Time for balance in gas drilling debate
In 1997, the Colorado Supreme Court ruled that neither mineral rights owners nor surface rights owners held a property right that was dominant over the other. Balance, the court said, among owners of “split estates” ” where the property rights below ground are owned by a different party from the land above ” is the law of the land.
Here’s the catch: The Colorado Oil and Gas Conservation Commission, the state body that regulates oil and gas drilling, does not operate under this precedent set by the court. Its statute still favors the rights of mineral owners. It’s anything but balance, and the property rights of surface owners are not being protected.
The COGCC receives its regulatory authority from the Colorado Legislature. So far, legislation to amend the Colorado Gas Conservation Act has not been passed to support the court’s 1997 ruling. Currently, mineral rights owners are free to drill and explore, then leave the homeowners, farmers, ranchers, businesses and local governments with the consequences of their actions ” and likely decreased value of their property ” without compensation.
Financial compensation is optional because surface owners hold no legal chips at the bargaining table. Oil and gas producers are required by law to notify surface owners 30 days in advance before drilling and related activities are put into motion. But they are not required to meet with surface owners regarding compensation for the lost use of their land or any diminished land value that may result. They are free to drill ” and occupy the property for the 20-30 years they need to complete drilling ” without a surface use agreement (SUA).
According to the COGCC, just 13.2 percent of wells drilled over the past five years had SUAs. And if there was an agreement, it’s often a “take-it-or-leave-it” type of deal, which is not much of a deal at all. So when faced with the prospect of receiving nothing, surface owners take what they can get on the ground. In practice, mineral rights are still dominant over surface rights.
Current state law directs the COGCC to require financial security and “protect” surface owners from “unreasonable crop losses and land damage from the use of the premises,” but delivers the commission or the courts zero authority to address surface damage compensation. Legislation I’ve introduced will change this. It amends the Colorado Gas Conservation Act and establishes fair negotiating positions for both energy producers and surface owners in determining appropriate compensation for the use of, and possible damage to, their land. Both sides benefit.
This change will not delay oil and gas exploration, but will require either an SUA or a written offer of settlement before drilling commences. It will close the legal loophole that some in the gas and oil industry have been exploiting at the expense of property owners.
Similar to Referendum C, a broad coalition of organizations has come together to support this legislation ” groups that are often on opposing sides from one another. To name a few: The Colorado Association of Home Builders, Colorado Association of Realtors, Colorado Corn Growers Association, Colorado Environmental Coalition, National Association of Industrial and Office Properties, Western Colorado Congress and the Gunnison County Farm Bureau.
Oil and gas development is important to Colorado’s economy. But our citizens expect the extraction and development of our natural resources to be done in the most responsible way possible. The reality, though, is drilling for minerals leaves a mark on our lands above and below the ground. Roads, pipelines, pads, transmission lines and compressor stations are built. Underground water tables, which feed streams and rivers, are affected. Wastewater ponds are created, and storm runoff can affect wildlife and the surrounding environment.
Oil and gas development also leaves a mark on the bank accounts of individual property owners who see the value of their investments decrease after exploration. But this doesn’t need to happen. If gas and oil exploration is performed in responsible ways, with financial compensation built into the equation if it is not, then both sides win. That’s the goal of this legislation.
According to the COGCC, there are 25,700 active wells in Colorado, and 40,000 wells have been plugged and abandoned. These wells are widely distributed across the state. In recent testimony before the commission, oil and gas representatives said they anticipate drilling thousands more wells over the next 20 years.
Clearly, action on this issue is long overdue. Many COGCC rules are already consistent with the ’97 court ruling. However, the authority to balance the rights among surface and mineral rights owners has yet to be accomplished. It’s time we level the playing field and act on this important issue.
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