Landowners who do not want to lease their land for natural gas drilling may not have much say in the matter.
Louis Chodkiewicz of Broadview Heights, who fought for two years and endured a heart attack in the process, said a wellhead now sits 175 feet from his property. There are four others like it within 500 feet, owned by other companies.
Ohio is one of 38 states in the country that provides gas and oil companies with a loophole to obtain property and mineral rights, known as mandatory pooling.
"How can the state of Ohio make me a partner with a company I want nothing to do with? It's not a choice, it's an ultimatum: 'Sign it or we take it,'" he said.
According to Ohio law in effect since 1965, a mandatory pooling order can be applied for if a tract of land is of insufficient size or shape for drilling a well and the "landowner has been unable to form a drilling unit on a just and equitable basis."
Tom Stewart of the Ohio Oil and Gas Association said "over-drilling became a problem in the 1960s with landowners drilling wells close to property lines in efforts to draw minerals from their neighbors properties.
"You had rigs all over," he said. "Until someone said 'You don't need eight straws in a bottle of Coke to drain it,' so they put in spacing requirements."
Laws established in the 1960s helped solve problems of over-drilling, but in the process, they restricted the mineral rights of landowners with property smaller than 20 acres.
Since laws should not impede landowners' rights to access their minerals, the right of pooling was written into the law to allow landowners to pool their properties to form a tract of land big enough for a drilling platform and share revenues from their collective mineral resources.
But Stewart says it would be unconstitutional to allow one minority owner to prevent others from accessing their mineral rights.
If it can be shown the holdout party was offered a fair share in royalty and production yet refused to participate, other parties may apply to the ODNR Division of Mineral Resources Management for a mandatory pooling order.
What opponents say
Opponents say the practice is being abused by gas and oil companies, who use it to circumvent the landowners' property rights.
"If the landowners were the ones making the large profits, then I'd believe the argument," said Vanessa Pesec of the Network for Oil and Gas Accountability and Protection. "It's not, though. It's to protect the 80 percent of profits for the corporations."
Pesec said the law also does not specify the amount of acreage that can be pooled, despite ODNR's stated recommendation that 90 percent of the land be already accounted for prior to seeking a pooling order.
"While ODNR says they like to have a majority, the law states there is no percentage minimum, so I could have one acre and mandatory pool 99 percent of the rest," Pesec said. "So by law, if they made a significant effort to get that and they couldn't, then they could still be given the right to drill, because there is no minimum."
In an email to Pesec, ODNR Deputy Director Thomas Tugend said there are no circumstances he is familiar with in which a recommendation would be approved to mandatory pool a majority of acreage.
Still, even Stewart admits critics of the practice are justified in some cases.
"There have been examples in the past, where they would use mandatory pooling as a club to force people to do something they didn't want to do," he said. "It's not a leasing technique. It's a preservation of mineral rights technique. For someone to say 'We'll just do it anyway' is an abuse."
Some Ohio land owners insist the practice is an abuse of their own property rights.
"To know that my state officials think so little of my civil liberties, and they want to strip it from me and give it to private companies, that's just wrong," said Ed Hashbarger of Steubenville.
Hashbarger, who owns 38 acres in Jefferson County, said he and his wife were told by representatives of ODNR and Chesapeake Energy that mandatory pooling could and would be used if landowners did not lease willingly.
"I'm in a legal lease agreement with these companies for as long as they want to use my minerals and land and there's nothing you can do about it?" he said.
Pete Kenworthy, a representative from Chesapeake, declined to comment and redirected all questions about the practice to Ohio Oil and Gas Association, or OOGA.
In 2008, Chodkiewicz appealed a mandatory pooling order awarded to Ohio Valley Energy Systems Corp. of Austintown.
While the Ohio Oil and Gas Commission ultimately upheld the pooling order, the report included that body's criticism of excessive use of the practice by Ohio Valley:
"The facts are: 39 (percent) of all mandatory pooling requests submitted between February 2006 and July 2008 in the State of Ohio have been submitted by Ohio Valley. The Commission finds this a troubling trend. Mandatory pooling should be a tool of last resort."
Ohio Valley President Ben Funderberg did not return calls seeking comment.
Stewart said Senate Bill 165, passed in late 2011, reworked the mandatory pooling laws to prevent such abuse. Now an application for mandatory pooling costs $5,000 and no person or company can apply for more than five orders in a year without special dispensation from the chief.
Still, Pesec points out that loopholes exist.
"A person is allowed to have five per year, but a person is broadly defined, and various spinoff corporations can be formed to pull permits," she said.
Few appeals
Bethany McCorkle of ODNR said that of the 123 mandatory pooling orders issued from 2007 to date, only four have made it to an appeal hearing before the Ohio Oil and Gas Commission, and only one of those has been overturned, meaning the commission ruled against the oil or gas company seeking the order.
She said the chief cannot rule on an order until it has been reviewed by the Oil and Gas Technical Advisory Council.
In general, Stewart said, the law recognizes that the acreage would be drained anyway if the well were installed without the parcel included in the pool.
The order, if issued, must specify who the permit has been issued to, the boundaries of the drilling unit, the proposed production site, each separately owned parcel or tract or portion thereof pooled by the order. It also must establish the "pro rata" portion of the production afforded to each land owner on a surface acreage basis, based on their percentage of land to the total acreage of the drilling unit.
Standard industry practice, as approved by Ohio law is that the gas company will maintain an 87.5 percent working interest and the remaining 12.5 percent is split among the property owners based upon the percentage of their acreage within the unit.
For example, on a 20-acre unit, a landowner having five acres within the drilling unit boundaries would receive 25 percent.
The order must also specify cost sharing for all parties if the pooled landowner decides to participate in the drilling and operation of the well.
"There's been people that have been mandatorily pooled and they didn't like it, but the issue is that their acreage is within the physical drainage area," Stewart said.
Unsatisfied
But Broadview Heights' Chodkiewicz isn't satisfied.
On top of having the well head closer to his property than was originally proposed, and closer to his property than any of the other people in the pool who initially signed a voluntary lease, he said he has to pay the taxes on the little bit of income the well provides. And there's a catch.
He has received a letter with his first working interest payment explaining that he would be responsible for a portion of operating fees, plugging fees and repair fees.
"As a working interest shareholder, you may be responsible for your proportionate share of all costs and liabilities associated with this well for the remaining life of the well," the letter states.
Chodkiewicz said the company also offers to relieve him of those liabilities by purchasing his working interest share from him.
It all leaves him puzzled.
"The state of Ohio makes me liable for them when I wanted nothing to do with it and I tried to stop it?" he said.
Pesec said mandatory pooling has been a very useful tool for the industry since urban drilling was passed in 2004. Companies can now operate in urban and suburban areas where land parcels are much smaller and pooling is necessary to form drilling units. She said the law supercedes community zoning laws.
ODNR spokeswoman Heidi Hetzel-Evans said pooling is used more often in urban drilling because of abandoned property and the legal issue of absentee landowners.
"It's not a rubber stamp process at all, and they hold them to a very high standard of proving they made a good faith effort to lease them," she said. "Additionally, operators must also prove there is not another location whereby mandatory pooling is not needed."