Surface owner right vs. mineral rights

By Marilyn Bay Wentz

Proponents of owner surface rights from oil and gas companies that own the land’s mineral rights will again try to succeed in having legislation passed during the 2006 Colorado Legislative Session.

House Bill 1219, sponsored by Rep. Kathleen Curry, D-Gunnison, would have required oil and gas operators and surface owners to negotiate compensation to be paid by the operator to the surface owner for loss of value associated with damages to the surface that are reasonably anticipated to result from proposed drilling operations. The bill would have established a procedure to be used if the parties failed to reach an agreement. The bill died in committee by a 5-6 vote.

“The close vote in committee tells me the bill was not quite ready,” said Curry. “People weren’t quite comfortable with the language, so this summer I have an aggressive program to bring all parties in this issue to the table so that we can come up with a bill of which folks are comfortable.”

Curry notes that the oil and gas industry had little incentive to come to the negotiating table. However, over the past year, new developments have changed that. Wyoming recently passed a surface owner rights bill, and the legislature in New Mexico had a similar bill on the docket but was unable to deal with it before the session closed. At the federal level, U.S. Rep. Mark Udall, D-Colo., plans to introduce a surface owners rights bill in Congress later this year. In addition, a citizens group representing landowners has organized and is planning to place the question on Colorado’s 2007 ballot if a bill is not passed during the 2006 Colorado Legislative Session.

“I believe we must address the issue of surface owners rights when it comes to oil and gas companies,” said Rocky Mountain Farmers Union (RMFU) President John Stencel. “Rep. Curry is on the right track with the approach of making the bill acceptable to both sides in the debate.”

Current law in Colorado 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.

“Unscrupulous companies can use the bonding provision to avoid having to pay the true value of damage caused,” Curry said. “Colorado home owners have not collected on this bond because the law states they must prove the damages came from unnecessary actions by the oil company.”

Changes Curry thinks will make the bill more likely to pass in 2006 include a more simplified upfront procedure. The assessment phase, which was proposed when an agreement could not be reached between landowner and oil company, will likely be removed. The basis of the bill, which includes an upfront agreement on compensation and citing of the well and access to it, will likely remain.

“This is a good bill for parties acting in good faith, we just have to figure out the least cumbersome, yet fair way to settle disputes between the two parties,” Curry said.

RMFU supports surface owner rights and will continue to monitor the bill formation.