A House committee on Wednesday unanimously approved a compromise solution to the long-running debate over whether energy companies should compensate landowners for the impact of their gas wells and roads.
The proposal, coming at a time of vigorous gas and oil development in the state, requires companies to tell sometimes unsuspecting landowners what to expect on their property after a drilling permit is granted.
Rep. Kathleen Curry’s House Bill 1185, passed by the House Transportation and Energy Committee, would also require more compensation for landowners. That compensation would occur through either surface-use agreements before drilling starts or a system of financial guarantees and appraisals of damage amounts.
The proof of compromise in what has become a high-stakes lobbying contest between the state’s real-estate and energy industries could be seen on the faces in the hearing room Wednesday night, committee chairman Rep. Jack Pommer said.
“Nobody’s smiling, because everyone’s nervous about what they’ve agreed to,” the Boulder Democrat noted after the vote on the heavily amended bill.
The measure calls for compensation for “damages directly caused by the disturbance of the surface for the conduct of oil and gas operations.”
Current law requires compensation only in cases of “unreasonable” damage.
If HB 1185 becomes law, damage that would require compensation includes decreased agricultural production, lost land value, lost use of land, lost access to land and property damage.
The bill requires the posting of a bond “or other adequate security” worth at least $15,000 per drilling permit when surface-use agreements can’t be struck.
Though the energy industry helped craft the bill as it now exists, some think the bonds should be smaller.
Other states require $2,500 bonds, said Greg Schnacke, executive vice president of the Colorado Oil and Gas Association.
“It’s still high,” he said. “We’re concerned.”
Landowner groups involved in the negotiations also have issues they want settled to ensure sufficient compensation, said Jeff Kirkendall of the Colorado Association of Realtors.
“Substantial progress has been made, yet there is a lot of work to do,” he said.
He asked the committee to move the bill forward, “so we may continue that work.”
As it heads to the House Appropriations Committee for fiscal analysis, Curry’s bill describes a multiple-appraisal system for determining how much drilling would hurt the value of a particular piece of property. The process would start with a landowner and an energy company each seeking their own assessments of potential damage.
If they can’t agree on a damage amount, a third appraiser could be appointed to settle the dispute, Curry said.
Staff writer Jim Hughes can be reached at 303-820-1244 or jhughes@denverpost.com.
