Farmers and environmentalists aren’t the only ones unhappy with Kern County’s new oil and gas permitting system.
An independent oil producer active in local agricultural areas has sued to block the new rules, alleging they put petroleum companies at an illegal disadvantage in negotiations with “split-estate” farmers who don’t own the mineral rights under their land.
The little-noticed suit last Tuesday by Ken Hunter, who because of the conflict resigned last month as chairman of an influential oil trade group, illustrates the difficulty of balancing the interests of split-estate farmers and oil producers.
Kern’s oil industry has largely embraced the new system as a solution to permitting vulnerabilities at the state level. But for the relatively small number of petroleum producers who drill in agricultural areas, the new process has introduced the potential for long delays and substantial new costs if surface property owners refuse to sign off on oil drilling plans.
As Hunter’s suit in Kern County Superior Court points out, state law guarantees oil companies access to property above their mineral rights, providing they provide notice to the surface owner at least 30 days in advance. The new rules increase the wait to as long as four months and add the expense of hiring a county employee to monitor a drilling operation 24 hours a day if the surface owner won’t sign off on the drilling plans.
Hunter, head of Vaquero Energy Inc. and Hunter Edison Oil Development Limited Partnership, both of which operate locally, maintains the new rules’ incentives are unnecessary. His suit says negotiations between split-estate farmers and oil producers are often successful because both sides are able to agree on accommodations, such as where wells should be placed and how much money oil companies should pay farmers for removal of crops.
But now that split-estate farmers have what can be considered the upper hand, his lawsuit asserts, they may try to negotiate higher payments from mineral rights owners.
“It is unnecessary and unworkable, and improper under California law, to give a surface owner more power to delay and frustrate the reasonable use of the surface for mineral development,” the suit states.
There are now at least three lawsuits targeting the zoning ordinance amendment approved Nov. 9 by a unanimous vote of the county Board of Supervisors, which made a point of addressing split-estate conflicts between farmers and oil producers. County staff deemed the potential extra waiting time and costs to be a fair compromise prodding oil companies to reach agreement with farmers who said oil producers were taking advantage, damaging farmland without offering fair compensation.
A Wasco-area farming company sued the county when the rules took effect last week; it said concerns raised by farmers were ignored by the county. A coalition of environmentalist activist groups filed a separate suit saying the new rules don’t offer enough protection against oil-related pollution. Both filings take aim at a massive environmental review required as part of the zoning ordinance amendment.
By contrast, the suit Hunter filed last week in Kern County Superior Court takes issue with what he asserts is an unduly burdensome incentive process built into the county’s newly amended zoning ordinance.
In an email Monday, he said the incentives system amounts to a financial penalty created for “just pure politics to make concessions to certain farmers.”
Hunter’s suit contains a special irony: Until the day before the county’s final approval of the zoning ordinance amendment, he was chairman of the California Independent Petroleum Association, which together with two other oil trade groups has put up an estimated $13 million to support the county’s work on the new permitting system.
Now, because of a contractual indemnification agreement with the county, CIPA and the other two groups will have to pay to defend the zoning amendment against Hunter’s lawsuit.
Hunter said by email he resigned from CIPA’s governing board because he differed with the majority’s support for the ordinance amendment.
“In order to pursue my company’s best interests I would be in a position of conflict with most CIPA members who do not operate in … split mineral ag lands,” he wrote.
This article was written by John Cox from The Bakersfield Californian and was legally licensed through the NewsCred publisher network.