They Can Call It What They Will – ‘Integration’, ‘Compulsory Pooling’, ‘Force-Pooling’…
IT’S TAKING PEOPLE’S PRIVATE PROPERTY RIGHTS FOR INDUSTRY PROFITS
FORCED POOLING HAS BEGUN IN IDAHO, TOO
HERE’S WHAT YOU NEED TO KNOW:
A growing number of Fruitland, Idaho residents are the test cases for Alta Mesa, the gas developer responsible for lobbying the State legislators and the Idaho Dept. of Lands to go with what they’re euphemistically calling “integration”: that is, forced pooling, or compulsory leasing. This means that the State will be forcing all mineral rights owners in a given section of land into either leasing or “participating” (contracting with AM to help pay development costs in exchange for a greater royalty if a well is good). AM only has to have 55% of mineral interest owners’ acres leased to instigate an Integration Order – the remaining owners (something under 45%) are the target of this order. Some of these owners will be represented by attorneys (including CAIA’s) at hearings before the Oil & Gas Conservation Commission (under the Idaho Dept. of Lands).
In 2015-16, CAIA represented several landholders in the first forced-pooling case. In 2016-17, an attorney working for CAIA represented other folks in a second integration case – which is being contested via a federal lawsuit (see here). In 2017, a third integration application was made, and many more homeowners are protesting their being force-pooled.
We can probably expect this to go on, and can’t predict where it will happen…
It’s time to be prepared.
You may read about forced pooling here:
>> SHOW US THE MONEY –> ‘Forced pooling’ and you
And for information on its harm to property values, mortgages and insurance:
>> THINK BEFORE YOU LEASE!
(and the Resources links associated with each of these sections).
But – FOR FRUITLAND RESIDENTS specifically, see the advice following…
1. If you have a mortgage on your property, you need to CALL YOUR LENDER IMMEDIATELY and tell them that the State of Idaho may soon be attempting to FORCE you to allow the minerals underlying your property to be extracted. You need to let your lender know that you are concerned that your property values will drop (which they definitely will – the closer they are to the gas facility, the more they will drop) and that you are concerned that this action by the State of Idaho could cause you to be in technical default of your mortgage (a taking?). If you have not signed a lease (whether you own your mineral rights or are a split estate surface-only owner), it is very important to make it clear to your lender that you have NOT signed, nor do you want to! You should make it absolutely clear that you expect your lender to get involved to try to stop this and protect your property values (and the lender’s collateral).
You also need to let your lender know that the State of Idaho is NOT REQUIRING INDUSTRY TO DO ANY BASELINE TESTING OF ANYTHING – water, air or soil testing – prior to drilling. This is EXTREMELY IMPORTANT, as most people mistakenly assume that the State of Idaho or federal government (EPA? – no) is requiring this pre-development data.
Whatever answers you get from your lender, insist they be put IN WRITING.
2. You need to CONTACT YOUR INSURANCE COMPANY and explain what is happening. Ask if you are covered in the event of a spill, explosion, or pipeline rupture. You should also ask who is liable if something happens and industry files bankruptcy – who would pay for any damages and who could be ultimately responsible? This is ESPECIALLY TRUE FOR PEOPLE WHO HAVE SIGNED OIL&GAS LEASES and are allowing industry to set up facilities or run pipelines/gathering lines across their properties! Bankruptcy is not at all a far-fetched scenario (after all, Alta Mesa bought the original leases from Bridge Energy when it went bankrupt a few years ago). Moody’s Investment Services has twice downgraded Alta Mesa’s financial rating in the recent past, making it more difficult for them to obtain supportive investment financing. They have said that AM should be considered “non-investment grade”, meaning Moody’s deems that Alta Mesa is on exceedingly shaky financial ground (which is another point you should make to your lender!). Another thing you’re being forced to do: do business with a company with a negative credit rating!
You need to also ask if you’re covered in the event of an induced earthquake (an earthquake caused by industry injecting liquids under high pressure, or by actual fracking or another type of well “treatment”). Earthquakes have been documented – across the globe – from oil and gas activities. Oklahoma has now surpassed California and Alaska in the sheer volume of earthquake activity, and it has all been linked directly to O&G activity. If you do not have earthquake insurance, it is probably a good idea to invest in it. (Your insurer may or may not offer it.) But: ask your insurance agent if INDUCED (caused by gas and oil activities) earthquakes will be covered under an earthquake policy.
Whatever answers you get from your insurance agent/company, insist they be put IN WRITING.
3. If you rely on well or spring water for drinking or feeding stock, you need to have your WATER TESTED. NOT THE TESTING PROVIDED BY THE HEALTH DEPT! You will need a full hydrocarbon panel – to include methane testing. YOU ALSO CANNOT DO IT YOURSELF OR HAVE SOMEONE WHO COULD BE CONSIDERED BIASED (relative, friend, neighbor, etc.) DO IT FOR YOU – that will not hold up in a court of law. You need to have a certified water operator do the collection. (CAIA can help you identify such a testing lab.)
If you do not have baseline tests to show that your water is NOT contaminated prior to drilling, you will not be able to hold industry accountable for contaminating it by drilling and its aftermath!
4. You should really have your home/land APPRAISED if this has not been done recently. This means a full-blown, written appraisal with comps and photos, prepared by a licensed appraiser – not just having a real estate agent run the comparable sales! Again, if you ever hope to show that industrial activity which you didn’t authorize has harmed your property values, this will allow you to compare before and after drilling when you get a lesser-valued appraisal down the road.
5. You would also be well advised to have a LICENSED/CERTIFIED HOME INSPECTOR check/document and report on (in a written report) the condition of your home – to include foundations, walls, ceilings, fireplaces, chimneys, walkways, windows, doors, everything – of ALL structures on your property. Things start moving when the oil & gas industry comes to town. After any shaking-up by seismic thumper trucks and/or explosive charges, they’re drilling and messing with the pressures underground… and underneath the foundation of your home and outbuildings.
6. Consider talking with an attorney. Be aware that any “oil and gas attorney” likely works for the industry – and that since O&G is new in Idaho, your lawyer probably doesn’t have specific experience with these issues… But your attorney will understand the basics of your situation and should be able to advise you on your response to the Integration Order (and perhaps represent you at the hearing). (CAIA has used two law firms in Boise: Nicholas Warden of Fisher Rainey Hudson; James Piotrowski of Herzfeld & Piotrowski. Both attorneys have become quite familiar with gas & oil issues in their integration subject representations.)
Do your neighbors a favor and make sure they’ve seen this list as well!