June 23 2014
Fracking and Property
Jillian Kay Melchior
Last September, Roni Bell Sylvester experienced the worst Friday the 13th ever. Floods coursed through Colorado, causing extraordinary damage to her farm, which has been in her husband’s family since 1869. The waters not only flooded the Sylvesters’ basement, causing massive damage to their home, but also knocked down other structures on their property, causing an additional $70,000 in damage to their vehicles.
“There was an actual current, an actual raging river, between five and, at some points, eight feet above ground that just raged through here,” Sylvester recalls. “We have a 55-inch watermark on the side of our house. It was such an incredible force that it picked up buildings that were here 110 years and threw them like they were just toothpicks.”
The Sylvester family has been able to restore their farm only because they are mineral-rights owners. Royalty payments from the energy companies leasing their property have helped cover the expense — already more than $200,000. Without royalties as a source of income, there would have been “no way,” Sylvester says.
The Sylvesters aren’t alone. Energy exploration has created a job boom in Weld County, which saw 6 percent job growth — one of the highest rates in the nation — last year, according to the Bureau of Labor Statistics. Sylvester proudly touts this figure, adding that the energy sector “is providing jobs, and when people have jobs, they have money to spend, and they patronize the community and its goods and services, so it’s a really healthy, good, strong circle.”
But this game-changing economic growth could quickly be reversed, as Colorado’s environmentalists continue their efforts to limit fracking throughout the state. Already, Longmont and Lafayette have enacted bans, and Boulder, Fort Collins, and Broomfield have approved moratoriums. Tomorrow, voters in Loveland will consider a moratorium, too. Meanwhile, around a dozen state-level ballot measures seek to expand restrictions across Colorado in what’s being hailed as “ground zero” for fracking.
For Colorado’s mineral-rights owners, this is a disturbing trend, says Dan Stroh, a businessman who owns property throughout the state. “When I buy property, I buy a bundle of rights, and my bundle of rights includes the minerals,” he says. “I should have the right to explore and take the minerals. I should be able to, because I own it, I paid for it, I paid property taxes on it, and the public did not. . . . It’s not right for them to preclude me from exploring, under controlled circumstances, my full bundle of rights on my own property.”
But Sharon Carlisle, who founded the pro-moratorium group Protect Our Loveland, tells National Review Online: “We’re not trying to tell anyone they can’t do anything with mineral rights, but when your mineral-rights extraction is possibly harming me as your neighbor, we have a problem. . . . I have a perfect right to ask [for more information about fracking]. It’s not just about economics, folks. I have a child, I have a kid.”
Colorado courts are already preparing to consider these conflicting perspectives, as the local bans and moratoriums have resulted in legal challenges, including suits brought by mineral-rights owners, who say that because they’re being prohibited from exercising their property rights by the local government, they deserve compensation.
If the mineral-rights owners prevail, taxpayers in Boulder County alone could be forced to pay as much as $1 billion in compensation, according to a study released June 12 by Netherland, Sewell & Associates, an international petroleum-engineering firm.
It remains unclear how long the lawsuits over the new fracking restrictions will take to adjudicate; experts in Colorado are estimating it could take anywhere from a few years to a decade.
But “just because the government threatens a lengthy legal process doesn’t mean that property-rights owners or mineral-rights owners should give up the fight — or that they will give up the fight,” says Michelle Bach Lyng, a spokesperson for the National Association of Royalty Owners in the Rockies. “Not only is this real property, and not only real compensation that they’re owed, but if we allow the government to take this liberty, what’s next?”
— Jillian Kay Melchior is a Thomas L. Rhodes Fellow for the Franklin Center for Government and Public Integrity. She is also a senior fellow at the Independent Women’s Forum.