DENVER (CN) – A federal judge granted a motion Tuesday to allow oil and gas industry representatives to intervene with a motion to dismiss a lawsuit claiming Colorado’s forced pooling law for mineral extraction is unconstitutional.
The Wildgrass Oil and Gas Committee, representing a subdivision in Broomfield, sued the state Oil and Gas Conservation Commission in January claiming its practice of allowing private companies to harvest minerals without owners’ consent deprives residents of their constitutional due process rights.
“Extraction [Oil & Gas] sat down with Broomfield to create a number of ground-breaking agreements, but another group has come forward because they don’t like it,” argued attorney Stanley Garnett, on behalf of intervenors American Petroleum Institute and the Colorado Oil and Gas Association.
“There is a time, and there is a place, and there is an authority to hear these objections, but I don’t think that it is appropriate for an Article III federal judge to rule on,” Garnett said.
That judge, U.S. District Judge R. Brooke Jackson, also questioned whether he should stick his nose into the case while legislation is pending in the statehouse and related lawsuits are making their way through state court.
“Judges read the paper just like everyone else these days, thin as it is, therefore it’s known that certain legislatures drafted an omnibus-type bill and the industry screamed bloody murder and one of the quotes in the article said, ‘Why can’t we just sit down and talk this out the Colorado way?’” Jackson said, referring to Senate Bill 181. “All this is to say there are things going on in the Legislature that are high on their agenda to address this. Why not leave it to them?”
Senate Bill 181, the Protect Public Welfare Oil and Gas Operations Act, would overhaul the way the state oversees the oil and gas industry, notably shifting from a model that fosters development to one that would regulate “in a manner that protects public health, safety, and welfare.”
While SB 181 would require consent from 51 percent of mineral owners for forced pooling to occur, attorney Joseph Salazar pointed out that it would still deprive 49 percent of residents of their rights.
Other critics question whether the bill’s solutions to forced pooling would only muddy the waters.
“Oil and gas particles are not self-aware, they do not consider themselves Boulder County particles or Weld County particles, and so you might be a development leading right up to the boundary of a friendly community and a more strict community,” attorney Zachary Grey said in an interview.
“Under the current system, and I think this would be true under the proposed changes to the conservation act in Senate Bill 181, there’s no way for a mineral owner to say ‘Thank you, but no thank you, I don’t wish to be included,’” Grey said.
When a mineral owner doesn’t sign a lease with an oil and gas operator, their rights might be “force pooled” with others to allow the resources to be extracted from large plots of land with minimal drilling. Operators typically use hydraulic fracture drilling – fracking – to drill horizontally under the land, making it next to impossible to go around individual properties.
“The statute in the rule was written at a different point in time,” plaintiff attorney Joseph Salazar told Jackson. “Forced pooling was never meant to apply to non-transient shale minerals.”
Wildgrass calls the opposed development “the largest combined drilling project in the history of Broomfield,” in which Extraction Oil & Gas proposed 120 wells on 10,240 acres, including the Lowell South Drilling Spacing Unit which is closest in proximity to the subdivision. Residents questioned the impact of drilling on health and safety, and the city rejected three comprehensive drilling plans submitted by Extraction Oil & Gas.
However, the Colorado Oil and Gas Conservation Commission approved 13 drilling permits in 2017.
“The only reason this is an issue is because horizontal drilling has come close to homes,” Senior Assistant Attorney General Kyle Davenport pointed out.
In a previous hearing, Extraction Oil & Gas promised Jackson it would delay drilling until June 1.
Jackson instructed Wildgrass to file a response to the oil and gas industry’s motion to dismiss.
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