ran a great piece on that one counselor.

        • fred jones
          Posted at 06:27h, 18 March Reply

          “Precedent case law dictates that minerals extracted from a property are only considered taxable assets of the property upon actual extraction, as they are legally deemed worthless, for tax purposes, until such time that extraction occurs.”

          I think we both know what this means, Josh…….which is pretty much what I said my friend. Until the Gov has a figure or actual value, your minerals or lack there of, are worthless, as would any takings claims. I don’t have to be a lawyer to figure that out. What the land above sells for because of such speculation (as Julie pointed out) is irrelevant to what could or could not lie below, locked up in the strata.

          • Tom Shepstone
            Posted at 08:53h, 18 March

            Another ludicrous argument. Trees aren’t taxed either until removes. Suggesting they have add no value beforehand is nonsense.

          • fred jones
            Posted at 09:26h, 18 March

            Tom… can SEE the trees. Tell me, how much gas in under your land man……a ball park amount will do my friend, with out a wild cat well.. Then we’ll talk takings and rewards.

          • fred jones
            Posted at 09:30h, 18 March

            I had my land logged 10 years ago……….and it was simple to assess a price to what I had. Tom, does the Gov. compensate property owners for speculative mineral deposits in an eminent domain takings? No…….they give the owner (hopefully) fair market value. Gov. takings are part of our Constitution and goes back to James Madison. The power of governments to take private real or personal property has always existed in the United States, being an inherent attribute of sovereignty. Let’s be real here, the NG companies give an initial signing award, but they are not fools. Do they not wait until a well is actually drilled and gas begins to reach a profitable level (after set up and drilling operating costs are reached) from such wells, BEFORE any royalties (if any), are paid out to the land owner? What if your property is not even considered for drilling? Do these folks deserve payment for what the NG companies don’t even want? It makes absolutely No sense. A lease is nothing more than a contract or speculative bet or venture between a private citizen and a NG company. You want ME to pay for your private bet? There is also some question of the legality of horizontal drilling under adjacent properties as a clear “trespass” (if the neighboring property is not leased) under current NYS law, which pertains to conventional drilling only. Do you know anything about this? I think is has to do with the nature of the gas deposits. Tight source rock as opposed to conventional reservoirs that vertical drilling used to tap.

          • Tom Shepstone
            Posted at 11:21h, 18 March

            Nobody is asking you to pay – that’s the problem with your argument.

          • fred jones
            Posted at 13:10h, 18 March

            Oh yes they are Tom. Our friend Josh S made it perfectly clear and I quote:
            “If New York won’t allow for the development of mineral rights, then the state (taxpayers) will have to pay the landowners what they would have gotten from the private for profit gas companies.”

            “taxpayers”……….um……that would be me my friend. This thought that Josh expounded on is the mindset of NG lessee since the beginning. I’ve heard it a thousand times if I’ve heard it once and it rubs me the wrong way.

          • Tom Shepstone
            Posted at 14:16h, 18 March

            Of course, if you take it. No one is asking for that except as a last resort. Just let people develop their resources. Yet again, you attempt to turn arguments in your direction with sleight of hand.

          • Tom Shepstone
            Posted at 11:20h, 18 March

            Now you are twisting the argument yet again. You were using taxation to suggest it implied value in the case of natural resources and now you’re wiggling away from it.

          • fred jones
            Posted at 13:11h, 18 March

            I am? Can you extrapolate please?

          • Tom Shepstone
            Posted at 14:18h, 18 March

            Taxation is a formula that may or may not have ay relationship to value (e.g., forest tax assessment under Section 480(a) of the RPTL.

          • fred jones
            Posted at 05:58h, 19 March

            Talk about sleight of hand 😉 Tom…….the only thing of value here (without drilling a wildcat well) is undeveloped land, period. Uncle Sam doesn’t recognize perceived, imaginary or hopeful NG reserves, neither do banks, when affixing a taxable value. They can’t see it. you can’t see, the land owner can’t see it, the NG companies can’t see it. They can do some seismic testing, but even that can’t tell what quality the shale gas is or how lucrative it might be. It’s all speculation my friend and you can’t be awarded on a “hopeful outcome”. That would set a precedence in the courts and open the biggest can-o-worms this country has ever seen. Imagine what could be next. And just because land values have been artificially driven up as Julie noted above, that does not mean there is NG below it. It means that folks are caught up in the NG lottery and they all think they are sitting on a gusher.Yeah…..the more I think of it, you’re right, I’m getting angry over “nothing”……virtually.

          • Tom Shepstone
            Posted at 06:03h, 19 March

            I like your sense of humor, Fred, but what are you getting angry about? If there’s nothing there “fuggedaboutit.”

          • fred jones
            Posted at 08:42h, 19 March

            Sorry Tom, old friend…….I just get a bit testy when someones threatens to add to my tax bill because they aren’t getting their way. Do I detect a little agreement from you on my “non-issue”? If so, I suspect you wouldn’t do a pro-Bono here if you were a counselor-in-law, for your clients, if they decide to sue the state over takings. Maybe you would for the publicity……only you can answer that.

            Hey……humor keeps you and I young.

  • Observer
    Posted at 03:08h, 15 March Reply

    The apple never falls far from the tree, Cuomo is proof. His father was a jobs killer and so is he. His father shut down the states mental facilities putting dangerously disturbed “medicated” people onto the the streets of our communities. Then he lowerd the income eligibility for receiving the meds to top cap of 560.00 a month while their disability was at 700.00 a month making the meds to costly that controlled their behavior. They bought guns and now the son is trying to cover the mistakes of his father with gun control at the expence of the law bidding gun owners. Government is for Government they no longer serve the people we are becoming the “Clockwork Orange” society our only chance to take back our Goverment is through Unity and the one percent know this. How do they keep us from becoming United and taking back democracy.? Look no further then fear mongering organizations that the one percent created they are the Mountain Keepers, NYRAD, and other groups like them. They divide the communities at a local level and keep us there.

    • fred jones
      Posted at 13:39h, 15 March Reply

      Under the provisions of the 1980 Disability Amendments Act, the Reagan Admin cut almost 25% in funding for mental institutions for NYS. At that time NYS was having a budget crisis as were many states across the country, so thousands of mentally ill were put out in the streets as the burden was conveniently shifted to the state level. I remember seeing maybe a small handful in NYC before that Federal fiasco. Could Mario have handled it better? Not without money. Also, the 1980 DAA created definitions of mental disability that differed considerably from those it had employed in the past and from prevailing professional definitions of acute mental disorder, and its actions resulted in a dramatic decline in the number of mentally ill people receiving SSI and SSDI. Mentally ill people, who constituted roughly eleven percent of recipients, made up some thirty percent of those dropped from the SSI and SSDI rolls.

      • fred jones
        Posted at 13:49h, 15 March Reply

        Love Clockwork Orange BTW…..brilliant but more an ultra-violence flick and Govs “remedy” to youth out of control, than a Gov. suppressive takeover of our basic freedoms. Saw it back in 1971 when the movie came out, too young to read the book at 10. I’d be more concerned at the Federal Level, though, than the state level.

    • Josh S.
      Posted at 23:02h, 15 March Reply

      Actually, the dystopian society that we’re approaching thanks to liberal or leftist policy more closely resembles George Lucas’ ‘THX 1138’ (1971), Terry Gilliam’s ‘Brazil’ (1985), and Orwell’s ‘Nineteen Eighty-Four’ (1984) than ‘Clockwork Orange.’

      Let’s not forget that government control of otherwise private property ownership is exactly what our founders fled from and revolted against – advocating instead for the respect and deference from government of certain inalienable rights in relation to that private property ownership.

      The mineral rights of private land owners MUST be respected at all costs. If not, then we lose who we are as Americans.

      It’s that simple.

      • fred jones
        Posted at 06:17h, 18 March Reply

        I was going to point to some of those movies Josh, (Brazil was crazy stuff) but you pretty much covered them all quite well, thanks! I’m totally on board with protecting property rights, I just take issue with this takings horse hockey. I have no qualms about anyone leasing and prospering, but I’m old school my friend and in the words of Jerry McGuire….”sho me the money” (actual $$$) lost, not some pipe dream, and I’ll dish out MY hard earned tax money to make you whole again. Fair is fair. Burdening and punishing ALL civil, tax paying NY land owners and non land owners, is NOT the way to get me or anyone else on your side. That is a real good way to make life long spiteful, enemies. Plus, you’re the Esq. Can you site any NY case law on takings claims awards in recent past? Just curious……


        • Josh S.
          Posted at 02:54h, 20 March Reply

          @fred jones –

          All great movies BTW!

          As far as regulatory takings go, I would personally focus on a federal Constituional claim as opposed to a state claim, as the federal Constitution would trump any discrepancies that may be present in either the NY State Consitution or NY case law.

          The primary authority upon which I would rely is the precedent decision of the US Supreme Court in the case of Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922).

          Facts of the Case:

          In an 1878 deed, the Pennsylvania Coal Co. granted to H.J. Mahon the surface rights to a parcel of land, but retained the mining rights to the land, whereby Mahon knowingly accepted any risk from, and forever released and waived all claims for damages resulting from, future mining that might take place below the parcel. In 1921 the Commonwealth of Pennsylvania passed the Kohler Act, which prohibited the mining of anthracite coal in such way so as to cause the subsidence of, among other things, any structure used as a human habitation. Pennsylvania Coal provided notice to Mahon that it planned to begin mining for coal under Mahon’s habitation. Mahon brought suit to prevent Pennsylvania Coal from mining under his land pursuant to the protections provided by the Kohler Act.

          Issues and Holdings of the Court:

          Issue #1: Whether the Kohler Act, as applied to the property in question, constitutes an exercise of the police power, requiring no compensation, or of eminent domain (a taking), requiring compensation.

          Holding #1: The Kohler Act, as applied to the property in question, does constitute an exercise of eminent domain (taking), thus requring the state governemnt to provide Penn Coal with compensation.

          Issue #2: Whether the Kohler Act in general constitutes an exercise of the police power or of eminent domain.

          Holding #2: The Kohler Act in general constitutes an exercise of eminent domain.

          Rule of Law: The Court ruled that whether a regulatory act constitutes a taking requiring compensation depends on the extent of diminution in the value of the property.

          “One fact for consideration in determining such limits is the extent of the diminution. When it reaches a certain magnitude, in most if not in all cases there must be an exercise of eminent domain and compensation to sustain the act.”

          “What makes the right to mine coal valuable is that it can be exercised with profit. To make it commercially impracticable to mine certain coal has very nearly the same effect for constitutional purposes as appropriating or destroying it.”

          “We are in danger of forgetting that a strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional way of paying for the change.”

          Replace the term ‘mine’ with drill and the term ‘coal’ with gas – and we have a relatively spot on precedent here, wouldn’t you agree?

          As far as valuing the damages resultant of such a taking is concerned, the case was sent back to the trial court to determine. If you read the entire decision, you’ll note that the Court never required Pennsylvaia Coal Co. to prove that there was indeed coal located underneath the property at issue, as both sides conceded on this issue – the only issue was how much coal was located under the property that would have been mined. And, as I stated before, it turned into a battle between expert witnesses, however, the trial judge gave deference to the amount of coal that was mined from adjacent/nearby properties – which is why I said Pennsylvania Marcellus production could be used as deferential / convincing evidence in the current NY situation. As well production varies, as you’ve observed, I could very much see the trial court accepting an average from PA Marcellus production and applying that number to NY. Of course, each effected property would have to be looked at seperately, and it could get expensive for the plaintiffs in such a case (which is why the JLCNY was limiting the number of plaintiffs it would take on in the initial filing – hoping that a victory would act as a chilling effect).

          This also applies to local levels of government that have instituted local bans against gas drilling, or attempt to prohibit such actvity via over-reaching zoning restrictions. In such a context, owners of property when such a ban/zoning is instituted would have significantly stronger claims, as any after-the-fact owners would have had notice of such bans/zoning prior to purching the property – the claims of after-the-fact owners would depend on whether or not a court would find such bans/zoning to be reasonable, which is very hard to say and would have to be looked at on a case-by-case basis considering that the areas effected by such bans/zoning have unique characterists, not to mention that the ban/zoning ordinances themselves are all a little different in their nature and scope.

          So, although you consider it to be a gamble, the Supreme Court of the United States says that so long as there’s something of value under the ground and the owner of those rights wants to extract it, they must be allowed to OR the owner must be suitably compensated by the governemnt for its intervention that denies the owners of such extraction rights from doing so.

          Hope this helps!

        • Josh S.
          Posted at 03:02h, 20 March Reply

          BTW – When reading the case, you could also substitute ‘Kohler Act’ with NY Gas Drilling Ban.

          –Josh S., Esq.

  • Julie
    Posted at 16:43h, 17 March Reply

    Excellent article Tom, well researched…

    • Tom Shepstone
      Posted at 17:13h, 17 March Reply

      Thank you, Julie!

  • fred jones
    Posted at 05:59h, 21 March Reply

    Thanks Josh. The way I understand takings is this:
    The problem with land owners thinking some regulatory taking has been done by the state or a town law, is that it ignores a critical part of the clause, the word “taken.” “Take” means, and has meant at the time the Fifth Amendment was ratified, “physically seize,” not “diminish in value.” The land owner can sell their land, develop it within established zoning regulations, build a house on it, cultivate it and so on.

    A regulation restricting the use of property to further legitimate public ends, will not be considered a taking merely because it impairs the value or the utility of that land. However, when the regulation goes too far (as Justice Holmes put it in Pennsylvania Coal Co. v. Mahon case), so as to deprive the property owner of ALL reasonable use or value of the property, it will be judicially recognized as the equivalent of a taking which may not take place without payment of just compensation to the property’s owner. the US Supreme Court has found that state courts have reasonably concluded that “the health, safety, morals, or general welfare” would be promoted by prohibiting particular contemplated uses of land. And in this context the Supreme Court has repeatedly upheld land-use regulations that adversely affected recognized real property interests.

    Also, zoning restrictions (may) deny an owner any economically viable use of his land.

    With all this in mind, one could assume that any so called takings claims, could be on a case by case basis and not a broad sweeping class action suit that some NY landowners are calling for if it comes to that. A tough row to hoe.

    • Tom Shepstone
      Posted at 06:54h, 21 March Reply

      You’re ignoring the fact land use regulations must be reasonable and based on a sound rationale. They cannot be based on whims or simple prejudices or baseless speculation, which is exactly what’s happening in so many cases with local laws restricting development. I have been writing zoning laws for nearly 40 years and I have observed an ever declining respect for the rule of law and an an ever increasing desire top exercise raw power without regard to Constitutional rights. I have given up more than one client for thinking the reins of power extended to making up excuses that would keep out Orthodox Jews and other people they don’t like and who feel the rules only exist to protect them and no one else. That’s why I have no respect for the NIMBY and have refused to oppose activities in my own neighborhood that were lawful though not necessarily appreciated. The law exists to protect property rights, not destroy them. That often involves balancing rights but it does not and cannot mean one group of people who happen to be in the majority at a given time and place get to deny the rights of others for no compelling reason. Surrender to that idea and we are all vulnerable.

      • fred jones
        Posted at 13:29h, 22 March Reply

        Not at all Tom. I’m just quoting what the definition is. You know it too. If you want to embellish that with the old “tyranny of the masses” jargon, have at it my good friend. I agree..the law exists to protect property rights……..but like it or not, that means everyone’s property rights. That’s a fine balance and when it tips in either direction by perceived or real reasons, feathers get ruffled and forks cry foul. Good luck making everyone happy. I too sat on town zoning boards over the years and can’t remember the decline in the rule of law, that you observed. In-fighting..yes………but almost always trying to please the majority as long as the law was fair and just. Not easy, but crucial and necessary. I quit that public life about 3 years ago… maybe your perception is a HVHF thing……just kidding 🙂

  • Dean Lowry
    Posted at 08:55h, 21 March Reply

    @Fred Jones:
    Fred, your argument doesn’t allow for the fact that many landowners in Broome County, New York had offers to lease of $5,500 per acre when the Moratorium was extended resulting in these offers. Nor does it consider that the Oil & Gas Industry paid for leases that have been essentially rendered useless (in my case $3,000 per acre in July 2008). There has been substantial monetary damage by the corruption demonstrated by both elected and appointed officials in New York State. I guess if the corruption serves your side then it’s easily overlooked. In my book, that’s exactly what’s wrong with our nation today, people seem to be willing to overlook corruption by members of their particular political party and their only argument is “well, look at the other guys, they do it too.” Very Disheartening.

    • fred jones
      Posted at 13:07h, 22 March Reply

      Dean, I fully understand the land value variances. But I feel little sympathy for any gasco that paid ANYTHING per acre in NYS when there was a moratorium on HVHF! The took a bet and lost. Now they cry foul? That is the nature of the business, even in states where HVHF is legal. Wildcat wells can at times prove to be dry holes, so no one gets nothing. And bully for all the land owners who got a nice signing bonus. That is in deed a good chunk of change folks I know personally received, that really needed it. Good neighbors, poor as dirt. But let’s be realistic my friend. Just because you or anyone who signed a lease, was by no means a guarantee that a gasco was going to sink a NG well on your property. They determine when and where, not the lessee. I’m 100% with you on zero tolerance of Gov. corruption. I adhere to no political party BTW…….they both can’t be trusted.

      • Dean Lowry
        Posted at 21:05h, 22 March Reply

        Actually Fred, I purchased leases just prior to the “Moratorium” was instituted. Never thought a state would act in such a manner. I’ve been in this business for over 30 years and work hand in hand with mineral owners everyday that have seen no damage to there water or air. In fact I’ve never actually ever heard of such a complaint (until Josh Fox started asking some “non-mineral” owning landowners) in over 30 years. My argument has always been, study all you want (while it’s happening) but don’t stop business as usual on speculation. On the premise of not knowing if a company was going to sink a well or not. We certainly were, my company lost $50,000,000 in initial funding in New York and were in the process of obtaining up to$1.3 Billion in additional funds for further acquisition and development. The political system in New York State is an embarrassment to our country and a true sign of socialism at work to destroy it.

        • Tom Shepstone
          Posted at 04:46h, 23 March Reply

          So well said, Dean. New York is also the only state I know where a permit issued to a landowner by a municipality can be revoked later by a new board for no other reason than the fact they don’t agree with it’s issuance despite the fact the landowner is already well into construction. Most states provide for vested rights, which is only fair, and a permit can only be revoked if the applicant misled authorities or the permit was issued in violation of the law. New York has no such standards and a landowner can lose everything halfway through a project with no recourse over what is nothing more than a political change of heart. That’s what anti-gas folks would like to have in this instance as well. Property rights mean nothing to them – it’s all about the power – and they do not see that what they are doing to others will, inevitably, happen to them as well without the rule of law. And, they wonder why New York is failing and failing badly.

        • fred jones
          Posted at 13:32h, 25 March Reply

          Dean………I hear you……but never say never my friend as far as what NYS can do to stick it to you. Being a life long resident myself, I know not to underestimate the Gov. and their ability to totally mess things up. To be honest, I can’t agree on the squeaky clean record the industry insists they carry. As in any industry, there are accidents and to completely say otherwise, to me, is highly suspect. No one is that good or lucky, but Tom knows, that’s irrelevant to me here. I sympathize with your loss Dean, that’s a good chunk of change, but all is fair when you’re dealing with any Gov entity, fair in their favor that is. It’s like betting against the house. And Tom, let’s let the courts rule on whose rights win out. I know you’ll be mad as a hatter if it doesn’t go your way, but….. why fret my friend……..your a PA boy anyway 🙂 They are going full steam ahead down your way.

  • Tom Botheuser
    Posted at 19:37h, 09 April Reply

    Tom your arguement that trees are not taxed does not hold water as any land owner will tell you… Woodlots are taxed at a different rate compared to developed land, hay fields, brushlots and anything with a creek flowing through it… At least here in Greene NY, Chenango county…

    • Tom Shepstone
      Posted at 20:30h, 09 April Reply

      The value of the trees is taxed as sold.

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