A major court fight over a controversial oil and gas practice is on hold after activists and state regulators reached an agreement that both sides are happy with — for now.
Drilling at a proposed extraction site near the Wildgrass subdivision in Broomfield won’t begin until early June, giving the Colorado Oil and Gas Conservation Commission time to consider a pooling application filed by Denver-based Extraction Oil & Gas against the neighborhood’s mineral-rights owners. The verbal agreement between homeowners, state regulators and Extraction representatives came in U.S. District Court today, February 12, after two days of hearings in a lawsuit filed against the state by impacted homeowners. Drilling had previously been scheduled to begin as soon as March 1.
“It’s validating to finally have our voices heard,” says Lizzie Lario, a Wildgrass resident and one of the plaintiffs in the case. “We have our seat at the table.”
At issue in the suit is the practice of forced pooling, which allows operators like Extraction to drill for oil and gas even without owning or leasing the rights to the reserves in question. Unless they have been previously “severed” and sold separately, the rights to underground oil and gas resources directly beneath privately owned land are generally held by the owner of the surface property — but in Colorado, thanks to forced pooling, ownership of these mineral rights is mostly beside the point.
Under the state’s pooling statute, operators may apply to the COGCC for the approval of drilling units that encompass dozens or even hundreds of individual mineral-rights tracts. If even a single mineral owner within the unit agrees to lease his or her rights to the driller, other "non-consenting" owners can be forced to do the same — and for their trouble, they’ll pay a steep penalty on any royalties earned on the produced oil and gas.
Last month, a group of Wildgrass mineral-rights owners sued the state in federal court, alleging that its pooling laws violate the U.S. Constitution. In an initial injunction hearing last week, Judge Brooke Jackson at times seemed sympathetic to the plaintiffs; in particular, he questioned why Extraction was scheduled to begin drilling even before the pooling application for the project had been approved. The COGCC is slated to consider the application at its meeting on March 11.
In a continuation of the hearing today, attorneys for the COGCC told the court that Extraction now plans to begin drilling on the Livingston Pad, the site near Wildgrass, in early June. (Extraction did not return a request for comment on the apparent postponement.)
“This is the first we’ve heard of this,” said Dan Leftwich, an attorney representing the plaintiffs. After Jackson instructed COGCC lawyers to confer with representatives from Extraction, which is not a party in the lawsuit, all sides agreed to put the issue on hold until the COGCC hearing in March.
“You’ve won a major battle here,” Jackson told the plaintiffs. “You’re going to get your commission hearing. And if the commission doesn’t consider your concerns seriously, then they’ve got a problem.”
Jackson’s verbal order sets the stage for what is likely to be the highest-profile forced-pooling hearing in the COGCC’s 68-year history. Long criticized by environmental and neighborhood groups as too closely aligned with industry interests, the agency is likely to be reformed in the next few months by Democrats in the state legislature, who want commissioners to prioritize health and safety concerns when regulating the drilling process.
Any potential legislative changes, however, will surely come too late to make a difference for Lario and other Wildgrass mineral-rights owners in their March hearing. And since the COGCC has rarely, if ever, denied a pooling application, it’s a good bet that both sides will be back before Judge Jackson soon, to address the suit’s wider claims that Colorado’s pooling laws are a constitutional violation.
“We won, but we still have a lot of work to do,” says Joe Salazar, a former Democratic state representative and another of the plaintiffs’ attorneys. “This isn’t over yet, not by a long shot. This is round one of a championship prize fight, and I anticipate that we’re going to go the distance.”