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Property damage bill moving in Colorado Oil, gas industry, property owners reach compromise on bill requiring compensation to property owners for damage from drilling Steven K. Paulson Associated Press Writer
With gas and oil development booming in the state, lawmakers on Feb. 8 tentatively agreed to a bill that would require companies to compensate property owners for damage caused by drilling.
The bill, hailed by the oil and gas industry as a good compromise that tells both sides what to do, would require companies to warn naive property owners of what could happen to their land and allows appraisers to settle disputes.
“This puts some sideboards on the process so we can now talk about coexisting without hammering each other to death. That’s the real change in the tenor of this debate,” said Ken Wonstolen, senior vice president of the Colorado Oil & Gas Association.
Rep. Jack Pommer, D-Boulder, who chaired the committee, said both sides gave significant ground to reach a compromise on an issue that has dogged Colorado politics for decades.
“We’re taking money out of people’s pockets either way,” he said.
The measure could help resolve complaints over so-called “split estates,” when one person owns the land but someone else owns the minerals beneath it. Companies that own or lease the minerals have a right under state law to “reasonable use” of the surface to extract the oil, gas or coal. While it’s been an issue for years, it has been the subject of debate as oil and gas development booming in recent years.
Rep. Kathleen Curry, D-Gunnison, said the compromise hammered out over the past few weeks would apply to all property owners.
Current law requires oil and gas companies to give landowners a 30-day notice for plans to drill on their property and allows them to post a bond — $2,000 for dry land acreage and $5,000 for irrigated property — if they don’t have an agreement with the landowner. The bill would increase the bond amount to $15,000 and allow drillers to avoid costly delays. It would allow up to three appraisals if both parties disagree.
Curry said it was difficult crafting a compromise that would apply statewide because the problems vary widely, depending on the region. Commission: state has made progress Brian Macke, director of the Colorado Oil and Gas Conservation Commission that oversees drilling companies, said the state has made progress ensuring property owners are compensated for the damages caused by drilling, but the commission has no authority to step in when drillers and property owners fail to agree on compensation.
Curry said the goal of her bill (House Bill 1185) is to give property owners leverage when negotiating with drillers over compensation for damage because there currently is no incentive for drillers to compromise. The House Transportation & Energy Committee approved the bill and sent it to the House Appropriations Committee to consider the $160,000 cost of enforcing it.
Curry said many property owners are unaware of the damage that can be caused after they receive notice that drillers plan to move onto their property and claim their mineral rights.
“This sends a message to the industry to tell people up front about siting and damages. People may not know what to ask for,” she told the committee.
Curry tried and failed last year to pass a similar bill that would have required compensation for property damage, to be determined by an appraiser or arbitration.
Energy companies objected because drilling could have been delayed by negotiations over damage compensation.
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