BLM contests split estate law

by Cat Urbigkit

Although the Wyoming Legislature enacted a new law designed to help surface owners involved in split estate issues with natural gas exploration and development companies, a letter from Bureau of Land Management Director Kathleen Clarke indicates that the state doesn't have jurisdiction in matters involving federal minerals.

The letter to Wyoming Oil and Gas Supervisor Don Likwartz came in response to a proposed state rulemaking process to implement the new law, which is set to take effect July 1.

Clarke wrote that although the BLM "shares the state's concerns and appreciate that there may be a need" for the provisions in the new law in cases involving split estates and non-federal minerals, "the history of success of federal oil and gas program operators in achieving amicable agreements with private surface owners is evidence that the federal program is already achieving a reasonable balance between the concerns of operators and the concerns of surface owners."

Clarke noted that the new law and regulations "would impose additional financial requirements that would burden the federal mineral estate, e.g., liability for loss of production and income, liability for loss of land value and duplicative bonding requirements to both the United States and to the Wyoming Oil and Gas Conservation Commission. The statute and regulations could also impose potential delays in approval of operations on federal leases."

Clarke also wrote: "Consequently, there are potential legal problems, such as the federal preemptive doctrine, if the state statute were to create an unreasonable barrier to developing federal minerals on split estate lands where the surface passed into private ownership (under federal law). ... We believe it would be inappropriate to have the state impose further economic burdens on the property interests of our existing lessees at this point."

Clarke concluded that in light of the legal concerns with the new law, "we believe that the statute and regulations implementing the statute are limited to application to state and private mineral estate."