Colorado Legislature Considers Limitations On “Force Pooling”

Rep. Mike Foote (D-Lafayette) and Rep. Dave Young (D-Greeley) introduced House Bill HB17-1336, legislation which would prevent a lessee representing less than a majority of the mineral royalty owners from obtaining a force pooling order. The authors of the legislation argue the intent of the bill is to prevent a mineral rights owner or lessee from forcing adjacent mineral interest owners to lease their minerals and to provide better information to affected parties. In addition, the legislation would provide mineral owners with additional time to decide whether to lease, participate in proposed well(s), or decide not to participate in the drilling of proposed well(s). Proponents of the legislation also argue that under current law, an oil and gas operator has too much of an advantage when it can tell an unleased mineral owner that if he or she does not sign a lease, then they will be force pooled.

The bill was introduced late in the session where rules allow expedited consideration, with the probable strategy being to prevent extended deliberation. The bill appears to conflict with Colorado property and constitutional law. Given significant departures from existing law, a longer time is necessary to fully appreciate how current law would be changed. Here are some of the problems:

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COGCC: A Balancing Act or “Subject To” Protection of Health, Safety, and Environment – A Surprising Decision from the Colorado Court of Appeals

A recent decision from the Colorado Court of Appeals (“Court”) could mean a new focus for the Colorado Oil and Gas Conservation Commission (COGCC). On March 23, a three-judge panel issued a split decision in Martinez v. Colo. Oil & Gas Conservation Comm'n, 2017 COA 37, with two of the three Judges rejecting the COGCC’s assertion that its role under the Oil and Gas Conservation Act (Colo. Rev. Stat. §§ 34-60-101 to -130) (the “Act”), is to balance oil and gas development with other public interests such as public health, safety, and welfare.

At issue was a petition for rulemaking filed with the COGCC in 2013 by members of the Boulder-based Earth Guardians asking that the COGCC “not issue any permits for the drilling of a well for oil and gas unless the best available science demonstrates, and an independent, third party organization confirms, that drilling can occur in a manner that does not cumulatively, with other actions, impair Colorado’s atmosphere, water, wildlife, and land resources, does not adversely impact human health and does not contribute to climate change.” The COGCC solicited and reviewed a substantial amount of public input on the matter, and later denied the petition, finding, inter alia, that the proposed rule would require it to “readjust the balance crafted by the General Assembly under the Act,” thus making the proposed rule “beyond the Commission’s limited grant of statutory authority.” The petitioners appealed that decision to the Denver District Court, which affirmed the COGCC’s denial of the petition.

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Earthquakes: State Regulation of O&G Injection Wells Is OK Oklahoma Judge Dismisses Federal Lawsuit on Jurisdictional Grounds

On Tuesday, April 4, 2017, Judge Stephen P. Friot, United States District Court for the Western District of Oklahoma, dismissed a nationally significant lawsuit brought over earthquakes linked to oil and gas wastewater injection wells on jurisdictional grounds.  See Sierra Club v. Chesapeake Operating, LLC, et al., No. CIV-16-134-F (W.D. Okla., Order dated 4/4/2017) (unpublished), The court deferred to the expertise of the Oklahoma Corporation Commission (“OCC”), the state body governing wastewater injection wells in Oklahoma. Citing the actions and capability of the OCC, Friot concluded:

Every night, more than a million Oklahomans go to bed with reason to wonder whether they will be awakened by the muffled boom which precedes, by an instant, the shaking of the ground under their homes. Responding to earthquake activity is serious business, requiring serious regulatory action. The record in this case plainly demonstrates that the Oklahoma Corporation Commission has responded energetically to that challenge. Of equal importance, it is plain that the Oklahoma Corporate Commission has brought to bear a level of technical expertise that this court could not hope to match.  The challenge of determining what it will take to meaningfully reduce seismic activity in and near the producing areas of Oklahoma is not an exact science, but it is no longer one of the black arts.  This court is ill-equipped to outperform the Oklahoma Corporation Commission in advancing that science and putting the growing body of technical knowledge to work in the service of rational regulation.

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What's Up With Chevron and Does It Matter?

If you have paid any attention to the U.S. Senate confirmation process for Colorado’s Judge Neil Gorsuch to the U.S. Supreme Court, you’ve heard Chevron come up.  According to Senator Al Franken (D-Minnesota), “For anyone who cares about clean air or clean water or about the safety of our food and medicines, it’s incredibly important . . . [it] simply ensures that judges don’t discard an agency’s expertise without good reason.”  In a 2016 opinion, Judge Gorsuch called Chevron a behemoth and argued that it “permit[s] executive bureaucracies to swallow huge amounts of core judicial and legislative power and concentrate federal power in a way that seems more than a little difficult to square with the constitution of the framers’ design.”

Chevron refers to a U.S. Supreme Court decision decided 33 years ago, Chevron U.S.A., Inc. v. Natural Resources Defenses Council, Inc., 467 U.S. 837 (1984) that embodies the judicial doctrine of court “deference” to an agency’s interpretation of ambiguous federal statutes.1   In Chevron, the Supreme Court reasoned that an agency is the subject matter expert and should have the authority to make policy choices – within reason.

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Wyoming Wolves De-Listed Under the Endangered Species Act

On March 3, 2017, the D.C. Circuit reinstated the rule promulgated by the United States Fish and Wildlife Service (“FWS”) in 2012 to remove the Northern Rocky Mountain gray wolf in Wyoming from the endangered species list under the Endangered Species Act (“ESA”). Defenders of Wildlife v. Zinke, --F.3d.--, 2017 WL 836089 (D.C. Cir. Mar. 3, 2017).  The FWS has been trying to turn over the management of the wolves in Wyoming to the state since 2008, but has faced several reversals at the hands of the courts.  This decision reverses a 2014 ruling of the U.S. District Court, District of Columbia that vacated the FWS 2012 rule delisting the gray wolf.

Although the D.C. District Court agreed with the FWS finding that the species had recovered and did not overturn FWS’ determination that the gray wolf is not endangered or threatened within a significant portion of its range, it found fault with the state plan to guarantee the required baseline wolf population.  The District Court denied the delisting of the gray wolf because FWS did not require Wyoming to meet a specific numeric buffer above the baseline population but instead relied upon representations in a “non-binding” Addendum to its wolf management plan.  On appeal the D.C. Circuit disagreed, and held that nothing in the ESA demands that level of certainty.  The Court stated that:

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Employer Alert: Colorado Supreme Court Narrows Employer Liability in Negligence Cases

The Colorado Supreme Court recently issued a decision that significantly reduces an employer’s liability in cases where both the employer and the employee are sued for injuries caused by the employee while performing job duties.  

In Ferrer v. Okbamicael, 2017 CO 14, decided on February 27, 2017, a pedestrian sued a taxi cab company and the taxi cab driver who struck her while on the job, causing significant injuries.  The pedestrian asserted two types of claims against the taxi cab employer: one based upon the doctrine of respondeat superior, where an employer is indirectly liable for the acts of its employees, and additional direct claims for negligent hiring, entrustment, supervision and training.  The taxi cab employer admitted that the taxi cab driving was acting within the scope of his employment duties at the time of the accident, thereby conceding the respondeat superior claim, but argued that this concession meant that it could not also be held liable on the direct negligence claims.  The Colorado Supreme Court agreed, establishing new law that an employer can avoid direct claims of negligence in this context by conceding that the employee was acting within the scope of employment at the time of the injury.  

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Update to February 11, 2016 Blog Post/Weed and Water - Can Water Be Used for Marijuana Cultivation in Colorado

Last Year, WSMT blogged about whether water could be lawfully appropriated for Marijuana cultivation.  2/11/16 blog post.  We provided three arguments why that would be allowed.

Almost exactly a year later, the Division  water referee agreed In Re High Valley Farms, LLC, 14CW3095 with two of the reasons we set forth in our blog from last year - namely that appropriation of water is controlled by state law, and that the word "lawfully" in the state law definition of beneficial use of water means that the appropriation, not the use of the water, must be lawful.  A copy of the February 17, 2017 order is available here.

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Wyoming Legislature Rejects Attempts to Penalize Wind Energy Industry

In a state that has been described as having “world class wind,” a boast hard to ignore during a winter that featured days upon days of wind gusts reaching 80 mph at times, wind energy has struggled to find a secure toehold due to the vice-like grip traditional extractive mineral industries have on the energy sector in Wyoming.  That may be changing, however.

This year, bills were proposed in both the Wyoming House and Senate that sought to limit the ability of wind producers to market their product within the State.  Luckily (or not, depending on your point of view), each bill failed in committee before being introduced on the floor of either house.  House Bill 127 sought to increase the tax on wind energy from $1.00/megawatt hour to $5.00/megawatt hour.  This bill was defeated by a 7-2 vote by the House Revenue Committee on January 23, 2017.  In the Senate, Senate File 71 proposed that utility companies that use wind or solar power would incur a penalty of $10.00/kilowatt hour starting in 2019.  After widespread public opposition to this bill reached the desks of the Senate, it died in committee.  So, while Wyoming is the only state in the U.S. to tax wind1, and while wind producers still face a more difficult permitting process before the Industrial Siting Council than their traditional extractive mineral counterparts, the State legislature prevented two significant roadblocks to future development from being erected.

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After Years of Planning, the Forest Service Approves Arapahoe Basin’s Ski Area Expansion (WAHOOOO!)

After Years of Planning, the Forest Service Approves Arapahoe Basin’s Ski Area Expansion  (WAHOOOO!)

On March 3rd, the attorneys of Welborn Sullivan Meck & Tooley will embark on our annual ski trip to Arapahoe Basin in the White River National Forest.  We look forward to the trip as a highlight of each winter season and, if we’re being honest with ourselves, a highlight of the year when all the hustle of firm life is exchanged for the exhilaration of a ski day in the Colorado mountains.  It is not too often that we lawyers get outside for an entire day to rip runs and bask in the sun.  

This year we will miss our fearless leader on the slopes and winter’s biggest fan, Chelsey Russell.

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Nonconsenting Owner in a Colorado Oil and Gas Well Must First Pursue Claim for Payment of Proceeds of Production at COGCC – not District Court

A recent Colorado Court of Appeals decision involves two parts of the statutes regarding the Colorado Oil and Gas Conservation Commission (Commission):  the pooling statute and the statute regarding payment of proceeds of production.  In Grant Brothers Ranch, LLC v. Antero Resources Piceance Corporation, ___ P.3d __ (2016), 2016 COA 178, the court held that the nonconsenting owner was required to exhaust its administrative remedies by bringing its claim at the Commission, and that the nonconsenting owner’s claim brought in district court should have been dismissed without prejudice.

The Commission established two drilling and spacing units to produce oil and gas in Garfield County.  Antero Resources Piceance Corporation (Antero) offered to lease the mineral interest owned by Grant Brothers Ranch, LLC (Grant Brothers) in the units.  Grant Brothers did not lease its interest and also refused Antero’s offers for Grant Brothers to participate in the wells.  After Antero’s requests, the Commission entered orders pooling all nonconsenting interests in the units. 

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Proposed Public Land Sale Falls to Public Opposition

On February 1, 2017, Representative Jason Chaffetz (UT-R) announced that he would pull a bill proposing to sell more than 3 million acres of public land.  It was easy to lose track of this sea-change proposal amidst the flurry of activity at the advent of the Trump administration, but the bill’s goal - as well as its failure - is noteworthy despite the fact that it is unlikely to become law.

Focusing first on the proposal, Mr. Chaffetz, a Republican Representative from Utah and chair of the House Oversight Committee, memorialized the argument held by some, especially in the West, that the federal government owns too much land, to the detriment of states.  In his home state of Utah, the legislature is seeking the “return” of federal lands to the state.  See http://publiclands.utah.gov/current-projects/transfer-of-public-lands-act.  Debate over federal property ownership has existed since the country’s inception, but recently the debate came to a head with Cliven Bundy and other groups claiming ownership over federally leased land.  States like Utah also challenged the extent and alleged burden of federal lands within their borders, while conservatives like Mr. Chaffetz aimed to turn that public sentiment into law.  House Republicans recently changed their internal rules to generally facilitate selling public land, and Mr. Chaffetz offered H.R. 621, which would sell 3.3 million acres of Bureau of Land Management lands spread across ten western states, and H.R. 622, which would transfer federal agencies’ policing power to local law enforcement. See http://chaffetz.house.gov/news/documentsingle.aspx?DocumentID=788.

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What Happens After the Nomination? How a Nominee becomes a Supreme Court Justice

On January 31, 2017, President Trump nominated Judge Neil M. Gorsuch, a Coloradan and judge on the Tenth Circuit Court of Appeals (“Tenth Circuit”), to fill the open seat on the United States Supreme Court that has been empty since Justice Antonin Scalia died on February 13, 2016.i   Judge Gorsuch was nominated to the Tenth Circuit by President George W. Bush on May 10, 2006, and confirmed by the Senate on July 20, 2006.  Prior to serving on the Tenth Circuit, Judge Gorsuch earned degrees from Columbia University, Harvard Law School and Oxford University, and he also served as a law clerk for the only other Coloradan who has served on the Supreme Court, Associate Justice Byron R. White and the still-serving Associate Justice Anthony M. Kennedy.ii

While Judge Gorsuch’s legal and personal history are going to be widely discussed over the coming weeks and months, what else happens after the nomination?  How does a nominee become a United States Supreme Court Justice?iii

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Hoping to Fish or Boat on Utah Waters? The Utah Supreme Court May Soon Clarify Your Access Rights.

After nearly a decade of uncertainty, Utahns and visitors alike are looking forward to certainty on two key issues: (1) public access to and (2) navigability of the Beehive State’s premier rivers.  

It all started with Conatser v. Johnson, where the Utah Supreme Court held that the scope of the public’s easement in state waters “provides the public the right to float, hunt, fish, and participate in all lawful activities that utilize the water” and that the public has the right to “touch privately owned beds of state waters in ways incidental to all recreational rights provided for in the easement, so long as they do so reasonably and cause no unnecessary injury to the landowner.”  In response, Utah lawmakers passed H.B. 141: Recreational Use of Public Water on Private Property in 2010, tightening public access to the state’s rivers and streams.  The law prohibits recreational water users (including anglers, kayakers, tubers, hunters and others) from walking on the private bed of a public waterbody.  According to the law, individuals fishing or recreating in public water that flows over closed private property may not walk on the land beneath the water without obtaining landowner permission. 

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Colorado Supreme Court Limits How Transbasin Water May Be Used and Holds That Unjustified Non-Use of Water Rights Will Count Against Water Users When They Change Their Water Rights

The Colorado Supreme Court recently addressed two previously unsettled issues that will impact other water users in Grand Valley Water Users Ass’n v. Busk-Ivanhoe, Inc., 14SA303 (2016).  First, the Court held that imported transbasin water may not be stored in the basin of import prior to first use unless the decree expressly authorizes it.  The Court reasoned that “just as the right to store water is not an automatic incident of a direct flow right, the right to store water in the basin of import prior to use is not an automatic incident of trans mountain water rights.”  Id. ¶ 49 (citations omitted). Second, the Court held that undecreed uses of the decreed amount of water could count as zero use in historical beneficial use analyses rather than be omitted from the study period.  The Court reasoned that the use of water for an undecreed purpose could be treated as “unjustified non-use” and should not be ignored by excluding it from the study period.  Id. at ¶ 71.  

The Court was split on the first issue of storing transbasin water in the basin of import prior to first use.  The dissent argued that the specific decree at issue implicitly permitted such storage.  Id. ¶ 84. It also argued generally that once water is exported it is fully consumed with respect to the basin of export so no further injury can occur there, and no one in the basin of import has any right to the imported water and can therefore not be injured regardless of its use, so the importer can use the water however it sees fit without injuring anyone in either basin.  Id.  ¶ 85.  Thus, the dissent argued, no explicit decree language is needed for storage of imported water.  Id.  

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Hardrock Mining Will Require Hard Cash

Hardrock Mining Will Require Hard Cash

On January 11, 2017, EPA published a proposed new rule that would require hardrock mining facilities to post security or prove their financial responsibility under Section 108(b) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund).  Owners and operators of such facilities can already be held strictly liable under CERCLA for cleanup of hazardous substances.  Soon they may also be required to demonstrate their financial strength as a condition of operating.  The total financial obligations imposed by the new rule could exceed $7 billion.

The new rule will apply to over 200 mines and processing facilities that produce gold, silver, copper, lead, iron ore, molybdenum, uranium and other hardrock minerals in over 30 states.  Four types of operations will, however, be exempt:  (1) placer mining; (2) exploration; (3) “[m]ines with less than five disturbed acres that are not located within one mile of another area of mine disturbance that occurred in the prior ten-year period, and that do not employ hazardous substances in their processes”; and (4) “[p]rocessors with less than five disturbed acres of waste pile and surface impoundment.”

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Amended BLM Right Of Way Regulations

The Bureau of Land Management (BLM) published amended rules governing rights of way granted under Title V of the Federal Land Policy and Management Act (“FLPMA”) and under the Mineral Leasing Act (for oil or gas pipeline rights of way) on December 19, 2016, 81 Fed. Reg. 92,122 (https://www.gpo.gov/fdsys/pkg/FR-2016-12-19/pdf/2016-27551.pdf).  The rules take effect January 18, 2017, assuming they are not affected by Congressional efforts to undo “midnight rules” promulgated by the outgoing Administration.  The amended rules are most significant for their changes to the processes for obtaining authorizations to use federal lands for solar and wind energy development.  However, the amendments will also affect, to a lesser extent, oil and gas operators who seek FLPMA rights of way for roads or water pipelines, or Mineral Leasing Act rights of way for oil and gas pipelines.  Please see our earlier blog discussing the proposed rule amending the right of way regulations at http://www.wsmtlaw.com/blog/blm-buries-change-to-mla-rights-of-way-in-wind-and-solar-leasing-change.html.  

Until now, the BLM’s policy on processing right of way applications for renewable energy projects was contained in instruction memoranda.  Those policies, as modified in the final rule, are now contained in the regulations to be codified in 43 C.F.R. Part 2800.  

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Weighing the Scales: Master Leasing Plan Aims to Balance Oil, Natural Gas and Mining with Conservation of Arches and Canyonlands National Parks

Internationally known for rugged landscapes and stunning views, the treasured Arches and Canyonlands National Parks now have a plan, that is, a Master Leasing Plan.  

The Bureau of Land Management (“BLM”) introduced the concept of Master Leasing Plans (“MLPs”) as part of a suite of federal onshore oil and gas leasing reforms rolled out by Secretary Salazar in early 2010.  The MLP’s intended purpose is to harmonize competing resources, i.e., the balancing of oil and gas development with conservation of natural and cultural resources.  MLPs provide BLM with an additional land use planning tool, allowing it to amend a governing resource management plan (“RMP”) to include new terms and conditions imposed by the MLP.  The goal, but not necessarily the reality, is to reduce risk of litigation and community protests over oil and gas leasing by enlisting early stakeholder input about where energy development is appropriate and how to protect other resources.

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Wyoming Supreme Court Justices Disagree: An Unusual Circumstance

Wyoming’s Supreme Court Justices seem to agree most of the time.  In fact, in 2016 more than 95% of the Court’s orders and opinions were unanimous.  The most recent disagreement is in Cheyenne Newspapers, Inc. v. The Board of Trustees of Laramie County School District Number One, 2016 WY 113, 2016 WL 6995555 (Wyo. 2016).

This case features a dispute between Cheyenne Newspapers, Inc., doing business as the Tribune-Eagle (“Tribune-Eagle”), and Laramie County School District No. 1 (“School District”) regarding a public records request.  The Tribune-Eagle submitted a request February 11, 2014, to inspect all emails to, among and from school board members since December 1, 2013, regarding school board topics.  This required the School Board to search not only the School District’s computer system, but also the personal email accounts of the school board members, because school board members use their personal email accounts to conduct school board business.  After completing the search the School District informed the Tribune-Eagle that the requested records could be obtained upon the payment of a $110.  The fee was for the clerical staff time and professional personnel time required to process the request.  The Tribune-Eagle refused to pay the fee and filed a declaratory judgment action seeking a ruling that the Wyoming Public Records Act (the “Act”) does not allow a government entity to charge for access to electronic records when the records request is for inspection only and not copying of the records.  The District Court found the fees to be allowable under the Act and also to be reasonable.  The Wyoming Supreme Court affirmed in a 3-2 split decision.

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Employer Alert Update: Nationwide Injunction Delays Implementation of New Overtime Rule for White Collar Employees.

Yesterday, a federal judge in Texas issued a nationwide preliminary injunction barring implementation of the new overtime rule that raises the salary threshold for white collar employees from $23,660 to $47,476. Court Decision This ruling means that the new salary threshold for overtime exemptions of executives, administrators, professionals and highly compensated employees will not go into effect on December 1, 2016, as planned. (Additional information concerning the new rule can be found in this blog post: White Collar Exemption Blog.

The ruling was the result of lawsuits filed in the Texas court against the U.S. Department of Labor (DOL) by 21 states and a coalition of business groups to stop the new overtime rule from ever becoming effective. The Texas court granted the defendants’ request to enjoin implementation of the rule on the ground that the DOL exceeded its authority in raising the minimum salary requirements for the exemptions.

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With $646 Billion In Annual Spending, The Outdoor Recreation Industry Has Caught The Eye Of The Hill

With $646 Billion In Annual Spending, The Outdoor Recreation Industry Has Caught The Eye Of The Hill

Private groups estimate that the outdoor recreation industry generates $646 billion in consumer spending each year and supports 6.1 million jobs—more than pharmaceuticals and motor vehicles and parts combined (see chart below). Yet, policy makers have been left in the dark as to the sector’s influence on the national economy because the federal government has never measured the recreational industry’s economic impact. H.R. 4665 seeks to better inform both policy makers and the industry by requiring tracking of the growing economic impacts of outdoor recreation on the national GDP.

Last week, H.R. 4665, entitled Outdoor Recreation Jobs and Economic Impact Act (the “Outdoor REC Act”), moved closer to law after the U.S. House of Representatives approved the bill sponsored by Representative Donald Breyer (D-VA) and Representative Dave Reichert (R-WA), and authored by Representative Peter Welch (D-VT). A true bipartisan bill, the legislation passed the House by voice vote under fast-track consideration.

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