NIAGARA FALLS —
Gas drilling companies, which covet the gas deposits in New York’s Marcellus Shale, have executed an aggressive land grab for gas leases across the state’s Southern Tier from homeowners for the purpose of “fracking” — high volume horizontal hydraulic fracturing.
Dangling promises of royalties that can go unfulfilled, the leasing brokers fail to inform homeowners of the heavy industrial, uninsurable risks fracking entails. Based on decades of conventional vertical drilling, homeowners signed preprinted lease agreements without negotiation. Today, these homeowners are trapped indefinitely by leases that give strangers free reign to take over their property while relinquishing basic home ownership benefits they once took for granted.
Since upstate homeowners did not know about the hazards of fracking when they signed the gas leases, it did not occur to them to check their mortgage. Residential mortgages prohibit heavy industrial activity and hazardous materials on the property. Residential fracking brings both.
The mortgaged property needs to stay safe and uncontaminated because lenders sell 90 percent of all home mortgage loans to the secondary mortgage market in exchange for funds to make new home loans. Gas leases allow gas companies to truck in tankers with chemicals, transport flammable gas and toxic waste, operate heavy equipment 24/7 and store gas underground, for years, all in a person’s backyard.
Gas leases also create easements which continue after the gas company leaves, with no funds for upkeep. Gas drillers can sell the lease without telling the homeowner, so there’s no way for a family to control who drills on their private property. Homeowner’s insurance doesn’t cover risks from fracking and neither does the gas lease. Industrial-sized risks are so expensive, even gas companies don’t get fully insured for them. Homeowners can get slammed with risks for the dangerous activity they don’t even control.
As fracking spreads across 34 shale-rich states, the $6.7 trillion secondary mortgage market — which holds 90 percent of the nation’s home mortgage debt — could get left bearing the liability; American taxpayers are next in line.
A growing number of banks won’t give new mortgage loans on homes with gas leases because they don’t meet secondary mortgage market guidelines. As a result, homeowners with a gas lease can be out of luck selling their homes since the lease impacts stick with the property. The impact falls not only on homeowners and taxpayers but also affects the banking, housing, insurance and secondary mortgage market interests and their investors. New construction, the sign of economic recovery, is threatened too because construction loans require a property to be free of the very risks that gas drilling brings.
For New Yorkers seeking the return of a healthy state economy, this shift of drilling risks from the gas companies to the housing sector, homeowners and taxpayers begs for immediate attention.
Elisabeth Radow, Esq. practices law in White Plains. She chairs the statewide League of Women Voters’ hydraulic fracturing committee.