Attorney briefs Craig City Council on oil and gas rights
September 28, 2011
In other action …
At its regular meeting Tuesday, the Craig City Council:
• Approved, 7-0, a special events permit for the annual Craig Chamber of Commerce Crabfest on Oct. 29 at the Boys & Girls Club of Craig.
• Approved, 7-0, the renewal of 3.2-percent retail liquor licenses for all three Kum & Go convenience stores in Craig.
• Approved, 7-0, a tavern liquor license for Dennis Otis, of Cool Water Grill, LLC.
• Heard an update on this year’s Grand Olde West Days from Kandee Dildine.
• Heard a month end financial report for August from finance director Bruce Nelson.
• Heard water and wastewater reports from public works director Bill Earley.
In oil and natural gas exploration, drilling and production, it's not uncommon for landowners and energy companies to become entangled in disputes.
Often, the origin of the disagreement involves differing opinions on whose rights take precedence — the landowner who owns the surface or an energy operator who has leased the subsurface minerals.
It's called a split estate, and in all cases the law protects the rights of the subsurface owner.
"Whoever has the rights to the subsurface is considered to have the dominant estate," attorney Jessica Ryan said at Tuesday night's Craig City Council workshop. "They have the decision-making authority and it doesn't matter if the surface owner is a private landowner or a municipality."
Ryan, a partner with Klauzer & Tremaine, LLC in Steamboat Springs, spoke with council members during a workshop on oil and natural gas operations in city limits. City residents, public officials and oil and gas industry representatives attended the discussion.
Craig Mayor Terry Carwile invited Ryan to the workshop after residents voiced concerns during the Sept. 13 council meeting regarding a company conducting seismic surveys inside city limits.
Ryan said Tuesday there's little residents can do to stop oil and natural gas exploration as long as the company made a reasonable effort to accommodate them as surface owners.
"With proper notice, adequate property interest and good faith negotiations, the seismologists can come into an area and conduct their testing," she said.
Craig City Manager Jim Ferree said Craig's land use code was rewritten four years ago, and he believed it was comprehensive regarding prohibiting oil and natural gas drilling and production in city limits.
But, "in most cases, local ordinances are trumped by state or federal statutes," Ryan said.
She said rules and regulations written by each state's supervisory agency, in this case the Colorado Oil and Gas Conservation Commission, can also supercede local ordinances.
Although local municipalities and counties are lower on the regulatory ladder, Craig is considered a "home rule city" and has certain reserved authorities.
But, Rich Tremaine, also partner with Klauzer & Tremaine, LLC, said he is unaware of any court decisions in which home rule regulations were upheld against oil and gas permit regulations.
"However, as a home rule city, I think a legal argument can be made that you have a legitimate interest to protect your citizens, utilities and infrastructure," Tremaine told the city council. "Protecting the assets and people of the city is where you guys have a lot of clout."
Tremaine suggested the council review its oil and gas regulations and amend them if necessary.
Jeff Comstock, Moffat County's natural resources director, said rather than try to adopt a whole new system of regulations, the city could protect its assets through its conditional use permit process or by entering into surface use agreements.
"The county has permitted three seismic permits in the last six months," Comstock said. "Every one of them has been so dramatically different that the set of stipulations we placed on them were diverse, they didn't look the same.
"My gut reaction is you are not going to need a new set of regulations, but that you are just going to need to apply what is pertinent at the time of each given project."
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