RMFU weighs in on Colo. Rep. Curry’s surface rights bill

DENVER—Rocky Mountain Farmers Union (RMFU) President John Stencel testified today before the Colorado House Transportation and Energy Committee in support of HB06-1185, sponsored by Rep. Kathleen Curry, D-Gunnison. The bill’s proponents say it will provide reasonable and fair compensation for damages caused by mineral development on land where landowners do not own the mineral rights. The bill also would provide legal recourse for disputes and simplify notification procedures for applications for surface development.

“Representative Curry’s bill will encourage drilling companies and landowners to come to an agreement before drilling begins. It also provides landowners with more legal options when negotiations break down,” said Stencel. “Compensation to the surface owner should cover the decrease in fair market value of the land where drilling occurs. Where applicable, compensation should include the loss of agriculture production and income, lost land value, loss of use of access to the surface owners land and the loss of value of improvements.”

Stencel, who spoke on behalf of RMFU’s 18,000 Colorado family farmers and ranchers, said that landowners are currently under-compensated and have no reliable recourse when a decision is made to drill for oil or gas on their property. The vast majority of landowners in Colorado, including farmers and ranchers, do not own the mineral rights on their properties. Colorado law requires that oil companies give landowners a 30-day notice for plans to drill on their property. It also allows companies to post a bond in the amount of $2,000 for dry land acreage and $5,000 for irrigated property in lieu of an agreement with the landowner. The proposed bill would up the bond amount to $25,000.

RMFU has worked with other agricultural groups and the oil and gas industry on this issue for the last six months to find solutions to address the problems facing surface owners who do not own mineral rights on their property. The language proposed by the agricultural groups, with the support of the oil and gas industry, although a positive step, does not go far enough to achieve the policy objectives developed by delegate members at the recent RMFU annual convention.

“RMFU’s policy specifies that a surface use agreement needs to be negotiated, that there needs to be dispute resolution through mediation or arbitration, and that a bonding requirement is needed to encourage surface use agreements,” Stencel said.

“Current law allows unscrupulous companies to use the bonding provision to avoid having to pay the true value of the damage caused,” Curry said this summer while conducting meetings with groups interested in this issue. “Colorado homeowners have not collected on this bond because the law states they must prove the damages came from unnecessary actions by the oil company.”