Exploration

Lawsuit Challenges Colorado’s ‘Forced Pooling’ Law

DENVER (CN) – A Colorado community sued the state’s Oil and Gas Conservation Commission in federal court Wednesday, claiming that a state law allows private companies to harvest minerals without the owners’ consent in violation of their constitutional rights.

In its lawsuit, the Wildgrass Oil and Gas Committee claims to be the latest victim of the commission’s rubber stamp approval of private oil and gas leases.

“We feel powerless,” said Jean Lim, one of the mineral owners in a statement. “It’s hard to believe this can happen in the U.S. I always thought property rights were protected and certainly never thought the government could take my property and give it to a private entity over my objections.”

The Wildgrass subdivision is located in Broomfield, Colorado, a suburb sandwiched between Boulder and Denver. The property owners there banded together in July 2016 after receiving “an unreasonable lease offer” from the Denver-based company Extraction Oil & Gas in June 2016.

In what the lawsuit calls “the largest combined drilling project in the history of Broomfield,” Extraction Oil & Gas proposed to drill 120 wells on 10,240 acres, including the Lowell South Drilling Spacing Unit which is closest in proximity to Wildgrass.

Residents questioned the impact of drilling on health and safety, meanwhile, the city rejected three comprehensive drilling plans submitted by Extraction Oil & Gas. Nevertheless, the Colorado Oil and Gas Conservation Commission approved 13 drilling permits in 2017.

Invoking a Colorado law allowing for forced pooling, the commission sent Wildgrass members “an election letter requiring that they either elect to voluntarily participate in the large-scale residential fracking project or have their minerals pooled into the project and suffer a hefty penalty despite their myriad objections.”

Wildgrass estimated 30,000 mineral owners were impacted by forced pooling last year.

“The practice is relied on so heavily by the industry, that some operators list changes to forced pooling regulations as a risk to their financial viability. The practice is clearly an egregious violation of property rights and must end,” said Anne Lee Foster of grassroots organization Colorado Rising in a statement.

According to the lawsuit, forced pooling is the only way hydraulic fracture drilling, or fracking can commence on large 1,000-acre units.

And Colorado law supports it.

“The law in Colorado allows forced pooling if operators own or have leased any acreage within the relevant drilling unit. Thus, operators can force pool multiple neighborhoods and thousands of people even if they directly have access to only one acre,” the complaint said.

In addition to strong-arming owners into leasing their minerals, the state penalizes individuals who refuse by holding them responsible for paying 200 percent of the company’s cost to drill, according to the lawsuit.

Consenting owners also receive a higher proportion of royalties than those who refuse.

In addition to violating individual rights to form contracts and to the freedom of association, Wildgrass said the pooling law grants access to non-consenting owners’ minerals at the benefit of a private corporation.

Wildgrass asked the court to declare Colorado’s forced pooling provision unconstitutional and to award it attorneys fees.

According to the City of Broomfield, initial drilling on the first wells begins in March.

Courthouse News Service –

AMANDA PAMPURO Reporting

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