llscher/Compulsory lnLegraLlon, v3 11/12/2011

1

!"#$%&%'()"*+,%+-"./"&0+"#.123)4.$5"67&+8$(&%.7"*+93%$+1+7&:""
;%&)+"<"./"!$&%')+"=>
?+-"@.$A"B&(&+"C7,%$.71+7&()"#.74+$,(&%.7"D(-""
A WhlLe aper (as amended)
8y Wllllam C. llscher
Synopsls: ln !une of 2003 Lhe new ?ork SLaLe SenaLe unanlmously passed 8lll # S3333-8, whlch was
sponsored by Lhen Sen. Ceorge Wlnner (8-n?).
1,2
lL amended 1lLle 9 of ArLlcle 23 of Lhe LnvlronmenLal
ConservaLlon Law Lo provlde for Lhe compulsory lnLegraLlon of prlvaLe properLy. 1hls paper examlnes
Lhe consequences of LhaL leglslaLlon and makes Lhe followlng argumenLs wlLh regard Lo Lhe regulaLory
reglme proposed by Lhe new ?ork SLaLe ueparLmenL of LnvlronmenLal ConservaLlon (n?SuLC).
! n?SuLC's pollcy ob[ecLlves are noL fulfllled by lLs proposed regulaLlons
! 1he LnvlronmenLal ConservaLlon Law (LCL) sLaLuLe does noL auLhorlze Lhe compulsory
lnLegraLlon of gas bearlng shale deposlLs
! Compulsory lnLegraLlon LhreaLens resldenLlal developmenLs and morLgages
! Compulsory lnLegraLlon of qos beotloq sbole Jeposlts consLlLuLes an unauLhorlzed Laklng
! n?SuLC's deflnlLlons are lnconslsLenL and conLradlcLory wlLh Lhe LCL sLaLuLe deflnlLlons
! Compulsory lnLegraLlon ls noL ln Lhe publlc lnLeresL, fosLer dlsrespecL for Lhe rule of law, and
promoLes clvll dlsobedlence.
llrsL rlnclples
Cu[us esL solum, e[us esL usque ad coelum ad lnfernos" ls an old maxlm meanlng Lhe owner of Lhe land
owns everyLhlng up Lo Lhe sun above and down Lo hell below.
3
1he 3
Lh
AmendmenL Lo Lhe ConsLlLuLlon
of Lhe unlLed SLaLes provldes, ln parL,: ..nor shall prlvaLe properLy be Laken for publlc use, wlLhouL [usL
compensaLlon."
4

ueclaraLlon of ollcy 23-0301: lL ls hereby declared Lo be ln Lhe publlc lnLeresL: Lo regulaLe Lhe
developmenL, producLlon and uLlllzaLlon of naLural resources of oll and gas ln Lhls sLaLe ln such a manner
as wlll pteveot woste, Lo auLhorlze and Lo provlde for Lhe operaLlon and developmenL of oll and gas
properLles ln such a manner LhaL a qteotet oltlmote tecovety of oll and gas may be had and LhaL Lhe
cottelotlve tlqbts of all owners and tbe tlqbts of oll petsoos lncludlng landowners and Lhe general publlc
may be fully proLecLed, and Lo provlde ln slmllar fashlon for Lhe underground sLorage of gas, Lhe
soluLlon mlnlng of salL and geoLhermal, sLraLlgraphlc and brlne dlsposal wells.."[emphasls added].

1he compulsory lnLegraLlon amendmenL provldes LhaL upon Lhe un-noLarlzed affldavlL
3
of a prospecLlve
well operaLor LhaL he conLrols by fee ownershlp, or lease, aL leasL slxLy percenL of Lhe land wlLhln a
prospecLlve spaclng unlL, Lhe landowner(s) of Lhe remalnlng forLy percenL of Lhe properLy wlLhln LhaL
spaclng unlL are !"#$%!"&' Lo selecL one of Lhree opLlons:
llscher/Compulsory lnLegraLlon, v3 11/12/2011


2

(1) parLlclpaLlng owner"- pay up fronL, a proporLlonaLe share of all esLlmaLed producLlon cosLs,
and accepL a proporLlonaLe share of any fees and llablllLy occasloned by Lhe well operaLors
negllgenL or lnLenLlonal acLlons, recelve a proporLlonaLe lnLeresL ln Lhe well's producLlon,
(2) non-parLlclpaLlng owner" - pay a dlsproporLlonaLe share of Lhe developmenL cosLs, penalLles
and fees lncurred by Lhe well operaLor, be sub[ecL Lo all llablllLles and cosL recoupmenL, aL a
300 rlsk penalLy", and be sub[ecL Lo a proporLlonaLe share of all cosLs golng forward, or
(3) royalLy owner"- pay no developmenL cosLs, and be exposed Lo no llablllLy buL forfelL Lhe slgnlng
bonus ordlnarlly lncluded ln a negoLlaLed lease and seven-elghLhs of all gas revenue.
none of Lhese Lhree opLlons permlL Lhe owners Lo elLher decllne Lo be lnLegraLed, or drlll Lhelr own
well.
Compulsory lnLegraLlon LhreaLens resldenLlal developmenLs
1he appllcaLlon of ArLlcle 23 ls noL resLrlcLed Lo rural areas. lL ls enLlrely posslble, even llkely, LhaL wlLhln
a slngle 640 acre spaclng unlL, a well operaLor could obLaln a lease Lo Lhe gas rlghLs of a 384 acre farm,
alrporL, park, swamp or cemeLery ad[acenL Lo a resldenLlal developmenL. 1lLle 9 could Lhen lnLegraLe as
many as 312 half acre suburban properLles or 1024 quarLer acre clLy loLs.

MorLgages are LhreaLened
All morLgages prohlblL hazardous acLlvlLy and hazardous subsLances on Lhe properLy. 1he lnvolunLarlly
lnLegraLlon of properLles lnLo hazardous lndusLrlal slLes rlsks Lhe foreclosure of Lhousands of morLgages
and can only serve Lo furLher depress consLrucLlon sLarLs ln an already unsLable economy.
llscher/Compulsory lnLegraLlon, v3 11/12/2011


3

8esldenLlal fracklng carrles heavy lndusLrlal rlsks, and Lhe rlpple effecLs could be Lremendous.
Pomeowners can be confronLed wlLh unlnsurable properLy damage for acLlvlLles LhaL Lhey
cannoL conLrol. And now a growlng number of banks won'L glve new morLgage loans on
homes wlLh gas leases because Lhey don'L meeL secondary morLgage markeL guldellnes. new
consLrucLlon sLarLs, Lhe bellweLher of economlc recovery, won'L budge where resldenLlal
fracklng occurs slnce consLrucLlon loans depend on rlsk-free properLy and a purchaser. 1hls
shlfL of drllllng rlsks from Lhe gas companles Lo Lhe houslng secLor, homeowners and
Laxpayers creaLes a perfecL sLorm begglng for lmmedlaLe aLLenLlon."
6

Crlglnal lnLenL
1he 2003 amendmenL modlfled new ?ork SLaLe's exlsLlng 1963 oll and gas leglslaLlon wlLh Lhe Lhree-
pronged ob[ecLlve of encouraglng developmenL, prevenLlng wasLe, and proLecLlng Lhe rlghLs of all
sLakeholders (l.e., landowners, Lhe publlc, and well operaLors). 1he 1963 provlslons were wrlLLen prlor Lo
Lhe developmenL of hlgh volume, sllck waLer, hydraullc fracLurlng , (an enhanced meLhod of exLracLlng
naLural gases locked ln shale formaLlons), and were based upon Lhe Lechnology of Lhe Llme, l.e. verLlcal
drllllng lnLo oll and/or gas flelJs ooJ pools. 8ecause oll or gas wlll flow Loward Lhe polnL of lowesL
pressure, Lhe 1963 unlLlzaLlon law was auLhorlzed as necessary Lo efflclenLly draln oll pools and gas
domes whlch underlay more Lhan one properLy.
unauLhorlzed 1aklng
1lLle 9 does noL auLhorlze Lhe compulsory lnLegraLlon of gas bearlng shale formaLlons. 8lll # S3333-8
seems Lo have lefL unchanged Lhe deflnlLlons secLlon of Lhe 1963 verslon. 1hus Lhe law glves a well
operaLor Lhe rlghL Lo drlll and exLracL oll and/or gas only from Lhe gas flelds and pools of lnLegraLed
landowners as Lhose Lerms are deflned ln LCL, 1lLle 1 - (23-0101 - 23-0102). A close readlng of Lhose
Lerms ls lnLegral Lo Lhe argumenL whlch follows.
6. "Field" means the general area underlaid by one or more pools.
7. "Gas" means all natural, manufactured, mixed, and byproduct gas,
and all other hydrocarbons not defined as oil in this section.
14."Pool" means an underground reservoir containing a common
accumulation of oil or gas or both; each zone of a structure which is
completely separated from any other zone in the same structure is a
pool.
17. "Reservoir" means any underground reservoir, natural or artificial
cavern or geologic dome, sand or stratigraphic trap, whether or not
previously occupied by or containing oil or gas.

A gas bearlng shale formaLlon, or anyLhlng whlch could be consLrued as such, ls noL lncluded ln Lhe
Lerms 'fleld', or 'pool'. 8ecause a 'pool' of gas ls deflned as a sLrucLure whlch ls compleLely separaLed
from any oLher zone ln Lhe same sLrucLure", LhaL Lerm as used ln 1lLle 9 would noL apply Lo gas bearlng
llscher/Compulsory lnLegraLlon, v3 11/12/2011


4

shale formaLlons whlch are nearly monollLhlc and conLlnuous solld sLrucLures, some of whlch underlle
several sLaLes.
Cases and llqulds are flulds. 1here ls noLhlng ln sclence LhaL conLroverLs Lhls sLaLemenL. Pydrocarbons,
lncludlng naLural gas and llquld crude oll, are llghLer Lhan waLer and rock, and wlll mlgraLe upward
Lhrough faulLs and flssures ln Lhe rock layers above unLll Lhey elLher reach Lhe surface or become
Lrapped wlLhln porous rock sLrucLures by lmpermeable rocks above. When hydrocarbons accumulaLe
beneaLh a sLraLlgraphlc Lrap, an oll fleld forms. 1he componenLs are separaLed by dlfferences ln denslLy,
wlLh a layer of waLer below Lhe oll layer and a layer of gas above. 1he gas and oll can be exLracLed by
drllllng and pumplng. 1he obvlous dlfference beLween Lhese dlscreLe flelds and pools of oll and gas, as
compared Lo shale gas formaLlons can be readlly seen ln Lhe followlng
7
graphlc.


1he Lerm '8eservolr' ls never used ln 1lLle 9. 1haL ls Lo say, noLhlng ln 1lLle 9 makes reference Lo or
lncludes anyLhlng whlch could be consLrued as a gas bearlng shale formaLlons. And, no agency of Lhe
SLaLe may promulgaLe rules and regulaLlons whlch exceed LhaL auLhorlzed and lnLended by sLaLuLe.
"`[n]ew language cannoL be lmporLed lnLo a sLaLuLe Lo glve lL a meanlng noL oLherwlse
found Lhereln' (Mcklnney's Cons Laws of n?, 8ook 1, SLaLuLes 94, aL 190). Moreover, `a
courL cannoL amend a sLaLuLe by lnserLlng words LhaL are noL Lhere, nor wlll a courL read
lnLo a sLaLuLe a provlslon whlch Lhe LeglslaLure dld noL see flL Lo enacL' (ld., 363, aL 323).
Also, an `lnference musL be drawn LhaL whaL ls omlLLed or noL lncluded was lnLended Lo
be omlLLed and excluded' (ld., 240, aL 412)."
8

Cas ls a noL a mlneral, alLhough lL may be conLalned wlLhln a mlneral deposlL such as Lhe Marcellus
Shale. ln order Lo hydraullcally fracLure a gas bearlng mlneral deposlL, some of Lhe shale musL flrsL be
llscher/Compulsory lnLegraLlon, v3 11/12/2011


3

mlned [removed] for Lhe well bore. urllllng Lhe well bore musL precede Lhe fracklng process. 1lLle 9 does
noL deflne, address or glve auLhorlLy for Lhe mlnlng of, or Lhe exLracLlon of mlnerals from shale gas
formaLlons.
lnconslsLenL 1ermlnology
lurLher verlflcaLlon LhaL Lhe compulsory lnLegraLlon leglslaLlon, was noL lnLended Lo lnclude gas bearlng
shale formaLlons ls evldenced by Lhe n?SuLC proposed deflnlLlons
9
of CperaLlons AssoclaLed wlLh Plgh-
volume Pydraullc lracLurlng.
!"#$%& '()*)(+,-('& *./00& 1)/2& /& 3/4)(5,67& 6)*-82/4)6& 9,(& :*)& /*& /& 6)6-;/4)6& <:50-;& 3/4)(&
*:<<07&/26&-*&;0/**-9-)6&/*&=&,(&==&-2&-4*&)24-()47&<:(*:/24&4,&>/(4*&?$$&4,&@AB&,9&4.-*&C-40)DE&
1he classlflcaLlon AA or A ls asslgned Lo reservolrs used as a source of drlnklng waLer. 1hus lf n?SuLC's
deflnlLlon of 'reservolr' ls applled as used ln Lhe Lerm 'pool', of Lhe LCL sLaLuLe 1lLle 1 - (23-0101 - 23-
0102), we are lefL wlLh Lhe oxymoron LhaL 'ool' means an underground dedlcaLed publlc supply of
drlnklng waLer conLalnlng a common accumulaLlon of oll or gas or boLh. under Lhe currenL proposed
n?SuLC regulaLlons
10
Lhls may become a self fulfllllng prophecy as Lhe use of dlesel fuel as a carrler fluld
ls noL expressly prohlblLed.
1respass
A person commlLs a Lrespass when Lhey lnLenLlonally enLer and remaln unlawfully on land ln possesslon
of anoLher ot coose o tbloq to Jo so.
11
A Lrespass does noL occur when an lnLruslon ls prlvlleged.
rlvllege ls obLalned Lhrough consenL of Lhe properLy owner or by law. 1here are aL leasL Lhree Lypes of
subsurface enLrles LhaL may resulL ln a subsurface Lrespass:
(1) dlrecLlonally drllled wells,
(2) ln[ecLed flulds ln enhanced recovery pro[ecLs, and
(3) hydraullc fracLure operaLlons.
12

1lLle 9 does noL glve Lo a well operaLor Lhe rlghL or auLhorlLy Lo deposlL and leave on anoLher's properLy
hundreds of Lons of sand, Loxlc chemlcals and polluLed waLer. WheLher Lhose deposlLs are surface or
subsurface ls lmmaLerlal.
8ule of CapLure
under Lhe rule of capLure, Lhe owner of a LracL of land acqulres LlLle Lo Lhe oll or gas whlch he produces
from wells on hls land, even Lhough parL of Lhe oll or gas may have mlgraLed from ad[olnlng lands.

lrac radlus
1he hydraullc lengLh of Lhe fracLure, or frac radlus, can be conLrolled by Lhe amounL of pressure applled
from Lhe surface and lLs effecLlve llmlLs closely monlLored by Lhe analysls of selsmlc reLurns. Lnglneers
selecL Lhe ln[ecLlon pressure, volumes of maLerlal ln[ecLed, and Lype of proppanL Lo achleve a deslred
resulL based on daLa regardlng Lhe poroslLy, permeablllLy, and modulus (elasLlclLy) of Lhe rock, and Lhe
pressure and oLher aspecLs of Lhe reservolr."
13
1hus, an lnadverLenL subLerranean Lrespass lnLo anoLher
landowner's shale deposlL need noL occur any more Lhan a lumber company need Lrespass onLo anoLher
landowner's foresL.
llscher/Compulsory lnLegraLlon, v3 11/12/2011


6

1he lengLh of a fracLure ls measured ln Lhree ways. 1he longesL measuremenL ls Lhe hydraullc
lengLh, measured by Lhe dlsLance Lhe fraclng fluld wlll Lravel. 1he propped lengLh ls Lhe
sllghLly shorLer dlsLance Lhe proppanL wlll reach." 1he shorLesL lengLh ls Lhe effecLlve lengLh,
whlch measures Lhe dlsLance wlLhln whlch Lhe fracLure wlll acLually lmprove producLlon".
14

1herefore, 1lLle 9 should be modlfled Lo esLabllsh a seLback dlsLance equal Lo or greaLer Lhan Lhe
propped lengLh" from an un-leased owner's properLy llne ln order Lo avold "frac Lrespass".

1lLle 9 as amended by 8lll # S3333-8, noL only falls Lo achleve a slngle ob[ecLlve of lLs declared pollcles, lL
ls so consLrucLed as Lo acLlvely prevenL and oppose Lhose ob[ecLlves.

CorrelaLlve 8lghLs
"
As Lhe name suggesLs, 1he docLrlne of correlaLlve rlghLs ls based on Lhe premlse LhaL every owner ln
common share equally ln Lhe rlsks and proceeds accordlng Lo hls proporLlonaLe share. 1he docLrlne of
correlaLlve rlghLs emerged ln ennsylvanla durlng Lhe nlneLeenLh cenLury because llquld oll and free gas
ln (domed) reservolrs wlll flow Lo a polnL of low pressure. under correlaLlve rlghLs, each landowner over
a common reservolr has Lhe legal rlghL Lo Lake Lhe oll and gas Lhrough lawful operaLlons on hls own land.
And each landowner over Lhe common reservolr has a duLy noL Lo damage Lhe reservolr. Lach of Lhe
landowners have reclprocal rlghLs and duLles whlch lnclude Lhe prevenLlon of wasLe, spollage, and
mallclous depleLlon. 1he opLlon for an ad[acenL owner Lo drlll hls own well ls a sorL of correlaLlve rlghL,
13

and Lhe denlal of Lhese rlghLs ls a conLradlcLlon Lo Lhe sLaLed ob[ecLlves of 1lLle 9. 1he opporLunlLy Lo
produce hls proporLlonaLe share of Lhe oll and gas under hls properLy boundarles ls Lhe landowner's
common law rlghL under a Lheory of ownershlp of Lhe mlnerals ln place.
16


under ArLlcle 23 correlaLlve rlghLs are condlLlonal, noL assured. 1he deparLmenL, wlLhouL conslderlng
correlaLlve rlghLs, may granL a permlL Lo Lhose enLlLles descrlbed ln paragraphs b and c of subdlvlslon 3
of secLlon 23-1901 of Lhls arLlcle for Lhe purposes of naLural gas developmenL lf Lhe deparLmenL
deLermlnes, afLer noLlce and hearlng, LhaL Lhe naLural gas resource would noL be developed by any
oLher enLlLy wlLhln Lwelve monLhs of Lhe close of Lhe hearlng record."
"
WasLe
"
no wasLe ls lncurred ln Lhe absence of compulsory lnLegraLlon. Solld mlneral deposlLs do noL flow.
Locked ln Lhe lnLersLlces of shale formaLlons, naLural gas wlll remaln Lhere lndeflnlLely and wlll noL
mlgraLe unLll Lhe flow ls sLlmulaLed by hydraullc fracLurlng of LhaL mlneral deposlL. 1he rule of capLure ls
lrrelevanL Lo Lhe PvPl process of exLracLlng gas from shale deposlLs. 1he gas wlll noL escape or be
wasLed. lL can remaln Lhere secure, [usL as lL has for eons pasL. 1o belleve oLherwlse would suggesL LhaL
only one well ls necessary Lo draln Lhe enLlre Marcellus formaLlon.

1he argumenL LhaL mulLlple faclllLles are occasloned ln Lhe absence of compulsory lnLegraLlon ls false.
1he currenL Lechnology of horlzonLal borlng allows Lhe drlll blL Lo be sLeered and placed wlLh preclslon
anywhere ln Lhe shale bed. Any shale deposlLs ln a spaclng unlL noL under Lhe conLrol of a well operaLor
can laLer be drllled, fracked, flared and compleLed from Lhe same well pad were lL under a compulsory
lnLegraLlon order. Compulsory lnLegraLlon ls noL necessary Lo decrease Lhe number of well pads, access
roads and anclllary faclllLles, such as compressor sLaLlons dehydraLors, eLc.

1he permlLLed pracLlce of flarlng a well
17
creaLes wasLe and polluLlon. As amended ln 2003, ArLlcle 23
makes no provlslons Lo prevenL Lhe enormous wasLe of naLural gas durlng Lhe flarlng process of
llscher/Compulsory lnLegraLlon, v3 11/12/2011


7

compleLlng a well. Cn !uly 28, 2011, Lhe u.S. LnvlronmenLal roLecLlon Agency (LA) proposed a sulLe of
hlghly cosL-effecLlve regulaLlons
18
LhaL would reduce harmful alr polluLlon from Lhe oll and naLural gas
lndusLry and prevenL Lhls wasLe. 1he 2003 leglslaLlon should be amended Lo adopL Lhose regulaLlons.

WasLe ls furLher occasloned by abuse of publlc subsldy. WhaL ls obLalned for free ls ofLen squandered.
As permlLLed by Lhe new ?ork SLaLe ueparLmenL of LnvlronmenLal ConservaLlon, shale gas exLracLlon ls
subsldlzed by Lhe uncompensaLed use and consumpLlon of publlc roads, publlc waLer
19

20
, publlc alr
21

and lncreased publlc healLh cosLs
22

23
. 1hus a proflL whlch could noL oLherwlse be reallzed by Lhe
lndusLry acceleraLes Lhe process of depleLlon. Compulsory lnLegraLlon furLher adds Lo Lhese
uncompensaLed cosLs a beneflL (Lo Lhe lndusLry) of 40 more properLy Lo explolL aL less Lhan markeL
value. AbsenL publlc subsldy by new ?ork Laxpayers, Lhe Marcellus Shale, would noL be proflLable as
shown ln Lhe followlng
24
graphlc:


WasLe ls creaLed by excess. uomlnlon Cove olnL LnC, L has recenLly applled Lo Lhe ueparLmenL of
Lnergy for a blankeL auLhorlzaLlon Lo exporL Llquefled naLural Cas Lo forelgn counLrles
23
, speclflcally
because recenL developmenL of Lhe Marcellus Shale has produced Loo much gas, Lhus depresslng Lhe
markeL prlce. 1herefore, conslsLenL wlLh Lhe pollcy ob[ecLlves of 1lLle 9, an exporL Lax should be lmposed
on Lhe removal of Lhls soverelgn resource from Lhe SLaLe. ln Lhe absence of such a Lax, wasLe and
unnecessary depleLlon are promoLed.

Compulsory lnLegraLlon prevenLs conservaLlon. Whlle a landowner may wlsh Lo prevenL such wasLe and
conserve hls gas for fuLure generaLlons, or even unLll Lhe markeL prlces may rlse, compulsory lnLegraLlon
requlres hlm Lo glve up hls gas Lo a company wlLh whom he has never negoLlaLed a lease and Lo sell LhaL
gas aL less Lhan opLlmum reLurns.
" "
llscher/Compulsory lnLegraLlon, v3 11/12/2011


8

ulLlmaLe 8ecovery
1he argumenL for a greaLer oltlmote recovery, wlLh regard Lo gas bearlng shale formaLlons ls lrrelevanL
because:
1. SLopplng shorL of Lrespasslng lnLo anoLher owner's shale deposlL does noL prevenL lLs fuLure
developmenL,
2. Compulsory lnLegraLlon can do noLhlng Lo lncrease Lhe amounL of gas already formed by naLural
processes.
3. Much llke Lhe falled kolkhozy collecLlve farms of SovleL 8ussla
26
, compulsory lnLegraLlon wlll
prevenL Lhe operaLlon of a free markeL by arLlflclally creaLlng an excess of naLural gas, Lhereby
depresslng Lhe mercanLlle prlce on world markeLs. WlLh a decrease ln selllng prlce, and wlLh Lhe
economlcs of Lhe Marcellus Shale already near or below Lhe break-even polnL, (see above
graph), furLher depresslng Lhe prlce wlll serve only Lo dlscourage commerclal developmenL and
consLraln Lhe recovery of Lhls resource unLll unnecessary and wasLeful depleLlon of Lhls flnlLe
resource agaln balances wlLh Lhe demand Lo creaLe a rlse ln prlces.

ubllc 1aklng, ubllc urpose

lor purposes of Lhe llfLh AmendmenL's 1aklng Clause, properLy Laken by Lhe governmenL from A and
glven Lo 8 musL saLlsfy Lwo crlLerla. llrsL, Lhe Laklng musL be for a "publlc use". Second, no prlvaLe
properLy shall be Laken for publlc use, wlLhouL [usL compensaLlon. ln kelo v. clty of New looJoo, 343
u.S. 469 (2003), Lhe Supreme CourL held ln a 3-4 declslon LhaL Lhe general beneflLs a communlLy
en[oyed from poLenLlal economlc growLh quallfled such redevelopmenL plans as a "publlc purpose"
whlch, ln Lhe oplnlon of Lhe ma[orlLy, consLlLuLes a permlsslble "publlc use". 1he provlslons of ArLlcle 23
fall Lo meeL Lhe crlLerla whlch underlle Lhe [usLlflcaLlon for publlc Laklng.
1. ln kelo, an underlylng assumpLlon was LhaL, lf noL redeveloped, Lhe sub[ecL properLles would
oLherwlse lle fallow or depreclaLe. under a compulsory lnLegraLlon order, Lhe value of un-leased
properLles cannoL be enhanced, buL only dlmlnlshed. Llke a maLure woodloL, Lhe acL of
exLracLlng Lhe gas resource from Lhe mlneral deposlLs wlll devalue Lhe properLy. Powever,
unllke a woodloL, lf lefL unLapped, Lhe gas bearlng shale formaLlon would only appreclaLe ln
value as surroundlng volunLarlly leased properLles are depleLed of Lhls flnlLe, non-renewable
resource.
2. A premlsed [usLlflcaLlon for Laklng ln kelo, was LhaL hlgher Laxes resulLlng from redevelopmenL
would flow Lo Lhe sLaLe (Lhe ulLlmaLe source of auLhorlLy for Lhe Laklng), and Lhereby lndlrecLly
reduce Lhe Lax burden of Lhe publlc. 8uL slnce new ?ork SLaLe has no severance Lax, no Laxes
wlll flow from Lhe Laklng. 1he publlc wlll bear Lhe burdens of Lhls lndusLry wlLhouL parLlclpaLlng
ln Lhe beneflLs.
3. 1here has been no concluslve demonsLraLlon LhaL promoLlng PvPl wlll, on balance, resulL ln
economlc growLh. 1he lssue remalns ln debaLe
27

28
.
4. Llke a sLand of vlrgln Llmber, undlsLurbed shale deposlLs are aL Lhelr hlghesL poLenLlal. 1hls ls noL
a redevelopmenL. lL needs no remedlaLlon.

un[usL CompensaLlon

!usL compensaLlon ls normally measured by "Lhe markeL value of Lhe properLy aL Lhe Llme of Lhe Laklng
conLemporaneously pald ln money."
29
none of Lhe Lhree opLlons mandaLed by 1lLle 9 remlLs a falr and
reasonable compensaLlon Lo Lhe lnLegraLed landowner(s).
llscher/Compulsory lnLegraLlon, v3 11/12/2011


9

1. As an lnLegraLed royalLy owner,(Lhe defaulL opLlon), lf Lhe well produces, Lhe landowner(s) wlll
be pald " Lhe lowest royalLy ln an exlsLlng lease ln Lhe spaclng unlL, buL no less Lhan one-elghLh
of Lhe [neL] revenue recelved by Lhe well operaLor for Lhe share of producLlon aLLrlbuLable Lo
your acreage." lurLher, Lhls leglslaLlon mandaLes LhaL Lhe landowner wlll be deemed lnellglble
for a slgnlng bonus. Slnce Lhe well operaLor could save as much as $128,000 (640 acres 40
$3,000) noL pald ln a slgnlng bonus, Lhls wlndfall proflL should be Laxed as such.
2. 1lLle 9 obvlaLes Lhe lncenLlve for a well operaLor Lo negoLlaLe a lease. Cnce a well operaLor has
obLalned Lhe mlneral rlghLs Lo slxLy percenL of Lhe prospecLlve spaclng unlL, lL ls agalnsL hls own
besL lnLeresL Lo pursue furLher leases wlLhln LhaL spaclng unlL. Compulsory lnLegraLlon has shorL
clrculLed Lhls negoLlaLlon process. 1hls ls agalnsL publlc lnLeresL and conLrary Lo Lhe provlslons
of Lhe 3
Lh
AmendmenL Lo Lhe ConsLlLuLlon.
3. A 300 rlsk penalLy" on 40 of Lhe spaclng unlL equaLes Lo 120 of Lhe drllllng cosLs whlch Lhe
non-arLlclpaLlng Cwner(s) wlll be forced Lo absorb. no raLlonal basls has been esLabllshed
whlch can [usLlfy such a dlsproporLlonaLe penalLy. As Lhe uocLrlne of CorrelaLlve 8lghLs dlcLaLes
LhaL boLh beneflLs and rlsks be shared equally, Lhe ob[ecLlves sLaLed ln 1lLle 9 could only be
[usLlfled lf on average, Lhree ouL of every four wells drllled ln Lhe Marcellus Shale resulLed ln a
dry hole. lurLher, 1lLle 9 does noL address Lhe lssue of wheLher Lhls 300 penalLy ls a wlndfall
LhaL should be assessed as a Lax agalnsL Lhe well operaLor or LreaLed as a Lax credlL Lo Lhe non-
arLlclpaLlng Cwner.

Lxample: Assume a $3M developmenL cosL per well (lncludes slLlng, drllllng, fracklng,
compleLlon and LransporLaLlon cosLs), wlLh a gross revenue of $23M = neL $20M over Lhe
llfe of a well. Also assume all 40 of Lhe spaclng unlL are non-arLlclpaLlng Cwners. 1hen
Lhe compuLed rlsk penalLy" ls $3M 40 300 = $6M, or $1M more Lhan Lhe operaLor's
cosL of developlng Lhe well. 1hls rlsk penalLy" wlll accrue Lo Lhe beneflL of Lhe well owner,
whlch ln almosL every case ls a forelgn corporaLlon. 8uL ln every case Lhls rlsk penalLy'
money wlll noL come lnLo new ?ork SLaLe.
1he neL revenue Lo Lhe non-arLlclpaLlng Cwner wlll be ($20M * 40) - $6M = $2M. 1hus,
even assumlng domesLlc ownershlp of Lhe non-arLlclpaLlng Cwners, Lhe Laxable lnflow Lo
Lhe SLaLe ls only 23 of Lhe poLenLlal revenue. 1hus by Lhls leglslaLlon, Lhe SLaLe has shorLed
Lhe non-arLlclpaLlng Cwner by 73 and has shorLed lLself by 73 of Laxes on LhaL revenue.
1hls ls wasLe by Lhe SLaLe and lL un[usLly deprlves Lhe landowners of Lhe full value of Lhelr
properLy asseLs ln vlolaLlon of Lhe llfLh AmendmenL.
1he scheme ls paLenLly unfalr. As almosL all cosLs Lo develop Lhe flrsL 60 wlll already be
lncurred, Lhe downslde rlsk Lo Lhe well operaLor ls a 40 loss of poLenLlal neL revenue, whlle
Lhe downslde penalLy Lo Lhe non-parLlclpaLlng owner may consume hls enLlre
compensaLlon.

ArLlcle 23 makes no provlslons for audlLlng Lhe accounLs of Lhe well operaLor, elLher by Lhe sLaLe or by
Lhe lnLegraLed owner(s).
noL ln Lhe ubllc lnLeresL
1lLle 9 ls noL ln Lhe publlc lnLeresL Lo Lhe exLenL LhaL compulsory lnLegraLlon puLs ln play" up Lo 40
more prlvaLe properLy LhaL would oLherwlse remaln un-leased. uevelopmenL of clean, susLalnable,
renewable, energy resources (solar, wlnd, wave and geoLhermal) wlll noL occur unLll governmenL
pollcles ()*)+,"'-."'/!01%-)(%*%-2 of Lhose Lechnologles wlLh Lhe mlnlng of fossll fuels.

llscher/Compulsory lnLegraLlon, v3 11/12/2011


10

ubllc ercepLlon
Compulsory lnLegraLlon fosLers dlsrespecL for Lhe rule of law. rlvaLe properLy rlghLs are such an lnLegral
parL of Lhe Amerlcan experlence LhaL even clLlzens unfamlllar wlLh Lhe 3
Lh
and 14
Lh
amendmenLs,
recognlze compulsory lnLegraLlon as fundamenLally wrong. Whlle many clLlzens may dlsllke havlng Lo
pay Laxes, mosL undersLand Lhe publlc necesslLy of fundlng governmenL funcLlons. 8uL compulsory
lnLegraLlon engenders more Lhan ouLrage. lL ls generally percelved as corporaLe larceny enforced by
governmenL. PaLe has Lwo componenLs, dlsllke and fear, and lL ls Lhe power of governmenL Lo Lake by
forclble compulslon whlch creaLes LhaL fear. lurLher, upon learnlng LhaL noL one member of Lhe Pouse
or SenaLe spoke ln opposlLlon Lo Lhls blll, clLlzens are unlversally dlsmayed. As dlsrespecL for Lhe rule of
law promoLes clvll dlsobedlence and rlsks rebelllon, Lhls law musL be amended for Lhe publlc good.
we've qot o boJ Lhlng moJe by meo, ooJ by CoJ tbot's sometbloq we coo cbooqe."
J0


SubmlLLed,
Wllllam C. llscher
107 Clarmar 8oad,
layeLLevllle, n? 13066
(313) 449-0297

AbouL Lhe auLhor: ln 2010, Mr. llscher was successful ln peLlLlonlng Lhe LnvlronmenLal CuallLy 8oard of Lhe A. uL Lo upgrade Lhe Sllver Creek
WaLershed, (a 32 square mlle area ln Susquehanna CounLy), Lo LxcepLlonal value sLaLus. Pe also acLed as an lnLervener before Lhe A. ubllc
uLlllLy Commlsslon ln opposlng Lhe AppllcaLlon of Laser Marcellus CaLherlng Company LLC., ln lLs bld for emlnenL domaln ln ennsylvanla
(uockeL no. A-2010-2133371). Mr. llscher served boLh wlLh Lhe unlLed SLaLes Marlne Corps and Lhe new ?ork SLaLe ollce. Slnce 1980 he has
malnLalned a prlvaLe lnvesLlgaLlon buslness ln boLh new ?ork and ennsylvanla.


1
ConfllcLs of lnLeresL - new ?ork SLyle: SenaLor Ceorge Wlnner's Shale lay, uC 8ureau, Alllson Slckle, !une 1
sL
, 2011,
hLLp://www.dcbureau.org/20100601731/naLural-resources-news-servlce/confllcLs-of-lnLeresL-new-york-sLyle-senaLor-george-wlnners-shale-
play.hLml
2
n? SLnA1C8 WPC CCSLu u8lLLlnC MC8A1C8luM PAS 1lLS 1C lnuuS18?,
new ?ork SLaLe SenaLor Ceorge Wlnner owns sLock ln companles dolng buslness ln Lhe
Marcellus shale and hls law flrm represenLs Lhe gas drllllng lndusLry. SenaLor Wlnner gave a
sLrong speech opposlng Lhe blll, whlch Lhe SenaLe passed overwhelmlngly. hLLp://www.nydallynews.com/nylocal/2010/08/03/2010-08-03
3
Parvard Legal Lssays, WrlLLen ln Ponor of and resenLed Lo !ohn Penry 8eale and Samuel WllllsLon, 1977, Ayer Company ubllshers,
lncorporaLed, p. 322, noLe 8. 1he maxlm ls sald Lo have been flrsL used by Accurslus of 8ologna, ln Lhe LhlrLeenLh cenLury.
4
1he lasL Lwo words of Lhe amendmenL promlse "[usL compensaLlon" for Laklngs by Lhe governmenL. ln uolteJ 5totes v. 50 Actes of looJ
(1984), Lhe Supreme CourL wroLe LhaL "1he CourL has repeaLedly held LhaL [usL compensaLlon normally ls Lo be measured by "Lhe markeL value
of Lhe properLy aL Lhe Llme of Lhe Laklng conLemporaneously pald ln money." Olsoo v. uolteJ 5totes, 292 u.5. 246 (19J4) ... uevlaLlon from Lhls
measure of [usL compensaLlon has been requlred only "when markeL value has been Loo dlfflculL Lo flnd, or when lLs appllcaLlon would resulL ln
manlfesL ln[usLlce Lo owner or publlc." uolteJ 5totes v. commoJltles 1toJloq cotp., JJ9 u.5. 121, 12J (1950)."
3
lorm 03-1-1: AfflrmaLlon Cf Acreage ConLrol & 8lghLs ln 1argeL lormaLlon
6
8adow, LllsabeLh n., Pomeowners and Cas urllllng Leases: 8oom or 8usL?, new ?ork SLaLe 8ar AssoclaLlon Iootool/uecember 2011, vol 83,
no.9
7
Clarke, 8oberL, Wood Mackenzle producL Manager, unconvenLlonal gas Servlces, 1he Clobal unconvenLlonal Cas 1rend, !anuary 26,2010
8
ln 1PL MA11L8 Cl WLS1L8n LAnu SL8vlCLS, lnC., L1 AL., v. uLA81MLn1 Cl Lnvl8CnMLn1AL CCnSL8vA1lCn Cl 1PL S1A1L Cl nLW
?C8k L1 AL., 97694. AppellaLe ulvlslon of Lhe Supreme CourL of new ?ork, 1hlrd ueparLmenL. ueclded and LnLered: november 23, 2003.
9
roposed Lxpress 1erms, 6 n?C88 arLs 330 Lhrough 336 and 36, SubchapLer 8: Mlneral 8esources, arL 360.2
10
roposed Lxpress 1erms 6 n?C88 arLs 330 Lhrough 336 and 360. SubchapLer 8: Mlneral 8esources. 360.6 Well ConsLrucLlon and
CperaLlon. (b) SlLe MalnLenance, (24) ulesel fuel may noL be used as Lhe ptlmoty carrler fluld for hydraullc fracLurlng operaLlons.
11
8LS1A1LMLn1 (SLCCnu) Cl 1C81S 138 (1963), see Cregg v. uelhl-1aylor Cll Corp., 344
S.W.2d 411, 416 (1ex. 1961) (sLaLlng LhaL enLry can occur by causlng a Lhlng Lo cross Lhe boundary and
llscher/Compulsory lnLegraLlon, v3 11/12/2011


11


does noL requlre a person Lo enLer). 1he 8esLaLemenL deflnlLlon also lncludes remalnlng on land of
anoLher or falllng Lo remove a Lhlng LhaL Lhe person ls under a duLy Lo remove.
12
1erry u. 8agsdale, Pydraullc lracLurlng: 1he SLealLhy Subsurface 1respass, 28 1uLSA L.!. 311, 317 (1993).
13
CoasLal, 268 S.W.3d aL 8
14
CoasLal, 268 S.W.3d aL 3.
13
PalbouLy v. 8.8. Comm'n of 1ex., 337 S.W.2d 364, 373 (1ex. 1962) (sLaLlng, when dlscusslng Lhe rule of capLure, LhaL [l]f Lhe owners of
ad[acenL lands have Lhe rlghL Lo approprlaLe, wlLhouL llablllLy, Lhe gas and oll underlylng Lhelr nelghbor's land, Lhen Lhelr nelghbor has Lhe
correlaLlve rlghLs Lo approprlaLe, Lhrough llke meLhods of dralnage, Lhe gas and oll underlylng Lhe LracLs ad[acenL Lo hls own")
16
Llllff v. 1exon urllllng Co., 210 S.W.2d 338, 362 (1ex. 1948).
17
Subdlvlslon (a) of SecLlon 336.2 ls revlsed and a new subdlvlslon (f) ls added Lo read: (c) 1he release or flarlng of gas, Lo Lhe exLenL permlLLed
by subdlvlslon (b) of Lhls secLlon, shall be done ln accordance wlLh a flare permlL lssued by Lhe dlvlslon.
18
hLLp://www.epa.gov/alrquallLy/ollandgas/pdfs/20110728facLsheeL.pdf
19
!ackson 88, 8 8alney earson, SC Csborn, n8 Warner, A vengosh 2011 keseotcb ooJ pollcy tecommeoJotloos fot byJtoollc ftoctotloq ooJ
*./0)F8/*&)G4(/;4-,2. CenLer on Clobal Change, uuke unlverslLy, uurham, nC.
20
8lchard A. kerr (13 May 2011). "SLudy: Plgh-1ech Cas urllllng ls loullng urlnklng WaLer". 5cleoce Now >>=: 773. 8eLrleved 27.06.2011
21
PowarLh, 8oberL W. and ALklnson, uavld 8., Assessmeot of tbe Cteeoboose Cos lootptlot of Nototol Cos ftom 5bole lotmotloos ObtoloeJ by
nlqb-volome, 5llck-wotet nyJtoollc ltoctotloq, Cornell unlverslLy, (Novembet15, 2010)
22
8achran, ur. Mary, cnMlcAl5 u5u lN NA1ukAl CA5 uvlOlMN1 ANu ullvk, lnLroducLlon, Analysls and CommenLs, 1he Lndocrlne
ulsrupLlon Lxchange, lnc., november 17, 2006
23
Law, Adam, M.u., 16 Murlel SL, lLhaca, n? 14830, LeLLer Lo new ?ork SLaLe Covernor uavld A. aLerson daLed 12-20-2009
24
Clarke, 8oberL, Wood Mackenzle producL Manager, unconvenLlonal gas Servlces, 1he Clobal unconvenLlonal Cas 1rend, !anuary 26,2010
23
hLLp://www.federalreglsLer.gov/arLlcles/2011/09/21/2011-24223/domlnlon-cove-polnL-lng-lp-appllcaLlon-for-blankeL-auLhorlzaLlon-Lo-
exporL-prevlously-lmporLed
26
1he creaLlon of kolkhozy ln Lhe SovleL unlon durlng Lhe counLry-wlde collecLlvlzaLlon campalgn of 1928-1933 was an example of fotceJ
collecLlvlzaLlon, Lhe lmmedlaLe effecL of whlch was Lo reduce graln ouLpuL and almosL halve llvesLock, Lhus produclng ma[or famlnes ln 1932
and 1933. (Wlklpedla)
27
8arLh, !anneLLe M., h.u., 1he Lconomlc lmpacL of Cas urllllng ln Lhe Marcellus Shale
28
ChrlsLopherson ChrlsLopherson, 1he Lconomlc Consequences of Marcellus Shale Cas LxLracLlon: key lssues
Cornell unlverslLy ueparLmenL of ClLy & 8eglonal lannlng, Ca8ul 8eporLs lssue 14, SepL. 2011.
29
Olsoo v. uolteJ 5totes, 292 u.5. 246 (19J4)
30
SLelnbeck, !ohn, 1be Ctopes of wtotb, 1940