The fight for surface owner protections from oil and gas development on private property dates back to the beginning of coalbed methane boom in the Powder River Basin in the mid-1990s. During Wyoming’s last oil and gas boom in the ‘70s, a law to protect surface owners’ rights was not considered necessary because relations between landowners and industry were generally positive. But the size and scope of today’s development has changed things, and landowners are increasingly feeling the need for legal protection for their private property rights.

Part of the difference between today’s situation and that of 30 years ago can be attributed to technical advances in the industry resulting in unprecedented well densities and an accelerated pace of drilling that is often incompatible with other land uses. Coalbed methane and traditional natural gas wells are now often drilled with as little as ten-acre spacing compared to the one well per 160 or 320 acres typical in the 1970s.

The Landowners Association of Wyoming, a newly formed grassroots organization, is leading the fight for such a law. WOC supports their efforts, knowing that if a landowner is empowered to take care of his or her land and water, the environment will be better protected.

Some of you may remember a famous scene from the 1976 movie, Network, where one character rouses the crowd into screaming out their windows and along the street: "We’re mad as hell and we’re not going to take it any more." This mantra could be the rallying cry of a new group in Wyoming, the Landowners Association of Wyoming or LAW.

After two attempts to pass laws through the state legislature protecting surface owner rights from oil and gas development failed due to extensive lobbying by the oil and gas industry, landowners from across Wyoming have had enough. Many feel as if they can’t sit around waiting for the legislature to act, and that it is time to take the issue to the people. LAW is working to put a citizen’s initiative guaranteeing landowner rights on the 2006 statewide ballot.

LAW supports a healthy oil and gas industry in Wyoming according to the organization’s president, Laurie Goodman. But, she adds, they also believe the oil and gas industry should be one that is legally required to compensate landowners for the damages and economic losses caused by oil and gas activities—like every other mining industry in the state.

As Kim Stevens, an Albany County landowner says, "My husband and I have worked to save enough money to buy our own little piece of heaven in Wyoming. We live here now and we’re part of this community, and if an oil and gas company should cause damages to our land, or cause it to lose its value – they should damn well have to pay us for that."

Split estates pit landowner interests against industry
Forty-eight percent of Wyoming’s privately owned land is "split estate." Split estate refers to a situation where one party owns the rights to the property or surface, while another controls its underlying minerals. Nearly all of Wyoming’s split-estate lands were created at the turn of the 20th Century when the federal government granted homestead rights to the surface of the land to encourage settlement of the West and reserved the minerals. In split-estate situations, the landowner receives no economic benefit from the extraction of the minerals underneath the surface and the minerals estate is dominant.

"The laws for compensating landowners are so weak [in Wyoming] that landowners have virtually no say," Goodman says. "Dominance is given to the extraction of oil and gas. The only landowner losses protected currently are losses to growing crops and to tangible improvements like fences and cattle guards. Hay meadows, grazing lands don’t qualify.

"The true answer to this problem is to make the surface estate equal to the mineral estate," Goodman says. "But making these estates equal would require federal legislation. "At a minimum, while the mineral estate stays dominant, any landowner in Wyoming should know beyond a shadow of a doubt that their private property rights include a legal guarantee that they will be paid for any damages and economic losses caused by the oil and gas activities," she concludes.

For some minerals, surface owner rights are already protected by law in Wyoming. The Surface Mining Control and Reclamation Act (SMCRA), which passed in the late 1970s with the help of former Wyoming Senator Cliff Hanson, ensures that the interests of surface owners facing trona or coal mining on their property are adequately compensated. At the time the law passed, representatives of the coal industry claimed it would drive them out of business. Today, Wyoming is the nation’s largest coal producer.

"I’ve heard the statement, ‘If this law goes through it’s going to cost us a billion dollars.’ Well if it’s going to cost industry a billion dollars with the law, who is it costing a billion dollars right now?" Eric Barlow, a Campbell County rancher and one of the organizers of the Landowners Association, asked in the May 30th issue of the Casper Star-Tribune.

Buy Out versus Pay Out

A May 30, 2004 article in the Casper Star-Tribune by reporter Dustin Bleizeffer suggests that a growing number of operators are choosing to buy out ranchers rather than come to an agreement on how to develop the resource in a mutually beneficial fashion. According to Bleizeffer, at least three of the industry’s top producers have chosen this route because it gives them more flexibility.

The president of the Landowners Association of Wyoming, Laurie Goodman, does not consider buy out a solution. "It’s not very common yet," she says. "But we don’t see [buy out] as a positive trend at all. It does not guarantee that the ranch is maintained as a ranch. It does not ensure that ranching continues. Our question is, who is going to maintain the ranches? Who is going to be the steward of the land? Where are these ranchers going to go? "I see this as an erosion of the ranch community," she continues. "We could lose the fiber of that part of Wyoming society."

Even if operators purchase the deeds to the lands where they operate, they are still bound by laws that protect environmental qualities, but they are free from any moral obligation to the people who have lived and worked the property for generations. The trend seems to reflect the growing perception that waving some dollars around in Wyoming is enough to take care of any inconvenience, such as making sure hay meadows are not destroyed by roads, gates aren’t left open for wandering cattle, wells do not go dry, and ranchers remain ranchers.

Big industry versus the 'little guy'
The move to secure surface owner protections is creating some strange bedfellows. Long-time Republicans and staunch Democrats, anti-environmentalists and environmentalists, fifth-generation Wyomingites and transplanted East Coast liberals are united in their desire to ensure the little guy who owns land—be it a ranch, ranchette or a lot in a subdivision on the outskirts of town—isn’t overrun by the interests of the billion-dollar multi-national oil and gas companies seeking to exploit the state’s natural gas wealth. These companies grossed nearly $12.5 billion in Wyoming in 2003.

In a February, 2004 Casper Star-Tribune op-ed piece, former Senator Malcom Wallop wrote, "Wyoming has enjoyed relative harmony between the oil and gas industry and private landowners for decades. Voluntary agreements and compensation packages are routinely negotiated, with the terms set by the industry. However, times are changing. A full two-thirds of our natural gas is produced by ten operators – none of which are headquartered in Wyoming. All of these operators are large, publicly-held corporations that are driven by legal responsibilities to maximize profits for their stockholders. These companies follow state laws – but if there are no laws requiring compensation for damages, they are not obligated to pay them."

That’s where LAW wants to change things. Its members and organizers do not believe trusting the benevolence of huge corporations like ExxonMobil, Chevron Texaco, EnCana or BP America will guarantee the surface owners’ interests are safeguarded. Many times they are, but there are enough horror stories circulating about industry abuses and inadequate compensation to ranchers to fuel the effort to secure more binding guarantees.

"A law that only requires notice and ensuring landowners have the right to help plan activities that will impact the surface is a step in the right direction, but frankly, these are mere courtesies that one industry should automatically offer to another – these courtesies shouldn’t have to be legislated," says Shaun Andrikopoulos, vice president of LAW. "Compensation for damages – that’s the core," he concludes.

Industry resists law citing crippling cost
This goal hardly seem radical, but spokespeople from the oil and gas industry resist it, saying a surface owners accommodation law is both unnecessary and costly.

Yet public records indicate that all of Wyoming’s top producers also operate in at least one of the ten other states in the nation that have some kind of surface owner accommodation laws. So, just as the argument in the ‘70s that SMCRA would put the coal industry out of business proved baseless, today’s argument that a law protecting surface owners against oil and gas development will cost the industry billions and drive them from the state seems disingenuous at best.

Bruce Hinchey, the president of the Petroleum Association of Wyoming believes the move to place a citizen’s initiative on the ballot is driven by a minority of landowners. "You’ve got good operators and landowners who get along and work things out," he said in the May 30th Casper Star-Tribune. "And then you’ve got bad landowners and bad operators. They are really the ones driving the issue at this point."

Hinchey’s comment raises the ire of the "bad" landowners behind LAW. "That comment was an unfair effort to marginalize very legitimate concerns of ranchers and landowners across the state," Goodman says.

She says that while LAW is not tracking membership, hundreds of volunteers have offered to help the organization gather the signatures needed to get their initiative on the 2006 ballot. In her mind, the people she is working for do not represent a minority interest.

"These people’s families have lived in Wyoming for generations. Others are new landowners who have chosen to live in Wyoming. They serve on school boards and city councils…They are an integral part of Wyoming society," she says.

Ballot initiative takes law-making to the people
LAW’s objective of getting their initiative on the 2006 ballot is daunting. Article 3 of the Wyoming Constitution reads as follows:

The petition may be filed with the secretary of state if it meets both of the following requirements:
(i) It is signed by qualified voters, equal in number to fifteen percent (15%) of those who voted in the preceding general election; and
(ii) It is signed by qualified voters equal in number to fifteen percent (15%) of those residents in at least two-thirds (2/3) of the counties of the state, as determined by those who voted in the preceding general election in that county.

For more information about the Landowners Association of Wyoming, to help secure signatures for their ballot initiative, or to sign the petition, visit the LAW website or email either ldgoodman1@aol.com or clabbgood@cs.com.

What this means is that the landowners have to get 33,000 people to sign their petition before January, 2006 for it to even appear on the statewide ballot. That’s a lot of signatures for a state like Wyoming. LAW’s ballot initiative contains identical language to the bill passed unanimously by the Joint Judiciary Committee in 2004. It applies only to oil and gas development, and guarantees landowners the right to negotiate for compensation of economic losses caused by oil and gas operations including, but not limited to: loss of agricultural production and income, loss of land value, loss of land use, loss of value of improvements, damage to aquifers and water supplies, costs of surface reclamation, and loss due to inability to implement uses planned previous to the notice requirement.

The law requires a 60-day notice period in which a company must inform the landowner of the proposed operations and negotiate for compensation as well as activities that cause the least amount of impact. If a surface use agreement cannot be finalized prior to oil and gas activity, this legislation establishes a new requirement for financial assurance for the eventual payment of surface damages, beyond a reclamation bond, to ensure the landowner eventually receives full payment for the negotiated surface use agreement. The petitions became available in early July and LAW has begun their signature-gathering campaign.

Property values adversely affected by oil and gas
The Bureau of Land Management predicts permitting 76,000 wells in the state of Wyoming over the next ten years. To put this number in perspective, it roughly equals the total number of wells completed in Wyoming since 1896. These wells bring in money and jobs, but they have their downside.

According to the United States Department of Agriculture, the average value of agricultural land in Wyoming has gone up nearly 50 percent over the past ten years. This increase reflects the shift toward amenity values such as open space, hunting, fishing, recreation, and natural, rustic beauty. They are not values that are compatible with the roar of gas compressors or a network of roads criss-crossing the land.

Drilling, excavation, industrial traffic, dust, noise, reservoir pits, seismic activity, gas pipelines, and power lines all threaten to detract from property values and landowners holding the deeds are increasingly finding themselves facing economic losses or even ruin. LAW hopes its efforts will prevent this and enable private citizens to enjoy some of the benefits of the natural gas boom.