Attorney General Looks Into Tactics Used To Obtain Gas Leases

In response to scores of consumer complaints, Attorney General Spitzer said today that his office was investigating tactics used by energy companies to obtain leases for natural gas exploration and extraction in the Southern Tier and Finger Lakes regions.

"The extensive underground reservoir of natural gas in the Southern Tier and Finger Lakes regions holds great promise for the regional economy," Spitzer said. "However, concerns have arisen about initial efforts to secure leases from landowners to explore and extract this important energy source."

"My office is interested in hearing from landowners, local officials and others about misrepresentations or heavy-handed practices employed to obtain a lease," the Attorney General said. "It is important for all concerned that a lease truly reflects a mutual agreement of the parties. Our goal is to protect consumer interests while encouraging appropriate energy resource development."

Spitzer said his office has already heard from dozens of landowners in the Southern Tier and Finger Lakes about various questionable practices used by energy companies in their pursuit of leases. Some landowners have said that energy company representatives had provided misleading information about gas leases and had pressured them into signing leases before they had an opportunity to consult with an attorney.

Representatives of the Attorney General's office attended a public meeting in the Town of Erin last month in which more than 100 landowners voiced such concerns. Since that time, additional complaints have been filed.

Spitzer said his office will carefully review the complaints and report its findings at a later date.

In the meantime, Spitzer urged landowners not to sign gas leases without taking certain steps:

  • Carefully review all of the terms and conditions of a lease;
  • Ask questions and be sure that you understand all contract provisions;
  • Compare offers from different companies;
  • Negotiate aggressively with companies;
  • Obtain promises and conditions in writing; and
  • Consult an attorney before signing any contract.

Spitzer urged landowners who have complaints about tactics used to obtain a lease to contact his office at 1-607-721-8771, or fill out a complaint form at www.ag.ny.gov.

New York's primary natural gas production zone -- the Trenton-Black River formation -- runs underground through Chemung, Schuyler, Steuben and Tioga counties. Total market value of oil and natural gas production in New York for 2003 was $232 million. Landowners received an estimated $29 million in production royalties.

The matter is being handled by Assistant Attorneys General Dennis McCabe and Michael Danaher, Jr. of the Attorney General's Binghamton Regional Office.

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