Land Shark at the Door? Why and How States Should Regulate Landmen

Abstract

The professionals who acquire energy-related land rights, who are primarily known as “landmen,” have a longstanding role in energy development, and have acted as intermediaries between energy companies and property owners for over a century. Currently, more than 21,000 land men and likely many more — work in at least two dozen states, negotiating high-stakes transactions with often serious financial and physical ramifications. But despite the power landmen wield, they are generally unregulated. This lack of regulation becomes concerning in light of landmen's reputation for predatory conduct, the vulnerability of the landowners they tend to transact with, their historical role in mass land dispossession, and the physical and financial risks they expose people to.

This Article examines the landman profession to assess whether landmen should be regulated, and to consider what an appropriate regulatory approach to landmen could entail. Part I.A provides background on the history of landmen and the typical role of a modern landman in the characteristic activity of securing mineral leases. Part I.B analyzes common ethical issues that arise in landowner-landman transactions, with a focus on misrepresentations and high-pressure sales tactics. Part I.C argues that these issues arise from the unequal bargaining power between landmen and rural landowners, and Part I.D looks at broader policy concerns. In Part II, the Article reviews existing frameworks governing landmen’s conduct, as well as unsuccessful efforts in Ohio and West Virginia to implement registration requirements. Part III reviews regulation of other sectors with professional activities comparable to landmen’s, assesses how regulatory efforts in those contexts have approached comparable ethical concerns, and argues that significant parallels exist across all of the professions. Part III connects the regulatory approaches to those professions with broader principles of how and when the law tends to intervene into bargaining and negotiation processes through regulation. Part IV argues that the frameworks and principles discussed demonstrate that landmen would be a consistent and proper subject of stricter regulation, and proposes elements of those frameworks that would be most appropriate for oversight of landmen

Keywords: energy, landmen, land use, minerals, natural resources, fracking, contracts, bargaining, ethics