RELIGION JUNE 6, 2013
It was late 2010 when a chipper agent for Kenoil, Inc., a drilling company in Eastern Ohio, drove to the nearby hamlet of Millersburg to visit Lloyd Miller. His car slithered down the hill overlooking the Millers's home and white farm buildings, past a set of pine green drums, pipes, and gauges—a shallow oil well that Kenoil had drilled on the Millers’s property many years ago—and stopped in front of the aluminum barn where the family, who are Amish dairy farmers, lodges its horses and buggy. The agent had an unexpected business proposition for Lloyd and his wife, Edna: Kenoil wanted to lease the right to drill on the Millers's land for shale gas. And for a lease of five years, he could offer them $10 an acre that same day.
The timing felt providential. The couple, who have several young children, were still paying off a 2006 loan they’d used to buy a small farm adjoining theirs. Gazing in the direction of his 158 acres, as he talked with me at his kitchen table in March, Miller said, “We thought, ‘Hey, that’s $1,500 we didn’t have.’” Still, he asked the agent about rumors of farmers who’d been given much larger signing bonuses in similar deals. He remembered the agent grinning dismissively as he said farms in the area were not leasing for more than what was offered. Miller, 46, considered the Kenoil well on the hill, and the years of good relations he had enjoyed with the company. “I just trusted him,” he said. The Millers signed the lease.
It was maybe two weeks, Miller figured, before they realized the enormity of what they’d done. First, their local paper, The Bargain Hunter, carried a front-page story advising farmers their land could be worth hundreds per acre to oil and gas companies. He compared notes with landowners nearby while on trips to the sale barns where farmers trade livestock, and when other farmers delivered hay for his cows. Miller is physically imposing—stout and broad-shouldered—but also painfully timid. When pressed on what his neighbors had earned, he gazed for a long time at Edna, who, with one of their daughters, was chalking the outline of a man’s pantleg onto a bolt of wool rolled out on the table. “My wife and I took turns kicking each other in the butt.” He paused for a long while. “Our ten dollars an acre compared to $1,000.”
Indeed, many area farms had leased for thousands. Even by a conservative calculation, the couple said they had missed out on a $79,000 signing bonus. (Kenoil declined to comment). Several times, they have felt the sting of their mistake, as during last year’s drought, when a decimated corn crop forced them to buy extra feed for the milking cows, costing thousands of dollars. The Millers have also tried to undo their misstep. Around the beginning of 2011, Lloyd presented his lease and his story to a lawyer, who said that by telling the Millers that $10 an acre represented the best deal available to them, the agent had committed fraud. He told Miller he could take Kenoil to court. “But I said, ‘Hey, that’s something we don’t do,’” Miller said. “He’s got to live with his conscience.”
Miller means that literally. The Amish interpretation of the Christian bible prohibits the use of the courts: Except in rare circumstances, the Amish do not sue. This has created a unique problem in the region. Home to the largest Amish community in the world, Eastern Ohio sits squarely on top of the Utica and Marcellus Shale formations, which contain billions in oil and gas recoverable through advances in hydraulic fracturing technology, or fracking. From the portions of the Utica Shale play that underlie Ohio alone, the Ohio Department of Natural Resources has estimated that companies may be able to extract up to 15.7 trillion cubic feet of natural gas. Chesapeake Energy CEO Aubrey McClendon has estimated the value of the Utica’s resources at $500 billion.
Accordingly, extraction companies are buying up the rights to drill on private property with unprecedented speed. At stake are geysers of money. And in the thousands of cases in which the landowner is of the Amish faith, their business partner would never dream of taking them to court should things go awry. This, obviously, has enticed some companies to take advantage of Amish farmers—who are finally figuring out how to fight back.
Amish farmers began to migrate to Ohio from settlements in Lancaster, Pennsylvania, in 1809, the first of them living on land deeded to them by President Thomas Jefferson. From about 250 Amish families in the main settlement in 1835, their numbers have grown to approximately 60,000 today, so that Eastern Ohio, not Pennsylvania, boasts the largest Plain community in the world. The greatest concentration is in Holmes County, where 42 percent of the residents are Amish, a quarter of them farmers. But there are about 50 Amish settlements, each made up of dozens of families, in 36 of Ohio’s 88 counties—namely the eastern ones where leasing, permitting, and drilling for shale gas are at their heaviest.1
The Amish are popularly known for their bonnets, buggies, and outdoor laundry lines, but their theology is much more complicated than simply avoiding modern trappings. Their prohibition on the courts derives from the portion of the Sermon on the Mount where Jesus instructs his followers to turn the other cheek, and if they are sued for their coats, to give up their cloaks, too. The Amish interpret this to mean that the court is no place to right wrongs. In 2011, for example, after the Securities and Exchange Commission charged a local man, Monroe L. Beachy, with running a Ponzi scheme that wiped out nearly $17 million in Amish retirement savings, a committee representing his some 2,500 Amish creditors asked a judge to dismiss his bankruptcy case so that they could resolve his debts amongst themselves.
When it comes to the oil and gas industry, this means that any agreement an Amish farmer makes with a company is, for the farmer, practically unenforceable. A rare case in which the plaintiffs were Amish suggests that Ohio’s oil and gas companies know this and have been willing to take advantage. In that Holmes County lawsuit, which began in 1991, a farming couple, Levi A. and Mary Yoder, complained that three oil companies had drilled a well partially on their property under a lease that had expired, depleting the reserves under the Yoders’ farmland of some $750,000 worth of oil.2 The defendants, which included the giant Columbia Gas Transmission Corp., lost and were ordered to pay $900,000. It is still one of the highest sums ever awarded in Holmes County. As to why it was so high, the presiding judge in the case, Thomas White, said employees of either Columbia Gas Transmission or its subsidiary, Columbia Natural Resources, tried to halt the lawsuit by putting pressure on the Yoders’ religious beliefs, a fact which came out in court testimony. Columbia had asked the Yoders’ bishop—the Amish equivalent of a priest—who was also a farmer, and who also had a lease with Columbia, to talk to the Yoders and invoke the Amish taboo on litigation so that they would drop their lawsuit.
At least, that was White’s recollection. David Noble, the longtime counselor for Columbia and the defense attorney in this case, said that if anyone had taken advantage of the Yoders, it was whoever had talked them into the lawsuit in the first place. The lawsuit they brought eventually compelled their three Amish neighbors, whose land also supported the well but who had no problem with Columbia, to testify in court. This so angered the neighbors that they refused to speak to the Yoders all during the trial.
“Those other three Amish men were the ones who talked to Mr. Yoder’s bishop,” Noble said. “I’m almost certain that somebody from Columbia Natural Resources was not doing that.” As for Columbia Gas Transmission Corp., who was also his client, he said without prompting, “It wasn’t always possible to know everything that was going on there. That’s generally true of most multimillion dollar companies.” He said the suit was bogus from the beginning, part of an orchestration by a local Columbia competitor whom Noble later bested in a racketeering case. The fact that, in the end, a court of appeals ruled in favor of the Yoders, “can only be explained by mental retardation or corruption. Take your pick.”
White, the judge in the case, now runs a Holmes County law firm with his son Christopher. Between them, the younger White said, they have consulted with several dozen Amish landowners who have been duped or wronged by energy companies and whose only remedy is through litigation. Christopher White, a jocund man in his 30s, offered a typical example. In early 2012, he said, “This guy came through town saying, ‘I’m Santa Claus, because I’m going to get you a phenomenal oil and gas lease.’… He buddied up to an Amish man and signed him for $15 an acre,” saying that there was no better deal to be had in the area. Afterward, the farmer consulted White, who concluded that the leasing agent had committed fraud. “But,” White added, “that Amish man just wanted to let it go.” Paul Miller, a garrulous old lawyer whose office sits between farms in Millersburg, the Holmes County seat, watched something similar unfold on the very road where he lives. Anticipating the boom, an oil company that had leases with most of his Amish neighbors sent representatives to extend those leases for five years at $200 an acre. Once again, agents made false assertions about the market, sealing deals with landowners who didn’t know any better. Miller's neighbors could have taken the issue to court. “But the Amish farmer just takes it and says, ‘I made a big mistake,’” Miller said.
Not that every Amish farmer is looking for a payday. Dale Arnold, the director of energy policy for the Ohio Farm Bureau and a Holmes County native, notes that some Amish lease their land for less than the market value on purpose, with many Amish believing that a windfall will cause their children to leave the faith. “They see their futures at stake,” he said. “So their bishop will say, yeah, you can get a lease. But your settlement is going to be smaller than what your English neighbors are settling on, and it’s going to be in this range.” Arnold has seen many Amish land collectives, of several dozens landowners each, sign leases this way. But an Amish bishop I spoke to, who has encouraged this path, noted a key difficulty: Many conservative practitioners of the Amish faith use so little farming technology that their farms barely break even. To them, the fat signing bonus seems like a must.
And yet the potential damage to land used for fracking is enormous. Between above-ground trucking and the storage of chemicals and heavy machinery, and the sheer size of the underground operation, a full-fledged site can occupy 10 acres of land—a significant percentage for the average Amish farm, which is usually no more than 150 acres. And a lease can entitle a company to much more than just fracking rights—like the right to conduct seismic testing, or construct pipelines or storage fields, on a piece of land.3 That’s not to mention the environmental hazards to livestock and water tables that fracking and auxiliary activities, like piping and storing, may pose. The signing bonus and royalty checks help compensate for the risk.
One argument goes that Amish farmers who find themselves in legal limbo should know better. Oil and gas development, after all, has been a mainstay in the area for more than a century, as the many pump jacks—the drinking bird–style oil wells—in Eastern Ohio cornfields attest. Increasingly, though, oil and gas companies are taking advantage of farmers who hold leases that they, their grandparents, or the person who sold them the land, may have signed decades ago.4 That's partly due to a quirk in Ohio law. A lease typically expires after a certain time period if the company involved does not build a well that pays royalties or produces oil or gas in certain quantities. But in Ohio, a company is not required to scrub a lease from the books once it expires; depending on how much of a fight a company puts up, expunging a lease from the books can require a landowner to appear before a judge.
That can put Amish landowners in a bind. A lease could be obviously expired, and yet, if a company wants to take the matter to court, a farmer could be powerless to expunge it. Christopher White described a client of his in a fairly representative situation. In 1983, he signed a lease that allowed a local oil company to drill a small well on his property. He voided the lease, by buying the well, four years ago. To make it official, the farmer prepared an affidavit—a minor legal exercise deemed OK by the church. But almost immediately, two national companies, Devon Energy and EnerVest, moved to block him. They argued that the lease, in which they had purchased an interest, was alive and well due to a second oil well attached to the lease, on the border of the farmer’s property.
Even if they don’t intend to drill there, companies like Devon and EnerVest have an interest in hanging onto the oil and gas rights. For one, the profit a company can make by owning merely a part of leases like these is enormous. Chesapeake Energy’s Aubrey McClendon, for example, boasted to shareholders on a 2011 conference call that the company had spent $2.2 billion on leasing acreage above the Utica Shale play, and then sold the leases to a fifth of those acres for $2.3 billion. On average, Chesapeake had held each of those leases for less than a year.
Christopher White went digging and discovered that the well on the edge of the property belonged to a different lease, also expired.5 But when he explained the error in the companies’ argument—that long ago, there had been a mix-up between two leases, and the lease in which they own interest was indeed dead—“They said, ‘Well that might be so, but we think we have an argument, and we’re not going to let you go.’” The only remedy, Christopher White said, was to ask a judge to interpret the contract. “If he wants to get that expired lease off his land and enter a new lease, he’s going to have to sue two national oil companies.” He said that the chances of this happening are very obviously low. (EnerVest did not reply to requests for comment and a Devon spokesperson declined to comment.)
Thomas White said the two companies’ intransigence is their way of saying to him, "You represent an Amish man. We know you won’t sue.” I asked Noble, the Columbia lawyer, if companies know this about the Amish. “Oh sure,” he said. “It’s a known fact to us.”
Locally, no one has been surprised that the Amish and energy companies find themselves in conflict. After all, the same stricture has been creating similar problems for decades. Garrett Roach, a Millersburg attorney, has seen many clients forgive debts of tens of thousands of dollars rather than collecting in court; he has represented Amish in lawsuits only when they were owed sums approaching a half a million dollars and their livelihoods depended on it. Thomas White recalled that in a bygone era, when he was a young assistant prosecutor, it was normal for Amish to avoid court even in criminal cases. He met an Amish farmer who had been horsewhipped by a gaggle of drunken boys burglarizing his house but refused to press criminal charges. Then there was the Amish man whose young daughter had been sexually abused by another man’s son. No charges were necessary, the man insisted to White, because the abuser’s father agreed to pay him some money.
The Amish will consult with lawyers. “When I was a young lawyer,” Paul Miller said, “an Amish businessman told me, ‘Now Paul, you understand, you can fight a tiger if you pull its teeth’”—meaning that a sharply-negotiated contract can protect them. Still, they lack recourse against breaches of contract. Working in Amish country, Paul Miller said, essentially means his entire practice has evolved around avoiding the use of the most fundamental tool in his toolbox.
By and large, English landowners have fared far better in the market. Arnold, the Ohio Farm Bureau energy policy director, said that English farmers routinely receive rental fees and bonus provisions in the thousands of dollars. They have also, when companies have taken advantage of them, been predictably litigious. Two counties over from Lloyd Miller, two English landowners who claim that they were defrauded, signing leases they thought were only authorizing shallow oil wells but in fact were for fracking operations, chose to take the matter to court. In January 2012 they filed a joint lawsuit to void their leases. They are each seeking more than $25,000 and a court-ordered injunction to stop drilling on their land.
Aware of the complications caused by a prohibition on lawsuits, some bishops have decided that their flock can pursue what’s known as a declaratory judgment, in which a judge merely interprets a contract. Many are still uncomfortable with that, but at least one Amish couple in Holmes County, a bishop named Reuben Schlabach and his wife Sara, are currently pursuing this option to try to have a lease voided. The process still unfolds in a courtroom, but the arrangement is more palatable because there are no monetary awards involved and no jury.
This route, though, only works in limited circumstances—it would not do in the case of someone like Lloyd Miller, who signed the undervalued lease. Near the end of my visit to his home, I asked him whether he was jealous of his English neighbors for their ability to sue. The question seemed never to have occurred to him. “To us, it’s not—it’s not even a matter of if we would. It’s my own mistake, and if he wants to take advantage of me…” Lloyd trailed off. He glanced out the window, at the frozen ground of his driveway. “Basically, you have to laugh it off, because it will spoil every day you wake up.”
Molly Redden is a staff writer for The New Republic. Follow her on Twitter @mtredden.