SHERIDAN - A proposed bill to give more bargaining power to those who own surface lands but not the underlying minerals is facing significant revision.

Even some proponents of House Bill 251 said some elements of the bill are unrealistic, such as a requirement that operators submit a development plan to the landowner prior to beginning any work.

Doug Cooper, a rancher near Casper, said the requirement won't work because oil and gas operators need results from initial wells in order to create a development plan.

"But surface use agreements do need to be in place before development begins," Cooper said.

Cooper testified before the Joint Judiciary Committee at Sheridan College on Thursday. The committee heard more than five hours of testimony and public comment on the bill, "Accomodation of Surface Owners."

Rep. Rosie Berger, R-Sheridan, is co-sponsoring the bill with Rep. Jack Landon, R-Sheridan, Sen. Curt Meier, R-LaGrange and Sen. Bruce Burns, R-Sheridan among others.

Berger said large-scale coalbed methane gas production is going to explode in Sheridan County and many of the ranchers and landowners there don't own the underlying minerals.

It's a dangerous situation considering that Wyoming law recognizes the mineral estate as dominant over the surface estate.

"Only when unreasonable damages can be proven does an oil and gas company have to pay the surface owner compensation," Berger said.

Berger said the intent of the legislation is to provide landowners throughout the state some assurances that they will be fairly compensated by the companies that have the right to develop the underlying mineral estate.

Currently, it is industry protocol to strike a surface use agreement with surface owners before development begins.

The Bureau of Land Management also requires that mineral developers have a surface use agreement in place before it will issue a permit to develop federal minerals.

In the Powder River Basin, where the coalbed methane gas industry has drilled about 15,000 of a possible 48,000 wells, about 40 percent of the area is under the split-estate scenario.

"It's always best if the relationship between the operator and the landowner is amicable, and it's best if there is a written agreement before work begins," said Sheridan attorney Tom Throne. "Unfortunately, greed and ego gets in the way and you get conflict."

Throne said many of his clients are the companies that develop coalbed methane gas. He said they sometimes complain that landowners make unreasonable demands.

Landowners are often shocked to discover that the mineral estate is dominate and therefore the mineral leassee has the right to access the surface - even without a surface use agreement - to develop the minerals.

Surface owners are entitled to compensation, but only for damages to crops.

Tom Toner, another Sheridan attorney, said the Legislature should consider expanding the state's compensatory view beyond damages to growing crops.

"Ranchers can't afford to go to judge and jury so they are at the mercy of the oil and gas developer," Toner said. "You're in a tough position if there are federal mineral under your property."

Toner said the state, towns and counties cannot impose zoning rules on mineral development, but the Legislature can create environmental laws that effectively control the development.

Officials from the Petroleum Association of Wyoming (PAW) said they oppose HB 251 as proposed, but noted that some of the organization's members would like some type of legislation to help them deal with unreasonable landowners.

"This legislation will surely put a chill on the development of split-estate lands if the bill is approved as it is," said PAW president Bruce Hinchey.

Hinchey questioned how "loss of value" would be determined in compensating landowners. He also objected to a portion of the bill that would allow the landowner to control surity bonds put up by the developer. Any bonding should be controlled by a third party, he said.

Another portion of the bill would award court costs and attorney fees to landowners should they prevail in a split-estate court case against producers. Hinchey said that rule should be a two-way street that allows oil and gas companies to collect court costs and attorney fees if they prevail.

PAW vice president Dru Bower informed the Judiciary Committee that the Wyoming Split-Estate Initiative has finally received a government grant, and the program will become active this summer.

With the initiative, mediation groups will be formed as well as a protocol for negotiating surface-use agreements.

Its intent is to foster cooperation among all the players and avoid split-estate conflicts.

However, the initiative is not a mandate. It also doesn't change any of the laws that govern split-estate issues.

The Wyoming Stock Growers Association (WSGA) is one of four participating organizations in the split-estate initiative.

WSGA executive director Jim Magagna said his group supports the idea of fostering more cooperation and giving parties the tools they need to negotiate successfully.

However, he disagreed with Bower's assessment that the majority of surface use agreements have been struck with no problems.

"In many of those agreements, there's usually one party who had to give up and take what they can get," Magagna said.