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Court of Appeals, State of Colorado2 East 14th Ave., Denver, CO
80203
COURT USE ONLY
District Court Boulder County, ColoradoCase Number: 2013CV63The
Honorable D. Mallard
Appellant: City of Longmont, Colorado
Intervenors: Our Health, Our Future, Our Longmont; Sierra Club;
Food and Water Watch; and Earthworks
v.
Appellees: Colorado Oil & Gas Association and Colorado Oil
and Gas Conservation Commission
Appellee-Intervenor: TOP Operating Company
Attorneys for Appellee Colorado Oil & Gas Association: Case
No.: 2014CA1759
Name(s): Mark Mathews, #23749Wayne F. Forman, #14082Michael D.
Hoke, #41034
Address: Brownstein Hyatt Farber Schreck, LLP410 Seventeenth
Street, Suite 2200Denver, CO 80202-4432
Phone:FAX: E-mail:
[email protected]@[email protected]
Name(s): Karen L. Spaulding, #16547BEATTY & WOZNIAK, P.C.216
Sixteenth Street, Suite 1100Denver, CO 80202-5115
Phone:Fax:Email:
[email protected]
COMBINED ANSWER BRIEF
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CERTIFICATE OF COMPLIANCE
I hereby certify that this brief complies with all requirements
of C.A.R. 28
and C.A.R. 32, including all formatting requirements set forth
in these rules.
Specifically, the undersigned certifies that:
The brief complies with C.A.R. 28(g).
Choose one:It contains 9381 words (excluding the caption, table
of contents, table of authorities, this certificate of compliance,
certificate of service, signature block and any addendum).It does
not exceed 30 pages.
The brief complies with C.A.R. 28(k).
For the party raising the issue:
It contains under a separate heading (1) a concise statement of
the applicable standard of appellate review with citation to
authority; and (2) a citation to the precise location in the record
(R. , p. ), not to an entire document, where the issue was raised
and ruled on.
For the party responding to the issue:
It contains, under a separate heading, a statement of whether
Appellee Colorado Oil & Gas Association agrees with the
statements of Appellants concerning the applicable standard of
review and preservation for appeal, and if not, why not.
I acknowledge that my brief may be stricken if it fails to
comply with any of the requirements of C.A.R. 28 and C.A.R. 32.
/s/ Mark J. Mathews
Mark J. Mathews
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TABLE OF CONTENTS
Page
iii
STATEMENT OF THE ISSUES PRESENTED FOR REVIEW
............................1
STATEMENT OF THE
CASE.................................................................................1
A. Nature of the
Case......................................................................1
B. Course of Proceedings and Disposition of the Court Below
.........................................................................................2
C. Statement of the Undisputed Facts
............................................4
1. Longmont voters approve Ballot Question 300
..............4
2. Hydraulic fracturing of oil and gas wells in Colorado
..........................................................................4
SUMMARY OF
ARGUMENT................................................................................5
STANDARD OF REVIEW/STATEMENT UNDER C.A.R. 28(k)
........................6
A. Summary judgment is appropriate when material facts are not
in
dispute........................................................................7
B. COGA need not prove its case beyond a reasonable
doubt.........................................................................................7
ARGUMENT..........................................................................................................10
I. The City may not prohibit hydraulic fracturing or the storage
and disposal of hydraulic fracturing waste
........................................10
A. A home-rule citys ban of activities that the state allows is
preempted, except in matters of purely local concern
.........10
B. The state has a significant interest in the regulation of oil
and gas and hydraulic
fracturing..............................................11
1. Colorado courts have repeatedly recognized the states
interest
................................................................11
2. The states comprehensive regulatory scheme demonstrates a
significant interest ................................16
C. Judge Mallard appropriately determined that the regulation of
hydraulic fracturing is not a matter of purely local
concern.................................................................20
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Table of Contents(continued)
Page
iv
II. The Citys ban prohibits conduct that the state allows and is
therefore preempted
...........................................................................23
A. The district court applied the proper test for operational
conflict
.....................................................................................23
B. Defendants misconstrue the application of the operational
conflict
test...............................................................................27
III. Judge Mallard correctly determined that the regulation was
a matter of mixed state and local interests as a matter of law
..............31
A. The Court did not need a fully developed evidentiary record
to make its
decision.....................................................31
B. Judge Mallard did not improperly resolve disputed issues of
material fact
.........................................................................35
1. Alleged disputed issues regarding health and safety
allegations......................................................................35
2. Alleged disputed issues regarding the use of hydraulic
fracturing in Longmont .................................36
3. Alleged disputed issues pertaining to waste and correlative
rights
............................................................38
IV. The Citys ban is impliedly preempted by the states
sufficiently dominant interests
.......................................................41
CONCLUSION.......................................................................................................44
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TABLE OF AUTHORITIES
Page(s)
Cases
Baum v. City of Denver,363 P.2d 688 (Colo.
1961)....................................................................................8
In re Bd. of Cnty. Commrs,891 P.2d 952 (Colo.
1995)..................................................................................44
Bd. of Cnty. Commrs of LaPlata Cnty. v. Bowen/Edwards
Assocs.,830 P.2d 1045 (Colo.
1992).........................................................................passim
Bd. of Cnty. Commrs v. BDS Intl, LLC,159 P.3d 773 (Colo. App.
2006)...................................................................29,
32
Board of County Commissioners v. Vandemoer,205 P.3d 423 (Colo.
App. 2008)
..................................................................passim
Cherokee Water & Sanitation Dist. v. El Paso Cnty.,770 P.2d
1339 (Colo. App.
1988).........................................................................8
City & Cnty of Denver v. State,788 P.2d 764 (Colo.
1990)..................................................................................25
City of Commerce City v. State,40 P.3d 1273 (Colo.
2002)............................................................................10,
24
City of Northglenn v. Ibarra,62 P.3d 151 (Colo.
2003)..............................................................................23,
24
Colo. Min. Assn v. Bd. of Cnty. Commrs of Summit Cnty.,199 P.3d
718 (Colo.
2009)...........................................................................passim
Combined Commcns Corp. v. City & Cnty. of Denver,542 P.2d 79
(Colo.
1975)....................................................................................30
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Davis v. Cramer,808 P.2d 358 (Colo.
1991)..................................................................................40
Independent Inst. v. Coffman,209 P.3d 1130 (Colo. App.
2008).........................................................................8
JJR v. Mt. Crested Butte,160 P.3d 365 (Colo. App.
2007)...........................................................................8
Jones v. Dressel,623 P.2d 370 (Colo.
1981)....................................................................................7
KN Energy, Inc. v. Great W. Sugar Co.,698 P.2d 769 (Colo.
1985)....................................................................................7
Natl Adver. Co. v. Dept of Highways,751 P.2d 632 (Colo.
1988)..................................................................................25
People v. Emmert,597 P.2d 1025 (Colo.
1979)................................................................................44
People v. Vasquez,84 P.3d 1019 (Colo.
2004)....................................................................................8
Rancho Lobo, Ltd. v. Devargas,303 F.3d 1195 (10th Cir. 2002)
....................................................................26,
27
Ryals v. City of Englewood,962 F. Supp. 2d 1236 (D. Colo. 2013)
...............................................................24
Sanger v. Dennis,148 P.3d 404 (Colo. App.
2006)...........................................................................8
Stell v. Boulder Cnty. Dept of Social Servs.,92 P.3d 910 (Colo.
2004)....................................................................................20
Town of Frederick v. North American Resources Co.,60 P.3d 758
(Colo. App.
2002)...............................................................15,
29, 32
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Town of Telluride v. Lot Thirty-Four Venture, LLC,3 P.3d 30
(Colo.
2000)........................................................................................24
Trinen v. City & Cnty. of Denver,53 P.3d 754 (Colo. App.
2002).............................................................................8
Voss v. Lundvall Bros.,830 P.2d 1061 (Colo.
1992),........................................................................passim
W. Elk Ranch, L.L.C. v. United States,65 P.3d 479 (Colo.
2002)......................................................................................7
Webb v. City of Black Hawk,2013 CO
9....................................................................................................passim
Statutes
C.R.S. 34-60-101 et seq.
................................................................................passim
Other Authorities
Dictionary for the Oil and Gas Industry 244 (Univ. of Texas
Ext., 1st ed. 2005)
.............................................................................................................17
Pa. Const. art. 1, sec.
27...........................................................................................44
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STATEMENT OF THE ISSUES PRESENTED FOR REVIEW
Whether the district court correctly granted summary judgment in
favor of
Plaintiffs.
STATEMENT OF THE CASE
A. Nature of the Case
The Colorado Oil and Gas Conservation Commission (COGCC or
Commission) permits and regulates hydraulic fracturing to
complete oil or gas
wells and the associated storage and disposal of wastes created
by the hydraulic-
fracturing-completion process. Nonetheless, a majority of the
citizens of the City
of Longmont (City or Longmont) voted to adopt Resolution 2012-67
to add
Article XVI to the City Charter (the Charter Amendment or
Article XVI),
which bans within the City the hydraulic fracturing of any oil
or gas well and the
storage and disposal of waste products created in connection
with the hydraulic
fracturing process.
After discovery and full briefing by the parties, the district
court held that
the Charter Amendment is invalid and preempted by the Colorado
Oil and Gas
Conservation Act (Act), C.R.S. 34-60-101 et seq., as a matter of
law. R.CF,
p.2054.
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B. Course of Proceedings and Disposition of the Court Below.
COGA filed its Complaint against Longmont on December 17, 2012,
and its
Amended Complaint on January 28, 2013. R.CF, pp.2206,2294. The
COGCC,
TOP Operating Company (TOP), and Citizen Intervenors Our Health,
Our
Future, Our Longmont, Sierra Club, Food and Water Watch, and
Earthworks
(collectively Defendant Intervenors) joined the litigation as
parties.
COGA, TOP, and the COGCC filed motions for summary judgment
requesting the district court invalidate the Charter Amendment
as preempted by
state law. R.CF, pp.450,547,631,655,729.
The Court granted motions by Defendants to continue the response
date to
the motions for summary judgment to allow for discovery. R.CF,
p.964.
Defendants propounded discovery and took depositions of the four
lay and expert
witnesses who had provided affidavits attached to several of
Plaintiffs motions for
summary judgment.
Longmont filed a consolidated response to Plaintiffs summary
judgment
motions. R.CF, p.1287. Defendant Intervenors likewise filed a
combined response
brief. R.CF, p.993. The court also heard oral argument. R.Tr.
(7/9/2014), p.1.
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The district court issued its Order Granting [Plaintiffs]
Motions for
Summary Judgment on July 24, 2014. R.CF, p.2038. The Honorable
D.D. Mallard
held the Charter Amendment invalid as preempted by state law,
and granted
summary judgment in Plaintiffs favor on their claims for
declaratory judgment.
The court also enjoined the City from enforcing Article XVI, but
stayed the
injunction pending appeal. R.CF, p.2054.
In her ruling, Judge Mallard utilized the Voss Courts
four-factor test to
determine that hydraulic fracturing is not a matter of purely
local concern. R.CF,
p.204850. Judge Mallard then found there was an operational
conflict between the
Act and the Charter Amendment because the Commission permits
hydraulic
fracturing and the storage and disposal of fluids, while the
Charter Amendment
forbids them entirely. R.CF, p.205154. Judge Mallard further
ruled the Charter
Amendment was preempted by the Bowen/Edwards operational
conflict test
because a ban on hydraulic fracturing could not be harmonized
with the Act. R.CF,
p.2053.
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C. Statement of the Undisputed Facts.
1. Longmont voters approve Ballot Question 300.
The City is a home-rule city which includes portions of Boulder
and Weld
Counties. R.CF, p.635. A majority of the Citys voters approved
Ballot Question
300, which amended the Citys home-rule charter to create a new
Article XVI.
R.CF, p.2298. As a result, the Citys home-rule charter now
states:
It shall hereby be the policy of the City of Longmont that it is
prohibited to use hydraulic fracturing to extract oil, gas or other
hydrocarbons within the City of Longmont. In addition, within the
City of Longmont, it is prohibited to store in open pits or dispose
of solid or liquid wastes created in connection with the hydraulic
fracturing process, including but not limited to flowback or
produced wastewater and brine.
R.CF, p.636.
2. Hydraulic fracturing of oil and gas wells in Colorado.
Hydraulic fracturing is a well-completion technique. R.CF,
p.623. Fluid is
pumped under high pressure into a cased wellbore creating small
fissures in the
target rock formation and allowing trapped hydrocarbons to be
produced. R.CF,
p.623. The fluids used in hydraulic fracturing consist primarily
of water, with sand
or silica added as a proppant to keep the fissures from
re-sealing, and a small
percentage of chemical additives. R.CF, p.623.
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Hydraulic fracturing has been used to complete wells in Colorado
for many
decades, and tens of thousands of wells have been hydraulically
fractured in
Colorado. R.CF, p.623. The Commission has found that most
hydrocarbon-bearing
formations in Colorado would not produce economic quantities of
oil or gas
without hydraulic fracturing. R.CF, p.623 (Most of the
hydrocarbon bearing
formations in Colorado would not produce economic quantities of
hydrocarbons
without hydraulic fracturing), R.CF, p.613 (Hydraulic fracturing
. . . is now
standard for virtually all oil and gas wells in our state.
Hydraulic fracturing has
made it possible to get this oil and gas out of rocks that were
not previously
considered as likely sources for fossil fuels.).
SUMMARY OF ARGUMENT
Cities in Colorado do not have the authority to ban hydraulic
fracturing
because the state has a significant, and even dominant, interest
in the efficient
production of oil and gas, and in furtherance of that interest
the state has chosen to
allow and regulate the practice.
As Judge Mallard determined, the states interest has been
confirmed as a
matter of law by the Colorado Supreme Court in Voss v. Lundvall
Bros., 830 P.2d
1061 (Colo. 1992), in which the court held [t]here is no
question that [the Act]
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evidences a significant interest on the part of the state in the
efficient and fair
development, production, and utilization of oil and gas
resources in a manner
calculated to prevent waste and to protect the correlative
rights of common-source
owners and producers to a fair share of the production profits.
Voss, 830 P.2d at
106566 (quoting Bd. of Cnty. Commrs v. Bowen/Edwards Assocs.,
830 P.2d
1045, 1058 (Colo. 1992)). This significant state interest, the
Voss court held, was
sufficiently dominant to preempt the Town of Greeleys ban on the
drilling of oil
and gas wells within its limits. Id. at 1068.
Voss mandates a similar result here. The City did not directly
ban oil and gas
drilling, as Greeley had done in Voss, but it did ban the use of
hydraulic fracturing.
The relevant question here is whether the state has the
authority and has chosen to
regulate hydraulic fracturing activity. If the Court finds that
it does, then the
Charter Amendment is preempted.
STANDARD OF REVIEW/STATEMENT UNDER C.A.R. 28(k)
COGA agrees that the issues raised in Defendants appeal are
subject to de
novo review, and that Defendants raised the issues in their
summary judgment
briefs below. COGA disagrees that Plaintiffs must prove the
Charter Amendment
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invalid beyond a reasonable doubt or that the Charter Amendment
is presumed
valid.
A. Summary judgment is appropriate when material facts are not
in dispute.
Summary judgment is appropriate when there is no dispute of
facts material
to the rendering of judgment. See, e.g., W. Elk Ranch, L.L.C. v.
United States, 65
P.3d 479, 481 (Colo. 2002). [T]he existence of a difficult or
complicated question
of law, when there is no issue as to the facts, is not a bar to
summary judgment.
Jones v. Dressel, 623 P.2d 370,373 (Colo. 1981). Even where
facts are hotly
disputed, summary judgment is appropriate where the disputed
facts are not
material to the courts determination. See KN Energy, Inc. v.
Great W. Sugar Co.,
698 P.2d 769, 777 (Colo. 1985). Because Defendants have not
identified any
material facts that are in dispute, there was no barrier to the
district courts issuing
summary judgment in Plaintiffs favor.
B. COGA need not prove its case beyond a reasonable doubt.
Defendants argue that the Charter Amendment is presumed to be
valid and
that Plaintiffs have the burden of proving it invalid beyond a
reasonable doubt.
Citys Op. Br. at 15,16,25,38,50; Ints Op. Br. at 34. No Colorado
case has ever
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applied the proposed beyond a reasonable doubt standard to
resolve state
preemption issues. Rather, the beyond a reasonable doubt
standard applies only
to constitutional review of otherwise validly enacted statutes
and ordinances and
not to preemption analysis. See, e.g., Trinen v. City &
Cnty. of Denver, 53 P.3d
754, 75860 (Colo. App. 2002) (applying beyond a reasonable doubt
standard to
constitutional review, but not in preemption analysis); Cherokee
Water &
Sanitation Dist. v. El Paso Cnty., 770 P.2d 1339, 134142 (Colo.
App. 1988)
(same).1
The reason this heightened standard does not apply in preemption
cases is
because the purpose of the preemption doctrine is to establish a
priority between
potentially conflicting laws enacted by various levels of
government. Colo.
1 Indeed, all the cases cited by Defendants involve
constitutional rather than preemption challenges. People v.
Vasquez, 84 P.3d 1019 (Colo. 2004) (constitutional challenge to
statute setting forth the procedures to be followed when a
defendant raises issues of mental retardation in a death penalty
case); Baum v. City of Denver, 363 P.2d 688 (Colo. 1961)
(reasonable doubt standard used in challenge to the constitutional
validity of a zoning ordinance); Independent Inst. v. Coffman, 209
P.3d 1130 (Colo. App. 2008) (constitutional challenge to campaign
finance law dispute); JJR v. Mt. Crested Butte, 160 P.3d 365 (Colo.
App. 2007) (constitutional challenge to city zoning decision);
Sanger v. Dennis, 148 P.3d 404, 411 (Colo. App. 2006) ([A] a facial
constitutional challenge . . . must be rejected unless there exists
no set of circumstances in which the statute can constitutionally
be applied.) (internal quotation marks and citations omitted).
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Mining Assn v. Bd. of Cnty. Commrs, 199 P.3d 718, 723 (Colo.
2009) (citing
Bowen/Edwards, 830 P.2d at 1055). Under Defendants proposed
standard, the
outcome of a courts preemption analysis would depend entirely on
which party
brought the declaratory claim because the state statutes and
regulations under
which a local regulation might be preempted must also be
presumed to be valid.
Indeed, contrary to Defendants assertions, the heightened burden
here
should fall on Defendants, because the Charter Amendment bans
the use of all land
within the City for particular activities. Local regulations
which ban an activity
altogether are subject to heightened scrutiny in preemption
analysis. Colo.
Mining Assn, 199 P.3d at 725. Courts examine with particular
scrutiny those
zoning ordinances that ban certain land uses or activities
instead of delineating
appropriate areas for those uses or activities. Id. at 730.
These pronouncements in
Colorado Mining Assn were made in the specific context of a
preemption
challenge to a local land-use regulation. See infra IV.
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ARGUMENT
I. THE CITY MAY NOT PROHIBIT HYDRAULIC FRACTURING OR THE STORAGE
AND DISPOSAL OF HYDRAULIC FRACTURING WASTE.
A. A home-rule citys ban of activities that the state allows is
preempted, except in matters of purely local concern.
In evaluating whether legislation by a home-rule municipality,
such as the
City, is preempted by state law, the Court must first determine
the legal issue of
whether the subject matter of the legislation is of statewide
concern, of mixed state
and local concern, or of purely local concern. Webb v. City of
Black Hawk, 2013
CO 9, 16. COGA agrees with Longmont that the Colorado
Constitution gives
home rule cities authority over matters of purely local concern
and the state
authority over matters of state concern. Citys Op. Br. at 17.
COGA also agrees
with the City that in matters of mixed state and local concern,
state and local
government laws can only coexist if there is no conflict,
because state law controls
when the two conflict. Id. The relevant test in matters of mixed
state and local
concern is whether the home-rule citys ordinance authorizes what
state statute
forbids, or forbids what state statute authorizes. Webb, 43
(citing City of
Commerce City v. State, 40 P.3d 1273, 1284 (Colo. 2002)).
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Thus, the City can only prevail in this appeal if it
demonstrates that the
Charter Amendment addresses solely a matter of local concern.
The City cannot
make this showing.2
B. The state has a significant interest in the regulation of oil
and gas and hydraulic fracturing.
1. Colorado courts have repeatedly recognized the states
interest.
Every Colorado case that has considered the issues has held that
the state has
a substantial interest in oil and gas regulation. The decision
in Voss, which the City
barely acknowledges, is the key preemption case involving a ban
of oil and gas
operations. In Voss, the citizens of the City of Greeley, a
home-rule municipality,
voted to adopt an ordinance banning the drilling of any oil and
gas well within the
2 Indeed, Defendants have admitted in a related case in which
COGA and the COGCC challenged certain oil and gas regulations
enacted by Longmont that the regulation of oil and gas development
is a matter of mixed state and local concern. R.CF, p.638 (citing
Longmonts Consolidated Reply in Supp. of Longmonts Cross-Mot. for
Partial Summ. J. at 8, COGCC v. City of Longmont, Case No.
2012cv702 (Boulder Cnty. Dist. Ct. Feb. 24, 2014) (The Colorado
Supreme Court has allowed local governments to regulate oil and gas
development within their jurisdiction, because these are matters of
mixed state and local concern.); Def./Int.s Cross-Mot. for Summ. J.
at 5, COGCC v. City of Longmont, Case No. 2012cv702 (Boulder Cnty.
Dist. Ct. Jan. 21, 2014)).
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city limits. 830 P.2d. at 1063. The Greeley City Council adopted
a similar measure.
Id.
The court first analyzed whether the ban on oil and gas wells
concerned
local, state or mixed interest. In doing so, the court examined
four factors to assess
whether Greeleys ban would be preempted: (1) whether there is a
need for state
uniformity of regulation; (2) whether the municipal regulation
has an extra-
territorial impact; (3) whether the subject matter is one
traditionally governed by
state or local government; and (4) whether the Colorado
Constitution specifically
commits a particular matter to state or local regulation. Id. at
1067.
Although the City nowhere discusses the Voss courts examination
of the
four factors, that discussion should be dispositive here.3 The
court found the first
factor . . . weighs heavily in favor of state preemption of
Greeleys total ban on
drilling within city limits. Id. at 1067. The states interest in
the efficient and fair
development and production of oil and gas resources in the
state, including the
3 This Court should reject the Citys invitation to reexamine
Voss, because [m]any material facts have changed dramatically since
Voss. Citys Op. Br. at 24. The Colorado Supreme Court reaffirmed
the validity of Voss in 2009 in Colorado Mining Assn, 199 P.3d at
724, as discussed in detail below. See infra IV.
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location and spacing of individual wells, militates against a
home-rule citys total
ban on drilling within the city limits. Id.
With regard to the second factor, the court held
extraterritorial effect of the
Greeley ordinances also weighs in favor of the states interest
in effective and fair
development and production. Id. The court relied upon the fact
that limiting
production to only one portion of a pool of oil and gas outside
the city limits can
result in increased production costs and that the drilling
operation may be
economically unfeasible. Id. at 106768. Greeleys drilling ban,
the court found,
affected the ability of those with mineral interests both within
and outside the city
boundary to obtain an equitable share of production profits in
contravention of the
Act. Id. at 1068.
Regarding the third factor, the court found [t]he regulation of
oil and gas
development and production has traditionally been a matter of
state rather than
local control. Id. In evaluating the fourth factor, the court
held that the Colorado
Constitution does not direct that oil and gas operations be
regulated at the state or
local level. Id.
As a result of its analysis, the court concluded that Greeleys
ban on oil and
gas drilling was preempted by state law:
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[T]he states interest in efficient oil and gas development and
production throughout the state, as manifested in the Oil and Gas
Conservation Act, is sufficiently dominant to override a home-rule
citys imposition of a total ban on the drilling of any oil, gas, or
hydrocarbon wells within the city limits.
Id. (emphasis added).
Even outside of the context of a ban on oil and gas development,
Colorado
courts have consistently recognized the states significant
interest in oil and gas
regulation. Contemporaneously with Voss, the court issued the
companion opinion
of Bowen/Edwards, in which it reaffirmed the states interest in
efficient and fair
development and production of oil and gas, the prevention of
waste, and the
protection of common-source owners and producers. 830 P.2d at
1058. While the
court did not find that the Act evidenced a legislative intent
to preempt all aspects
of a countys statutory authority to regulate land use involving
oil and gas
operations (emphasis added), it held that a local government
could not regulate
matters involving technical aspects of oil and gas or the
location of wells:
We hasten to add that there may be instances where the countys
regulatory scheme conflicts in operation with the state statutory
or regulatory scheme. For example, the operational effect of the
county regulations might be to impose technical conditions on the
drilling or pumping of wells under circumstances where no such
conditions are imposed under the state statutory or regulatory
scheme, or to impose safety regulations or land restoration
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requirements contrary to those required by state law or
regulation. To the extent such operational conflicts might exist,
the county regulations must yield to the state interest.
Id. at 1060.
Similarly, in Town of Frederick v. North American Resources Co.,
this
Court relied on the states interest in oil and gas development
and operations as
expressed in the [Act] to void several of the Towns oil and gas
regulations as a
matter of law. 60 P.3d 758, 761 (Colo. App. 2002). Relying on
Bowen/Edwards,
the court held that the local imposition of technical conditions
on well drilling
where no such conditions are imposed under state regulations, as
well as the
imposition of safety regulations or land restoration
requirements contrary to those
required by state law, gives rise to operational conflicts and
requires that the local
regulations yield to the state interest. Id. at 765.
Finally, the Colorado Supreme Courts decision in Colorado Mining
Assn
provides further support of the states significant interest in
oil and gas regulation.
199 P.3d at 723. There, Summit County banned the use of cyanide
or other toxic or
acidic reagents in heap or vat leach mining, because the County
determined those
activities posed unacceptable environmental and public health
risks. Id. at 722.
The court relied upon Bowen/Edwards and Voss in holding the
Countys ban was
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impliedly preempted by the overriding state interest in
regulating toxic chemicals
used in mining, noting the common themes that the state has a
significant
interest in both mineral development and in human health and
environmental
protection. Id. at 730.
2. The states comprehensive regulatory scheme demonstrates a
significant interest.
The states significant interest in hydraulic fracturing and the
storage and
disposal of related wastes is also reflected in the Act and the
COGCCs extensive
regulatory framework. Defendants argue that the Charter
Amendment does not
prohibit what the state permits because the state does not
explicitly authorize
hydraulic fracturing. Citys Op. Br. at 35; Ints. Op. Br. at 33.
In rejecting this
argument below, Judge Mallard stated the Commission regulates
the oil and gas
industry and hydraulic fracturing is a common practice in that
industry . . . . [T]he
Court finds there is a comprehensive regulatory structure in
place in Colorado to
regulate the oil and gas industry. R.CF, p.2046.
Judge Mallards ruling is amply supported by the Act and
COGCC
regulations, which expressly authorize hydraulic fracturing. The
Act establishes
the COGCC and vests it with broad authority to enforce the Acts
provisions, make
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17
and enforce rules and orders, and do whatever may be reasonably
necessary to
carry out the provisions of the Act. Voss, 830 P.2d at 1065
(citing C.R.S. 34-60-
105(1)). In particular, the Act provides that the COGCC has
authority to regulate
the drilling, shooting, and chemical treatment of hydrocarbon
wells. C.R.S. 34-
60-106(2)(a), (b). Shooting is the process of fracturing the
rock in the target
formation, which once was accomplished by detonating high
explosives in the
wellbore, but which now is typically accomplished by hydraulic
fracturing. See
The Dictionary for the Oil and Gas Industry 244 (Univ. of Texas
Ext., 1st ed.
2005). Chemical treatment refers to any process, including
hydraulic fracturing,
that involves the use of a chemical to affect an operation. Id.
at 44.4
4 The City argues that, since chemical use is not an integral
part of the definition of hydraulic fracturing and since hydraulic
fracturing is defined as the use of pressurized fluid to fracture,
this statutory section cannot authorize regulation of hydraulic
fracturing. Citys Op. Br. at 36. The COGCC, however, relied upon
the references in the Act to drilling, shooting and the chemical
treatment of wells as specific authority for its new hydraulic
fracturing chemical disclosure rules, including the 100 Series,
definitions of Chemical(s), Chemical Disclosure Registry, Chemical
Family, Hydraulic Fracturing Additive, Hydraulic Fracturing Fluid,
and Hydraulic Fracturing Treatment. See R.CF, p.623 (relying on
specific statutory authority of sections 34-60-106(2), 34-60-106(4)
and 34-60-106(10), CRS.). On this and other issues, COGA
incorporates the arguments and authorities in the COGCCs Answer
Brief.
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18
Moreover, the Commission took hydraulic fracturing into
consideration
when it comprehensively updated its regulations in 2008,
analyzed groundwater
quality trends in 2009, adopted a special notification policy in
2010, and designed
a new groundwater sampling and monitoring program during 2011.
R.CF, p.596. It
amended its rules in December 2011 for the specific purpose of
addressing
hydraulic fracturing concerns. R.CF, p.623. The Commission
employs a technical
staff that receives specific training on hydraulic fracturing
technology and
developments. R.CF, p. 60607. As amended, the Commission Rules
use the term
hydraulic fracturing at least 41 times.
The Commission requires producers to test their well casings in
advance to
verify that they can withstand the pressures that will be
applied during hydraulic
fracturing. Rule 317.j. It mandates that the operator design its
well to confine
hydraulic fracturing fluids to the objective formations, and
monitor and record
pressures continuously during hydraulic fracturing operations to
assure that
hydraulic fracturing fluids are confined to the target formation
and that wellbore
integrity is maintained. Rules 317 and 341. Within thirty days
after completing or
re-stimulating a formation, operators must file a Completed
Interval Report (Form
5A) that summarizes the fracturing treatment. Rule 308B.
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19
The Commission also regulates the chemicals used in hydraulic
fracturing.
See Rule 205. Upon the conclusion of a hydraulic fracturing
treatment, producers
must report the total volume of water or other base fluid that
was used in the
hydraulic fracturing treatment, information regarding each
chemical or additive
used in the hydraulic fracturing fluid, the maximum
concentration of each
chemical added to the fracturing fluid, and the chemical
abstract service number
for each such chemical. Even if the supplier of the fluid claims
that its specific
formula is a trade secret, specific information about the
chemicals nevertheless
must be provided to the Commission or to any health care
professional who
requires such information. Rules 205A.b.(5) and d.(2).
Producers must notify landowners and local governments in
advance of
their intention to hydraulically fracture a well. Additionally,
they must provide
landowners with a copy of the Commissions informational brochure
on hydraulic
fracturing (see R.CF, p.61314), instruct them on how to access
additional
information regarding the proposed well on the Commissions
website, and inform
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20
them of their right to oppose or comment upon the proposed
operations. Rule
305.c.5
Importantly, the COGCC itself has argued that the Act authorizes
it to
regulate hydraulic fracturing and the storage and disposal of
related wastes, and
that its Rules regulate these practices. See R.CF, p.182732. The
Court should
defer to the Commissions interpretation of its rules and the
Act. See Stell v.
Boulder Cnty. Dept of Social Servs., 92 P.3d 910, 91516 (Colo.
2004) (in
construing statutes and regulations, court should afford the
agency tasked with
carrying out mandate deference in its interpretation
thereof).
C. Judge Mallard appropriately determined that the regulation of
hydraulic fracturing is not a matter of purely local concern.
After considering the applicable case law, the Act, and the
regulations,
Judge Mallard carefully weighed the four Voss factors and
appropriately
determined that the regulation of oil and gas in general and
hydraulic fracturing in
particular is not a matter of purely local concern. R.CF,
p.204850.
5 The Commission also extensively regulates the handling,
transportation, and disposal of waste products associated with the
drilling and operation of oil and gas wells. See Rules 316A, 323,
324A, 325, 326, and 90108.
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21
Judge Mallard first determined that the need for statewide
uniformity weighs
in favor of preemption. R.CF, p.2048. While the City states that
the court hinted
that regulations governing hydraulic fracturing need not be
uniform across the state
(Citys Op. Br. at 22), Judge Mallard in fact determined the
opposite: The first
factor, the need for statewide uniformity, weighs in favor of
preemption. Just as in
Voss, the oil and gas reserves that exist today still do not
conform to local
governmental boundaries. Patchwork regulation can result in
uneven production
and waste. R.CF, p.2048; see also Colo. Mining Assn, 199 P.3d at
731 (A
patchwork of county-level bans on certain mining extraction
methods would
inhibit what the General Assembly has recognized as a necessary
activity and
would impede the orderly development of Colorados mineral
resources.).
Judge Mallard concluded that the second factor also weighs in
favor of
preemption because Longmonts ban on hydraulic fracturing has
extraterritorial
impact. R.CF, p.2048. As with the uniformity element, Voss has
already decided
this extraterritorial impact exists as a matter of law in favor
of the state, because a
ban can result in increased production costs, which would impact
the access of
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22
nonresident owners of oil and gas mineral interests located both
within and outside
of the City to obtain an equitable share of production. Voss,
830 P.2d at 106768.6
Finally, Judge Mallard determined that the third Voss factor
favors
preemption because oil and gas activity has traditionally been
governed by the
Commission, a statewide agency. R.CF, p.2049; see also Voss, 830
P.2d at 1068
([T]he regulation of oil and gas development and production has
traditionally
been a matter of state rather than local control.).
Defendants claim that this factor does not weigh in COGAs favor
because
the State has not traditionally placed any substantive
restrictions on fracking and
because governance of the state over oil and gas production set
forth by the Act is
silent with regard to fracking. Citys Op. Br. at 22; Ints Op.
Br. at 42. But the
state, in fact, does extensively regulate hydraulic fracturing.
See supra I.B.2.
Additionally, it is undisputed that since the 1970s, Colorado
has authorized and
6 Additionally, the Charter Amendment could have a ripple effect
with other jurisdictions that have adopted or may adopt in the
future similar ordinances. Other jurisdictions along Colorados
Front Range (Boulder, Boulder County, Fort Collins, Broomfield, and
Lafayette) have adopted similar bans and moratoria on oil and gas
operations, specifically banning hydraulic fracturing. This ripple
effect has resulted in a patchwork of local regulations banning the
use, storage and disposal of hydraulic fracturing fluids. See Webb,
37 (Black Hawks ordinance may lead to other municipal bicycle bans
by local communities).
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23
regulated the drilling and completion of oil and gas wells
including the use,
disposal and storage of hydraulic fracturing fluids. R.CF,
p.176,1898,2039. As the
City has no tradition of regulating hydraulic fracturing of oil
and gas wells, this
factor favors the state. R.CF, p.2050.
In light of the states significant interest in oil and gas
regulation and the
Voss factors, the Charter Amendment at the very least implicates
mixed state and
local concerns, as Judge Mallard determined.
II. THE CITYS BAN PROHIBITS CONDUCT THAT THE STATE ALLOWS AND IS
THEREFORE PREEMPTED.
A. The district court applied the proper test for operational
conflict.
As Judge Mallard appropriately determined, the test to determine
whether
home-rule legislation conflicts with state law is whether the
home-rule citys
ordinance authorizes what state statute forbids, or forbids what
state statute
authorizes. R.CF, p.2054 (quoting Webb, 43); see also City of
Northglenn v.
Ibarra, 62 P.3d 151, 165 (Colo. 2003). Employing this test,
Judge Mallard
concluded: The operational conflict in this case is obvious. The
Commission
permits hydraulic fracturing and Longmont prohibits it. R.CF,
p.2051.
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24
Defendants argue that the court erred in employing the Webb
conflict test.
Citys Op. Br. at 26; Ints Op. Br. at 32. But Colorado courts
have consistently
used this test in determining whether a home-rule municipalitys
ordinance,
particularly an ordinance banning certain activity, is preempted
by conflicting state
statutes or regulations:
Ryals v. City of Englewood, 962 F. Supp. 2d 1236, 1249 (D. Colo.
2013). Court holds that regulation of sex offender residency is a
matter of mixed state and local concern and therefore the citys
effective ban on all felony sex offenders living within its
boundaries is preempted by conflicting state law.
Webb, 16. Court finds that city ordinance banning bicycles
traveling from outside the municipality on streets within
municipality regulated in an area of mixed state and local law, and
therefore was preempted by state law allowing home-rule cities to
prohibit bicycles only if an alternative route is established.
Ibarra, 62 P.3d at 163. Home-rule citys ordinance banning
unrelated or unmarried registered sex offenders from living
together in a single-family residence was preempted by conflicting
state law.
Commerce City, 40 P.3d at 1284. Statutes governing automated
vehicle identification systems preempted conflicting provisions of
home-rule ordinances because issue was a matter of mixed state and
local law in which both cities and the state have important
interests at stake.
Town of Telluride v. Lot Thirty-Four Venture, LLC, 3 P.3d 30,
37(Colo. 2000). Rent control for private residential property was
held to be a matter of mixed local and statewide concern, and
statute prohibiting municipalities from enacting rent control
preempted home-
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25
rule towns affordable housing mitigation ordinance imposing rent
control.
Voss, 830 P.2d at 1068. Court holds that City of Greeleys ban on
oil and gas activity was preempted under the states sufficiently
dominant interest in oil and gas regulation, despite Citys argument
that it had broad land-use authority to regulate oil and gas under
its home-rule authority and the LUCEA.
Natl Adver. Co. v. Dept of Highways, 751 P.2d 632, 635 (Colo.
1988). Court holds that control of outdoor advertising signs within
home-rule municipality is a matter of mixed state and local
concern, and Colorado Outdoor Advertising Act therefore preempted a
conflicting city regulation.
In every one of these decisions, the court first determined
whether the
subject matter of the home-rule governments ordinance was of
statewide concern,
mixed concern, or of local concern. In every case, the courts
determined that the
subject matter was a matter of mixed local and state concern and
employed the
exact conflict test in Webb to hold that state law preempted the
local ordinance.7
7 Defendants cite to one case, City & County of Denver v.
State, 788 P.2d 764(Colo. 1990) as an example of where local
interests have been deemed to outweigh state interest. Citys Op.
Br. at 18; Ints Op. Br. at 2728. In this decision, the court held
that a state statute forbidding municipalities from adopting
residency requirements for municipal employees unconstitutionally
interfered with the power of home-rule municipalities because the
Colorado Constitution grants home-rule cities the right to regulate
the right of municipal employees. The court reached this holding
only after concluding that the residency of the employees of a home
rule municipality was solely a matter of local concern.
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26
Here, as Judge Mallard noted, the conflict is obvious. The state
regulates
hydraulic fracturing and the storage and disposal of associated
wastes, and the
Charter Amendment forbids these technical production aspects.
Under the Webb
conflict test, the Charter Amendment is flatly preempted. The
City, however,
misconstrues the Webb conflict test and argues that preemption
can only occur
based upon explicit provisions of state law. Citys Op. Br. at
3237. To the
contrary, what state statutes forbid or authorize may be
explicit or implicit: [A]
local regulation and a state regulation conflict if they contain
either express or
implied conditions which are inconsistent and irreconcilable
with each other.
Colo. Mining Assn, 199 P.3d at 725 (quoting Ray v. City &
Cnty. of Denver, 121
P.2d 886, 888 (Colo. 1942)).
Indeed, even Rancho Lobo, Ltd. v. Devargas, 303 F.3d 1195 (10th
Cir.
2002), which the City relies upon (Citys Op. Br. at 3334), holds
that preemption
under New Mexico law may be based either on what state law
explicitly says or
what it implies: A local governmental bodys ability to regulate
in an area may be
preempted either expressly, by the language of a statute, or
impliedly, due to a
conflict between the local bodys ordinance and the contents,
purposes, or
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27
pervasive scheme of the statute. Rancho Lobo, 303 F.3d at 1201
(quoting San
Pedro Mining Corp. v. Bd. of Cnty. Commrs, 909 P.2d 754 (N.M.
Ct. App. 1995)).
In sum, the Charter Amendment is preempted because state law
and
regulations explicitly and implicitly authorize and regulate
hydraulic fracturing and
the storage and disposal of related waste.
B. Defendants misconstrue the application of the operational
conflict test.
Defendants also argue that Judge Mallard adopted the wrong
operational
conflict test and Plaintiffs must prove an operational conflict
of the sort described
in Bowen/Edwards. Citys Op. Br. at 27; Ints Op. Br. at 31.
Defendants rely upon
the operational conflict standard employed in Bowen/Edwards in
arguing that the
Charter Amendment can be harmonized with, and does not
materially impede,
the states comprehensive regulations governing oil and gas
operations. Citys Op.
Br. at 4, 30; Ints Op. Br. at 15.
As an initial matter, Judge Mallard did analyze the Charter
Amendment
under the Bowen/Edwards conflict test, as well as under the Webb
test. After
discussing the Bowen/Edwards test, Judge Mallard held: There is
no way to
harmonize[] Longmonts fracking ban with the stated goals of the
Oil and Gas
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28
Conservation Act. As described above, the states interest in
production, and
prevention of waste and protection of correlative rights, on the
one hand, and
Longmonts interest in banning hydraulic fracturing on the other,
present mutually
exclusive positions. There is no common ground upon which to
craft a means to
harmonize the state and local interest. R.CF, p.2053.
While Judge Mallard applied both tests out of an abundance of
caution, there
is ample ground to conclude that the Bowen/Edwards test should
not apply in
analyzing whether a local government ban is preempted. In
contrast to the ban in
Voss, Bowen/Edwards involved La Plata Countys adoption of a
regulatory scheme
that required oil and gas operators to obtain county permits and
comply with
certain performance standards. 830 P.2d at 104850. In finding
that the states
interest in oil and gas does not impliedly preempt all aspects
of a countys land-
use authority over oil and gas operations, the court held that,
outside of areas
involving technical conditions on drilling or pumping or safety
or land restoration
requirements, a local government could regulate oil and gas
operations unless its
regulations conflicted with state requirements. Id. at 1060.
As the Supreme Courts own distinctions between the Voss and
Bowen/Edwards cases reveal, Colorado courts have applied the
Bowen/Edwards
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29
operational conflict test in evaluating whether particular oil
and gas regulations
enacted by a statutory municipality can be harmonized with state
requirements
covering the same conduct. See, e.g., Town of Frederick, 60 P.3d
758; Bd. of Cnty.
Commrs v. BDS Intl, LLC, 159 P.3d 773 (Colo. App. 2006). By
contrast, when a
home-rule governments ban is involved, Colorado courts have only
employed the
Webb test. See cases including Voss cited at supra II.A.8
The Charter Amendments ban on hydraulic fracturing activities is
not an
ordinary land-use regulation; nor does it impose land-use or
other specific
regulations like the setbacks, performance standards, or
monitoring requirements
addressed in Bowen/Edwards. Colorado courts routinely recognize
the distinction
between regulation of a non-technical activity and its total
prohibition, finding the
8 Defendants correctly state that the Bowen/Edwards conflict
test was employed in Town of Frederick, 60 P.3d at 76364, and Board
of County Commissioners v. BDS International, LLC, 159 P.3d 773
(Colo. App. 2006). (Citys Op. Br. at 2728; Ints Op. Br. at 32).
These cases are distinguishable in two respects. First, neither
case involved a home-rule municipality, and therefore the Webb
conflict test was appropriately not employed by the courts. Second,
these cases did notinvolve a local government ban or moratorium.
Rather, each case analyzed a local government ordinance
establishing specific requirements on oil and gas
developmentincluding setbacks, water and air quality rules, and
noise and visual impact requirementsto determine whether they
conflicted in operation with the detailed requirements of the COGCC
rules. In that circumstance, the court appropriately employed the
Bowen/Edwards conflict test.
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30
former to be within a citys authority while the latter is not.
The Colorado Supreme
Court has consistently held that the power to regulate does not
include any
power, express or inherent, to prohibit. Combined Commcns Corp.
v. City &
Cnty. of Denver, 542 P.2d 79, 8283 (Colo. 1975) (quoting Gen.
Outdoor Adver.
Co. v. Goodman, 262 P.2d 261 (Colo. 1953)); cf. Colo. Mining
Assn, 199 P.3d at
731 (Though counties have broad land use planning authority,
that authority does
not generally include the right to ban disfavored uses from all
zoning districts.)
(emphasis in original) (citing Combined Commcns).
Finally, even if this Court determines that the Bowen/Edwards
operational
conflict test does apply in this case, the Court should uphold
the invalidation of the
Charter Amendment because it cannot be harmonized with state
law.
Bowen/Edwards, 830 P.2d at 1060. As Judge Mallard determined,
the Charter
Amendment flatly prohibits well-completion and operational
techniques related to
hydraulic fracturing while state law explicitly allows and
regulates them. R.CF,
p.2054.
The Charter Amendment also fails the operational conflict test
in
Bowen/Edwards because it regulates, through its ban, technical
aspects of oil and
gas operations. As Bowen/Edwards held, the COGCC has exclusive
authority to
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31
regulate the technical aspects of oil and gas operations and
such technical
regulation constitutes a de facto operational conflict.
Bowen/Edwards, 830 P.2d at
1060; see also supra I.B.2. Citing Bowen/Edwards, Judge Mallard
ruled that the
Charter Amendment was operationally preempted because it banned
a technical
process commonly used to bring wells to production, and
imposed[d] technical
conditions on the drilling or pumping of wells. R.CF, p.2053.
Under the
Bowen/Edwards conflict test, the Charter Amendment is preempted
by the
Commissions exclusive authority over technical aspects of oil
and gas operations.
III. JUDGE MALLARD CORRECTLY DETERMINED THAT THE REGULATION WAS
A MATTER OF MIXED STATE AND LOCAL INTERESTS AS A MATTER OF LAW.
A. The Court did not need a fully developed evidentiary record
to make its decision.
Defendants incorrectly argue that the district court was
required as a matter
of law to hold a fact-intensive, ad hoc evidentiary hearing to
determine whether an
operational conflict exists. Citys Op. Br. at 40; Ints Op. Br.
at 31. Defendants
rely upon Bowen/Edwards, but nothing in that case purports to
require an ad hoc
evidentiary hearing, or a fully developed factual record, in
every preemption
matter. Rather, such a record is required only where the court
cannot determine
whether a specific challenged regulation operationally conflicts
with state law as a
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32
matter of statutory construction. In cases where the
municipality bans what the
state allows, no evidentiary record is required because the
court can determine the
preemption question on the basis of the texts of the governing
statutes and
regulations, as well as the legal holdings in Voss and numerous
other cases. As
Judge Mallard determined: This Court, like the courts in Voss,
Town of Frederick
and BDS, finds it can resolve this matter in an order of summary
judgment. The
operational conflict in this case is obvious and patent on its
face. There are no
genuine issues of material fact in dispute. There is no need for
an evidentiary
hearing to determine whether the ban on hydraulic fracturing, as
a practical matter,
creates operational conflict. R. CF, p.2054.
Bowen/Edwards only determined that an ad hoc evidentiary hearing
was
required under the facts of that case because the court could
not find an operational
conflict in the language or purposes of the relevant statutes
and regulations. Id. at
105960. The complaint had alleged express preemption of the
entirety of the
countys regulations and did not allege that any specific
sections of the regulations
were preempted through an operational conflict. Id. The court
remanded the case to
the district court so that Bowen/Edwards could amend its
complaint to specify the
particular regulations it was challenging as preempted. Id. at
1060 (Upon remand
-
33
of the case to the district court, Bowen/Edwards should be
afforded the opportunity
to specify by appropriate pleading those particular county
regulations which it
claims are operationally in conflict with, and thus preempted
by, the state statutory
or regulatory scheme . . . .). Thus, it is only in this context
of comparing the
operational application of two competing sets of regulations and
the court is unable
to discern a conflict on its face that Bowen/Edwards requires a
fully developed
evidentiary record. Id.
Other Colorado courts have ruled on preemption claims when
possible
without first requiring development of a factual record. For
example, the Voss
court declared a Greeley ordinance banning oil and gas drilling
preempted, despite
the fact that no factual record had been developed. Voss, 830
P.2d at 1063 n.2
(noting that no such [factual] record is before us in this
case).9 And in Board of
9 Voss is particularly instructive. Two years after Greeley
banned oil and gas drilling entirely in 1985, it amended its
municipal code to allow drilling and exploration in certain zones
in the city, subject to special review and various requirements.
Voss, 830 P.2d at 1063 n.2. The court declined to consider the
effect of the 1987 amendments in part because determination of
those effects would have required an adequately developed factual
record, while evaluation of the 1985 ban on drilling did not
require any such record. Id. The difference, of course, is that the
court was able to determine as a matter of law that the ban would
necessarily conflict with the states interest in oil and gas
production, whereas the special review process and other specific
restrictions in the 1987 amendments could
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34
County Commissioners v. Vandemoer, the court specifically noted
that no fully
developed record [is] needed for an operational conflict
analysis if on [the] existing
record the issue can be decided on its face. 205 P.3d 423, 428
(Colo. App. 2008)
(citing BDS Intl, 159 P.3d at 779). The court decided that the
total prohibition
against moving agricultural sprinklers on county roadsa clear
land-use
enactmentoperationally conflicted with state statute, based
solely on evaluation
of the statutory terms and the state policy evinced by the
statutory regime. Id. at
42829.
Here, Plaintiffs have specifically alleged in their complaints
that the Charter
Amendment is preempted as a matter of law because it prohibits
and negates what
the state allows and regulates. See generally R.CF, pp.129,
2294. No evidentiary
hearing was required because the preemption question can be
decided on the basis
of the texts of the governing statutes and regulations, as well
as the legal holdings
in Voss and numerous other cases.
conceivably be implemented in a way that would not prohibit what
the state allows or otherwise frustrate the states interest.
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35
B. Judge Mallard did not improperly resolve disputed issues of
material fact.
1. Alleged disputed issues regarding health and safety
allegations.
Defendants argue that the district court should have more
closely considered
the Citys evidence regarding the alleged harms to local health,
safety, and the
environment caused by hydraulic fracturing. Citys Op. Br. at
1920, 4950; Ints
Op. Br. at 2526. Had Judge Mallard considered this evidence, the
City argues, she
would not have concluded that the risks of hydraulic fracturing
are insufficient to
completely devalue the States interest. Citys Op. Br. at 20
(quoting R.CF,
p.2050).
But Judge Mallard clearly did weigh state and local interests in
oil and gas
regulation, including the Citys allegations of health and safety
impacts, carefully
in her ruling. After evaluating a broad range of precedent,
Judge Mallard
concluded as a matter of law that the state has a substantial
interest in oil and gas
and hydraulic fracturing regulation that was not undermined by
the Citys
allegations: [w]hile the Court appreciates the Longmont citizens
sincerely-held
beliefs about risks to their health and safety, the Court does
not find this is
sufficient to completely devalue the States interest, thereby
making the matter one
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36
of purely local interest. R.CF, p.2050. Instead, Judge Mallard
appropriately
determined that the regulation of hydraulic fracturing was a
matter of mixed state
and local concern. Id.
While the City complains that Judge Mallard improperly passed
off
weighing health and safety risks to the legislature and state
agencies (Citys Op.
Br. at 21), this misconstrues Judge Mallards decision. In fact,
Judge Mallard
referred to Defendants raising issues of public policy because
Defendants were
asking the court to change the law to give primacy to local
government interests:
Longmont and the environmental groups . . . are essentially
asking this Court to
establish a public policy that favors protection from health,
safety and
environmental risks over the development of mineral resources.
Whether public
policy should be changed in that manner is a question for the
legislature or a
different court. R.CF, p.2050 (italics in original).
2. Alleged disputed issues regarding the use of
hydraulicfracturing in Longmont.
The City also argues that the court erred in not considering its
evidence that
some wells in Colorado do not employ hydraulic fracturing or its
submitted
affidavit that described the process of underbalanced drilling
as a viable alternative
-
37
to hydraulic fracturing. Citys Op. Br. at 42. While COGA
strongly disagrees with
the notion that underbalanced drilling is a viable alternative
to hydraulic fracturing,
this dispute was immaterial to Judge Mallards decision. Whether
one or more
formations underlying Longmont could theoretically be developed
using a
technique other than hydraulic fracturing is simply irrelevant
to the operational
conflict issue.
Judge Mallard correctly decided that the Charter Amendment was
preempted
as a matter of law. She first determined that the regulation of
hydraulic fracturing
was at least a matter of mixed state and local concern. R.CF,
p.2050. She then
determined that the COGCC in fact regulates hydraulic fracturing
activity. R.CF,
p.2051. Finally, Judge Mallard determined that the operational
conflict in this
case is obvious. The Commission permits hydraulic fracturing and
Longmont
prohibits it. Id. None of those holdings rested on any factual
determination
relating to the viability of underbalanced drilling or any
alternative well-
completion technique.
Moreover, any factual determination Judge Mallard may have
made
concerned undisputed matters that were unrelated to whether
alternatives exist to
hydraulic fracturing. Judge Mallard stated:
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38
[V]arious affidavits filed in this case attest to the almost
exclusive use of hydraulic fracturing as a well completion process
in the Wattenburg [sic] Field, the formation underlying Longmont.
R.CF, p.2052.
It is undisputed that fracking results in efficient production
of oil and gas. Id.
The fracking ban has ended production in Longmont because TOP
will not complete its wells without the ability to conduct
hydraulicfracturing. Id.
The Citys claims regarding alternatives to hydraulic fracturing
are
immaterial to these factual issues, all of which concern
unrebutted evidence
regarding the use of hydraulic fracturing in the Wattenberg
Field and the
perception of TOP that the use of hydraulic fracturing was
critical to its
development of its wells in Longmont. Accordingly, the Citys
evidence regarding
alternatives to hydraulic fracturing was immaterial to her
decision.
3. Alleged disputed issues pertaining to waste and correlative
rights.
The City also complains that Judge Mallard resolved disputed
issues of fact
as to whether the Charter Amendment causes waste and impairs
correlative
rights contrary to the states interest. Citys Op. Br. at 4448.
Again, Judge
Mallard resolved the preemption issue as a matter of law and any
alleged factual
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findings regarding waste and correlative rights were immaterial
to her ruling that
the Charter Amendment is operationally preempted.
Additionally, Judge Mallards factual conclusion regarding waste
and
correlative rights also concerned undisputed matters:
Because of the ban, mineral deposits were left in the ground
that otherwise could have been extracted in the Synergy well.
Mineral deposits are not being drilled due to the fracking ban.
R.CF, p.2052.
Longmonts ban on hydraulic fracturing does not protect
correlative rights. See . . . affidavit of Synergys President,
Edward Holloway (Because proceeds from the well are distributed
ratably by acreage, Longmonts ban causes mineral owners in Longmont
to receive a higher percentage of the proceeds from their acreage
actually contributes to the production. It causes mineral owners
outside of Longmont to receive a lesser percentage of the proceeds
than their acreage actually contributes to the wells production.)
R.CF, p.205253.
These factual determinations concerned undisputed issues
pertaining to the
fact that Synergy is not hydraulically fracturing portions of
its wells underlying
Longmont due to the ban. R.CF, p.2052.10 As a result, Synergy is
paying mineral
10 Defendant Intervenors contend that Synergy agreed
contractually not to frack within the city of Longmont. Ints Op.
Br. at 41 (citing R. CF, p.1719). Defendant Intervenors contention
is incorrect. Synergy agreed to not use hydraulic fracturing within
city limits solely with respect to any well accessed by the road
that was the subject of the agreement between Synergy and the City.
R. CF, p.1450; see also R. CF, p.1719 (responding in the
affirmative to the following
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owners outside of Longmont a smaller percentage of royalties
than their mineral
acreage is actually contributing to the production from the
wells. The City
presented no evidence to challenge Mr. Holloways affidavit. Id.
This is unrebutted
testimony by an operator as to what is actually occurring during
the ban. The
Citys evidence that the Charter Amendment prevents waste and
protects
correlative rights is irrelevant to these findings.11
question: And Synergy, in the last sentence of paragraph 5(a)
[of the agreement between Synergy and the City], agreed not to use
hydraulic fracturing within the city limits from any well accessed
by this road?) (emphasis added).11 The Citys primary argument that
hydraulic fracturing results in waste is not based on a resolution
of some disputed factual matter, but is premised on a strained
interpretation of the term waste. See Citys Op. Br. at 4445. The
City argues that the Charter Amendment does not result in waste
because any resource that remains undeveloped as a result of a ban
can always be recovered later through some other, possibly as yet
undiscovered, means. The Acts legislative declaration (C.R.S.
34-60-102(1)), the definitions of waste ( 34-60-103(11)(13)), the
general waste prohibition ( 34-60-107), and Rule 201 together
prohibit this type of waste. A reasonable and prudent operator is
required to produce oil and gas in economic quantities and protect
the correlative rights of mineral owners. Davis v. Cramer, 808 P.2d
358, 360361 (Colo. 1991). The Citys fanciful interpretation of the
term waste would render the Acts prohibition against waste entirely
toothless.
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IV. THE CITYS BAN IS IMPLIEDLY PREEMPTED BY THE STATES
SUFFICIENTLY DOMINANT INTERESTS.
The Charter Amendment is impliedly preempted by the states
dominant
interest in efficient and equitable oil and gas production.
Because Judge Mallard
ruled that the Charter Amendment was operationally preempted,
she did not reach
whether the states interest in oil and gas regulation impliedly
preempted the Citys
ban. R.CF, p.2048. (This Court is not going to go so far as
finding that implied
preemption applies in this case, though it recognizes the
possibility that implied
preemption may apply.)
In Voss, as mentioned above, the Colorado Supreme Court held
that the
states interest in the efficient and equitable development and
production of oil
and gas, as manifested in the Act, was sufficiently dominant to
override
Greeleys ban on oil and gas operations. Voss, 830 P.2d at 1068.
The Voss court,
though, did not make clear whether the home-rule citys ban was
impliedly
preempted due the states dominant interest, or whether the ban
was preempted due
to its irreconcilable conflict with state law.
The answer to the precise basis for the Voss decision came 17
years later in
Colorado Mining Assn, 199 P.3d at 718. In that case, the court
held that Summit
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42
Countys ban on the use of cyanide in heap and vat leach mining
operations was
impliedly preempted by the states sufficiently dominant
authority in the
controlled use of chemicals in mining operations. Id. at 732.
The court extensively
discussed and relied on its decision in Voss to void the countys
ban as impliedly
preempted: We find Voss particularly instructive because, if a
home-rule city may
not enact a ban prohibiting what the state agency may authorize
under the statute,
surely a statutory county may not do so. Id. The court confirmed
that its holding
in Voss was based on implied preemption: We found [Greeleys] ban
to be
unenforceable because the states interest in efficient
development and production
of oil and gas in a manner preventative of waste and protective
of correlative rights
. . . preempts a home-rule city from totally excluding all
drilling operations within
the city limits. [Citation omitted.] We held [in Voss] that the
state interest
manifested in the state act was sufficiently dominant to
override the local
ordinance. . . . Sufficient dominancy is one of the several
grounds for implied state
preemption of a local ordinance. Id. at 724 (quoting Voss, 830
P.2d at 1061).
Defendants will argue that implied preemption does not apply
here because
of the courts pronouncement in Bowen/Edwards that the Act does
not preempt all
aspects of a home-rule municipalitys land-use authority. COGA
agrees that the
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43
Act does impliedly preempt the ability of local governments to
regulate some
aspects of oil and gas activity. But under Voss, local
governments are impliedly
preempted from enacting regulations that impact the states
interest in the
efficient and equitable development and production of oil and
gas. Voss, 830 P.2d
at 1068. In fact, the Citys ban impacts directly the states
interest in promoting
efficiency of production and the avoidance of waste of these
valuable mineral
resources. See Voss 830 P.2d at 1067; see also C.R.S.
34-60-102(1) (protect
against waste); 34-60-103(11) (defining waste to include the
unreasonable
diminishment of quantities of oil and gas that can be produced),
103(12) &103(13);
34-60-107 (expressly prohibiting waste of oil and gas);
34-60-116(1)
(establishing drilling units to prevent waste); and 34-60-117
(prevention of waste
and protection of correlative rights). Accordingly, the Charter
Amendment is
impliedly preempted.12
12 The Defendant Intervenors argue that the Charter Amendment is
not preempted by state law because it is necessary to protect the
inalienable rights of Longmonts citizens. Ints Op. Br. at 1622. As
an initial matter, Defendant Intervenors asserted no counterclaim
or defense as to the unconstitutionality of the Act. Therefore, the
issue is not properly before the Court. Moreover, Defendant
Intervenors acknowledge that they have no Colorado case law to
support their argument. They provide no history of the Inalienable
Rights Clause in the Colorado Constitution, and no legal discussion
other than citations to a
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44
CONCLUSION
For the foregoing reasons, COGA respectfully requests that the
Court affirm
the district courts order granting Plaintiffs motions for
summary judgment.
Dated: March 5, 2015
Pennsylvania case interpreting a Pennsylvania constitutional
provision stating that: The people have a right to clean air, pure
water, and to the preservation . . . of the environment. . . . As
trustee of these resources, the Commonwealth shall conserve and
maintain them for the benefit of all the people. Pa. Const. art. 1,
sec. 27. The Colorado Constitution contains nothing remotely
similar, and the public trust doctrine has been rejected here
numerous times at the ballot and in Colorado case law. See In re
Bd. of Cnty. Commrs, 891 P.2d 952 (Colo. 1995); People v. Emmert,
597 P.2d 1025 (Colo. 1979).
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45
Brownstein Hyatt Farber Schreck, LLP
By: /s/ Mark MathewsMark Mathews, #23749Wayne F. Forman,
#14082Michael D. Hoke, #41034
Beatty & Wozniak, P.C.
Karen L. Spaulding, #16547
ATTORNEYS FOR APPELLEE COLORADO OIL & GAS ASSOCIATION
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46
CERTIFICATE OF SERVICE
I certify that on March 5, 2015, I electronically filed a true
and correct copy
of the foregoing APPELLEE COLORADO OIL & GAS
ASSOCIATIONS
COMBINED ANSWER BRIEF with the Clerk of Court via the Colorado
ICCES
program which will send notification of such filing and service
upon the following
counsel of record:
Devorah Ancel John E. MatterSierra Club Environmental Julie M.
Murphy Law Program Asst Attorney Generals85 Second Street, 2ndFloor
1300 Broadway, 10th Fl.San Francisco, CA 94105 Denver, CO 80203
Thomas J. Kimmell Eric HuberZarlengo & Kimmell, PC 1650 38th
Street, Suite 102W700 N. Colorado Blvd. Suite 598 Boulder, CO
80301Denver, CO 80206
Kevin J. Lynch Eugene MeiEnvironmental Law Clinic Daniel E.
KramerSturm College of Law City of Longmont2255 East Evans Ave.,
Ste 33 Civic Center ComplexDenver, CO 80208 408 3rd Avenue
Longmont, CO 80501Phillip D. Barber1675 Larimer Street, Suite
620Denver, CO 80202
/s/ Paulette M. ChessonPaulette M. Chesson, Paralegal
011520\0009\11888284.15