Idaho vacates order forcing landowners into oil leases

  • Apr 25, 2019
  • Idaho Statesman

Idaho officials have vacated an order forcing landowners to sell their natural gas and oil to an energy company following a ruling from a federal judge who found the officials violated the U.S. Constitution.

The Idaho Oil and Gas Conservation Commission on Tuesday voted 5-0 to vacate the order after the federal judge in the August ruling directed the panel to do exactly that. “I would suggest that since the judge told us to vacate the order, we ought to vacate the order,” Commissioner Jim Classen told fellow commissioners shortly before the vote.

Citizens Allied for Integrity and Accountability sued in 2017, contending the state discriminated against landowners with an order finalizing a deal that favored Texas-based Alta Mesa.

The court ruling in August 2018 said the state’s lack of explanation for what is “just and reasonable” meant the state failed to satisfy due process requirements.

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.

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 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 to apply integration.

The state did that, forcing reluctant landowners to sell their oil and gas to Alta Mesa. Those landowners responded with a lawsuit in federal court.

“I don’t see why anybody being paid by the state of Idaho should be responsible for a group of people from Texas coming in here and reaping our natural resources and making money off of what we own as Idahoans,” Joey Ishida of Payette told the commission on Tuesday.

The commission also voted 5-0 on a remedy to the judge’s order. State officials plan to hold a public hearing that will consider how to define “just and reasonable.”

Mick Thomas, the oil and gas division administrator for the Idaho Department of Lands, said that hearing would likely be in late June or July.

Alta Mesa, the company named in the lawsuit, is based in Houston. However, an independent company has since been formed called High Mesa, which now has ownership of operations in Idaho.

Michael Christian is an attorney who has represented Alta Mesa and attended Tuesday’s meeting. He said after the meeting that a well has been drilled in the area contested in the lawsuit, but it’s not in operation because of the judge’s ruling.

Idaho officials have vacated an order forcing landowners to sell their natural gas and oil to an energy company following a ruling from a federal judge who found the officials violated the U.S. Constitution.

The Idaho Oil and Gas Conservation Commission on Tuesday voted 5-0 to vacate the order after the federal judge in the August ruling directed the panel to do exactly that. “I would suggest that since the judge told us to vacate the order, we ought to vacate the order,” Commissioner Jim Classen told fellow commissioners shortly before the vote.

Citizens Allied for Integrity and Accountability sued in 2017, contending the state discriminated against landowners with an order finalizing a deal that favored Texas-based Alta Mesa.

The court ruling in August 2018 said the state’s lack of explanation for what is “just and reasonable” meant the state failed to satisfy due process requirements.

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.

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 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 to apply integration.

The state did that, forcing reluctant landowners to sell their oil and gas to Alta Mesa. Those landowners responded with a lawsuit in federal court.

“I don’t see why anybody being paid by the state of Idaho should be responsible for a group of people from Texas coming in here and reaping our natural resources and making money off of what we own as Idahoans,” Joey Ishida of Payette told the commission on Tuesday.

The commission also voted 5-0 on a remedy to the judge’s order. State officials plan to hold a public hearing that will consider how to define “just and reasonable.”

Mick Thomas, the oil and gas division administrator for the Idaho Department of Lands, said that hearing would likely be in late June or July.

Alta Mesa, the company named in the lawsuit, is based in Houston. However, an independent company has since been formed called High Mesa, which now has ownership of operations in Idaho.

Michael Christian is an attorney who has represented Alta Mesa and attended Tuesday’s meeting. He said after the meeting that a well has been drilled in the area contested in the lawsuit, but it’s not in operation because of the judge’s ruling.