Ohio Property Owners File Lawsuit Challenging Natural Gas Drilling Leases

A group of 33 property owners in eastern Ohio have filed a lawsuit against natural gas and oil companies and two land agents over their land lease rights.

According to a report from SalemNews.net, the lawsuit seeks to get fair market value from their land for leases the property owners signed with drilling companies which plan to use it for new hydraulic fracturing (fracking) activity. The owners claim they were approached about leasing their land to Anschultz Exploration between 2008 and 2010 so it may open fracking operations atop the Utica shale formation. This was before a “boom” in fracking activity took hold in the region and the bonuses they were paid to sign the lease deals are paltry compared to today’s bonuses.

As a way of twisting property owners’ arms into signing lease deals, companies which plan to use fracking on that land will often offer a large, up-front sum of money to a landowner for the drilling rights. Just three years ago, the lawsuit claims, these bonuses were just about 1 percent of the amounts offered to landowners today.

Anschultz has since sold its lease deals to Chesapeake Exploration and in doing so, failed to notify the property owners of this transfer. The lawsuit claims these transfers were not notarized and therefore could not be recorded at a local courthouse, but were despite this lack of notarization. The property owners believe they were entitled to 30 days’ notice of Anschultz’ intent to transfer the lease rights to Chesapeake.

In addition to these challenges, the land owners believe Anschultz owes them for “sitting on” the lease deals without any fracking production. The lawsuit seeks to get “fair market value” for the land over the course of the lease even if the company failed to open any wells during that time. Perhaps those landowners could have, in the meantime, sought another company with which to enter into a lease agreement, and for much more money than they were offered just a few years ago.

One stipulation not carried over to the Chesapeake leases was the right of a property owner to seek a third-party lease, which Anschultz said it would match when it held the lease. Those filing lawsuits against the energy companies claim Chesapeake’s land agents Sharon Carter and Pete Rantovich misrepresented the terms of the transferred lease, specifically in regard to the rights of a property owner to accept those third-party deals.

Property owners also claim in their lawsuit that Anscultz misrepresented how it would conduct fracking drilling on their land. When these deals were signed, there was only a fraction of the evidence there is today on the dangers of fracking drilling, especially for those living closest to active wells. People within a mile of an active fracking well face a serious danger of suffering one or more of several types of contamination and pollution, which could impact overall property value and their health. Most often reported in the vicinity of an active fracking well is groundwater contamination which often leads to contamination of private water wells.

The lawsuit filed seeks to have the transferred leases to Chesapeake voided and the original deals with Anscultz restored. It also seeks at least $25,000 in damages for each plaintiff joining the action.

This entry was posted in Hydraulic Fracturing / Fracking. Bookmark the permalink.


© 2005-2016 Parker Waichman LLP ®. All Rights Reserved.