Court to weigh whether CDOT gains mineral rights during condemnations
Colorado’s Supreme Court has agreed to consider whether the Colorado Department of Transportation is authorized to acquire mineral rights beneath condemned lands.
The case involves oil and gas beneath about 70 acres the state acquired from Agnes Hunt for construction of Interstate 70 east of Rifle.
The Colorado Court of Appeals in April ruled in favor of Gypsum Ranch Co. LLC, which later bought the Hunt estate and claims that in doing so it became owner of the mineral rights below the condemned right of way.
What was then the Department of Highways condemned the right of way in 1975, but it took more than a decade for the agency to reach a settlement over fair payment. The state paid $110,000.
Taking place at a time before there was much natural gas development in the area, the condemnation proceedings instead included a substantial dispute over the value of gravel deposits, based on Hunt’s contention they must be considered part of the condemnation.
In January 2008, Ninth Judicial District Judge James Boyd concluded that gravel deposits are part of a mineral estate, and he found that the transportation department had acquired the oil and gas minerals, too.
The appeals court disagreed, saying that “as a general rule, where the surface of the land contains sand and gravel, a mineral reservation does not include the sand and gravel.” It also found that Colorado’s eminent domain statute “limits CDOT’s ability to acquire any interest in mineral deposits other than those required for subsurface support” of a highway.
It says the law specifies that condemnation otherwise should not include “any vein, ledge, lode, deposit” associated with the property. In 2008, the Legislature amended the law to make clear that the preclusion includes oil and gas. The appeals court says the clarification reaffirms what the Legislature intended under the law in place in 1975.
The appeals court had sent the case back for further district court proceedings consistent with its findings.
The Supreme Court has agreed to consider only the question of the Colorado Department of Transportation’s ability to take over mineral rights in condemnations. It has declined to consider the department’s appeal of other issues in the case.
The Colorado Department of Transportation has contended the agency commonly obtained both surface and mineral estates in the 1970s and 1980s in condemnation proceedings, except where prior owners expressly reserved the mineral estates.