The Battle over Local Control Heats up Again as Thornton’s Oil and Gas Regulations Challenged in Court

Six weeks following the City of Thornton’s adoption of strict new regulations on oil and gas operations, the Colorado Oil and Gas Association (“COGA”) and the American Petroleum Institute (“API”) have filed suit, in what looks to be just the latest clash in Colorado’s struggle over who manages oil and gas in the state – the Colorado Oil and Gas Conservation Commission (“COGCC”) or cities and towns?

In August, after what COGA described as “an extremely limited stakeholder process,” Thornton’s City Council adopted Ordinance No. 3477 by a 7-2 vote. The ordinance provides for much stricter standards than the rules of the COGCC. Some of the differences are highlighted below:

   Thornton's Ordinance COGCC Rules
Setback from Buildings/Lots Well pad must be at least 750 feet from existing or planned buildings and existing or platted residential lots (Section 18-881.(a)(1), (2)) Well must be at least 500 feet from a Building Unit (Rule 604.a.(1))
Setback from Water Bodies Well pad must be at least 500 feet from the ordinary High Water Mark (HWM) or the edge of the bank of any irrigation or lateral ditch (Section 18-881.(a)(3)) Setbacks only required for Drilling, Completion, Production and Storage Operations within Public Water System Surface Water Supply Areas (Rule 317B)
Surface Disturbance Multiple wells proposed by Operator must be located on a multi-well pad
(Section 18-881.(b)(1))
Operators must consolidate wells on multi-well pads only in Designated Setback Locations and only where technologically feasible and economically practicable (Rule 604.c.(2)E.i.)
Liability Insurance Operator must maintain general liability insurance of $5 million per occurrence (Section 18-881.(y)) Operator must maintain general liability insurance of $1 million per occurrence (Rule 708)
Flowlines  Abandoned flowlines must be removed (Section 18-881.(c)(1))  Flowlines may be abandoned in place if disconnected, buried, and permanently sealed (Rule 1103)

 

The suit, filed on October 10, 2017 in the Adams County District Court, challenges the validity of the ordinance in light of the broad authority granted to COGCC, stating that the regulations “are in operational conflict with [state law] because they forbid what state law authorizes and materially impede the state’s interest in the uniform regulation of oil and gas operations.” Complaint, ¶ 40. The City’s response is due next week.

Over the last five years, Colorado has witnessed a marked uptick in attempts of local regulation of oil and gas operations as Front Range communities expand deeper into the prolific Denver-Julesburg Basin. In November 2012, voters in Longmont approved a measure to prohibit hydraulic fracturing within the city limits and in November 2013 Lafayette, Fort Collins, Broomfield, and the City of Boulder passed similar measures which either banned the practice or placed a moratorium on drilling. Lafayette’s ban was struck down the following year by the Boulder County District Court, and in 2015 the Colorado Supreme Court struck down the measures passed by Fort Collins and Longmont.

In 2016, the COGCC approved new rules aimed increasing the participation of local governments when large-scale oil and gas operations draw close to urban areas. These rules require operators to provide local governments with early notice and the opportunity to participate in the siting of large facilities (Rule 305A). They also require additional mitigation measures and best management practices from operators at large sites (Rule 604.c.(4)). Finally, the rules require operators to share information with municipalities about their future oil and gas development plans (Rule 302.c.).

Nonetheless, Front Range municipalities are still seeking increased authority in the field. In March of this year, Lafayette approved the so-called “Climate Bill of Rights and Protections,” and in November the city council is scheduled to vote on a year-long drilling moratorium. Fresh on the heels of the filing against Thornton, numerous Front Range communities have joined forces with Broomfield to ask the Governor and COGCC to recognize and address their need for greater control over operations within their jurisdictions. A ruling on Thornton’s ordinance may help shed light on the extent of local regulatory power over oil and gas operations.

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