Karla Riley, who with her husband, Bob, raises cows on a 120-acre farm near Oakland, says they were able to negotiate a $25-per-acre lease rate three years ago when the "land men" came calling. They have used the money to fix up their place and felt tapping shale gas was a good way for the nation to reduce its dependence on imported oil.
But Riley, 62, says she became disillusioned as she heard about problems associated with shale gas drilling in Pennsylvania and elsewhere. Now she's worried that drilling could foul their well or the springs they use to water their cows, and could render unsalable the home she and her husband built with their own hands.
"We were OK with it as long as it's OK," she said. "But nobody told us. Why would you cut your throat for a glass of water?"
The Rileys signed a lease with Magnum Land Development, a leasing firm based in Traverse City, Mich. Phone calls to the company seeking comment were not returned.
Maryland Attorney General Douglas F. Gansler's office has a task force studying leasing issues, and it has issued two memos, including one offering tips for owners on what to look out for in considering leasing their land for gas drilling. His office has also warned that gas leases could jeopardize their mortgages, because they could run afoul of federal agencies or government-backed entities that underwrite or guarantee more than 90 percent of mortgages in the United States.
But there do not appear to be any clear-cut legal avenues in Maryland for revoking leases or going after leasing agents for alleged misrepresentations. Energy leasing is not covered under the state's consumer protection laws, says Erin Fitzsimmons, Gansler's special assistant for the environment, and Maryland lacks a fraud statute that might enable prosecution for deceptive practices.
Garrett County's Board of Realtors is growing concerned about the impact shale gas leasing might have on property sales. Paul Durham, the board's director of government affairs, said real estate agents are increasingly being asked by prospective buyers about gas leasing in the vicinity of properties up for sale.
"That's starting to become a question we can't answer," he said.
That information is not easy to come by without a costly title search, Durham says, because of the way leases are recorded in county land records. Real estate agents also worry that banks and other lenders might begin to deny mortgages or foreclose on properties that are leased for drilling, as has reportedly happened in New York.
Believing that more information will help, the Realtors called for establishment of a public lease registry in a letter to the commission appointed by Gov. Martin O'Malley to advise his administration on shale gas issues.
Western Maryland's elected officials say they're studying whether to pursue registry legislation but aren't sure how to make it workable or whether it is needed. And if shale gas leases must be registered, they ask, why not those for coal, wind turbines or any other activity on land?
"The government can't take care of everything that someone might think needs to be done in leases," said Sen. George C. Edwards, a Republican who represents Garrett and Allegany counties. He suggested that the details of a lease, particularly money issues, are between the landowner and the lessee.
"I feel for some of these people that signed some of these leases for $2 an acre, $5 an acre, when now you can get considerably more than that,'' Edwards said.
He says he routinely advises constituents to consult with a lawyer before signing anything.
But it's not that easy to get informed legal advice about gas leasing, says Dusty Horwitt of the Environmental Working Group. The Washington-based advocacy group recently published a report on leasing practices in five states, including Maryland, in which it contends that drilling companies routinely disclose to shareholders and potential investors a variety of risks involved with shale gas development, including leaks, spills, explosions and blowouts, but make no mention of them to landowners.
Horwitt said attorneys in Colorado, New York and Virginia told him that relatively few lawyers are experienced in advising landowners about energy leasing.
Del. Heather R. Mizeur, a Montgomery County Democrat, said she's prepared to introduce legislation to address the concerns of landowners and real estate agents. "There's no reason why Wall Street investors should have more information about the riskiness of this practice in order to protect their financial investment in the company," Mizeur said. "Why should that outweigh the impacts on landowners who are engaging in these leasing practices?"
Mizeur said the full text of the leases ought to available to the public, rather than the vague summaries often filed.
Paul Roberts, co-owner of a winery near Friendsville and a member of the CitizenShale group, said the issue goes beyond one of whether hydraulic fracturing or shale gas development could cause environmental harm.
Roberts, who did not lease the mineral rights under the vineyard, said that by leaving Garrett residents largely in the dark about what leases have been negotiated around them, the county and state are depriving residents of income and missing out on much-needed tax revenue to keep public services running.
"We're getting ready to close up to four schools over about a $1.5 million budget gap that could easily have been filled if this lease registry had been in place," he said.
"People would have been far better educated, able to get information about lease prices, and our county's residents would be much wealthier," he said in an email. "Instead, a bunch of tycoons in Texas and Oklahoma made all the money, and the state of Maryland taxed very little of it."