Lessors of Two Evils

Abstract

In every oil- and gas-producing state, landowners are subject to some type of eminent domain policy that can coerce them into leasing their land to developers. At least 38 states employ forced pooling, the most common of these policies, and the most widely criticized for being harmful to landowners. The only top oil- and gas-producing state that does not use forced pooling is Texas. Instead, it uses a policy called Rule 37, which has notably not yet been criticized. Using a novel dataset containing detailed lease date for nearly 100,000 leases at the New Mexico-Texas border, I examine leasing outcomes (royalty rate, bonus payment, and concessions terms) for landowners under each policy–forced pooling and Rule 37. I employ a differences-in-differences approach and find that, despite the criticism, landowners contracting under forced pooling fare better in two dimensions of lease outcomes (royalty rates and concessions from firms) and no worse in the third (bonus payments), than landowners contracting under Rule 37.

Rachel Feldman
Rachel Feldman
Ph.D. Candidate

I am a 4th year PhD Candidate at Georgetown University. My research focuses on applied microeconomics, specifically energy and environmental economics. You can find my CV here.