Landowner Coalitions: The Good, The Bad, and The Ugly

May 30, 2014

As the fracking industry gains traction in New York State, landowners are increasingly banding together to maximize their negotiating power with gas companies. Some groups are a loosely organized network of neighbors. Others are formally organized entities, complete with scientific advisors and an experienced legal team. Here’s a breakdown of the Good, the Bad, and the Ugly about landowner coalitions of any stripe:

The Good

  • Greater numbers generally translate into a stronger negotiating position, particularly when the members are landowners with contiguous tracts of property. The effect is to level the playing field—a distinct benefit when dealing with corporate negotiators who’ve been at the bargaining table a lot longer than the landowner.
  • Coalition members can pool their financial resources and hire skilled and experienced representatives, attorneys, or scientific advisors to walk them through the gas leasing process.
  • Members can bank on the collective wisdom that comes with having another set of eyes—or two, or a thousand—examine a multifaceted issue.
  • Landowners of small tracts of land, or of property with less value to the gas companies, can benefit from the overall value of the property represented by the coalition. There is truth to the saying “the whole is greater than the sum of its parts.”
  • Coalition members can help each other keep expectations reasonable, which minimizes disappointment and keeps the negotiation process on track.
  • The coalition can efficiently disseminate relevant information to its members.
  • The coalition can quickly mobilize its members when it’s important for their views be heard.
  • The coalition is able to speak with a unified voice to corporate representatives, governmental agencies, lobbyists, and members of the media, with respect to the preservation of natural resources, related mineral rights, hunting or recreation concerns, or the latest drilling technology.
  • From a practical standpoint, members have a stronger political voice, and can offer thoughtful input into the legislative process.
  • The coalition can partner with like-minded citizen groups, lobbyists, or organizations, and share, vet, or receive up-to-the minute information.
  • The coalition can help a geographical region forge a positive identity. This identity could be beneficial in attracting new business or growing the local economy.
  • Shared information tends keeps everyone honest, including those on the opposite side of the negotiation table.

The Bad

  • Some of the positive attributes of coalitions can also be a potential drawback; large numbers of members can become unwieldy or unorganized in the absence of solid leadership.
  • Inevitably, differing interests emerge; without skilled leadership, a vocal majority can potentially squelch a minority viewpoint.
  • Compensation systems vary; if royalties from production are retained as some or all of the compensation for coalition members should ensure that it is for a fair exchange of value of services rendered.
  • The existence of mega-coalitions is relatively new. Some of the kinks still need to be worked out, particularly as coalition members learn from new experiences and as technology advances.
  • Mature and experienced leadership is a must for any coalition, and is sometimes in short supply. Coalition leaders represent landowners both at the bargaining table and in the public eye, and it’s essential that they have the integrity and ability to evaluate matters appropriately.
  • Mistakes at the bargaining table matter. Artificially high per-acre prices can have a dampening effect on negotiations, particularly as more and more gas reserves are found in the Northeast.

The Ugly

  • Not all coalitions are equal. A hundred thousand Facebook members does not necessarily mean a hundred thousand landowning, fully subscribed, committed coalition members. Nor does it mean that the members’ property is contiguous. Some subscribers are along solely for the scientific or legislative information the coalition might disseminate. Others are still kicking the tires on the idea of land leases. These large numbers can convey a false sense of unity.
  • Some believe that coalitions have the potential to turn members into one-issue voters. People, however, are at different ends of the social or political spectrum, and a strong coalition should be respectful of this divergence in opinion when it comes to political issues.
  • Some believe that coalitions are so entrenched in a pro-fracking position that they’ve lost the capacity for the fair assessment of science, technology, or safety matters. Strong coalition advisors should retain the ability to objectively evaluate the facts and provide solid advice.