Inverse Condemnation

[Terrel L. Shields]

When a government so impairs a property from its viable uses, at some point it is an inverse condemnation & a set up for a potential claim from the damaged party.

New York refuses to approve drilling that involves "fracking" and they define the term frack somewhat clearly. The companies that held options to lease large chunks of NY are letting those go and the mineral owners are livid that NY will not allow fracking. In a recent meeting at Albany, 6 busloads of supporters of fracking were a drop in the bucket to anti-frack protesters.

New York oil was discovered near Cuba, NY in the 17th Century. "Snake Oil" as a medicine was derived from oil used by the "Seneca" Indians. So "Seneca" became "Snake" oil in the popular jargon. NY produced oil during the Civil War but a big boom occurred a few decades later and there was substantial oil drilled up through WWII.

In the 1970s I knew folks who were drilling gas wells in W. New York and selling for a premium price compared to what we were drilling for in E. Texas. Oil was regulated so oil drilling was ebbing to nearly nothing.

So if you are a mineral owner, it looks to me like NY is inviting an inverse condemnation suit from mineral owners denied the possiblity of developing their mineral rights. The government has basically condemned their property without compensation.

So is this a "taking" after years of hollow promises to proceed? I think so.

There is one effort to bypass the gov...I await to see the results. Since drilling is still legal, just not fracking with "slick water" fracks...a new process may make it economic to frac with propane and if so, such a water-free frack will accomplish the same results...hopefully; and, in doing so, bypass the restrictions on frack fluids. That would be an ironic justice, for a ban on fracking to actually make a new technology competitive with the "old" frack methods...and tell the anti-frack crowd to take a hike.

What is made from oil? ... about everything contains an oil by-product including

Fuel products obviously
paint, thinners, wall paper,
acetone, cleansers, soaps, "surfactants" (Joy dishwashing deterent is 40% surfactant)
Polyester, nylon, orlon, dacron, ...
Highway surfaces
perfume, lipstick, medications, household sprays
plastic (computer cases, telephones, cel phones, nylon, orlon, etc. etc.)
containers, plates, disposables, shopping bags, the shoes on your feet.
Inks, dyes, film, food flavoring, food coloring,
tires, battery cases, wiring coverings
seat pads, dash boards, steering wheels, air bags, seat belts, etc.
fibers, ropes, parachutes, anti-freeze, solvents, water pipes, gas pipes, sewer pipes...
Alcohol, synthetic rubber, raincoats, Scotchgard, Scotch tape, etc.

Look at your desk. The surface is likely a product of oil. The case on the printer, the computer, the phone, the camera, Disto, clipboard, tape measure, monitor, stapler, and inside the computer is even more. Perhaps a tax should be imposed upon states that refuse to allow drilling but use petrochemicals anyway.

 

[Jim Onderisin]

Interesting post.

 

[hastalavista]

Philosophically, I'm with the property owners.

Can the state make the argument that the property owners have no realistic expectation that the process to access the deposits would be allowed?

 

[Mark K]

When a government so impairs a property from its viable uses, at some point it is an inverse condemnation & a set up for a potential claim from the damaged party.


So if you are a mineral owner, it looks to me like NY is inviting an inverse condemnation suit from mineral owners denied the possiblity of developing their mineral rights. The government has basically condemned their property without compensation.

So is this a "taking" after years of hollow promises to proceed? I think so.

They've been doing it for many years thru zoning, "endangered species", etc. that's its just standard operation procedure for the Gov't to essentially take property without compensation.

My sister bought a canal front lot years ago and tried to build recently. But the Florida environmental Nazis told her that some "protected" bird was now living there and she couldn't build. Very valuable lot now used for the home of some songbird. If the state or feds want to protect the bird that much, they should pay market value for the lot and create a sanctuary. (I suggested fencing the place and turning some cats loose; should take care of the bird problem.)

Spotted owl ring a bell? How many jobs were lost and how much property set off-limits to the owners because of this scam?

Local authorities forcing owners to set aside part of their property for parks or greenspace as a condition for development approvals.

EPA and others telling owners that if there is standing water on part of their property for only two weeks a year that it is now designated wetlands and effectively prohibits any use of the land.

Someone needs to sue the Feds and States and convince a court to force them to pay the full cost of their regulations.

 

[Lost Cause]

Philosophically, I'm with the property owners.

Which property owners? There are property owners on both sides of that issue; those that want to develop and those who oppose development.

Should the state reverse course and approve such development, will the property owners whose property's Market Value may diminish as a result of the development be equally entitled to compensation for their loss? It just doesn't look like a one-way street.

 

[rbrienza]

I had a property, 40 acres, that was at one time was in a Federal flood way but was taken out. The county still has it as Flood Zone and nothing can be to the property. Rendering it useless and valueless (they still expected the owner to pay taxes), that I told by client that it was a taking by prescription (condemnation), in that that the zoning was so restrictive that the owner could not build anything on it.

 

[CANative]

There are pros and there are cons.

http://en.wikipedia.org/wiki/Hydraulic_fracturing

I did not know that Hiliburton was the first to patent the technology.

 

[Greenra]

Good or Bad, restrictive and/or overreaching of police powers is not unusual across the county providing job security for attorneys and work for appraisers. Sounds like a bifurcated case--- first determine if and what date a taking occurred, and second what were the damages. However, in this case damages maybe nil as the price of oil seems to rise with little restraint--- or maybe its just seems that way when I buy gas.

 

[Elliott]

All I know about the oil business:

i drink your milkshake - YouTube

I have permit fishermen friends who were impacted by the Exxon Valdez oil spill that took 20 years to settle....they got $15,000. The judges are soon in the pockets of oil company lawyers. Corporations are entities designed to make a return on investment, humans are designed to eat daily.

 

[hastalavista]

Philosophically, I'm with the property owners.

Which property owners?

The ones who own the land with development potential that is being restricted.

There are property owners on both sides of that issue; those that want to develop and those who oppose development.

Should the state reverse course and approve such development, will the property owners whose property's Market Value may diminish as a result of the development be equally entitled to compensation for their loss? It just doesn't look like a one-way street.

In any situation, there is almost always two (or more) sides of the fence.
Philosophically, I'm for allowing owners of land to develop it to its full potential. I'm also favorable to developing our own, national energy resources.

That doesn't mean develop at any cost (to other stakeholders).
In my view, what it does mean is that the state has to have a significant and overriding interest in preventing the development vs. allowing the property owners to develop. However, regardless if the state has an overriding interest or not, if the state denies the development, then the inverses condemnation question is legitimate.

Note that I asked if the property owners had a realistic expectation that such development potential existed? If not, I'd be more inclined to agree with the state that a claim for just compensation is unwarranted. If there was a reasonable expectation, I'd be more inclined with the property owners that just compensation is warranted.
The state has a relatively broad ability to enforce regulations on individual property owners. When that enforcement becomes a "taking", then the individual owner has the constitutional right to just compensation.


Mine is not a radical concept (at least, it wasn't always viewed as such!).