Key Takeaways
A father and son who purchased land in upstate New York because of its natural gas potential are suing the state because they argue New York is taking the value of their property without compensation by banning fracking.
They bought the land in 2011 after the father, a geologist, was attracted to the property’s natural gas potential, but before the state banned fracking, first by executive order in 2014 and later by legislation in 2020.
New York is dependent upon imports for almost 85% of its energy and pays about 40% higher electrical rates and about 23% higher natural gas prices than average.
While the plaintiffs do not argue with New York’s right to ban fracking, they believe that the Fifth Amendment of the Constitution requires that the financial cost of that policy should not fall on the shoulders of people who invested in good faith under the laws in effect at the time of purchase.
E&E News reports that a father and son who own the mineral rights to 164 acres of land in upstate New York are suing the state in federal court to challenge the state’s ban on fracking. According to the lawsuit, NY’s ban on fracking is unconstitutional under the Fifth Amendment because it deprives the landowners of productive use of their property, amounting to an unfair taking by the government. Their case is being handled by the Pacific Legal Foundation, which supports private property rights. The state’s bans on high-volume hydraulic fracturing, carbon dioxide fracturing, and propane gel fracturing, which effectively prohibit all development of the Marcellus and Utica Shale formations, amount to an impermissible government taking, according to the suit. These formations extend across the border into Pennsylvania, where they have been developed safely and extensively for over fifteen years. The plaintiffs are asking the court to block the state from enforcing the ban.
According to the complaint, the lawsuit is relevant to issues of energy independence and affordability. While banning hydraulic fracturing, New York State imports nearly 85% of its energy, with much of it in the form of natural gas coming from fracked basins in Pennsylvania. New York consumers pay high prices as the state’s residential electricity costs average between 24 and 27 cents per kilowatt-hour — approximately 40% above the national average — and natural gas prices run about 22.8% above the national average.
Background
In 2011, Madison Woodward III, a geologist, and his son Thomas purchased land in Delaware County that was on a rich natural gas reserve with the expectation that they would be allowed to develop the natural gas resources beneath their property. Three years later, on December 17, 2014, New York Governor Andrew Cuomo determined that there were too many unanswered questions regarding fracking to move forward with the technology, despite the fact that economically depressed areas of Upstate New York would have reaped benefits enjoyed by Pennsylvania landowners next door. He issued an executive order banning fracking. In 2020, the New York State legislature codified the ban in statute and imposed an indefinite moratorium on propane gel fracturing, followed by a 2024 ban on carbon dioxide-based fracturing.
According to the Pacific Legal Foundation, propane gel fracking is different from hydraulic fracturing in that the process uses gelled propane that can be recovered and reused instead of using millions of gallons of water and sand. The propane returns to a gaseous state after extraction, leaving no wastewater needing to be disposed of. The technology is available, and operators are ready to use it.
With the legislature’s ruling after the Woodwards purchased the property, they lost the ability to use the mineral rights they had purchased. Mineral rights are the legal ownership of the natural resources beneath land. The Woodwards sold the surface rights to the land in 2019, but had held onto the mineral rights, hoping that technology would eventually allow the natural gas to be developed. But New York banned all forms of technology that would allow that development.
The basis of the lawsuit is that while New York has the right to set energy policy, the financial cost of that policy should not fall on the shoulders of people who invested in good faith under the laws in effect at the time of purchase. The landowner or mineral rights owner should not have to pay for the decision made by the state.
Analysis
These actions show that New York tends to shut down new and innovative technologies without sufficient study, as was the case with the 2024 law banning carbon dioxide fracturing. The moratorium on propane gel fracturing without a timeline is effectively a ban. New York has frozen out an entire industry that would create jobs and lower energy costs in the state, where costs are among the highest in the nation.
As the Pacific Legal Foundation explains, New York must either compensate property owners for appropriating their mineral estates or allow them to make productive use of their property. The state’s current approach effectively prohibits any viable extraction methods and violates the Constitution. The suit will be heard in federal court.
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