A surface use agreement is a common tool for reconciling the competing rights of the surface and mineral estate owners or lessees to use the surface of real property. Generally, where surface development or use occurs on a split estate, both the surface and mineral estate owners are entitled to use the surface and to reasonable accommodation of their respective interests. A mineral interest owner’s right to use the surface estate to access the mineral resources, and even to build temporary or permanent structures for mineral production, can have significant on-the-ground impacts on land use, health and safety, aesthetics, and property values. It also can be a source of environmental liability to the surface owner. States and increasingly local governmental entities regulate oil and gas activity in these areas, but generally the best and most certain protection for the respective estate holders is obtained through private agreements.

Retaining the flexibility to develop the surface estate and avoiding associated liabilities is an increasingly important issue for surface owners in the West—especially as development of the Niobrara play continues in northern Colorado, including the Denver vicinity, and parts of adjacent Wyoming, Nebraska, and Kansas. In locations where oil and gas development is likely, a comprehensive surface use agreement can be the best method to assure that the highest and best use of real property is available to the owner or developer of the surface estate and that the value of the surface estate is preserved.

Kaplan Kirsch and Rockwell represents surface owners and users to ensure compatible development of underlying minerals, whether severed from the surface estate or not. The firm helps its clients to fully utilize all available statutory, regulatory, and contractual mechanisms to minimize effects of mineral development on the available uses and value of the surface estate. Through negotiation of surface use agreements that define notice, location and operational requirements, firm attorneys have helped provide certainty for clients regarding the potential impacts of oil and gas operations or mineral development on their properties. Additionally, the firm counsels clients about how to manage the risks and liabilities associated with development of the subsurface estate, and has helped clients obtain favorable land use permitting conditions, stringent cleanup standards, and indemnification assurances. These protections have allowed property owners to preserve the integrity of surface uses such as residential and commercial uses, livestock grazing or hay production, energy production, and wildlife habitat and open space.

 

Preserving the value of a 20,000-acre master planned community with thriving retail centers, recreation facilities, community events, parks and trails, and up to 10,000 homes was an urgent concern for one of our clients, who sought to protect its growing community from intrusive development of underlying oil and gas resources. Kaplan Kirsch & Rockwell helped the master developer in drafting and negotiating a surface use agreement that respected the underlying estate’s right of reasonable access, but also assured through oversight and planning requirements that oil and gas development sites would be operated, maintained, and reclaimed to reduce adverse impacts on quality of life and property values for adjacent community residents. The firm assisted the client by identifying regulatory protections and opportunities to enhance those protections through supplemental contractual obligations. Firm attorneys also drafted and helped negotiate the form of related access easements to be granted by the master developer. After the agreements were signed, Kaplan Kirsch & Rockwell prepared a checklist the master developer can use to monitor whether subsequent subsurface development is in compliance with secured commitments.

The firm’s lawyers have helped a large ranch owner in Routt County, Colorado to develop a surface use agreement to cover oil and gas development of the underlying estate. To ensure that subsurface development was compatible with the preservation of open space and wildlife habitat, as well as a conservation easement on the property, firm attorneys drafted a detailed agreement specifying where drillings pads, utilities and access roads were to be located, requiring clustering of wells to minimize their footprint, and mandating directional and horizontal drilling to minimize surface disruption. These commitments helped reduce the impact of the oil and gas development, protecting the important wildlife and agricultural resources on the property.

KKR recently helped secure a compatible development agreement on behalf of a developer of a permitted wind farm that included a wind-powered electrical generating facility, related improvements and machinery, wind turbine generators, and electrical transmission and communication lines. Firm lawyers counseled the wind farm operator prior to development of either of the respective property interests to create a framework within which future development activities by both estates could peacefully coexist. KKR helped the client to negotiate local land use permitting conditions that protected both mineral and wind uses and draft the surface use agreement that included provisions to protect generating facilities directly, through operational limitations on oil and gas drilling activities, and through use of a buffer zone around the facilities in which certain seismic and other activities were prohibited.

 

  • Compatible development agreement for a wind farm and related facilities on a surface leasehold estate in eastern Colorado
  • Surface use agreement for a large ranch in northern Colorado
  • Protective agreements for rural recreational properties from the Northern Plains to the Western Slope
  • Surface use agreements, access easements, and compliance tools for a large master planned community and mixed use development near Denver, Colorado
  • Advice regarding risks posed and mitigation available under an existing surface use agreement affecting a large commercial mixed use development, near Denver, Colorado