“I care about what my name is attached to and I don’t want to be forced into it,” testified Wildgrass mineral owner resident Mark Lindner in explaining why he was appalled when he found out that if one person in his neighborhood signed a lease offer that the State of Colorado would force the rest of the neighborhood mineral owners in the designated spacing unit of 1600 acres to be associated in business with Extraction Oil and Gas. He explained that his wife’s colleague was Erin Martinez whose husband was killed in the Firestone explosion. He stated that he had two boys whose health might be endangered, according to his independent research of peer reviewed health impact studies for those who live next to oil and gas developments. Colorado Solicitor General Eric Olson objected, saying “He’s not an expert, he can’t state that [health and safety impacts].” Judge R. Brooke Jackson responded with, “He’s just a guy, he doesn’t have to be an expert to describe his state of mind as to whether or not to sign a lease. Overruled.”
Wildgrass Oil and Gas Committee (WOGc) is just made up of normal “guys” and women who were astonished in June 2016 when they found out that they were mineral owners who could be forced by the State of Colorado to lease their minerals to Extraction Oil and Gas in the operator’s efforts to put a megawell pad in their dense residential Broomfield neighborhood. That is why on January 23, WOGc filed a lawsuit against the Colorado Oil and Gas Conservation Commission (COGCC) to challenge the constitutionality of the forced pooling provision of the Colorado Oil and Gas Act. The hearing on the motion for a temporary restraining order occurred for three hours on Friday afternoon, February 8 and will be continued on Tuesday, February 12 at 11 a.m. in Judge Jackson’s courtroom.
The small seating area in the courtroom was largely filled with about 50 members and supporters of WOGc from Broomfield and other impacted Front Range neighborhoods. WOGc attorneys were Colorado Rising Director Joe Salazar and Dan Leftwich of Mind Drive Legal Services, LLC. The Colorado Attorney General’s office sent four attorneys, to whom Judge Jackson quipped, “Is just Phil Weiser left in the office?”
The first WOGc mineral owner witness was Max Caputo who clearly stated that the threat of State forced pooling gave mineral owners little option but to sign over their property to a private corporation. In response to Attorney Salazar’s questions, he stated that he had no lease bargaining power with the operator due to the State-sanctioned pressure of forced pooling and that he was given no information by the operator or State to help him determine if the lease offer from Extraction was just and reasonable, as required by the Colorado Oil and Gas Act. As Colorado Solicitor General Eric Olson kept asking Mr. Caputo to read the forced pooling pamphlet shown on the monitor, Judge R. Brook Jackson finally said to Solicitor General Olson, “What are you trying to accomplish? The witness said he was not given a mineral valuation and didn’t know if he was getting a good deal.” Mr. Caputo also stated that at no time was he given any plans by the COGCC or the operator about how his community’s safety would be protected during oil and gas operations, so that the safety of his community along with his property value were his considerations in not wanting to sign a lease.
In addition to the WOGc lawsuit claim that forced pooling unconstitutionally “interferes with Plaintiff members’ right to freedom of association, the WOGc lawsuit also claims that forced pooling “impairs the right to contract.” Wildgrass resident Mark Lindner stated that the mineral owner is unable to negotiate with the operator for a contract at fair market value because the COGCC allows the operator to threaten the mineral owner with forced pooling right on the second page of the lease offer. He said that he did research on Extraction to consider if the lease offer would be a wise investment. He found that Extraction was losing money, was highly leveraged, its stock price was hitting all-time lows, and it had negative earnings, according to its stockholder calls. He stated that if the project went forward that Extraction “would declare bankruptcy and leave Broomfield holding the bag and the residents would be stuck with the mess.”
Mr. Lindner also stated that it is easy to observe in the Wildgrass neighborhood that the Extraction Livingston pad is moving forward, which leads one to believe that there is nothing that can stop the forced pooling of mineral owners despite the fact that WOGc has filed for a forced pooling protest hearing at the COGCC. He stated that he believes that Extraction has delayed WOGc’s forced pooling protest hearing from October 2018 to December 2018 to January 2019 to March 2019 in order to make sure the project is so far along that the COGCC will not seriously consider stopping the project when it finally hears the forced pooling protest.
Founding WOGc Chair and former Wildgrass resident Ann Marie Byers testified as to the history of WOGc’s lack of due process at the COGCC for two years. First, she described how the rule of capture no longer applied to hydraulic fracturing yet the 1951 forced pooling laws had not been updated to take into account hydraulic fracturing in residential neighborhoods. During WOGc’s prehearing meetings for its spacing unit application protest in October 2017, WOGc was denied requests by COGCC Hearing Officer Rouse when WOGc asked for information that would allow mineral owners to ascertain if they were being offered just and equitable leases, including Extraction profitability and drilling efficiency, along with health and safety information on the operator. At that point, Judge Jackson inserted that the Colorado Oil and Gas Act clearly stated that the COGCC’s goal should be to guarantee that the mineral owner is given a just and equitable lease.
In the subsequent narrow WOGc protest limited by Hearing Officer Rouse in October 2017, it was found that WOGc was not given proper notice and the hearing was continued. WOGc then dropped its protest because the COGCC agreed that Extraction’s drilling permits would “comport with” the Best Management Practices (BMPs) in the Operator Agreement signed between Broomfield and Extraction in October 2017. Mineral owners are not allowed by the COGCC to protest drilling permits and the COGCC approved the Extraction Livingston drilling permits on June 1, 2018, reneging on its promise to attach the BMPs to the drilling permits.
Judge Jackson seemed very surprised when Ms. Byers pointed out that COGCC rules allow the operator to drill the wells before mineral owners are force pooled. Judge Jackson asked, “What happens if they started drilling and I rule here that Extraction should stop?” Ms. Byers deadpanned, “I guess they would have to put it back in the ground.”
“Why is Extraction not here?” Judge Jackson then asked after remarking that Extraction had a lot at stake in the proceedings. Colorado Solicitor General Olson replied that Extraction declined to be part of the proceedings. Some residents did recognize an Extraction attorney in the audience. Attorney Salazar pointed out that Extraction was complying with COGCC rules for the most part and that the constitutionality question applied to the COGCC rules themselves. Judge Jackson stated that currently he was not inclined to rule all forced pooling in Colorado unconstitutional but he was more concerned with its applicability to Wildgrass’s situation.
Judge Jackson pointed to the imminent 5 pm closing and asked the parties to ponder over the weekend if there was some other way to resolve these issues other than a court ruling. Judge Jackson stated that he “found it bizarre that a company can drill holes in the ground before forced pooling.” He also wanted Wildgrass to further address issues of standing, ripeness (in exhausting all remedies), and case precedent.
The hearing will continue on Tuesday at 11 a.m. with completion of testimony by Ms. Byers, cross-examination of Ms. Byers by the State, and then the testimony of one State witness.
The public is invited to attend:
When: Tuesday, February 12 at 11 a.m.
Where: Alfred A. Arraj Courthouse, 901 19th Street, Denver 80294, Courtroom A902
What To Bring: State Identification
What Not To Bring: No liquids, No recording devices (can bring phones but not record), No weapons or weapon-like instruments (airport standards)
Parking: From the Courthouse webpage: “There are several parking lots located near the courthouse, including lots at 20th & Champa, and a parking structure at 19th & Curtis Street. Since court may continue past 5:00 p.m. you should avoid parking in lots where an attendant keeps your keys and/or the lot closes at 5:00 p.m.”
Here are links to related documents: