Morals, Greed and Corporations

In My Humble Opinion
1

This is based on a true story.

I’m just looking for general comments on whether you think the landowner in this story was greedy or not, and maybe a reflection on your personal morals and if you’d do the same thing.

30 years ago, Company leased some land next to Landowner to drill an oil well. The drilling operations were wrought with problems, and this particular well took eight months to drill. During that time, much more fluids and drill cuttings come up to surface then expected and overflow the sump (where these types of materials are put). The drill crew decided to dig and dump on the site without notifying Company about what’s going on (they hid it basically). Sorry to say, but this happened a lot back in the day. The well is a non-producer and is capped and abandoned.

Ten years later, Company finds out that this happened when Landowner calls to complain (it’s not his land, but he’s on it often and nothing is growing). Company visits the site and Landowner and agrees that this site is in horrible shape and remediation plans are formed. As part of the remediation, a municipal access road is used, so the original lease road is dismantled and reclaimed.

Reclamation is slow but progressing according to plan, and about ten years later, the municipality re-evaluates it’s roads and assigns the lease road to Landowner, so it is now part of his land and he owns it. This results in Company paying Landowner annual rentals to continue to use the road for reclamation operations (road use payments are standard). Around the same time, Landowner asks if he can be employed by Company to help with reclamation and the Company agrees, paying him a premium price for his services.

Over the last ten years, Landowner is getting more and more demanding. One day of repairing a broken fence costs $2500, one day of grading the access road costs $5000. Landowner starts performing work without prior consent of Company and just sending in bills. Company starts getting frustrated with this practice and attempts to put a stop to it by discussing with Landowner during one of the fall site visits.

A few months after this discussion, in the spring, when reclamation activities are starting up again, Landowner sends a letter to Company stating that he will not grant access to the road unless Company pays him $250,000. At this point, over the past 10 years, Landowner has pulled in almost $500,000 from various tasks he’s performed and billed Company for, for the rentals he already gets for the road use per year (which are reviewed each year and generally increased), as well as general damage payments because the land next to his has had equipment and activity on it for a number of years.

My question is, do you think Landowner is acting fairly, or being greedy by asking for a quarter of a million for road use (the road in question is about 1 km long and is the only access to the site at this time)? Once I get a few replies, I’ll let you know what Company decided to do and what types of answers I’m getting in real life.

2

How much was the Company paying to use the road prior to the $250,000 demand?

3

Approximately $15,000 per year.

4

Well, that seems a tad steep then.

5

Landowner is profiteering. Yes, he’s greedy.

6

Seems usurious to me.

7

Landowner is greedy and profiteering, but isn’t it funny how that looks so much worse when a private individual does it, rather than a large corporation?

8

Well, so far the responses in this thread are opposite to what I’m getting in real life. Most people I ask about this situation have been saying that if a person can take advantage of a big corporation in that matter, more power to them, because it’s a drop in the bucket for them and it ‘doesn’t really affect anyone’. Also, the fact that it’s oil and gas makes a difference apparently.

9

I’d tend to give the private landowner a moment (but only a moment) of empathy I wouldn’t give a corporation (an individual might be some sort of crazy).

Regardless, he turns into nothing but a cause of frustration and animosity. And, were I a decision maker for the corporation, this would fill me with the type of despair you can only get from working in a rational system with an irrational individual. Also regret that I didn’t get a right of way years ago.

The landowner’s a jerk and I’m anticipating future entertaining but frustrating posts relating his increasing displays of jerkiness.

10

He is definitely being greedy and profiteering. And not just about the road. $2,500 for a days work on the fences? Sounds like he’s being stinging them for a while if he’s been charging like that.

If I was in the company and had any sort of visibility to that sort of shenanigans I would have quick smart being saying. Thanks for your services, but we’ll just hire contractors from here on in.

The trouble with this attitude, in my mind, is that it’s a very slippery slope, and sounds all too very similar to the argument used by shoplifters, oh it’s only Walmart, “it’s a drop in the bucket for them”

11

Yes, I agree with all of you.

So, in this situation, the company paid the money. The road access issues and money demands happened a couple of years ago and building a new road would have cost much more then he was demanding, so he had us by the nuts.

I am going to visit this landownwer on Friday as part of my job. I’m new in this role so am being brought along as sort of an introduction in to landowner issues and what I may have to face down the road. We are applying for our reclamation certificate next spring, so it sounds like he’s upset about the end of his cash cow and wants to talk to us about it. I am pretty sure something will come up to try and delay the end of this.

12

He sounds like a blackmailer who has heard that you’re just going to tell people the secret and end his power over you.

13

In my own life I try to be fair and charitable to the point of altruism, and in my experience this approach is shared by many Americans.

However, on this very board you can find Dopers arguing that a rational operator in the free market should attempt to maximize gain. Indeed some would argue that Landowner, if a corporation, would have a fiduciary obligation to maximize shareholder profit. In that case the only reason for restraint would be fear that adverse financial consequences (e.g. bad publicity or litigation) would exceed the profit.

14

Sounds like the owner of the land has a legitimate claim for damages that was done many years ago by the drilling team and the Company. The landowner apparently feels that milking this out over decades will be much more profitable to him than settling for some monetary amount. This also appears to be the least costly method as determined by the Company. They apparently believe that by paying for the remediation themselves over time will be less costly than some sort of monetary settlement. Appears that both parties are in agreement.

What’s the problem?

15

The point that this behavior, no matter how reprehensible, by a corporation would be passed off as “enhancing shareholder value” is well taken. There are many activities that, if carried out by individuals (especially poor ones) are considered unacceptable or even illegal (e.g. ticket scalping) but perfectly normal for a corporation (see the ticket prices to see a NY Yankees game).

16

Naw, he’s being greedy.

17

He’s being greedy, but I guess when you have employees or agents (the drill crew) screw things up to an extent that it creates animosity, then what do you expect? If they are employees, hopefully there was an ass-chewing involved, if they were outside consultants, hopefully the company is indemnified against their screw-up. Landowner clearly sees this as his way to clean up financially. For instance, for that lease road, I’d see no problem starting with $15k, and then adding 10% per annum thereafter. (He does have to “maintain” the road in theory, yes?). Going from 15k to 250k is absurd.

His other pricing is a bit outrageous as well. Its that stupid saying I can never remember properly: pigs get fat, hogs get slaughtered. (or something like that.)

I’m betting both parties have made themselves a really crappy bed that they will have to lie in. The Corp clearly started with shoddy work and environmental contamination (hopefully not groundwater). The Landowner is now being a jerk. Eventually karma will catch up with him, just like it did with the corporation.

18

The landowner doesn’t own the land in question. The land is about 5 km away from the landowners home and adjacent to the edge of his land. His land use was not impacted by the operations (he had cattle at one point but now does nothing with the land).

19

By whom?

I say the landowner’s greedy. If he was incorporated I’d say the same thing. Making a profit is not the same as profiteering. Charging a market-clearing price is one thing; Ticketmaster’s another.

20

I’m confused by this. So he’s just some dude who lives nearby?