Gates Mills, OH Land Trust Proposal to Restrict Utica Shale Drilling

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A proposal being floated by the mayor of Gates Mills, OH that encourages landowners to sign over their mineral rights to a so-called land trust which would be governed by a board appointed by the village. The trust would control where--and if--Utica Shale drilling could happen within the village. That is, landowners will give up their right to choose if their land should be leased or drilled on. A bad deal for landowners--and a good deal for the socialist mayor of Gates Mills.

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Gates Mills, OH Land Trust Proposal to Restrict Utica Shale Drilling

  1. 1. THE UTICA/POINT PLEASANT DEEP WELL DRILLING UNITIZATION PROJECT Summary The Village of Gates Mills, with the assistance of participating organizations, would form a real estate trust to take assignment of, or lease, the mineral extraction rights of all property owners in Gates Mills and, possibly, surrounding areas. The extraction rights to be transferred or leased would be those for deposits below 5,000 feet, currently being extracted using hydraulic fracturing. The trust would represent the interests of all property owners who transfer or lease their extraction rights to the trust. The trust would negotiate with prospective drillers regarding the location and number of wells and the royalties and other amounts to be paid to the participating property owners. Structure  The trust would have 7 or 9 trustees, initially selected by the Village and the participating organizations. Future trustees would be selected by the then-existing board of trustees.  Property owners who assign their rights to the trust would become beneficiaries of the trust, entitled to a pro rata share of the royalties and other amounts paid on account of all property included in the trust.  The pro rata share would be determined by dividing a particular property owner’s acreage by the total number of acres the trust controls, with such share adjusted to account for those property owners willing to allow their property to be the site of a well and those that are unwilling to do so.  The trust would receive (initial) funds from proceeds of the Village’s Conservation Levy. Rationale  Current industry-based projections indicate that drilling in the Gates Mills area will occur in approximately 10 years.  Ohio law limits the ability of the Village, qua Village, to control the drilling.  Property owners can agree amongst themselves to control or limit drilling.  Working together, Village property owners can determine the location and number of wells. {4648137:2}
  2. 2. Timing  Solicit support of other organizations – February and March, 2014  Form trust – May 1, 2014  Select trustees – July 1, 2014  Hold public meetings – July and August, 2014  Initiate property owner solicitation – September 1, 2014 {4648137:2}

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