Name: A border war? Wyoming considers massive land, mineral rights purchase from oil company, which would spill over into Colorado
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A border war? Wyoming considers massive land, mineral rights purchase from oil company, which would spill over into Colorado

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By | | The Denver PostWyoming is weighing a massive land and mineral rights purchase that could give it a piece of Colorado — actually, a lot of little pieces — along with a big straw to dip into the state’s oil and gas reserves.And legal experts say there probably isn’t much Colorado can do to block that from happening. Welcome to a different kind of border war, one that isn’t about the annual football rivalry between Colorado State University and the University of Wyoming.Wyoming is seriously considering what one lawmaker there described as the largest governmental land purchase the country has seen since Russia sold Alaska to the U.S. in 1867, according to reports inThe purchase involves 1 million acres of land and 4 million acres of mineral rights now owned by Occidental Petroleum, which has had them on the market since October. Occidental has not said what the purchase price would be, but it’ would be in the hundreds of millions of dollars.“It is unusual that a state would buy mineral resources at all, and that they would buy these resources in another state,” said Mark Squillace, an expert on natural resource law at the University of Colorado Boulder.Occidental Petroleum, Colorado’s largest oil and gas producer, needs to raise cash and pay down the debt it took on , which wrapped up in August.The U.S. government awarded the land and associated mineral rights stretching across southern Wyoming to the Union Pacific Railroad in the early 1860s. Over time, those holdings ended up with Union Pacific Resources Group, then Anadarko Petroleum and then Occidental.Wyoming Gov. Mark Gordon wants the state to step up as a buyer, using state funds, a move he argues provide better control over how the land is developed, as well as a revenue source of the state, which has had the foresight to store up billions in reserves generated from its mineral holdings.The bulk of the assets for sale are in Wyoming. But a sliver of the land being sold, under 1,000 acres, and a bigger chunk of mineral rights, spill over into Colorado. Larimer County is home to about 140,000 of those mineral acres, followed by Weld County with 50,000 mineral acres, and Logan and Sedgwick at under 10,000 acres each.“As Wyoming moves forward and continues to pursue analyzing this opportunity, we would consider including the Colorado properties, which is almost all mineral acres and not surface,” said Michael Pearlman, Gov. Gordon’s spokesman.Wyoming will need to do its due diligence and get an outside appraisal for the value of the minerals in question before it decides whether to makes a purchase, Pearlman emphasized. It will need to settle on a price and terms and win political approval. A deal is far from done.“As this process has not yet been initiated, it’s premature to speculate what Wyoming would do with the Colorado assets. All options for the Colorado land and rights remain on the table,” he said.Although states regularly buy up water rights located in other states, owning mineral rights and parcels of land isn’t that common. What should Colorado do if Wyoming, or Utah or New Mexico want to own a piece of the state isn’t a question that comes up often.“If I were the state, I would want to be sure that Wyoming had agreed to comply with all state laws and regulations and to comply with all royalty and severance taxes,” said Squillace.Weld County Commissioner Barbara Kirkmeyer said it is unlikely that the state or county governments could block Wyoming from making a purchase. And Colorado law prohibits governments here from making purchases without an express public use.Thornton purchased farms in Weld County and Larimer County . That didn’t sit well in those counties, but Thornton could show a public need.Preserving Colorado pride probably wouldn’t qualify under state law as a public use. In the end, Kirkmeyer adds that mineral rights and the minerals themselves are private property rights.“We don’t get in the middle of people selling their private property rights,” she said. “But with regards to the payment of taxes, we would absolutely be getting involved.”Weld County would want to make sure Wyoming paid all of the property, severance and income taxes it owed, down to the last penny.“Our concerns are more financial,” she said.Larimer County attorney Jeannine S. Haag didn’t return calls to discuss the matter and Colorado Attorney General Phil Weiser was reluctant to offer a legal opinion until putting more research into the question.“It’s a complicated issue that would require more time for review and analysis,” said Lawrence Pacheco, a spokesman for the Attorney General’s office. “So we won’t be able to comment at this time.”Devin Watkins, an attorney with the Competitive Enterprise Institute in Washington, D.C., said any purchase by a state of land in another raises a host of legal questions.A key demand Colorado should make of Wyoming is that it surrenders sovereign immunity and agree to be treated as a private entity operating in the state. When Wyoming was on the other side of the question in a recent transaction where the Navajo tribe wanted to buy up coal leases in the state, Wyoming asked for that, Squillace said“They were going to block the sales unless the tribal corporation gave up its sovereign immunity, That could be a similar issue with Colorado and Wyoming,” he said.Fights over land and borders were more common when territories jostled to become states and define themselves. In the mid-1830s, Michigan and Ohio almost came to blows militarily over a disputed strip of land in what was known as the Toledo War. Congress had to step in to resolve the dispute.A is often cited when the issue of states owning land outside their borders comes up. The state of Georgia purchased land in Tennessee as part of the construction of a railroad line between Atlanta and Chattanooga.Georgia owned a railyard in Chattanooga that occupied prime real estate. Years after the railroad was built, Chattanooga officials decided they needed that land to improve the street grid and moved to seize that little piece of Georgia via eminent domain. Georgia cried foul, arguing that it had sovereign immunity.But the Supreme Court ruled that when Georgia purchased the land, it surrendered its rights as a state in regard to that parcel. It became subject to the laws of Tennessee, including the rights granted to Chattanooga to claim the land for a public purpose.That ruling makes it unlikely Wyoming could argue its oil and gas holdings should be regulated under its laxer environmental standard rather than under Colorado’s more stringent rules.“They can’t authorize things that would be illegal under Colorado law,” Watkins said.And because Wyoming will likely collect royalties on production, not actually handle getting the oil and gas out of the ground, a producer working on its behalf would fall under Colorado regulations anyway.Where it gets trickier is if a dispute lands in Colorado courts and Wyoming says it isn’t getting a fair shake. Say the state or one of the counties, uncomfortable with the idea of “foreign” ownership, make laws that specifically target Wyoming but not everyone else.“States are required to respect the sovereign immunity of other states in their own courts,” Watkins said.The nation’s founders, realizing that state courts wouldn’t always give outsiders an impartial hearing, created a remedy for that. When states sue each other, the cases can go straight up to the U.S. Supreme Court.The founders also addressed the issue of states trying to buy up land in other states in order to expand.“To expand Wyoming, they would need the consent of Colorado and Congress to do that,” Watkins said.There is absolutely no sign Wyoming has any intent to do that, but as the saying goes, you give them an inch, and they take a mile. And as far fetched as that might sound, in 2013, Colorado northeastern counties, fed up with state leaders, .Colorado probably couldn’t do much to stop Wyoming from owning bigger and bigger parcels of the state, Watkins said, provided the state isn’t doing so to stealthily expand its territory.And there is a scenario where Wyoming could get even more valuable assets in Colorado. Assume Occidental decides it needs to sell more holdings, this time large chunks of lands and mineral rights deep in Colorado’s highly productive Wattenberg Field.If private buyers are scare, could Wyoming, assume the first deal proved rewarding, step forward again?That is all hypothetical. But Wyoming owning land in Colorado does raise a whole host of legal questions that both sides would be well advised to hammer out and reach agreement on well in advance, Watkins said.We invite you to use our commenting platform to engage in insightful conversations about issues in our community. 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By | | The Denver PostWyoming is weighing a massive land and mineral rights purchase that could give it a piece of Colorado — actually, a lot of little pieces — along with a big straw to dip into the state’s oil and gas reserves.And legal experts say there probably isn’t much Colorado can do to block that from happening. Welcome to a different kind of border war, one that isn’t about the annual football rivalry between Colorado State University and the University of Wyoming.Wyoming is seriously considering what one lawmaker there described as the largest governmental land purchase the...

A border war? Wyoming considers massive land, mineral rights purchase from oil company, which would spill over into Colorado

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