Surface-owners rights bills in trouble in state senate

Surface-owners rights bills in trouble in state senate

Mar. 7, 2001

Capitol Report
By Senator Jim Dyer

These weekly columns I'm privileged to compose are not a chore, rather they seem more like writing letters to a friend: you, gentle reader. I appreciate your comments on them. (If you respond by e-mail please use my jdyer@sni.net address.)

And, to-day's letter is of particular importance to our gorgeous part of Colorado.

Tuesday afternoon the nine member Senate Agriculture and Natural Resources Committee met for nearly four hours and heard testimony on the contentious issue of surface owners' interests and the interests of developing the vital energy resources that underlie so much of our lands.

I chair this committee but at this hearing I was at the other end of the table presenting a three bill package developed by Greg Walcher Executive Director of the Colorado Department of Natural Resources and a member of Gov. Bill Owens' cabinet. Even with the governor's tacit blessing, the bills got rough handling from the oil and gas guys and their confederates.

Walcher set the tone for this legislation in an April 2000 memo he sent to the Colorado Oil & Gas Conservation Commission. In part, he wrote:

"Most of our State's laws and regulations regarding oil and gas development were written in a different time and in today's environment do not always balance the rights of mineral owners, the rights of surface owners, and concerns of the general public.

"While we support the continued right of mineral owners to extract their property, it is also clear that current laws may not adequately mitigate the effects of drilling on the surface owners and environment.

"I can't presume to tell the Commission what to do on the technical aspects of pending applications. But I do not believe a purely technical process serves the public interests. I strongly encourage the Commission to find a way to strike a more sensible balance between development and the interests of surface owners and the environment. The Department of Natural Resources will work to find reasonable solutions to legal problems raised by current OGCC statutes."

Walcher's memo represented a dramatic sea change coming from Owens' administration suspected of friendly industry ties. Sort of like a "Nixon goes to China" headline.

The practical legislative outcome was the three House bills that came to me after passage there Feb. 7.

Two bills deal with the future:

HB-1088 concerns notifications regarding mineral rights that are severed from the surface estate. The bill would provide more information to surface property purchasers about the mineral estate. And would notify mineral estate owners if any surface development is planned. This bill will likely pass with ease.
HB-1068 would encourage recording oil and gas rights and allow surface owners to gain clear title to abandoned interests. The surface owner can initiate this action if the mineral estate has not been used, taxed or recorded for twenty years. It is in the states interests to rejoin surface and mineral. This will pass with difficulty.

The last bill deals with the present and is in major trouble based on the deletion of five words.

HB-1062 is our own Rep. Mark Larson's bill. He did his usual outstanding job, and the bill flew through the House. It would require oil and gas operators to enter into negotiations with surface owners to decide the amount of compensation due to the surface owner as a result of damage caused by production.

Here's where the deal began to fall apart.

Mark's version of the bill says that appraisers would inspect the site and determine which damages are expected to be caused by the operator's proposed drilling operations. The bill continues "To the extent that such damages include the diminution of the site's property value, such valuation shall be calculated in accordance with the fair market value of the site based on its current use."

This means that if it is pasture land, that's how it would be valued. Even though that pasture was ripe for development and would likely fetch a ton of money.

My amendment in the Senate struck those last five little words: "based on its current use," thus making the standard "fair market value."

The industry howled.

I had the three bills pulled from the table and discussions continue. I believe that if the industry doesn't relent, a citizens' initiative will impose greater restrictions which could hamper extraction of much needed energy.

Somewhere there are words that can solve my dilemma. But they escape me now. Not a good way to end a letter to a friend.