DENVER (CN) — A Front Range community group asked the Colorado Court of Appeals on Tuesday to revive their constitutional challenge of the state’s practice of force pooling mineral resources.
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. Nonconsenting owners are also levied a penalty to compensate consenting mineral owners for the risks and costs associated with drilling.
Great Western Operating Company began filing paperwork to drill the Ivey units in Adams County in 2017. Oil producer PDC energy acquired Great Western in 2022.
Several residents who objected to drilling so close to home formed ACCDAN, which stands for Adams County Communities for Drilling Accountability Now.
ACCDAN sued the Colorado Oil and Gas Conservation Commission in Adams County District Court in January 2021 opposing the forced pooling of members' minerals. The case was moved to Denver in February 2021 and dismissed that November due to a lack of standing. ACCDAN appealed.
On behalf of the community group, attorney Michael Foote told an appellate panel on Tuesday that forced pooling violates the rights of nonconsenting mineral owners.
“There are plenty of cases that cite an appropriate hesitation to dismissing an action where a constitutional right is at issue,” Foote urged the court.
Foote also argued technology has made forced pooling unnecessary and lends new scrutiny to the state’s ability to force pool resources from mineral owners. Oil is not siphoned out of an underground pool, it's obtained from solid rock through horizontal drilling and hydraulic fracturing.
“Forced pooling is no longer necessary like it was in 1951,” Foote argued.
Court of Appeals Judge Terry Fox asked Assistant Attorney General Kyle Davenport to address whether technology has made forced pooling obsolete. Fox was appointed by Democratic Gov. Bill Ritter.
“The technology has certainly changed, but that doesn’t mean the analysis of whether pooling continues to serve a public interest has changed,” Davenport replied. “Spacing and pooling work together to protect the public policy interests of protecting public health, safety, welfare, protecting correlative rights, and preventing waste.”
Proponents of forced pooling say it efficiently extracts resources and helps minimize surface impacts.
Davenport urged the court to leave the task of updating the state pooling statute to the Legislature.
“We do not need a trial with only six mineral interest owners and one operator on the Front Range to determine whether the law should stand statewide,” Davenport argued.
The state 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 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 the penalty levied against nonconsenting mineral owners.
Testimony before the state Senate Committee on Agriculture & Natural Resources indicated no application for forced pooling has been denied to date.
On behalf of Great Western, attorney Jamie Jost underscored the lower court’s finding that members of ACCDAN did not have standing to bring the lawsuit because their mineral rights were all leased to the developer.
“ACCDAN’s mission is to obstruct development. That has nothing to do with the nonconsenting provision,” Jost argued. “We believe that you could affirm because there is no injury-in-fact, because they consented. ACCDAN could never be deemed nonconsenting under the statute.”
John Hickenlooper-appointed Judge Craig Welling and Jared Polis-appointed Judge Eric Kuhn rounded out the panel. Although Judge Fox promised an opinion in due course, the panel did not indicate how it would decide the case.
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