Coloradans Ask 10th Circuit to Let Federal Courts Referee Mineral Pooling Fight

The 10th Circuit will decide whether a federal judge should rule on Colorado’s practice of force pooling oil and gas rights or whether the issue belongs in state court.

A storage tank stands near a well pad located in a field near a housing development in Broomfield, Colo., on Feb. 28, 2019. Frustrated residents of a Denver suburb say state law is forcing them to participate in a major oil and gas drilling project against their wishes, so they launched legal challenges with potentially significant consequences for the industry. (AP Photo/David Zalubowski)

(CN) — A Colorado community asked the 10th Circuit on Wednesday to let its due process claims against the state’s practice of force pooling oil and gas leases play out in federal court.

In 2016, the Colorado Oil and Gas Conversation Commission sent members of the Wildgrass subdivision in Broomfield a letter offering residents the option to volunteer their oil and gas rights for a large-scale extraction project, or be forced to pool them together.

Instead, a band of community members sued the state in January 2019.

U.S. District Judge R. Brooke Jackson, a Barack Obama appointee, dismissed the case in March 2020, citing the Burford abstention. Jackson found Burford directs federal courts to leave state issues to state courts “where the exercise of federal review of the question in a case and in similar cases would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial public concern.”

The Wildgrass Oil and Gas Committee appealed.

On behalf of the community, attorney Megan Hayes told the 10th Circuit panel on Wednesday that the case belongs in federal court because the state’s process for fighting forced pooling violates 14th Amendment due process rights.

“Isn’t that a complaint you could have dealt with in an appeal to state court?” asked U.S. Circuit Judge Joel M. Carson III, a Donald Trump appointee. “One of the important factors in Burford is whether you could have gotten relief through the state courts.”

Hayes stood her ground. “There’s no reason a federal court can’t make this decision,” Hayes, a member of the grassroots organization Colorado Rising for Communities, said.

Carson pressed the issue. “Where would you be if the commission said ‘tell us everything you want us to know,’ and you asked about air pollution and setbacks and listed all of your terms, you had a witness on the stand, and then the commission said ‘thank you, those things don’t matter to us, we’re going to deny it anyway,’” Carson said. “Where would you be now?”

Hayes chuckled.

“Well, I’d probably be out skiing right now,” she quipped. “You’re raising an important point, had the commission provided more clarity about what it would consider to be relevant lease terms, had the commission given Wildgrass members the opportunity to be heard about health, safety, environment, money issues, they would have been heard, but their contention is they weren’t heard, and according to the state’s brief, there really isn’t any place for them to be heard.”

U.S. Circuit Judge Carlos Lucero presided over the hearing. The Bill Clinton appointee tried to simplify the case according to the maxim of KISS — Keep It Simple Silly.

“My problem from where I sit is the cases that might appear to be simple get overly complicated by arguments that are so far in the ether that I find it difficult to breathe good clean oxygen and understand them,” Lucero said, letting out a whistle. “I don’t mean to imply that I’m going to rule your way, I just want to make sure I understand your argument.”

To Colorado state attorney Kyle Davenport, Lucero asked, “Why isn’t your case as simple as saying 1. There are difficult questions of state law, 2. The exercise of federal review of the case would be disruptive of state efforts, end of discussion?”

Davenport readily agreed.

“I think it is that simple, judge, I may just be taking the long way around of saying that,” Davenport replied.

U.S. Circuit Judge Carolyn McHugh homed in on whether the state could actually offer relief to individuals who contested forced pooling leases.

“What about the argument that bringing action in state court would have been futile, and they know it would have been futile because they’ve brought actions in state court before during the permitting phase and their arguments were all rejected,” the Obama appointee asked attorney David Meschke, arguing on behalf of intervening parties the Colorado Oil & Gas Association and the American Petroleum Institute.

Meschke, of the Denver firm Brownstein Hyatt Farber Schreck countered, “The argument that this would be futile misunderstands the Administrative Procedure Act process.”

While the 10th Circuit Court of Appeals is based in Denver, Colorado, the hearing was held remotely and broadcast over YouTube. The panel did not indicate when or how they will decide the case.

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