Longmont City Council is supporting a bill that would stop local governments from being forced to pool their mineral rights.
Sponsored by Sen. Sonya Jaquez Lewis, a Democrat representing Longmont, Lafayette, Louisville and west Erie, along with Reps. Andrew Boesenecker (D-Fort Collins) and Mike Weissman (D-Aurora), SB23-201 aims to shore up certain rights for mineral resource property owners.
Currently in Colorado, any mineral owner that owns or has secured consent of more than 45% of the mineral interests in a drilling project can begin pooling the interests of the remaining mineral owners, either voluntarily or through an administrative hearing process known as “forced pooling.”
According to the Colorado Oil and Gas Conservation Commission, pooling is meant to allow owners to share costs and proceeds from oil and gas development, while also ensuring that a mineral owner who refuses to enter into a lease does not prevent the development and production of oil and gas minerals owed by others.
This means that an owner — including local governments — that doesn’t consent to having their minerals drilled often still have to, and by law in Colorado often have to pay for their proportion of drilling costs through proceeds as a “risk penalty.”
The bill, which was introduced March 20, would prohibit a forced pooling order that includes an unleased, nonconsenting mineral owner that is a local government or school district. This was cited as a large reason why Longmont City Council voted to support the bill.
The bill would also reduce the amount of production costs that a nonconsenting mineral interest owner must pay, require applicants to prove they have consent from more than 45% of the mineral interests, have drilling be attempted without disturbing a nonconsenting mineral owner’s rights, and issue forced pooling orders in a way that minimizes impact on public and environmental health.
Currently, Boulder County — which has a longstanding policy of protecting open space from oil and gas development — is facing the type of situation this bill aims to prevent.
Last year, county commissioners rejected a lease offer from Extraction Oil and Gas for county-owned mineral rights near Longmont. Commissioners indicated in comments at the time that they would fight a forced pooling order from the state, arguing that forcing a government entity to be part of a business enterprise would be unconstitutional.
The state has yet to hold a hearing on whether to pool the county’s minerals. As the law currently stands, Boulder County would have the option to petition the application if the state ruled to force the pooling of minerals, but there’s not been much success doing so in Colorado.
Boulder County legislators have tried to take on forced pooling before. In 2017, former Boulder County Commissioner and Senator Matt Jones sponsored a bill that aimed to add some limited protections for nonconsenting mineral rights owners in a forced pooling order, which failed in committee.
This year’s bill is scheduled for a hearing with the Agriculture and Natural Resources committee at 1:30 p.m. Thursday.
