A couple who own mineral rights within Boulder is suing the city over its oil and gas moratorium.
John and Valorie Wells, who own the rights to minerals under city-owned land near Boulder Reservoir, are plaintiffs in the suit that alleges that Boulder’s ban on oil and gas development violates the Fifth Amendment’s rule against taking private property without compensation, according to a news release from the Public Trust Institute emailed late Tuesday. The couple is represented by Dan Burrows, who also serves as the institute’s legal director, and Evan Stephenson of Spencer Fane LLP in Denver.
The suit names the city and interim City Manager Chris Meschuk as defendants.
Boulder spokesperson Sarah Huntley confirmed that the lawsuit was served to the city late Tuesday but said the city could not provide additional comment on the pending litigation.
“We will be reviewing it and will respond with the city’s position through the legal process,” Huntley wrote in an email.
The city adopted an ordinance in June 2013 that prohibits the city manager and city staff from accepting or processing any application for oil and gas exploration permits on open space properties as well as any application for use review involving oil and gas extraction or exploration, according to the city’s website. Council has continued to extend that moratorium, with the latest extension happening in December.
“This ban has deprived mineral owners of their property without just compensation, which violates the United States constitution. Boulder has effected a ‘taking’ of mineral rights within its city limits and underneath city-owned land, and owes mineral right owners compensation for this taking,” the lawsuit argues.
The Wellses do not live in Boulder County. They are Coloradans, though Burrows would not specify where they live and it’s not immediately clear via a public records search.
According to the lawsuit, John Wells purchased the mineral rights in 1981, in partnership with geologist Robert Roehrs as part of a business and investment venture. In August 1990, Wells and Roehrs leased the rights through a two-year oil and gas lease with WestOil for $1600 plus a 16% royalty on any minerals extracted.
However, WestOil did not develop the property and no minerals were extracted through the lease.
“Nonetheless, the subject property has significant oil and gas production potential,” the lawsuit states.
While the mineral rights are separate from the surface rights, the rights allow use of the surface as is necessary to access, mine or drill for the minerals, according to the complaint.
“The Wellses are in their 80s. The likelihood that they are going to actually capitalize on this investment at this point when the city has delayed and delayed and delayed … has basically come to zero,” Burrows said.
“It’s not like they are Chevron,” he added. “They’re just a husband and wife who have this in their family trust.”
Mark Squillace, a University of Colorado Boulder law professor who specializes in natural resources, said he’s skeptical about the suit.
“It’s probably not a frivolous lawsuit, but I think it’s unlikely for the plaintiffs to prevail,” he said. “It seems a bit like the plaintiffs are trying to get money for something that really has no particular value to them.”
Burrows disagreed with that idea. Public Trust Institute is a donor-backed nonprofit organization that, according to its website, aims to “uphold our state’s constitution and defend the principles of individual freedom and personal responsibility.” PTI is responsible for bringing a successful ethics complaint against former governor and now U.S. Sen. John Hickenlooper.
“We take these suits because of the generosity of our donors. We are not interested in wasting their money on lost causes,” Burrows said.
Still, Squillace said the moratorium could affect a person’s property rights but that doesn’t necessarily mean they’d be successful in claiming a Fifth Amendment taking. Location, for example, can lead to property development being considered unreasonable under state law.
If the land was considered open space or was part of the area surrounding the Boulder Reservoir when the rights were purchased, Squillace said it’s possible the property owner bought the mineral rights with an idea that there could be restrictions.
“You really have to look at the context,” he said. “There is plenty of case law that says cities could prohibit it.”
Burrows wasn’t certain if the land was officially designated as open space when his client purchased the mineral rights under it, but it certainly wasn’t developed. Boulder began construction on the reservoir in 1954, and Wells and Roehrs bought the mineral rights nearly three decades later.
