National Association of Royalty Owners’ Colorado Chapter Fights for Mineral Interest and Royalty Owners at Colorado Oil and Gas Task Force Meeting in Rifle. Board member Roy Savage testifies to the success of cooperation between land owners, mineral owners, and producers
RIFLE, Colo. (December 10, 2014) – Today, National Association of Royalty Owners Colorado Chapter board member Roy Savage offered testimony to the Colorado Oil and Gas Task Force outlining how stakeholders have worked together to work out conflicts between land owners, mineral owners, producers, and municipalities in energy development. Savage’s testimony was part of a panel titled “Mineral owners and takings issues”.
“If you look hard at the oil and gas business in Garfield County you can see a real success story. Here, big ranches and landowners have created an environment in which oil and gas operators have been able to innovate and the result is efficiency for the operators, huge financial rewards for royalty owners and taxpayers, and much better land use,” said Savage. “After 20 years of intense oil and gas development on our ranch lands, over 1,000 wells drilled, thousands of fracs, miles of pipeline, our water is tested clean and safe, our air is cleaner, our agriculture is more efficient, and our wildlife more abundant. It is my opinion that the land is in better shape than it has been since homesteading began.”
The entirety of Savage’s Task Force testimony can be found below this press release.
In Colorado, mineral rights are considered at least equal to surface rights. Thus, a ban on mineral development is akin to reverse condemnation which requires just compensation. Such actions would trigger takings claims – claims against the government for depriving citizens of property rights without just compensation.
Takings expert Wayne Forman, shareholder at Brownstein Hyatt Farber and Schreck, offered a legal analysis of takings claims in Colorado at today’s Task Force meeting.
According to his analysis, if local control regulation, setbacks, or bans prevent access to severed mineral interests, it could result in a total takings and require compensation. Even partial takings could result in money due to mineral interest and royalty owners from local governments, according to Forman.
The determining factor is the economic impact of the regulation on the claimant, which is typically measured by the difference in property value prior to and after the impact of the regulation is felt.
“Takings claims are starting to be filed across the country in response to new, restrictive regulations of oil and gas development,” said Forman. “The Task Force should be wary of recommending legislation that could substantially reduce the value of severed mineral interests and give rise to very costly takings claims.”
NARO Colorado has been the leading voice against those who would strip mineral owners of their right to develop their real property, which is in direct contravention to the U.S. Constitution.
“Mineral rights in Colorado are a real property right. Many families rely on income from mineral ownership to help during retirement, send kids to college, or bolster the bottom lines of family farms,” said Michelle Smith, President of NARO Colorado. “If Coloradans allow special interests to compel the government to take this real property right without just compensation, what’s next?”
About the National Association of Royalty Owners (NARO) Colorado
NARO Colorado encourages and promotes the exploration and production of minerals in Colorado, and represents the interests of over 600,000 mineral interest and royalty interest owners in the state. The organization preserves, protects, advances, and represents the interests and rights of mineral and royalty owners through education, advocacy, and assistance to its members, to NARO chapter organizations, to government bodies, and to the public. Additional information about NARO Colorado can be found here.
Testimony from NARO Colorado Board Member Roy Savage
Thank you for taking time today to listen to mineral owners. I am a board member of the National Association of Royalty Owners, a mineral owner and royalty owner, and cattle rancher. My family has been developing on Western Colorado resources for four generations. We have been mining claimants, sheep and cattlemen, homebuilders, energy technology patent inventors, and surface owners. We have been consultants to oil companies, contractors, co-tenants, partners, joint venture operators, and surface owners to many oil and gas companies, from Exxon and Shell to WPX and Mobil.
We have never been silent partners with the oil and gas industry. We’ve argued with operators over reasonable compensation for surface damages, over well pad location, and about reclamation. With our neighbors we contested royalty density applications in front of the COGCC.
We thought we were not getting paid fully for our royalties due, we litigated. When we thought that was insufficient, we formed our own oil company and we participated. I believe the public interest lobby objects to oil and gas drilling primarily because it is an industry done in full view.
I believe the issue before you is essentially a land use argument. Oil and gas is a peculiar industry. It does its work on other peoples’ land to produce other peoples’ resource in full view from the interstate.
The surface use argument over access for mineral development is not new in Colorado. We have had long arguments with operators over reasonable compensation for surface damages. With a number of our neighbors we contested well-density applications at the COGCC. The arguments created by split estates have always been heard in Courts or before the COGCC. The results have always held that the mineral estate is entitled to access, but with “reasonable accommodation” of the surface estate. The result of prohibitions and ever-increasing setbacks will be taking of mineral property without compensation for no demonstrable protection of public health and safety.
The oil and gas industry reacted to surface owner arguments with astounding and rapid applications of new technology. In a decade we have watched as oil and gas drilling has gone from a single well per section to ten acre spacing, three D seismic surveys, multi-well drilling pads, directional and horizontal drilling, remote fracing, and water recycling. In large measure, this industrial revolution has been driven by the oil and gas business’ incessant search for efficiency and by the “reasonable accommodation doctrine”. In some measure cooperation between landowners and oil and gas operators has aided the “unconventional” oil and gas phenomenon.
If you look hard at the oil and gas business in Garfield County you can see a real success story. Here big ranches and landowners have created an environment in which oil and gas operators have been able to innovate and the result is efficiency for the operators, huge financial rewards for royalty owners and tax payers, and much better land use. After 20 years of intense oil and gas development on our ranch lands, over 1,000 wells drilled, thousands of fracs, miles of pipeline our water is tested clean and safe, our air is cleaner, our agriculture is more efficient, and our wildlife more abundant. It is my opinion that the land is in better shape than it has been since homesteading began.
On our ranch and mineral lands we share the surface with oil and gas operators, ditch owners, public roads, accesses to public lands, private accesses, hunters, and literally hundreds of other mineral owners. Not all of these encumbrances are welcome and we don’t accommodate them out of altruism, but we do understand that some others have private property rights that require our accommodation. That includes the right of mineral owners to access their resource.
Our neighbors and the public must learn to understand the new public debate over oil and gas drilling, setbacks and moratoriums, is of great concern to land and mineral owners. We view the intrusion of public interest organizations into the oil and gas land use debate as illegitimate attempt to exert control over private property rights. We’ve never advocated irresponsible development, but we have no choice but to object to campaigns that deprive us of the valuable rights associated with mineral ownership.
The propaganda campaign against a vital industry without any clear science that indicates a risk to public health and safety is insupportable. The studies to date conclude only that more study is required. Our experience over 50 years and hundreds of wells is that fracing has not polluted or physically harmed anyone. There have been incidents when operators have lost control of produced water that has polluted ground and surface water. These incidents are no more serious nor more numerous than in any other industry with which we have all learned to live.
Mineral Owners object to the land use argument being played out in a public forum where propaganda and sensational journalism take the place of evidence and law in deciding the fate of our property rights. We do not think this is legitimate. We believe that abridging our property rights with pre-emptive law without due process of the Courts is an improper use of the state’s authority to protect public health and safety. Before sequestering mineral owners’ property to prohibit development the state must show clear and demonstrable risk. A drill rig in view on the neighbor’s land does not constitute a public risk.
Private ranch and farm owners have a long history of successfully managing their lands in cooperation and sometimes contention with oil and gas operators under the regulatory guidance of the oil and gas conservation commission and adding to our burdens as an already highly-regulated industry is counter-productive. Land owners will not abide a rule that takes over property rights by handing over authority to adjacent land owners. We have statutes and regulations adequate to protect the public.
We ask that any recommendation the task force makes to the legislature preclude taking of mineral owner property. The legal issues of takings is complex, but what I know with certainty is that legislative language stating the drilling prohibitions does not solve the issue. Legislative pronouncements that prohibitions do not constitute a taking will not alter the state and federal protections afforded private property rights.
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