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Supreme Court Takes on Coal-Seam Gas Case

Supreme Court Takes on Coal-Seam Gas Case

The U.S. Supreme Court announced Friday it will resolve a civil court case between a group of oil companies, headed by BP Amoco Production Co., and the Southern Ute Indian Tribe over rights and royalties to natural gas produced from coal in the San Juan Basin. The Supreme Court will hear arguments in April with a decision due by the end of June.

The decision gives the oil companies the opportunity to overturn a July decision handed down by the 10th Circuit U.S. Court of Appeals, which awarded ownership of the gas contained in 200,000 acres of Colorado land to the tribe. Andy Inglis of BP-Amoco said, "Unfortunately, the 10th Circuit Court's decision has created confusion and uncertainty, which we believe the Supreme Court recognizes and will help resolve. We are optimistic the Supreme Court will overturn the 10th Circuit Court's decision and restore these mineral rights to the historical owners."

The Southern Ute Tribe's original litigation was filed in 1991 when it argued that it not only owns the coal which is found on its reservation, as required by the Coal Land Acts of 1909 and 1910, but also the gas that this coal produces. The oil companies argue that all the minerals except coal belonged to original homesteaders and they acquired the minerals from the homesteaders legally.

A three-judge appellate court ruled in favor of the tribe in 1997, but the oil companies were granted an appeal to have the 10th Circuit review the case last year. The ruling, however, once again went against the oil companies.

Amoco defendants appealed to the Supreme Court, saying the case affects more than 16 million acres of potential coal-bearing land. Amoco warned the court of "industry disruption and profound uncertainty and hardship."

The U.S. Justice Department, however, disagreed, saying the claims were exaggerated. And the Department of the Interior, which had been a defendant with Amoco in the case, reversed its position, siding with the Southern Utes, following passage of legislation in the 105th Congress that grandfathered all existing coal-bed methane leases except those on Indian lands.

The Interior Department is expected to continue to work with Congress to evaluate whether any additional legislation is appropriate to address future questions about methane ownership.

John Norris

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