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Surface use bill’s fairness at issue

It’s all about fairness, both supporters and opponents of proposed oil and gas legislation said in a hearing at the state Capitol in Denver Wednesday.Several Garfield County residents, along with other proponents of a surface use bill sponsored by state Rep. Kathleen Curry, D-Gunnison, said her measure is needed to level the playing field in negotiating with energy developers over compensation for land impacts.But energy developers say House Bill 1185 would be unfair to those who own or lease subsurface minerals. Witnesses for both sides testified during a five-hour hearing before the House Transportation and Energy Committee Wednesday. The hearing was scheduled to continue this morning.At issue is how to achieve fair compensation for property owners who don’t own the mineral rights under their land but are impacted by oil and gas development.”Just because we bought our property without the mineral rights doesn’t mean we have no rights at all,” said Garland Anderson, who lives on Grass Mesa near Rifle.But Howard Boigon, an attorney representing the Colorado Oil & Gas Association, said owners of minerals have rights too, including the right to reasonably access them from the surface.”Minerals have no value if they can’t be accessed. It’s as simple as that,” he said.He argued that Curry’s bill would unconstitutionally deprive mineral owners of their rights, but she said that’s happening to surface owners now.”Reasonable access is not a synonym for taking land without compensation,” Curry said.Boigon and other opponents of Curry’s bill said it could make it too expensive to drill some wells and would leave companies vulnerable to lawsuits for years after drilling occurs.”It would actually discourage the negotiation of surface use agreements. We think it would encourage lengthy and expensive litigation,” he said.Curry’s bill is intended to encourage surface owners and energy companies to negotiate a surface use agreement for compensation. Now, companies that don’t reach an agreement can drill after posting $2,000 bond, in the case of nonirrigated land, and $5,000 for irrigated property. They also can post a statewide, $25,000 bond covering all such instances.Under Curry’s bill, companies still could drill without an agreement but would have to post a $25,000 bond in each instance. They also would have to make an offer to compensate for loss in a property’s fair market value expected to result from the energy development.If surface owners weren’t happy with the offer, they could go to court. If the court awarded them compensation 20 percent higher than what the company offered, they would have to be paid triple damages as well as attorney fees and other costs.Jay Still, executive vice president for Pioneer Natural Resources, which has almost 1,500 wells in Las Animas County, worries that the law would serve as a deterrent to reaching agreements because property owners would be tempted to take their chances at winning a big award in court.”This is extremely troublesome for us as an oil company in this bill,” he said.There was talk Wednesday of the bill being amended to eliminate the triple-damage clause. However, the industry still fears that Curry’s desire to require compensation for fair market value could make some drilling prohibitively expensive, particularly in areas where property values are high and drilling could interfere with plans for residential development.They also said her bill would result in job losses and cost millions of dollars in state and local taxes and other revenues from energy development.But Duke Cox, president of the Grand Valley Citizens Alliance, said current law leaves surface owners with no leverage in negotiations if they don’t have mineral rights.”We are still stuck at this point with pretty much a take-it-or-leave-it kind of situation,” he said.Industry representatives said they are willing to discuss means of addressing surface owner concerns, including compensating agricultural operators for lost production. But Curry said agricultural compensation isn’t nearly enough.”That’s a far cry from what’s in this bill in terms of property value loss,” she said.She also she and the industry are far apart in their views about what should be done, and the industry never invited her to meetings they have held with agricultural groups on an alternative surface use bill they hope to have introduced. She said she had thought the industry supported the idea of letting courts resolve differences over compensation.”I’m not so sure anymore what industry supports,” she said.Curry said the legislation is urgently needed. She said some 5,000 wells could be drilled in Colorado this year, and 1,000 to 1,500 of them could take place on property where the surface owners don’t own any of the mineral rights.Buffie McFadyen, a member of the Transportation and Energy Committee, also said a bill is needed soon.”If we don’t find a solution in the legislature this year at some level, this is the West and I’m afraid of what the consequences will be if this bill doesn’t pass,” she said.Garfield County Commissioner Trési Houpt voiced support for the measure, although she noted the County Commission hasn’t taken a position.”My constituents in Garfield County need you,” she told committee members. “Your constituents around Colorado need you. They need you to recognize that surface rights are property rights.”Duane Zavadil, an executive with Bill Barrett Corp., which has been drilling extensively south of Silt, said the company would support legislation that would result in fair, predictable and timely surface use agreements. But he said a law resulting in costly agreements would result in higher prices for consumers of oil and gas. Contact Dennis Webb: 945-8515, ext. 516dwebb@postindependent.com


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