REGULATORY LIMITATIONS ON LESSEE'S RIGHT TO DEVELOP

• Jurisdiction: United States

Surface Use for Mineral Development in the New West
(Feb 2008)
CHAPTER 11C
REGULATORY LIMITATIONS ON LESSEE'S RIGHT TO DEVELOP
Michael J. Wozniak
Beatty & Wozniak, P.C.
Denver, Colorado

Increasing Regulatory Limitations on Lessee's Right to Develop

Trends/Causes

• Increase consumer demands for commodities

• Increasing commodity prices = record permit & APD issuance (But misleading due to use of common pads)

• Urbanization of the West

— 39.98 million population increase in West by 2040

— 65% increase in population

— Significant increase in low density suburban (1 unit per .5 to 10 acres) and in exurban (1 unit per 10 to 40 acres)

— Significant decrease in amount of rural acreage (< 1 unit per 40 acres)

• Surface Developers of Residential and Planned Industrial Development - Political Power

[Page 11C-2]

Regulatory Limitations on Lessee's Right to Develop

• Western Environmental Ethic

— Open space, national forests, national parks, nimby

• Western Recreation Ethic

• County Regulations, City Ordinances, Zone District(s), Covenant Controlled Communities-Land Use Authority Expanding

— Grass roots pressure

• Farmer/Rancher Way of Life

• Ever Heightened Conflicts Between Diverse Groups For Use of Surface Lands

Ventura County v. Gulf Oil Corporation

601 F.2d 1080 (9^th Cir. 1979), 445 U.S. 947 (USSC 1980)

• Gulf Oil was a federal oil and gas lessee. County sought to compel Gulf to obtain a permit to conduct exploration and drilling activity under its zoning ordinances

• 9^th Circuit rejected the County claims and held, relying on the Property Clause, "...the Federal Government has authorized a specific use of federal lands and Ventura cannot prohibit that use, either temporarily or permanently, in an attempt to substitute its judgment for that of Congress."

[Page 11C-3]

"Despite this extensive federal scheme reflecting concern for the local environment as well as development of the nation's resources, Ventura demands a right of final approval. Ventura seeks to prohibit further activity by Gulf until it secures an Open Space Use Permit which may be issued on whatever conditions Ventura determines appropriate, or which may never be issued at all. The federal Government has authorized a specific use of federal lands, and Ventura cannot prohibit that use, either temporarily or permanently, in an attempt to substitute its judgment for that of Congress."

"The present conflict is no less direct than that in Kleppe v. New Mexico, supra. Like Kleppe, our case involves a power struggle between local and federal governments concerning appropriate use of the public lands. That the New Mexico authorities wished to engage in activity that Congress prohibited, while the Ventura authorities wish to regulate conduct which Congress has authorized is a distinction without a legal difference."

[Page 11C-4]

Non-Environmental...