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May 24, 2024

New Legislation Protects County-owned Minerals

SB24-185 Exempts Oil and Gas Owned by Local Governments From Drilling Without the Owner’s Permission

Boulder County, Colo. - On May 22, 2024, Governor Jared Polis signed SB24-185, which prevents oil and gas operators from drilling into oil and gas owned by towns, cities, and counties without their consent, a procedure known as “forced pooling.” The bill was sponsored by Boulder County legislators Senate President Steve Fenberg and Representative Judy Amabile and was drafted with the close cooperation of the Boulder County Attorney’s office. A similar effort failed in the 2023 legislative session, despite the hard work of proponents including Boulder County.

With the new law in place, Boulder County’s thousands of acres of mineral rights, mostly associated with open space lands, are fully under the county’s control. With forced pooling, the Colorado Energy and Carbon Management Commission (CECMC, formerly the Colorado Oil & Gas Conservation Commission) can order an owner of oil and gas to let their minerals be developed against their will. Under SB24-185, local governments are protected from that threat. That protection allows local governments a significantly stronger position from which to work with oil and gas operators and make decisions about their property.

The bill also contains provisions that will benefit all mineral owners. It requires operators to provide clear proof of the mineral rights they claim to own or control and prohibits any drilling before the owners’ permission or a CECMC order has first been obtained.

“We are really pleased that this multi-year effort has succeeded,” said Commissioner Levy. “Finally, we are empowered to protect county-owned lands from the extraction of oil and gas the way the public wants us to be.”

“It’s important to know that not only Boulder County’s minerals are now protected, but so are the minerals owned by any other local government that does not want their oil and gas to be accessed with massive drilling projects,” said Commissioner Loachamin.

“The threat of forced pooling has always hung over Boulder County in trying to meet its obligations under the open space property rules because we knew that, in the end, our oil and gas could be taken from us,” said Commissioner Stolzmann. “Now we don’t have to worry about that and can make our decisions based on the needs and expectations of our residents.”

Background

In 2018, Extraction Oil & Gas, Inc., sought to force pool several thousand acres of county-owned oil and gas in a four-square-mile area south of Longmont to support a 32-well pad planned across the county line in Weld County. That effort ultimately failed when Boulder County demanded that Extraction prove that it owned sufficient mineral rights in the area to allow it to get the forced pooling order from the CECMC. However, the county’s mineral ownership has remained at risk for forced pooling and drilling.

The forced pooling system was developed over the past seventy years to avoid the kind of rampant and uncontrolled drilling that happened in earlier decades when owners tried to drill their minerals before anyone else got the chance. Forced pooling is of questionable value in modern times and in areas like the Denver Julesburg basin where hydraulic fracturing is necessary to access oil and gas. Nonetheless, it has been upheld by courts and state government.

In 2023, SB23-201 sought to exempt local governments from forced pooling, among other changes to the law, but the effort failed in its first committee. SB24-185 presented a revised approach and included lessons learned from the prior year.

Governor Jared Polis signed H.B. 24-185 in Boulder on May 22, 2024.

Commissioner Claire Levy joined Governor Jared Polis, Representative Judy Amabile, Senate President Steve Fenberg, and City and County of Broomfield Council Member Jean Lim in Boulder for the signing of SB24-185 on May 22, 2024. The new state law exempts oil and gas owned by local governments from drilling without the owner’s permission.