Sarah Sorum handles a variety of operational matters for oil and gas clients. Her practice includes the negotiation and drafting of conveyance, leasing, and surface use contracts as well as settlement agreements pertaining to a variety of contract and real property disputes. Sarah counsels industry clients on the leasing of state and federal proper...ty as well as applicable federal, state, county, and city land use regulation and compliance issues. Sarah is licensed to practice in both Colorado and North Dakota. More

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)

 

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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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More Oil and Gas Regulation Headed for Colorado Ballots?

Come November, Colorado voters may decide whether oil and gas development should be subjected to more stringent regulation. Three ballot initiatives proposed by Boulder-based Coloradans Resisting Extreme Energy Development have survived legal challenges and are now headed for signature collection. Supporters have until August 8 to collect the necessary signatures to get these measures on the November ballot. Opponents, like Protecting Colorado’s Environment, Economy, and Energy Independence (PCEEEI), argue that passage of any of these measures could cripple Colorado’s oil and gas industry.

Proposed Initiative 63 (Right to Healthy Environment) creates a fundamental “right to a healthy environment” under the Colorado Constitution. It also specifies that local regulations that are more protective of a “healthy environment” will not be preempted by state law. Finally, the proposal creates a private right of action allowing any “aggrieved” party to sue for injunctive or declaratory relief, as well as punitive damages in some instances.

See text of the proposal here:
http://www.sos.state.co.us/pubs/elections/Initiatives/titleBoard/filings/2015-2016/63Final.pdf

Proposed Initiative 75 (Local Government Control of Oil and Gas Development) declares that “[o]il and gas development, including the use of hydraulic fracturing, has detrimental impacts on public health, safety, general welfare, and the environment.” It transfers the regulatory authority over oil and gas operations from the state to local governments, and specifically recognizes local authority to ban oil and gas development entirely.

See text of the proposal here:
http://www.sos.state.co.us/pubs/elections/Initiatives/titleBoard/filings/2015-2016/75Final.pdf

Proposed Initiative 78 (Mandatory Setback from Oil and Gas Development) increases minimum setbacks for new facilities (or for re-entry to a previously plugged and abandoned well) to 2,500 feet from schools, homes, hospitals, and “areas of special concern.” Current regulations require 500 foot setbacks from homes and 1,000 foot setbacks from “high occupancy buildings,” such as schools and hospitals. The proposal also authorizes local governments to require even greater setbacks.

PCEEEI estimates that this measure could eliminate “at least 87 percent of all new production in Weld County alone.” Governor Hickenlooper also weighed in on the matter, stating that the increased setbacks “would in many cases, invalidate people’s opportunity to extract natural resources that they own.”

See text of the proposal here:
http://www.sos.state.co.us/pubs/elections/Initiatives/titleBoard/filings/2015-2016/78Final.pdf

For more on the citizen initiative process, see:
http://www.wsmtlaw.com/cms-assets/documents/191009-726917.gpsolo-article-novdec-2014.pdf

Does any of this sound familiar? In 2014, two oil and gas related initiatives – one requiring 2,000 foot setbacks and one authorizing increased local regulation of oil and gas development –garnered the requisite signatures and headed for the ballots. At the eleventh hour Governor Hickenlooper and Democratic Rep. Polis announced a compromise which kept these (and two industry-backed initiatives) off the ballots in exchange for the creation of a task force charged with addressing citizens’ concerns about hydraulic fracturing. If Initiatives 63, 75, and 78 move forward, we may be headed for a repeat of this drama in the fall.

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