Though the New York Times' gas reporter has fans, it is no secret that I do not belong to his fan club. Yet, I readily agree with those who say his reporting makes a difference in public opinion and outcomes.
Last week provided another example of the impact of the New York Times' gas reporter, when mid-level officials at the United States Department of Agriculture announced, via emails, that the USDA would reverse the historic policy of categorically excluding individual rural mortgage loans from a full NEPA review, if gas drilling was being done on the property. According to the gas reporter, the USDA officials in New York began reviewing this policy, after reading his October 2011 story that asserted gas drilling conflicted with mortgages, and ended with a scary quotation mentioning the subprime loan fiasco that nearly destroyed our economy. See the two NYT stories that I reference at the links that follow:
http://www.nytimes.com/2011/10/20/us/rush-to-drill-for-gas-creates-mortgage-conflicts.html.
http://www.nytimes.com/2012/03/19/us/drilling-property-mortgages-may-get-closer-look-from-agriculture-dept.html?_r=1&p.
By the end of the week, Secretary Vilsack himself had stepped into the matter, reversed the email statements from a couple career officials, and reaffirmed the historic USDA policy of categorical NEPA exclusion for rural loans.
http://www.nytimes.com/2012/03/23/us/usda-wont-review-mortgages-linked-to-drilling.html.
What amazed me about the original October 2011 story continues to amaze me today. To date, despite all the space he has had on this issue, the NYT gas reporter has not presented even one example, let alone large numbers, of a mortgage not being repaid or going into foreclosure, as a result of gas drilling taking place on a property.
We have a national mortgage foreclosure crisis, with record numbers of foreclosures, but not one is attributed to gas drilling on the property. We have had gas drilling on mortgaged properties for decades, but not one example of how gas drilling and mortgages actually conflict when it comes to repaying a mortgage is found. Not one!
In fact, I would bet my standard single beer of one's choice that the presence of gas drilling decreases mortgage default risk and the absence of gas drilling--and the associated income--raises it.
While the presence of gas drilling makes repayment of mortgages more likely and not less likely, and while USDA ultimately reaffirmed the historic operation of its rural loan program, the NYT gas reporter may have inspired after decades a federal lawsuit that could slow or stop a federal program that provided last year $18 billion dollars of loans to 140,000 families, many of whom are reported to be low-income.
He has clout. No doubt about that.
As the owner of a land leasing firm that has secured well over 1,000 leases over years here in Western Pennsylvania, I can speak from personal experience that I have never once seen with my own eyes, or even heard anecdotally of anyone EVER having any sort of conflict between a gas lease and a mortgage. The only time we've been contacted by a bank is for a subordination which would specifically grant the bank the right to royalty payments in the event of a default.
ReplyDeleteAs usual, you hit the nail on the head. Our friend the NYT gas reporter is completely missing the fact that many folks are getting a check that would easily allow them to pay off their mortgage in one fell swooop before any operations even begin. Many folks are receiving 6 figure monthly paychecks once production begins.
Also, with horizontal drilling, the vast majority of leased properties won't even have to deal with any surface disturbance that could possibly devalue the land.
The NYT gas reporter needs to start fishing with some different bait. All he's been able to catch over the last several YEARS is red herring.
Mike Knapp
Knapp Acquisitions & Production
Isn't it amazing how in this issue, certain reporters (Urbina and Abrahm Lustgarten come to mind) can simply assert something with no supporting data and that then becomes a position that needs to be taken as seriously as one with loads of supporting data. Wow.
DeleteThis was true on alleged radioactivity, the alleged shale gas ponzi scheme, alleged groundwater contamination by fracking, alleged cancer causing chemicals in frack fluids, animals allegedly killed by frack fluids, and this bogus mortgage issue.
Lots of alleging going on with no facts behind it.