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Challenge to forced mineral pooling defeated

Colorado law allows oil and gas developers to petition the state to force pool minerals from owners who do not consent to lease them.

/ May 11, 2023
Workers tend to a well head during a 2013 hydraulic fracturing operation outside Rifle, in western Colorado. A federal judge has blocked oil and gas drilling on almost 500 square miles in Wyoming and says the government must consider cumulative climate change impacts of leasing public lands across the U.S. for energy development The order marks the latest in a string of court rulings over the past decade faulting the government's consideration of emissions when issuing energy leases. (AP Photo/Brennan Linsley, File)

DENVER (CN) — The Colorado Court of Appeals on Thursday affirmed the dismissal of a neighborhood group’s challenge of the state’s practice of force pooling minerals after finding members had already leased their resources and lacked standing to sue.

Great Western Operating Company began filing paperwork to drill the Ivey units in Adams County in 2017. Several residents who objected to drilling so close to home formed ACCDAN, which stands for Adams County Communities for Drilling Accountability Now.

Under current law, the Colorado Oil and Gas Conservation Commission can order individual mineral interests to be "pooled" and sold if 45% of owners with connected rights agree to lease their own.

The neighborhood group sued the commission in Adams County District Court in January 2021, opposing the forced pooling of members' minerals as a violation of their constitutional rights. The case got moved to Denver in February 2021 and dismissed that November. The group appealed and argued the case before the Court of Appeals last week.

The complaint relied heavily on ACCDAN member Stacy Lambright, who opposed forced pooling but owned minerals leased to Great Western, causing the court to find she lacked standing to sue over the practice.

“So long as the leases are valid, Lambright no longer has a mineral interest that will be impacted by the pooling statute,” wrote Judge Eric Kuhn in the 17-page opinion. “Even if this were not the case, the plain language of the leases’ ‘right to pool’ provision already expresses Lambright’s consent to statutory pooling.”

While ACCDAN claimed four other members wanted to challenge the forced pooling practice, they did not argue whether they would have standing.

The court did not weigh in on the constitutional issues raised or on if individuals forced to pool their resources suffer harm.

Proponents of forced pooling say it efficiently extracts resources and helps minimize surface impacts.

Colorado passed sweeping reform in 2019 meant to expand local control of oil and gas development and task the Colorado Oil and Gas Conservation Commission with considering the effects of drilling on human health and the environment.

In April, a state Senate committee killed a bill that would have required developers to present proof to mineral owners that they had obtained consent from 45% of mineral owners before pooling could occur. The bill also would have removed a penalty levied against nonconsenting mineral owners.

Testimony before the state Senate Committee on Agriculture & Natural Resources indicated no denied applications for forced pooling.

Oil producer PDC Energy acquired Great Western in 2022. The company did not immediately respond to inquiries for comment, nor did an attorney representing ACCDAN. A representative from the Colorado Oil and Gas Conservation Commission declined to comment.

Judges Craig Welling and Terry Fox concurred on the opinion.

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Categories / Appeals, Energy, Environment

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