Tag Archives: Property Rights

Big Business, Government Choose Profit Over Property Rights

At the end of September, North Carolina’s Mining and Energy Study Group approved a recommendation for compulsory pooling. The law forces landowners to accept compensation for fracking under their property, regardless of consent, if 90 percent of the surrounding land is voluntarily leased to the company. The recommendation is expected to be enacted by State legislature this fall.

The North Carolina General Assembly first passed compulsory pooling in the 1940s, but it is rarely applied, and never state-wide. Politicians are implementing it because, without it, fracking may not have a future in North Carolina. North Carolina is not the first state to take legal measures to trample on personal property rights to ensure that the energy companies can proceed with fracking, either. Compared to Arkansas’ 1 percent required minimum and Virginia’s 25 percent minimum, 90 percent seems generous.

Community activists in Raleigh are appalled. State representatives are trying to quell concerns by attempting to ensure that, when companies extract resources from the land, they don’t extract resources form neighboring properties without compensating the owners. But the contracts assigned to the percentage of owners who are forced to comply are not necessarily a fair trade. The minimum signed price agreed on by neighbors determines compensation, while the owner lacks a voice.

Hypocrisy is apparent in the response to the approval by Mining and Energy Commission Chairman James Womack. He finds it “personally abhorrent that a simple majority of land owners could dictate what I can do with my land,” but voted for compulsory pooling. He cited the concern over a landowner’s refusal to sign a lease preventing others from signing leases because of the potential for the resources to also be extracted from land not under contract. The “problem we have with the passion to protect private property is that you’re giving power to certain individuals to shut down the industry,” Womack said.

Womack, however, isn’t framing property rights in the situation properly. It might be disappointing and financially detrimental to other landowners and energy companies if they cannot extract resources, but it is not a violation of their rights. The real “culprit” is technological: The limitations of their extraction capabilities.

If someone cannot perform an activity on their land without harming neighboring properties, they should not be allowed to proceed. Lobbyists, businesses, and legislators seem to lack understanding of this basic notion, or choose to blur the lines when faced with massive profit potential. I cannot start a fire on my property, knowing it might spread to all of the neighboring properties and destroy their foliage. If I do, law should dictate that I face legal repercussions and my neighbors gain reimbursement. No one would logically allow me to approach the state legislature and demand that because I find it profitable to burn the forests on my land, my neighbors should also be forced to allow theirs to be burned.
Yet this is precisely what many state legislatures and businesses are doing. Energy companies do not want to face an onslaught of legal charges against them, but businesses should have to internalize the costs of their behavior rather than excusing it through legislative means. This kind of behavior is immoral and aggressive toward the minority of landowners who do not wish to participate in a business they do not find profitable or environmentally safe.

The situation highlights the danger of allowing legislators to control the marketplace. They choose to aid companies instead of respecting the concerns of their citizens in order to maximize the profit potential of resource extraction. In the short term, this action could be seen as wise or beneficial for the community as a whole. For those who see the environment as their number one concern, however, no monetary reward outweighs the long-term damages incurred.

We should always have a right to maintain our property, regardless of how disappointing the results of enforcing it may be to those who wish to profit from it. Businesses do not have a right to behave in a way that forces unwilling members to participate as much as I have a right to burn down my neighbor’s forest because I think it’s better for everyone involved. The law system should reflect a respect for the individual’s ability to determine what is best for them and their property and not an abandon that value at the expense of citizens in order to allow companies to maximize profits.

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