Idaho: Federal judge erred scrapping forced oil leases

September 11, 2018

BOISE, Idaho (AP) — A U.S. District Court judge made a legal error, Idaho officials say, and should reverse his ruling that Idaho violated the U.S. Constitution by forcing several landowners to sell their natural gas and oil to a Texas company.

The Idaho attorney general’s office in documents filed Monday says Chief U.S. District Court Judge B. Lynn Winmill “was clearly erroneous” in a ruling last month that could have significant ramifications for a state-approved process intended to prevent a minority of mineral rights owners from stopping natural gas and oil production.

Winmill ruled that a special hearing held by Idaho officials to settle a dispute between several landowners and Houston-based Alta Mesa Resources Inc. ran afoul of the Constitution’s protection of procedural due process. That’s intended to protect an individual’s rights from state authority, and Winmill ordered Idaho to vacate its decision.

Idaho officials wrote that Winmill’s ruling doesn’t meet a required legal threshold to determine that rights have been deprived. As a result, the state is asking Winmill to eliminate his order and rule that Idaho acted legally within the confines of the Constitution.

“The court cannot make the required finding that plaintiffs have been deprived of a constitutionally protected property interest,” Idaho officials wrote.

Idaho also asked that if Winmill doesn’t reverse his ruling, that he make it only applicable to two landowners involved in the lawsuit.

Citizens Allied for Integrity and Accountability, a watchdog group concerned with property rights and public health, sued last year with the landowners. It contends the state discriminated against landowners with an order following the special hearing that finalized a deal that favors Alta Mesa.

Among the group’s concerns are possible pollution and a decline in home values from nearby oil and gas wells that make royalties received by the landowners negligible.

James Piotrowski, an attorney representing Citizens Allied and landowners, said Monday’s filing represents Gov. C.L. “Butch” Otter and his “administration doubling down on their claim that people don’t have property rights to the minerals under their land.” Piotrowski said he would respond to the state’s filing before an October deadline.

Idaho has been working on its natural gas an oil laws in recent years as advancing technologies have helped Alta Mesa make Idaho a state that produces oil and gas. Winmill’s ruling didn’t negate any of those laws, but it appears to put a significant part of the process in question.

“We’ve now got a ruling that says the current system will not produce legal results,” Piotrowski said.

The Idaho Department of Lands is named as a defendant. Department spokeswoman Emily Callihan said Tuesday the agency does not comment on pending litigation. The Idaho attorney general’s office is representing the Lands Department. Spokesman Scott Graf said that office had no comment.

Specifically, the lawsuit involves a process called integration. Under Idaho law, when owners with at least 55 percent of the mineral rights in an area agree to lease, the remaining minority can be forced to take part.

Integration is a common practice in gas- and oil-producing states. It’s intended to prevent a minority of mineral rights owners in an area from stopping natural gas or oil production, which can generate jobs and revenue for the state. It’s also intended to ensure all mineral rights owners who deserve a share of oil and gas profits get it should one of the landowners decide to drill a well and pull out all the oil and gas.

The area being contested in the lawsuit has leases for more than 55 percent in the 640-acre parcel just across the Snake River from Oregon. But there are holdouts, so Alta Mesa asked state officials under state law to apply integration. That led the hearing that Winmill found violated the Constitution.

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