Tuesday, October 22, 2013

The razing of 1101 Carter Road: The rest of the story… Land “covenant” in deed forbids “human habitation”

The Sautner home became focus of the antifracking movement
PHOTO JAMES PITARRESI 
When I last visited Carter Road, a contractor for Cabot Oil & Gas was demolishing the former home of Craig and Julie Sautner, the anti-fracking activists who had relinquished their three-bedroom ranch as part of a settlement with the Texas drilling company. This was part of a larger dilemma in their hometown of Dimock, Pennsylvania, where the Sautner’s water well was polluted by nearby Cabot drilling operations, according to records from the state Department of Environmental Protection. It’s a charge that Cabot has denied publically and settled privately – with the Sautners and dozens of other plaintiffs.

The Sautner property – adorned with anti-fracking posters and inhabited by some of the most vocal and visible of fracking critics -- had become a particular symbol of the tensions that divided the community. Julie and Craig were featured in various high-profile accounts of the conflict as either victims, heroes or phonies. The aquifer that provided water to their home on 1101 Carter Road, and to 64 other homes in
EPA tecs sample water at Sautner home in 2012
Photo: JAMES PITARRESI
the area, was the focus of a controversial EPA investigation that found pollution at levels posing safety threats in 8 percent of the wells. Instead of making recommendations, the federal agency deferred to the industry’s solution, approved by the state, which was to deliver water in bottles and tanks to affected homes and provide filtrations systems. The Sautners and some other residents found those measures ineffective, and they unsuccessfully pursued a water line from the nearby village of Montrose – a measure that would have cost Cabot more than $11 million.  (A more full account of that story here.)

As part of an eventual settlement, the Sautners sold their property to a Cabot subsidiary for $167,500. Cabot demolished the vacant house, company spokesman George Stark told me after my visit last month, because the company was planning to sell the property, and it was more marketable without the
structure. Yet that answer doesn’t square with information on a deed that has since been filed in the Susquehanna County Court House in Montrose. After demolishing the house, Cabot sold the 3.3 acre parcel to Tim and Debbie Maye – owners of an adjoining property -- for $4,000. (Perhaps the absence of the house is an asset to Cabot, which retained the mineral rights on the Sautner acreage, although it’s worth noting that the DEP has forbid the company to drill in the area until it resolves the persistent problem of methane seeping into some water supplies in nine square miles around Carter Road. It's also worth noting that the Mayes have a history with Cabot that's antithetical to the Sautner's. The Mayes, who were once critical of the company, became shale gas supporters after they settled pollution claims of their own )

The most striking aspect of the sale, however, is this: The new owners of 1101 Carter Road are bound by certain conditions set forth in the deed, in parlance that may fairly be described as epic. It forbids a “residence or dwelling for human habitation” on the land. The time frame for this and other restrictions is “forever,” to be observed by future generations as “covenants running with the land.”

The sale, first reported this week by Laura Legere for State Impact, represents a kind of denouement to a story that I have been following for years while reporting for the Press & Sun Bulletin, in writing Under the Surface, and for this blog. The Sautners were initially enthusiastic and expectant supporters of shale gas development when the landman convinced them to lease their mineral rights in 2008. Their story, and the story of more than dozens others affected by Cabot’s operations, captures a complication that belies a common industry pitch:  Everyone’s a winner with shale gas development. Landowers get royalties, others get jobs, and there is cheap abundant energy for all. Claims of water contamination are exaggerated, fabricated, or trumped up by overreaching regulators.

In reality, there are economic winners and losers, as well as substantial environmental risks and trade-offs. The risks and trade-offs are hard to quantify because the industry is exempt from reporting requirements to disclose what it puts into the ground to stimulate wells, and what comes out. Whether you find this acceptable is likely to depend on whether you trust the industry more than government, your tolerance for mineral extraction in places you care about, and your belief in the wisdom of investing heavily in a fossil based energy system to meet 21st century challenges.

We know this: In some places gas is flowing, and with it, economic bounty to a mix of parties. But we also know this, like most things in life, is a circumstantial and transitory condition. The reality of the matter is that it often takes teams of bankers, lawyers, real estate agents, insurance actuaries, and regulators to sort it all out while being mindful of split estates, law suites, lease language, liabilities, and policy that can cut both ways depending on the proficiency and determination of various stakeholders. In the end, the example on 1101 Carter Road left a new land “covenant” forbidding “human habitation” at a place once called home by the Sautners.

4 comments:

  1. It looks like they're going the way of institutional control - as used in superfund site remedial actions. Deed restriction is one layer of many for administrative control of property. At least superfund allows for public comment. This is just weird. Here's a nice rundown on institutional controls (IC) pertaining to US EPA Superfund. I realize this is not superfund - but similar in nature for site restrictions.

    http://www.epa.gov/superfund/policy/ic/guide/guide.pdf

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  2. Interesting comparison. Thanks for sharing. Of course the EPA is chartered with protecting the environment. Cabot is chartered with maximizing share value. I’m guessing that managing liability is a legal art when acquiring and disposing of a property with pollution history. There is a clause in the deed that states no "hazardous waste" was released on the site. It's interesting that they felt it necessary to state this. Of course, this is semantics, as "hazardous waste" is a government classification from which the industry is exempt. Full deed is posted on Legere's article - http://stateimpact.npr.org/pennsylvania/2013/10/20/battleground-dimock-property-sold-deed-bars-owners-from-building-home-there/

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    1. My understanding of market economics is based on watching Antiques Roadshow on PBS. An item's value seems to be based on the story behind the item (provenance) and the number of people interested in that story. Sure there's some that just like an item for aesthetics, but they'll buy the next aesthetically pleasing and cheaper item. For example, the $1,000 grandfather clock versus the $1,000,000 moth eaten blanket. I guess my point is that the story matters and you do an excellent job relaying the story. How this relates to real estate is beyond my depth.

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  3. This comment is from attorney David Slottje, who ran into a technical glitch and asked me to post for him.

    Tom:
    I tried to post the following comment, but am not certain I was successful:

    "Tom:

    Great post.

    Using a covenant (running with the land) to prohibit the use of a property
    for purposes of human habitation is a common 'solution' or 'remediation'
    method employed (and is often a remedy imposed by environmental regulators)
    where a property has been contaminated by hazardous materials.

    By definition, the imposition of such a restriction results in a diminution
    of value (of the property) because the universe of potential future
    purchasers of the property is necessarily diminished by virtue of the
    presence of the restriction. This is a fact.

    Given the fact of this restrictive covenant, the Cabot spokesperson’s
    statement that the house was razed to make the property more marketable
    seems disingenuous at best, and in my opinion was affirmatively misleading.
    (If they are reading this, I would welcome the opportunity to use discovery
    to pursue this matter in greater detail.)

    David Slottje
    Community Environmental Defense Council, Inc.
    Ithaca, NY"

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