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Monday, July 15, 2024 | Back issues
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Colorado Senate committee rejects changes to ‘forced pooling’ of mineral rights

Under Colorado law, residents and even cities can be forced to "pool" and sell mineral resources at the behest of oil and gas developers.

(CN) — In a 5-2 vote on Thursday evening, the Colorado Senate committee on Agriculture & Natural Resources voted down a measure that supporters say would have prevented oil and gas companies from steamrolling mineral rights holders.

Under current law, the Colorado Oil and Gas Conservation Commission can order individual mineral interests to be "pooled" and sold if 45% of owners who have connected rights agree to lease their own. In practice, that means Coloradans can be forced to lease their mineral rights if enough of their neighbors do.

In addition, nonconsenting owners must foot the bulk of the bill. They are also levied a 200% penalty to compensate consenting mineral owners for the risks and costs associated with, for example, drilling a nonviable well.

For bill sponsor Sonya Jaquez Lewis, a Democrat representing Boulder and Broomfield, reforms are necessary — and the issue is personal.

“This is the issue that made me run for office,” Jaquez Lewis told the committee. “I watched my neighbors and my community members have medical conditions and have the impacts of fracking in their communities.”

Critics like Jaquez Lewis say the law, written in the 1950s, allows industry to deprive people of their property and doesn’t incentivize good-faith negotiations with mineral owners.

Proponents say the system is needed to efficiently extract energy resources and protect consenting owners. They argue it also protects the environment by limiting the footprint of oil-and-gas operations.

SB23-201 proposed to establish a “property owners' rights" for mineral resources, requiring developers to present property owners with a third-party analysis proving they'd obtained consent from 45% of mineral owners in the area. The bill also would have eliminated the penalty levied against nonconsenting mineral owners and prevented local governments from being force-pooled.

As it currently stands, even Colorado cities can see their mineral rights force-pooled and sold to developers. That can push new oil-and-gas activity on communities that have already voted against such development.

Take Longmont, a city 30 miles north of Denver with a population of 100,000. Residents there voted in 2012 to ban fracking in city limits. The state Supreme Court overturned that ban in 2016.

“Longmont has done everything in its jurisdiction to protect our residents from oil and gas development," Longmont Mayor Joan Peck told the committee during public-comment period last week. "However, as the law stands, we cannot say no to development."

“The city’s efforts to minimize oil and gas development has come at a great cost," Peck added, noting the city had spent millions in court fighting to limit oil and gas drilling in the area.

In Jaquez Lewis' district, the city of Broomfield joined Longmont in supporting the bill. The Denver suburb has seen similar issues, with new oil and gas developments showing up despite opposition and lawsuits from residents.

Meanwhile, the city of Aurora opposed the bill. Jeffrey Moore, the city's oil and gas manager, said his "core" concern was that "a local government with even an acre of property in another area would have veto power over drilling." The bill also saw opposition from state industry groups, including the Colorado Oil and Gas Association, the Colorado Alliance of Mineral and Royalty Owners, the Colorado Farm Bureau, and Colorado Cattleman's Association.

Several individuals who had experienced forced pooling testified in favor of the measure. Among them was Charlie Lim from the Wildgrass community in Broomfield.

A group of neighbors in Wildgrass sued the state in 2019 in an effort to stop the forced pooling of their resources and gain a voice in the development occurring around their property. They lost in both state and federal court.

“One particular concept that was very difficult to grasp was force[d] pooling,” Lim told lawmakers. “The lease offer stated we would be force-pooled if we did not sign the lease agreement."

"We foolishly thought [that] surely no one in the United Stated would be forced to lease their interests to private developer if they did not want to," Lim added. Under current Colorado law, he learned, the reality is a bit more complicated when it comes to mineral rights.

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Categories / Energy, Environment, Government

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