Tuesday, January 11, 2011

"In Texas, what's yours is yours and nobody can take it from you... Unless it's the oil and gas industry."

Texas gas drilling's 'Rule 37' is eminent domain by another name


Mike Norman
Fort Worth Star-Telegram
Copyright 2011

No right-thinking and right-voting Texan would stand by and let somebody take away their private property or somebody else's private property.

Heck no.

Well, it's OK to take away somebody else's property for a school or some other vital public use. But you darn sure can't have your property taken away just so someone or some company can make money. No way.

Eight in 10 Texas voters in 2009 approved a constitutional amendment saying just that. They put shackles on government's use of eminent domain -- legally taking away someone's property -- for commercial purposes.

The worst political mistake governor-for-as-long-as-he-wants Rick Perry ever made was his 2002 plan for the Trans-Texas Corridor. That multi-decade idea for wrapping the state in superhighways died not because Texans don't like roads but because it would take away too much private property.

In Texas, what's yours is yours and nobody can take it from you.

Unless it's the oil and gas industry. They're different. We even have laws that tilt the table in their favor.

Fort Worth city and school officials got a taste of those laws earlier this week. Chesapeake Energy started a process at the Railroad Commission that eventually could allow the company to take Barnett Shale natural gas from under city and school property in east Fort Worth.

Then as quickly as the threat appeared, it went away. On Tuesday, Chesapeake sent a letter to the commission withdrawing its request. Company officials blame the original filing on a clerical error.

Plenty of other Tarrant County residents might wish their problems would go away so easily. They're the targets of similar Railroad Commission "Rule 37" proceedings brought by Barnett Shale natural gas companies.

In the last six months of 2010, Chesapeake started at least 29 such cases, and all are still pending.

Rule 37 has become the eminent domain of the mineral lease world. It started out as a way to protect property owners, and in rural Texas where land and mineral rights ownership is measured in the dozens or hundreds or thousands of acres, it probably works out that way.

What it says is you can't drill within a certain distance of somebody else's land or the minerals below it unless they've signed a lease saying you can. The theory is, they have the right to get somebody else of their choosing to drill on their land.

In Barnett Shale urban drilling, it's different. People who own residential lots in the middle of a sea of other residential lots have to sign leases with the same driller as their neighbor. If they don't, Rule 37 lets the Railroad Commission give its official blessing for drillers to leave the holdouts behind, empty-handed.

The theory behind the rule gets turned on its head: No property owner can stand in the way of other property owners getting what they want.

People who lose their property in eminent domain proceedings at least have the right to a court-determined payment. Not so for Rule 37.

Eight Euless property owners who were the final holdouts in Chesapeake's "BC Associates 4H" set of leases, the subject of a Rule 37 proceeding started in November, this week were sent letters from a Railroad Commission hearing examiner. Chesapeake had ended the process, they were told, by deciding to drill past their property and leaving the wellbore sealed for the required 330-foot distance around them.

That leaves them to choose between leasing to Chesapeake or nothing.

That's property rights, Texas style.

Mike Norman is editorial director of the Star-Telegram / Arlington and Northeast Tarrant County.


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