Wyoming Law Requires Compensation for Mining Damages

Wyoming recently enacted a law that protects landowners who don't own the rights to minerals underneath their property. If oil and gas companies start drilling and damage the property, the landowner is entitled to damages.

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JEFF BRADY reporting:

I'm Jeff Brady. The origins of this conflict go back to the mid- 1800s, before anyone could even imagine the West being so crowded. The federal government was trying to attract settlers here. It offered millions of acres of free land to homesteaders. Build a house on a plot of land, and it was all yours. But then things got more complicated around the turn of the century, as industrialization made oil more valuable. Allen Ravanov(ph) is with the Bureau of Land Management's Wyoming office.

Mr. ALLEN RAVANOV (Bureau of Land Management, Wyoming): Starting with the early 1900s, Congress started understanding the value of the federal lands, with respect to the minerals underlying those lands.

Mr. BRADY: From then on, Congress decided to split surface and mineral rights. Settlers who just wanted land for farms and ranches got the surface. The government kept the minerals. But oil and gas companies could only get those minerals by drilling from the surface.

Mr. RAVANOV: The courts have determined through the years that the mineral estate is what is called a dominant estate, meaning that the person trying to develop those minerals has the right to access those minerals. If you didn't have the right to access them, the value of the mineral estate would be nil.

Mr. BRADY: In return, Congress required oil and gas companies to pay for damage to agriculture and improvements, such as houses or outbuildings. But today, that land is used for more than just ranching and farming. Tourism is big business. There's no provision, though, to pay for things, like a lost view of the mountains, because of tall drilling rigs. That's where the states are stepping in. In addition to Colorado, New Mexico is considering a law to compensate landowners. Wyoming passed such a law last year. Bruce Hinchey heads the Petroleum Association of Wyoming.

Mr. BRUCE HINCHEY (President, Petroleum Association, Wyoming): I think the bill that was passed was a good compromise. It worked out for all concerned, as far as I can see at this point. Things that are in the bill are both good for the industry and good for the landowner.

Mr. BRADY: Wyoming's law is less aggressive than what's being proposed in Colorado. Oil and gas companies are allowed to post much smaller bonds, as little as $2,000 to cover surface damage. But even Wyoming's law may be undone. Last August, BLM Director Kathleen Clark sent a letter to state officials, saying their law does not apply to Federal mineral leases. Again, Allan Ravanov with the BLM.

Mr. RAVANOV: She was concerned that the statute might create some unnecessary burdens on the developers of that Federal mineral estate.

Mr. BRADY: And besides, Ravanov argues, the BLM already has a process for resolving disputes between oil companies and surface property owners. But remember, the agency is only required to pay for damage to farming and buildings. That's why Laurie Goodman says state laws are needed. She's with a group called the Landowner Association of Wyoming.

Ms. LAURIE GOODMAN (Landowner Association of Wyoming): There's not a fundamental evil intent, here. It's just a situation that the original laws of the early 1900s are no longer meeting the reality of the economics today for private landowners.

Mr. BRADY: Goodman says Congress could resolve this issue once and for all, and lawmakers appear to have started down that road. One provision of a big energy bill passed last year requires the BLM to take a look at this issue. The agency is holding public hearings, and expects to make its recommendations to Congress in May. Jeff Brady, NPR News, Denver.

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