COGCC combined answer brief

COURT OF APPEALS, STATE OF COLORADO 2 East 14th Avenue Denver, CO 80203 District Court, Boulder County, Colorado Honorable Dolores Mallard Case Number: 2013CV63 Appellant: CITY OF LONGMONT, COLORADO, Appellant-Intervenors: OUR HEALTH, OUR FUTURE, OUR LONGMONT; SIERRA CLUB; FOOD AND WATER WATCH; AND EARTHWORKS, v. Appellees: COLORADO OIL AND GAS ASSOCIATION and COLORADO OIL AND GAS CONSERVATION COMMISSION, Appellee-Intervenor: TOP OPERATING CO. COURT USE ONLY CYNTHIA H. COFFMAN, Attorney General MICHAEL FRANCISCO, Assistant Solicitor General* JAKE MATTER, Assistant Attorney General* JULIE MURPHY, Assistant Attorney General* Ralph L. Carr Colorado Judicial Center 1300 Broadway, 10th Floor Denver, Colorado 80203 Direct: (720) 508-6289 [email protected] [email protected] [email protected] Registration Number: 39111, 32155, 40683 *Counsel of Record

Case No.: 2014CA1759

COMBINED ANSWER BRIEF OF THE COLORADO OIL AND GAS CONSERVATION COMMISSION

TABLE OF CONTENTS Page

i

INTRODUCTION .................................................................................. 1

ISSUES PRESENTED FOR REVIEW ................................................. 3

STATEMENT OF THE CASE AND FACTS ........................................ 4

SUMMARY OF THE ARGUMENT .................................................... 10

ARGUMENT ........................................................................................ 12 I. The Longmont bans are impliedly preempted, just like

Greeleys ban was in Voss. .............................................................. 12 A. The State has a sufficiently dominant interest in regulating

hydraulic fracturing and the storage and disposal of E&P Waste to preempt the Longmont bans. ......................................... 13

B. The Longmont charter amendment is inconsistent with and irreconcilable with the State regulatory scheme. ......................... 19

II. Longmonts fracking ban is preempted by operational conflict as a matter of statewide concern, or alternatively, mixed statewide and local concern. ................................................ 29 A. Regulating hydraulic fracturing is a matter of statewide

concern. ............................................................................................. 30 B. Even if considered a matter of mixed concern, Longmonts

fracking ban impermissibly conflicts with state law. ................... 38 C. Longmonts claimed factual dispute does not undermine

the case for operational conflict preemption. ................................ 43 D. Longmonts E&P Waste storage and disposal bans are

preempted as matters of mixed concern. ....................................... 45

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ii

III. Longmonts ban on hydraulic fracturing is void under the Areas and Activities of State Interest Act because it prevents the extraction and exploration of minerals. ................................... 47

IV. Longmonts ban on disposal of fracking fluids is void under the federal Safe Drinking Water Act. ............................................. 48

CERTIFICATE OF COMPLIANCE .................................................... 51

CERTIFICATE OF SERVICE ............................................................. 52

TABLE OF AUTHORITIES Page

iii

CASES Banner Advertising, Inc. v. City of Boulder,

868 P.2d 1077 (Colo.1994) ..................................................................... 20

Bath Petroleum Storage, Inc. v. Sovas, 309 F. Supp. 2d 357 (N.D.N.Y 2004) .................................................... 49

Bd. Of County Commrs v. BDS Intl, 159 P.3d 773 (Colo. App. 2003) ................................................. 18, 25, 33

Bd. Of County Commrs v. Bowen/Edwards Assoc., 830 P.2d 1045 (Colo. 1992) ............................................................ passim

City and County of Denver v. State of Colo., 788 P.2d 764 (Colo.1990) ........................................................... 29, 30, 37

City of Denver v. Qwest Corp., 18 P.3d 748 (Colo. 2001) ........................................................................ 36

City of Northglenn v. Ibarra, 62 P.3d 151 (Colo. 2003) ............................................................ 20, 29, 37

Colo. Min. Assn v. Bd. Of County Commrs, 199 P.3d 718 (Colo. 2009) .............................................................. passim

Gade v. Natl Solid Waste Mgmt. Assn, 505 U.S. 88 (1992) ................................................................................. 42

Johnson v. Jefferson Cnty Bd. of Health, 662 P.2d 463 (Colo. 1983) ...................................................................... 20

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iv

Kemper v. Hamilton, 274 P.3d 562 (Colo. 2012) ...................................................................... 37

National Advertising Co. v. Department of Highways, 751 P.2d 632 (Colo.1988) ....................................................................... 40

Robinson Twp., Washington Cnty. v. Commonwealth, 83 A.3d 901 (Pa. 2013) ........................................................................... 37

Town of Frederick v. N. Am. Res. Co., 60 P.3d 758 (Colo. App. 2002) ............................................. 18, 25, 33, 40

Town of Telluride v. Thirty-Four Venture, 3 P. 3d 30 (Colo. 2000) ........................................................................... 46

Voss v. Lundvall Brothers, 830 P.2d 1061 (Colo. 1992) ............................................................ passim

Webb v. City of Black Hawk, 295 P.3d 480 (Colo. 2013) ................................................................ 29, 45

Wolfe v. Sedalia Water & Sanitation Dist., 2015 CO 8 (Colo. 2015) .......................................................................... 12

STATUTES 42 U.S.C. 300f ........................................................................................ 48

C.R.S. 24-65.1-101 ................................................................................... 9

C.R.S. 24-65.1-202(1) ............................................................................. 47

C.R.S. 30-20-100.5 ................................................................................. 46

C.R.S. 30-20-101 .................................................................................... 46

C.R.S. 34-24-101 .................................................................................... 23

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v

C.R.S. 34-60-101 ............................................................................ passim

C.R.S. 34-60-102(1) ...................................................................... 6, 24, 39

C.R.S. 34-60-102(1) (1984) ..................................................................... 14

C.R.S. 34-60-103(4) ................................................................................ 17

C.R.S. 34-60-103(6.5) ....................................................................... 22, 46

C.R.S. 34-60-104(2) .................................................................................. 7

C.R.S. 34-60-105(1) ................................................................................ 22

C.R.S. 34-60-106(11) ................................................................................ 7

C.R.S. 34-60-106(2) ................................................................................ 22

Colo. Sess. Laws, ch. 317, sec. 1 ................................................................. 6

Colo. Sess. Laws, ch. 320, sec. 1 ................................................................. 7

RULES 2 CCR 404-1 ................................................................................................ 4

Commission 2008 Rulemaking Statement of Purpose .................... 1, 7, 36

Commission Rule 100-Series Definitions .............................................. 4, 5

Commission Rule 205A ........................................................................ 4, 25

Commission Rule 305.c .............................................................................. 4

Commission Rule 308B .............................................................................. 5

Commission Rule 316C .............................................................................. 5

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Commission Rule 317.j ......................................................................... 5, 25

Commission Rule 317.s .............................................................................. 5

Commission Rule 318A ...................................................................... 14, 31

Commission Rule 325 ........................................................................... 5, 48

Commission Rule 341 ............................................................................... 32

Commission Rule 603 ................................................................................. 6

Commission Rule 604.c .............................................................................. 5

Commission Rule 805.c .............................................................................. 5

Commission Rule 900-Series ...................................................................... 5

Commission Rule 908.h ............................................................................ 46

TREATISES Phillip D. Barber, 1B Colo. Methods of Practice 14:4 (5th ed.

2011) ....................................................................................................... 17

1

INTRODUCTION

Few public policy issues in Colorado have been the subject of more

intense debate, discussion, and regulatory activity in recent years than

the use of hydraulic fracturing in oil and gas drilling. The Colorado Oil

and Gas Conservation Commission engaged in a protracted and

controversial rulemaking wherein the appropriate level of regulation for

fracking was actively debated. See 2008 Rulemaking Statement of

Purpose, p.35 (discussing Rule 341) (available at

http://cogcc.state.co.us/RuleMaking/FinalRules/COGCCFinalSPB_12170

8.pdf).

That rulemaking was the epitome of a compromise in that it may

have pleased nobody. But it was the embodiment of the States best

judgment about how to balance the costs and benefits of fracking. Some

citizens, and some local governments think the State balanced those

costs and benefits incorrectly, and a few, including Longmont, simply

think the activity should be banned, at least within its borders. This

Court need not and should not resolve the ultimate policy debate about

fracking. Whatever the merits of Longmonts position are as a matter of

2

policy, since at least 1992, it has been clear local governments are not

empowered to prohibit drilling practices permitted by the State.

While the City of Longmonts ban on fracking is preempted under

several doctrines and statutes, the case can be resolved by a simple,

direct application of Voss v. Lundvall Brothers, 830 P.2d 1061 (Colo.

1992). As the Court emphasized in Voss, in the context of a home-rule

city (Greeley) using land-use authority to ban certain oil and gas

development practices, [t]here is no question that the efficient and

equitable development and production of oil and gas resources within

the state requires uniform regulation of the technical aspects of drilling,

pumping, plugging, waste prevention, safety precautions, and

environmental restoration. Id. at 1068 (quoting Bd. Of County

Commrs v. Bowen/Edwards Assoc., 830 P.2d 1045, 1058 (Colo. 1992)).

Unanimously, Voss held the home-rule citys attempt to ban oil and gas

drilling was preempted by the State regulatory system. Voss remains

good law. It must be followed here. The Longmont bans, like the Greely

ban before it, are preempted by state law and regulation.

3

ISSUES PRESENTED FOR REVIEW

1. Is the City of Longmonts ban on hydraulic fracturing activities impliedly preempted by the States dominant interest in regulating oil and gas development?

2. Is the City of Longmonts ban on hydraulic fracturing activities preempted by operational conflict with the States authorization of the same activities?

3. Does the Areas and Activities of State Interest Act preempt the City of Longmonts ban on hydraulic fracturing?

4. Does the Federal Safe Drinking Water Act preempt the City of Longmonts ban on certain disposal techniques used with hydraulic fracturing?

4

STATEMENT OF THE CASE AND FACTS

Hydraulic fracturing is a well-completion technology that creates

small fractures in hydrocarbon-bearing geologic formations. These

fractures enable oil and natural gas to flow through a reservoir and into

the wellbore. Fracking in Colorado began in the 1970s and most wells in

the State would not produce economic quantities of oil and natural gas

without hydraulic fracturing. In fact, every oil and gas well in the City

of Longmont has been fracked at least once. CF, p. 1213, 9.

The Colorado Oil and Gas Conservation Commission (Commission

or COGCC) is the regulatory body charged with implementing the

Colorado Oil and Gas Conservation Act, 34-60-101 et seq., C.R.S. The

Commission Rules, 2 CCR 404-1, authorize and regulate hydraulic

fracturing: Rule 100-Series Definitions (defining Base Fluid, Hydraulic

Fracturing Additive, Fluid & Treatment, Proppant and Total Water Volume);

Rule 205A (disclosure and reporting of chemicals);

Rule 305.c.(1)(C)(iii) (operators must provide COGCCs information sheet on hydraulic fracturing, CF. 613, to nearby homeowners);

5

Rule 308B (operators must report the details of fracturing including the volumes of all fluids involved to COGCC);

Rule 316C.a (operators must notify COGCC 48 hours in advance of hydraulic fracturing);

Rule 317.j (detailing casing and cementing required before completion operations; aquifer protection);

Rule 317.s (imposing setback between existing wells and planned wells where the planned well will be hydraulically fractured);

Rule 805.c (silica dust control and handling).

The Commission Rules also authorize and regulate the storage and

disposal of wastes associated with hydraulic fracturing, which the

Commission Rules define as Exploration and Production Waste (E&P

Waste):

Rule 100-Series (Definition of E&P Waste); Rule 900-Series (E&P Waste Management); Rule 325 (underground disposal of water; Class II injection wells); Rule 604.c.(2)(B)(ii) (prohibiting pits containing hydraulic

fracturing fluid or flowback within 500 feet of homes).1

1 The Commission adjusts the level of regulation covering fracking activities. For example, on March 2, 2015, the Commission adopted new rules governing open pit storage of fracking waste. The rule prohibits open pits in flood plains, as defined by municipalities. See

6

In 1994, the General Assembly revised the legislative declaration of

the Oil and Gas Conservation Act to read: It is declared to be in the

public interest to foster, encourage, and promote the development,

production, and utilization of the natural resources of oil and gas in the

state of Colorado in a manner consistent with protection of public

health, safety, and welfare. See 34-60-102(1)(a)(I), C.R.S.

(underlined wording added in 1994); see Colo. Sess. Laws, ch. 317, sec.

1, at 1978; CF, p.1872.

In 2007, the General Assembly enacted significant revisions to the

Oil and Gas Conservation Act, including amending the legislative

declaration to read: It is declared to be in the public interest to

foster encourage, and promote the responsible, balanced development,

production, and utilization of the natural resources of oil and gas in the

state of Colorado in a manner consistent with protection of public

health, safety, and welfare, including protection of the environment and

wildlife resources. See 34-60-102(1)(a)(I), C.R.S. (underlined

_________________________ Rule 100 Series Definition of Floodplain and revised Rule 603 available at http://cogcc.state.co.us/RR_Docs_New/FloodPlain/FinalRule.pdf

7

wording added in 2007); Colo. Sess. Laws, ch. 320, sec. 1, at 1357 (HB

07-1341); CF, p.1876.

HB 07-1341 also made the states chief medical officer, the

executive director of the Colorado department of health and

environment (CDPHE), a permanent voting member of the

Commission, 34-60-104(2)(a)(I), C.R.S., and directed the Commission

to Promulgate rules, in consultation with [CDPHE], to protect the

health, safety, and welfare of the general public in the conduct of oil and

gas operations. 34-60-106(11)(a)(II), C.R.S. The rulemaking required

under these statutory changes was the most extensive rulemaking

hearing in the Commissions history. 2008 Rulemaking Statement of

Purpose, p.5.2 The 2008 rule amendments were intended to address

increased drilling activity extending into new areas of the state with

additional people and respond to public concern for the health, safety

and welfare of Colorados residents. Id., p. 1-2.

On November 6, 2012, Longmont residents voted in favor of Ballot

Question 300, which amended the Citys home-rule charter to create a

2 Available at http://cogcc.state.co.us/RuleMaking/FinalRules/ COGCCFinalSPB_121708.pdf

8

new Article XVI. CF, p.2298. As a result, Longmonts 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.

CF, p.636.

The foregoing bans have stopped new oil and gas development in

Longmont. Appellee TOP Operating owns and operates producing wells

in Longmont and, prior to the passage of the bans, contracted with the

City to drill and hydraulically fracture others. However, in light of the

Citys prohibition on hydraulic fracturing, TOP has determined that it

cannot economically develop its mineral interests in Longmont.

Similarly, Synergy Resources, Inc. has been adversely affected by the

Longmont bans. Synergy obtained a permit from the Commission to

drill a horizontal well originating at a surface location in nearby

Firestone, Colorado. The well was built as-planned and travels

horizontally through minerals under Firestone and Longmont. In light

9

of the Citys ban on hydraulic fracturing, Synergy could not fracture

stimulate that portion of the horizontal well under Longmont, thus

reducing the productivity of the well.

On December 17, 2012, Plaintiff-Appellee Colorado Oil and Gas

Association (COGA) sued to invalidate the Longmont bans in their

entirety as preempted by the States comprehensive regulatory scheme.

The Commission and TOP subsequently joined the case as plaintiffs.

CF, p.317. The Commission also argued the bans were void under the

Areas and Activities of State Interests Act, 24-65.1-101, et seq. C.R.S.

Longmont filed counterclaims arguing its charter amendment was a

valid exercise of its home-rule authority under the Colorado

Constitution.

In the spring of 2014, Appellees filed motions for summary judgment.

Appellants sought leave to conduct written and oral discovery prior to

responding to the motions, which the district court granted. The district

court heard oral argument and entered an order granting summary

judgment on July 24, 2014 invalidating the charter amendment in its

entirety. CF, p.2038-54 (subsequently Order). The district court also

granted the Appellees request for an injunction enjoining Longmont

10

from enforcing the bans, but stayed the injunction during the pendency

of this appeal.

SUMMARY OF THE ARGUMENT

First, Longmonts bans are impliedly preempted by the States

dominant interest in regulating oil and gas development. Courts

consider a sufficiently dominant state interest in regulating a matter to

indicate an intent by the General Assembly to preempt conflicting local

government regulations. There is little question the Commission is

responsible for regulating the use of hydraulic fracturing and the

storage and disposal of associated waste and that the use of fracking is

prevalent in the Longmont area. Longmont simply banned what the

State has authorized, a paradigm case for implied preemption.

The Longmont bans impeded the state interest, regardless of

perceived health risks or benefits from fracking activity. Any doubt

about the Commissions authority to regulate fracking must be resolved

by deferring to the Commissions interpretation of its own authority.

Finally, hydraulic fracturing is a technical aspect of oil and gas

development, and as such, the statewide regulation of the activity

preempts local regulation.

11

Second, the Longmont bans are preempted by operational conflict

with the State law and regulation governing fracking. The regulation of

fracking is a matter of statewide concern whereby conflicting local

regulation is preempted. The four factors traditionally applied to

determine matters of statewide concern favor preemption: (1) there is a

need for uniform statewide regulation of fracking, (2) the local ban of

fracking has an extraterritorial impact, (3) the State has traditionally

regulated fracking, and (4) the Colorado Constitution is neutral on the

subject.

Even if considered a matter of mixed state and local concern, the

Longmont bans conflict with state laws and regulation and are

preempted. Local regulations must be capable of being harmonized with

state law and regulation to survive in an area of mixed state and local

concern. The simple ban of fracking activity cannot be harmonized with

State authorization of the same.

Third, the City of Longmonts bans are preempted under the State

Areas and Activities of State Interest Act, which provides a mechanism

for localities to enact limited regulations in a specific zone properly

designated. Absent designation, local regulations in this area are

preempted.

12

Fourth, the Longmont ban of disposing of fracking fluids by means of

injection wells is preempted under the Federal Safe Drinking Water

Act. Local governments are not free to prohibit the use of wells known

as Class II injection wells.

ARGUMENT

I. The Longmont bans are impliedly preempted, just like Greeleys ban was in Voss.

Standard of Review: Summary judgment is appropriate when the

pleadings and supporting documentation demonstrate that no genuine

issue of material fact exists and that the moving party is entitled to

judgment as a matter of law. See C.R.C.P. 56(c). Appellate courts review

the grant of a motion for summary judgment de novo as a question of

law. Wolfe v. Sedalia Water & Sanitation Dist., 2015 CO 8, 12 (Colo.

2015).

Colorado courts follow a three-pronged analysis to determine

whether state law preempts a local regulation either by (1) express

preemption, (2) implied preemption, or (3) operational conflict

preemption. E.g. Colo. Min. Assn v. Bd. Of County Commrs, 199 P.3d

718, 724 (Colo. 2009); Bowen/Edwards, 830 P.2d at 1056-57. It has long

been understood that the purpose of the preemption doctrine is to

13

establish a priority between potentially conflicting laws enacted by

various levels of government. Bowen/Edwards, 830 P.2d 2045 at 1055.

Implied preemption is a species of statutory interpretation. Implied

preemption examines whether the state interests at issue are

sufficiently dominant so as to override conflicting local rules, and

analyzes whether state and local regulatory schemes contain either

express or implied conditions which are inconsistent and irreconcilable

with each other. Colo. Mining Assn, 199 P.3d at 725 (citation omitted).

This argument was preserved. CF, p.736-38.

A. The State has a sufficiently dominant interest in regulating hydraulic fracturing and the storage and disposal of E&P Waste to preempt the Longmont bans.

The most straightforward way to resolve this case is to apply the

preemption analysis from the Colorado Supreme Courts seminal case of

Voss v. Lundvall Brothers, which found the City of Greeleys ban on oil

and gas drilling to be impliedly preempted by the Oil and Gas

Conservation Act, 34-60-101130, C.R.S., (Act). There, just as here,

a home-rule city banned oil and gas activities which were expressly

authorized by the Commission. Id. at 1062.

Almost all legal issues in this case have been definitively answered

by the decision in Voss, in the context of facts that are materially

14

indistinguishable from this case:

Both cities lie within what is known as the Greater Wattenberg

Area. See Commission Rule 318A. Both cities banned Commission-authorized activities.

Both cities claimed to have exercised home rule authority.

Citizens in both cities expressed concerns about the health and

safety of oil and gas development by banning such activities.

The Commission interpreted its regulatory scheme as preempting city prohibitions.

On these nearly identical facts the Colorado Supreme Court examined

the conflicting claims of the State and the locality and found the local

regulation was preempted. The same is true here.

The Voss decision examined the declared purposes of the Act as the

expression of the state interest in oil and gas operations. Id., at 1065

(citing 34-60-102(1), C.R.S. (1984) (purposes were to foster,

encourage, and promote the development, production, and utilization of

15

the natural resources of oil and gas in the state of Colorado, prevent

waste and protect correlative rights)).3

The Commissions authority under the Act was compared to the

home-rule citys claimed authority to use land use regulation to ban the

drilling of oil and gas wells within city limits. The Court found there

was no question the Act evidences a significant interest on the part of

the state in efficient and fair development, production, and utilization of

oil and gas resources. Id. at 1065-66.

The Court concluded the States interest 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. at 1068.

This was so [b]ecause oil and gas pools do not conform to the

boundaries of local government, Greeleys total ban on drilling within

the city limits substantially impedes the interest of the state in

fostering efficient development and production of oil and gas resources

in a manner that prevents waste and that furthers the correlative

rights of owners and producers in a common pool or source of supply to

3 As stated in the Statement of Facts, supra, the Commissions statutory mandate was enlarged in 2007. See 34-60-101(1), C.R.S.

16

a just and equitable share of profits. Id. The entire analysis in Voss

applies to Longmonts bans on oil and gas operations involving

hydraulic fracturing.

There is no legally meaningful difference between banning oil and

gas drilling, and banning hydraulic fracturing and the storage or

disposal of its associated waste. Other than calling for the court to

outright reverse the Voss decision, which this court cannot consider, the

defendants try mightily to create a difference between a total ban on

drilling in Greeley and Longmonts total ban on hydraulic fracturing

and other Commission-authorized activities. See Longmont Op. Br. at

23-25. For preemption purposes, there is no difference. Almost all wells

in the Longmont area, including the Greater Wattenberg Area, and in

all of Colorado, rely on hydraulic fracturing to be productive. 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.); CF, p.623 (Most of the hydrocarbon bearing

formations in Colorado would not produce economic quantities of

hydrocarbons without hydraulic fracturing.).

17

Longmont cannot disagree with the prevailing use of fracking to

complete wells. See Order at 15; CF, 2052 (relying on evidence at CF,

pp.660-61). Longmonts fracking ban does not allow any fracking under

any circumstances a total ban whereas the Commission authorizes

hydraulic fracturing, including the storage and disposal of its associated

waste, pursuant to a comprehensive regulatory regime. There is no

question the Longmont bans have undermined the States interests in

oil and gas development codified in the Act. For example, Synergys

experience is a textbook example of an abuse of correlative rights in

contravention of the Acts mandate that such rights be protected. See

34-60-102(1)(a)(III) & 103(4), C.R.S; see also Order at15; CF, 2052

(Longmonts ban on hydraulic fracturing does not protect correlative

rights of owners; it impairs the correlative rights of owners.).4

4 State oil and gas conservation commissions exist to modify the common law rule of capture. The protection of correlative rights is an essential element of Colorados Act. See Phillip D. Barber, 1B Colo. Methods of Practice 14:4 (5th ed. 2011) (Three essential areas in which the public had a legitimate interest in altering the common law [were the prevention of waste, maximizing recovery and that] oil and gas produced, saved and sold should be divided in an equitable manner among the persons having the right to extract them. This concept was expressed in the term correlative rights.).

18

The Longmont charter amendment substantially impedes the state

interest in the equitable and efficient development and production of

Colorados oil and gas resources as embodied in the Act and

Commission Rules. Cf. Voss, 830 P.2d at 1068. There is no dispute

about the overwhelming, near-universal use of hydraulic fracturing in

Colorado. Likewise, there is no dispute the bans have stopped

operations that were otherwise permitted by the Commission.

The unbroken string of cases following the Voss analysis bespeaks of

the vitality of the precedent. Many of the subsequent cases involve local

regulations attempting to limit oil and gas operations. See Bd. Of

County Commrs v. BDS Intl, 159 P.3d 773 (Colo. App. 2003) (finding

numerous county regulations of oil and gas operations preempted);

Town of Frederick v. N. Am. Res. Co., 60 P.3d 758 (Colo. App. 2002)

(finding certain town requirements preempted).

In particular, the Colorado Supreme Courts analysis in Colorado

Mining Association amplifies the preemption conclusions from Voss.

There, in a strikingly analogous case, a local government banned an

industrial activity many members of the public believed to be dangerous

to the health and safety of local citizens; namely mining techniques

using toxic chemicals such as cyanide. Id. at 721. When the ban was

19

imposed, there was no doubt that mining using these toxic substances

could result in environmental catastrophe, as the Summitville Mine

disaster from mining using cyanide polluted the nearby Alamosa River.

Id at 727. In the face of these negative externalities, the General

Assembly granted the Board extensive authority to authorize and

regulate mining operations proposing to utilize toxic or acidic chemicals

for mineral extraction. Id. at 728. Declaring Voss to be particularly

instructive, the court in Colorado Mining Association explained that

[s]ufficient dominancy is one of several grounds for implied state

preemption of a local ordinance[,] id at 724, and [d]ue to the

sufficiently dominant state interest in mineral processing utilizing such

chemicals, we find implied preemption in this case. Id. at 726.

B. The Longmont charter amendment is inconsistent with and irreconcilable with the State regulatory scheme.

Local rules are impliedly preempted where they contain either

express or implied conditions which are inconsistent and irreconcilable

with the state regulatory scheme. Colo. Mining Assn, 199 P.3d at 725

(citation omitted). Outright prohibitions, like those at issue here, are

subject to heightened scrutiny in preemption analysis. Id.

20

It is axiomatic that a local government cannot prohibit what the

Colorado General Assembly has chosen to permit. From Voss to Ibarra

to Colorado Mining Association, the Colorado Supreme Court has

consistently found local bans to be preempted by State laws permitting

the activity: a home-rule city may not enact a ban prohibiting what the state

agency may authorize under the statute. Colo. Min. Assn, 199 P.3d at 730 (discussing Voss);

Summit Countys existing ordinance is not a proper exercise of its land use authority because it excludes what the General Assembly has authorized. Id. at 721;

local ban ordinances that conflict with state statutes in an overlapping field of regulation are subject to preemption. Id. at 724;

State regulations authorizing placement of multiple registered sex offenders in single household implied intent to preempt local regulation banning such households. City of Northglenn v. Ibarra, 62 P.3d 151, 163 (Colo. 2003).5

5 The Colorado Supreme Court has invalidated other bans on activities authorized by the state. See, e.g., Johnson v. Jefferson Cnty Bd. of Health, 662 P.2d 463, 471 (Colo. 1983) (local government may not forbid that which the state has explicitly authorized.); see also Banner Advertising, Inc. v. City of Boulder, 868 P.2d 1077, 1081-83 (Colo.1994) (federal preemption analysis; local ban impliedly preempted where federal regulation allowed activity).

21

The Longmont bans fall squarely within this species of implied

preemption cases. State laws that authorize an activity preempt local

regulations that purport to ban the authorized activity. This case can be

resolved by applying the implied preemption line of cases where local

governments have attempted to ban activities that are otherwise

authorized by state law.

Without a doubt, fracking has been the subject of intense public

scrutiny in recent years, even though it has been used for decades in

Colorado and elsewhere. This is not some little-noticed aspect of oil and

gas operations that has escaped the watchful eye of the Commission; far

from it. For example, in 2011, the Commission adopted additional Rules

directly applicable to hydraulic fracturing operations. These Rules were

the result of participation from the industry and public, including many

citizens who echoed the health and safety concerns represented in

Longmonts brief. CF, p.623 (Statement of Basis and Purpose for

Commission Rule 205A).6 Where the States authorized response to

6 In 2008, the COGCC completed a review and update of its regulations. Numerous sections of the regulations related to hydraulic fracturing were revised. The regulations now contain standards that address current hydraulic fracturing practices. The COGCC is commended for this comprehensive program update. State Review of

22

particular concerns conflicts with a localitys, the states position must

prevail.

The General Assembly expressly authorized the Commission to

regulate the shooting and chemical treatment of wells, including

through the use of hydraulic fracturing, 34-60-106(2)(b), C.R.S., and

has expressly authorized the Commission to regulate the generation,

transportation, storage, treatment, and disposal of exploration and

production wastes. 34-60-103(6.5), C.R.S. The Commission has the

power to make and enforce rules and to do whatever may reasonably

be necessary to carry out the provisions of the Act. 34-60-105(1),

C.R.S. The Commission has used its authority under the Act to enact a

comprehensive set of regulations authorizing hydraulic fracturing and

the storage and disposal of E&P Waste. See Rules listed in Statement of

Facts, supra.

Should there be any doubt about the Commissions authority to

regulate hydraulic fracturing operations or the nature of that

regulation, the courts must defer to the Commissions interpretation of

_________________________ Oil and Natural Gas Environmental Regulations, Inc., Colorado Hydraulic Fracturing State Review (2011), CF, p.581, 593 (E&P Waste rules review ).

23

its own organic statute and regulations. The Supreme Court in

Colorado Mining Association looked to the Mined Land Reclamation

Boards reasonable interpretation of its own statute, the Mined Land

Reclamation Act, 34-24-101, et seq. C.R.S., to determine the Board had

the statutory authority to promulgate rules and regulations authorizing

the activity in question. 199 P.3d at 732. While not bound by the

Boards interpretation, the Colorado Supreme Court accorded deference

to the interpretation that the Board, not local government, had the

authority to regulate mining techniques using toxic chemicals such as

cyanide. Id. Likewise, here, the Commission interprets its authorizing

statute to give it the exclusive authority to regulate and permit

hydraulic fracturing operations. That interpretation is reasonable, has

never been questioned by the General Assembly, and should be given

deference.

The district court correctly noted [t]here is no question that the Oil

and Gas Conservation Act evidences a significant interest on the part of

the state in the efficient and fair development, production, and

utilization of oil and gas resources. Order at 5, 11; CF, 2042, 2048. The

Colorado Supreme Court has conclusively found that the State has a

sufficiently dominant interest to override a home-rule citys

24

imposition of a total ban on the drilling of any oil, gas, or hydrocarbon

wells within the city limits. Voss, at 1068. The Act expresses this

dominant interest whereby the State favors allowing each oil and gas

pool in Colorado to produce up to its maximum efficient rate of

production, preventing waste, and protecting correlative rights. 34-

60-102(1)(b), 1(a)(II) & 1(a)(III), C.R.S. The legal conclusion, namely

that Colorado has a sufficiently dominant interest in oil and gas

development to preempt a local ban on hydraulic fracturing operations,

remains binding. Such an interest is sufficient, without more, to

impliedly preempt local regulations that conflict with the state

regulation. E.g., Colorado Mining Assn, 199 P.3d at 733 (Implied

preemption occurred here because the General Assembly expressed a

sufficiently dominant interest by assigning to the Board the field of the

use of chemicals and other toxic and acidic reagents in mining

operations).

Moreover, case law also compels a finding of implied preemption over

hydraulic fracturing because the practice falls squarely in the technical

aspects of oil and gas operations, a field in which state regulation is

superior. Hydraulic fracturing is a quintessentially technical aspect of

oil and gas operations. The companion case to Voss, Bowen/Edwards,

25

830 P.3d at 1066, noted that preemption occurs by implication when a

local government impose[s] technical conditions on the drilling or

pumping of wells under circumstances where no such conditions are

imposed under the state statutory or regulatory scheme); see also BDS,

19 P.3d at 779 (local regulations are preempted if they impose

technical conditions on the drilling or pumping of wells under

circumstances where no such conditions are imposed by state law);

Town of Frederick, 60 P.3d at 764 (same). Courts understand the

statewide need for uniform regulation of the technical aspects of oil and

gas operations and the irreconcilable conflict that occurs if local

governments impose competing regulations on such activities.

Even a cursory review of the fracking rules adopted by the

Commission attests to the technical nature of the activity. Rules require

everything from specific disclosure of all chemicals used in hydraulic

fracturing fluid (e.g. Rule 205A), to specific cementing and casing

requirements that are engineered to sustain the pressures caused by

fracking. See Rule 317.j; see also Order at 10 n.4; CF, 2047 (detailing

Rules applicable to fracking). Rule 317.j alone is a paradigm example of

regulating the technical aspects of oil and gas operations, including

completion operations. It regulates specific psi strengths at specific

26

hours, requires cement to be in position a specific number of feet above

or below certain drilling zones, details how many hours the cement

shall cure before fracking can start, among other drilling minutia. As

the trial court found, Hydraulic fracturing is clearly within the

purview of a petroleum engineer; it might be a technical aspect of oil

and gas production [n]umerous Commission Rules apply to technical

aspects of the hydraulic fracturing process. Order at 11; CF, 2048.

Longmont has no answer to the technical nature of the Commissions

regulation of fracking, as the Opening Brief fails to discuss the issue.

Ever since the Colorado Supreme Court discussed the regulation of

technical aspects of oil and gas drilling in Bowen/Edwards, courts in

Colorado have understood that local regulations cannot impinge on the

technical aspects of oil and gas drilling. This finding independently

supports the conclusion that Longmonts fracking ban conflicts with the

Commissions regulation of the technical aspects of oil and gas

operations, namely regulations that allow hydraulic fracturing under

specified conditions.

Longmont makes much of the perceived harms and threat to

public health and safety from hydraulic fracturing. Longmont Op. Br.

at 7, 8-10 . It then boldly touts an alternative technology that it

27

contends should be used instead of fracking. Id. 10-12.7 But these

concerns are precisely the type of policy judgments considered by the

General Assembly, which continues to encourage fracking under the

regulation of the Act and Commission. With 34,000 workers in Colorado

employed in the oil and gas industry, Colorado sees billions of dollars a

year in economic activity from this industry.8 As a result, the State pays

keen attention to the use of hydraulic fracturing. Longmont is hardly

alone in being critical of fracking. As the district court correctly

recognized, this litigation is the wrong forum to engage in a policy

debate over the costs and benefits of fracking. That is the domain of the

General Assembly, and in this case, its designee, the Commission.

More importantly, even if all of Longmonts concerns were taken as

true, the implied preemption conclusion stands. Implied preemption

legally follows when a state law or regulation conflicts with a local ban.

7 Longmonts alternative drilling technology rests on managing the natural pressure of a reservoir. Op. Br., 11. The Voss Court held that managing the pressure characteristics of such reservoirs was the domain of the State. Voss, 830 P.2d at 1067.

8 See, e.g., Colorado Office of State Planning and Budgeting, Dec. 22, 2014 Report, p.7 (discussing oil and gas industry in Colorado); available at http://www.colorado.gov/cs/Satellite/OSPB/GOVR/1218709343298.

28

There is no balancing of interests, nor any need for a determination of

factual claims and policy judgments. The superior State interest

prevails over a contrary local regulation, as a matter of law. The

reasons behind Greeleys ban of oil and gas drilling played no role in

Voss. Likewise, Summit Countys reasons for banning mining which

used cyanide were well known, but provided no defense to the superior

State policy. Implied preemption calls for this dispute to be resolved

without taking any position on Longmonts policy claims.

The district court walked through the implied preemption analysis

and opted to resolve the case on other grounds (operational conflict

preemption), noting that it recognizes the possibility that implied

preemption may apply. Order at 11; CF, 2048. It does and should

apply. The Longmont bans impermissibly conflict with the Act by

banning a practices explicitly authorized by the Act and Commission

Rules. Three independent reasons compel a finding of implied

preemption: (1) the State has a sufficiently dominant interest in the

regulation of hydraulic fracturing operations; (2) the State authorizes

what Longmont purports to ban; and (3) hydraulic fracturing is a

technical aspect of oil and gas operations, an area which cannot be

29

subject to local regulation. All three reasons call for implied preemption

to apply.

II. Longmonts fracking ban is preempted by operational conflict as a matter of statewide concern, or alternatively, mixed statewide and local concern.

Standard of Review: See section I above. Also, the question of

whether a matter is of state, mixed or local concern is a legal question

reviewed de novo. Webb v. City of Black Hawk, 295 P.3d 480, 486 Colo.

2013). The issue was preserved. CF, p.736-47.

Even if Longmonts fracking ban were not preempted by implication,

it would be preempted by operational conflict. The threshold issue in

deciding whether a law is operationally conflicted is to decide if the area

of regulation is matter of statewide, local, or mixed concern. See Webb,

295 P.3d at 486. A local government cannot regulate a matter of

statewide concern unless the Colorado Constitution or a state statute

expressly authorizes local regulation. City and County of Denver v. State

of Colo., 788 P.2d 764, 767 (Colo.1990) (relied on in Voss, 830 P.2d at

1066-67); Ibarra, 62 P. 3d at 156 (If there is no such explicit

authorization, then [the Courts] inquiry is over and the local law is

30

preempted.).9 If the matter is purely of local concern, then a conflicting

State law or regulation will fall. Voss, 830 P.3d at 1066. For matters

that are of mixed state and local concern, the state law or regulation

will preempt any local regulation that cannot be harmonized. Id.

A. Regulating hydraulic fracturing is a matter of statewide concern.

Courts have traditionally looked to four factors as part of the totality

of circumstances consideration of whether a matter is of statewide,

local, or mixed concern: (1) the need for statewide uniformity; (2) the

extraterritorial impact of the local regulation; (3) traditional source of

regulation; and (4) whether the Colorado Constitution specifically

commits the particular matter to state or local regulation. Voss, 830

9 The test for preemption is legal and does not call on courts to simply weigh competing interests of the State and local government, contrary to Longmonts gloss of City and County of Denver v. State, a case where a local residency requirement for city employment was found to be a local concern. See Longmont Op. Br. at 17-18 (citing City and County of Denver as standing for local interests outweighing state interests). That case applied standard operational conflict preemption analysis and did not talk of local interests outweighing state interests. Moreover, the Colorado Supreme Court has recently confirmed that the state has a significant interest in both mineral development and in human health and environmental protection. Colo. Mining Assn, 199 P.3d at 730.

31

P.2d at 1067. All parties agree with the applicability of these factors.

The district court independently analyzed the factors and found the

first three favored preemption and the fourth factor was not applicable.

These findings were sound. Order at 11-12; CF, 2048-2049.

First, the need for statewide uniformity in regulation of hydraulic

fracturing strongly favors preemption. Oil and gas development

represents a multi-billion dollar industry in Colorado as of 2012,

playing a prominent role in the state economy. See fn.8, supra. As the

Colorado Supreme Court noted in Bowen/Edwards, there is no

question that the efficient and equitable development and production of

oil and gas resources within the state requires uniform regulation of the

technical aspects of drilling, pumping, plugging, waste prevention,

safety precautions, and environmental restoration. 830 P.2d at 1058.

This need for uniform regulation stems from the reality that oil and gas

reserves do not conform to the boundaries of any particular local

government (e.g. the Greater Wattenberg Area underlies numerous

counties north of Denver, and thus the location and spacing of oil wells

is most efficiently controlled by State. See Commn Rule 318A). The

State has found uniform regulation of oil and gas reserves to be crucial

to efficient and fair production of resources. For example, without

32

uniform regulation the development of oil and gas resources in Colorado

would be inefficient because a patchwork of local regulations would

distribute the benefits and burdens artificially based on local

government jurisdiction, as opposed to regulations targeting the oil and

gas reserves as a whole.

Uniform regulation of hydraulic fracturing is also necessary because

the process is a quintessentially technical aspect of oil and gas

operations. The procedure involves injecting large quantities of water,

gels, acids or gases underground to stimulate the production of oil and

gas from a target geologic formation. See Commn Rule 100 Series

Definition of Hydraulic Fracturing Treatment. The Commissions

regulatory regime is replete with technical requirements pertaining to

hydraulic fracturing. See, e.g., Commn Rule 341 (requiring operators to

monitor pressures during hydraulic fracturing). Because hydraulic

fracturing is a technical aspect of oil and gas operations, the State has a

strong interest in uniform regulations to ensure the efficient and

equitable development and production of the states oil and gas

resources. See Bowen/Edwards, 830 P.2d at 1066 (preemption occurs

where local government impose[s] technical conditions on the drilling

or pumping of wells under circumstances where no such conditions are

33

imposed under the state statutory or regulatory scheme); BDS Intl,

LLC., 159 P.3d at 779 (local regulations are preempted if they impose

technical conditions on the drilling or pumping of wells under

circumstances where no such conditions are imposed by state law or

regulation.); Town of Frederick, 60 P.3d at 764 (local regulations are

preempted if they regulate technical aspects of drilling and related

activities). As the district court noted, there is a comprehensive

regulatory structure in place in Colorado to regulate the oil and gas

industry, Order at 9; CF, 2046 and [t]he Court finds the Commission

regulates hydraulic fracturing. Order at 10; CF, 2047.

The case law attesting to the technical nature of oil and gas

regulations compelling statewide as opposed to local interest leaves no

doubt that the first factor strongly favors preemption. The district court

below did not hold otherwise, finding the need for uniform regulation of

hydraulic fracturing to be compelling.

Second, the Longmont fracking ban has an extraterritorial impact,

also favoring preemption. The district court looked to the undisputed

evidence that Synergy had drilled a well from a well pad outside

Longmont with a horizontal well bore that ran under Longmont city

limits for a portion. Given Longmonts fracking ban, Synergy fracked

34

only the portions of the well that did not underlie Longmont. As a

result, the Synergy well produced less oil and gas than it would have

produced had the entire well been fracked. Order at 12; CF, 2049. This

evidence of an extraterritorial impact is indicative of how a local ban on

oil and gas activity will have an impact outside the jurisdiction.

In addition, in Voss, the Supreme Court determined the City of

Greeleys ban on drilling had an extraterritorial impact because oil and

gas pools do not conform to the boundaries of local government. Voss,

830 P.2d at 1068. The Court reasoned that Greeleys total ban on

drilling within the city limits substantially impedes the interest of the

state in fostering the efficient development and production of oil and

gas resources in a manner that prevents waste and that furthers the

correlative rights of owners and producers in a common pool or source of

supply to a just and equitable share of profits. Id. Just as with

Greeleys ban, Longmonts ban affects the ability of nonresident owners

of oil and gas interests in pools that underlie both the city and land

outside the city to obtain an equitable share of production profits in

contravention of one of the statutory purposes of the Oil and Gas

Conservation Act. Id.

35

Longmont points to evidence that Synergy fracked a well right up to

city limits as demonstrating the lack of an extraterritorial impact of the

local ban. Longmont Op. Br. at 22. Quite the opposite, the admission

that an oil and gas well originating from outside Longmont had to

refrain from fracking because of Longmonts ban proves the

extraterritorial impact. The second factor strongly favors preemption.

Third, the tradition factor favors preemption because the Voss Court

determined the regulation of oil and gas development and production

has traditionally been a matter of state rather than local control. Voss,

830. P.2d at 1068. Fostering the efficient, safe production of the states

oil and gas resources benefits all Colorado citizens, and has been the

declared policy of the state for more than 60 years. The General

Assembly created the Commission to oversee oil and gas exploration

and production on behalf of all people in the state. In the 23 years since

the Supreme Courts decision in Voss, the Act and Commission Rules

have been updated multiple times to keep pace with technological

developments, including hydraulic fracturing technologies. For

example, amendments to the Act in 2007 led to an extensive update of

36

the Commission Rules in 2008.10 Such advances have further solidified

the Commissions role as the authority over technical aspects of oil and

gas regulations because technological advances greatly increase[ ] the

need for uniformity of regulation. City of Denver v. Qwest Corp., 18

P.3d 748, 755 (Colo. 2001).

Longmonts only response on this point is to misdirect the inquiry

and claim the State has not placed restrictions on fracking, which

avoids the real legal question: has the State traditionally regulated the

oil and gas industry, including the use of hydraulic fracturing?

Longmont Op. Br. at 22. The district courts conclusion that this area

has traditionally been a matter of State regulation is unassailable. The

third factor likewise favors preemption.

10 See Final Statement of Basis and Purpose for 2008 Rulemaking (available at http://cogcc.state.co.us/RuleMaking/FinalRules/ COGCCFinalSPB_121708.pdf; CF, 73 (discussing 2007 amendments to the Act and resulting 2008 rulemaking).

37

Fourth, the Colorado Constitution is silent on allocating authority

over oil and gas development, or fracking in particular. There should be

no dispute this factor does not apply to the case.11

Looking at the four standard factors, there is a strong case for

regulation of fracking to be found a matter of statewide concern. The

first three factors favor preemption and the fourth factor is neutral. As

a matter of statewide concern, Longmont cannot regulate in the area

unless it has been expressly authorized to do so by the Colorado

Constitution or a state statute. See City and County of Denver, 788 P.2d

at 767; Ibarra, 62 P. 3d at 156. There is no such authority. Therefore,

11 Intervenors, including the Sierra Club, argue the Longmont bans are proper under the Inalienable Rights clause of the Colorado Constitution, Art. II, 3. Sierra Club admits this novel argument is unsupported by any Colorado case law and resorts to a case from Pennsylvania claiming the Environmental Rights Amendment to the Pennsylvania Constitution is comparable to Colorados Inalienable Rights clause. Sierra Club Op. Br., pp. 18-19 (citing Robinson Twp., Washington Cnty. v. Commonwealth, 83 A.3d 901 (Pa. 2013)). Sierra Clubs reliance on Robinson Twp. is misplaced because the Pennsylvania court found dispositive that the provision establishes the public trust doctrine. Id., at 942, 956. Colorado courts have thus far rejected the public trust doctrine. Kemper v. Hamilton, 274 P.3d 562, 570 (Colo. 2012) (Hobbs, J., dissenting and discussing attempts to amend Colorado Constitution to recognize doctrine).

38

the inquiry is over and the Longmont fracking ban is preempted by

operational conflict as a matter of statewide concern. The district court

analyzed the factors, finding they favored preemption as a matter of

statewide concern, CF, p. 2048-2049, but it opted instead to decide the

case as a matter of mixed state and local concern. The more direct and

appropriate result is to preempt the Longmont fracking ban on account

of the statewide interest and lack of any express local authorization to

regulate in the area.

B. Even if considered a matter of mixed concern, Longmonts fracking ban impermissibly conflicts with state law.

In matters of mixed concern, a local regulation will be preempted by

operational conflict if it cannot be harmonized with the superior state

law. Even if this Court disagrees with the statewide interest in

regulation of hydraulic fracturing, set forth above, the State regulations

and interests in oil and gas development would, at a minimum, make

the matter one of mixed concern.

There is little doubt the State authorizes and regulates the hydraulic

fracturing of oil and gas wells, including all producing wells within

Longmont city limits. As the evidence below demonstrated, every

producing well in the City has been hydraulically fractured at least

39

once. See CF, p.663-64 (Commission affidavit); and CF, p.1213

(Affidavit of Citys expert stating such wells were all fractured). The

wells in Longmont were all drilled subject to permitting and regulation

by the Commission. The Longmont fracking ban nullifies the

Commissions authority to determine that drilling coupled with

hydraulic fracturing is needed to foster the responsible, balanced

development, production, and utilization of the natural resources of oil

and gas in the state of Colorado in a manner consistent with protection

of public health, safety, and welfare, including protection of the

environment and wildlife resources. 34-60-102(1)(a)( I), C.R.S. By

preventing viable development of oil and gas wells, the Longmont ban

promotes waste (understood as inefficient development of oil and gas

resources), undermines correlative rights of mineral interests outside

Longmont, and destroys the States interest in ensuring that each oil

and gas pool in Colorado [will] produce up to its maximum efficient rate

of production. 34-60-102(1)(a)(II); 102(1)(a)(III); 102(1)(b), C.R.S.

The Longmont ban on hydraulic fracturing presents an irreconcilable

conflict with the Act and Commission Rules and is operationally

preempted. As matter of mixed concern, the district court found the

40

conflict to be obvious because the Commission permits hydraulic

fracturing and Longmont prohibits it. Order at 14; CF, 2051.

Longmonts argument misreads Colorado Supreme Court precedent

by failing to acknowledge the role played by the four-factors discussed

in Bowen/Edwards and subsequent cases as the starting point of

conflict analysis, followed by an ad hoc determination of the conflict. In

Webb, a case from just two years ago, the Court walked through the four

factors and then analyzed the conflict: The test to determine whether a

conflict exists is whether the home-rule citys ordinance authorizes

what state statute forbids, or forbids what state statute authorizes.

295 P.3d at 492. Longmonts argument misreads the controlling

precedent.

The argument also misreads Court of Appeals precedent by

characterizing Town of Frederick as having rejected the so-called ban

what has been authorized test. Longmont Op. Br. at 28.12 There is

12 In fact, Longmonts argument flips the analysis from Town of Frederick, which stated the issue as:

Similarly, the Town relies on National Advertising Co. v. Department of Highways, 751 P.2d 632 (Colo.1988), for the proposition that there is no operational conflict here because its ordinance does not authorize any act that the state prohibits.

41

nothing particularly noteworthy in how Town of Frederick walked

through preemption analysis. It focused on the potential for

harmonizing local regulation with state regulation; fully consistent with

giving close scrutiny to local regulation that simply bans an authorized

activity.

The argument also misses how the district court below found, at least

by implication, that Longmonts fracking and related bans did in fact

materially impede the States proven interest in regulating and

authorizing the very same activity. The district court even quoted

Longmonts preferred nomenclature from Bowen/Edwards about

materially impede or destroy before stating, [h]ere, giving effect to

the local interest, banning fracking, has virtually destroyed the state

interest in production. Order at 15; CF, 2052. There was no error

below, and even if Longmonts desired formula were the exclusive test,

the fracking ban would still be preempted by operational conflict.

Some preemption cases face local government regulations with a

lesser degree of conflict, including regulations which attempt to permit

_________________________ But Longmont is not authorizing something the State prohibits; instead it is prohibiting something authorized by the state.

42

or condition an activity authorized by the State, as opposed to a simple,

complete ban. E.g. Town of Frederick, 60 P.3d at 760 (local regulation

banned drilling unless special use permit obtained). Cases such as these

frequently turn on detailed analysis of how much interference is caused

by the additional local regulation and to what extent those double

regulations can be harmonized. This is analogous to federal preemption

law where courts look to the ability to comply with both regulations as

an indication that both regulations can survive without preemption.

Gade v. Natl Solid Waste Mgmt. Assn,

505 U.S. 88, 98 (1992). There is simply no need to speculate on how less

onerous local regulations may fare under an operational conflict

preemption analysis to decide this case. E.g. Bowen/Edwards, 830 P.2d

at 1060 (The county regulations thus appear to be designed to

harmonize oil and gas developmental and operational activities with the

countys overall plan for land-use).

Courts may face closer cases in the future, but this is not a close

case. Longmonts law can only be understood as a pure ban refusing to

allow any hydraulic fracturing activity, no matter how the State

attempts to control or regulate the activity. See Order at 16; CF, 2053

(There is no way to harmonize[] Longmonts fracking ban with the

43

stated goals of the Oil and Gas Conservation Act. The conflict in this

case is an irreconcilable conflict.). A ban of what the State allows is a

paradigm conflict subject to preemption.

C. Longmonts claimed factual dispute does not undermine the case for operational conflict preemption.

Perhaps recognizing the weakness of its legal position, Longmont

suggests this Court remand the case for additional factual development

instead of affirming the preemption finding of the district court.

Longmont Op. Br. at 38-50. Relying on a misreading of

Bowen/Edwards, Longmont contends the court needs a further

developed factual record to decide the operational conflict claims. Id. at

39 (citing Bowen/Edwards, 830 P.2d at 1061). There are multiple

problems with this line of argument.

First, Longmont continues to misstate the legal standards for

determining implied preemption and operational conflict preemption.

The implied preemption test is a matter of statutory construction that

does not hinge on localized concerns over health and safety. See Colo.

Mining Assn. 199 P.3d at 730-31. Even under the more involved

analysis for operational conflict preemption, Longmont continues to

improperly suggest a local interest can outweigh state interests in a

44

matter of mixed state and local concern. As explained above, the proper

analysis for a matter of mixed concern is whether the local regulation

can be harmonized with the state regulation, not whether the judicial

branch agrees with policy judgments of the state or local government.

The analysis turns on the conflict or harmonization of regulations, not

on the perceived values of factual claims made by the state or local

governments.

Second, none of the alleged factual issues raised by Longmont are

material to the operational conflict preemption analysis. Take for

example the most important[] issue, according to Longmont, of

whether Longmonts ban on hydraulic fracturing has destroyed the

state interest in oil and gas development. Longmont Op. Br. at 41-43.

This asks the wrong question. The State has an interest in oil and gas

development through the use of hydraulic fracturing, which the State

has elected to regulate and authorize as an efficient and commonly used

well-completion process. The Longmont ban conflicts with the State

interest because the State allows and regulates, intentionally so, the

use of hydraulic fracturing. That it may be theoretically possible to drill

an oil and gas well without using hydraulic fracturing does not, legally,

reduce the conflict and resultant preemption. And, tellingly, Longmont

45

cannot point to any economically viable development of oil and gas wells

in Longmont not using hydraulic fracturing. Even assuming all the

facts Longmont marshals are disputed, they are simply not material.

D. Longmonts E&P Waste storage and disposal bans are preempted as matters of mixed concern.

Longmonts bans on the open pit storage and disposal of wastes

associated with hydraulic fracturing implicate, at a minimum, matters

of mixed concern. Such bans are therefore operationally preempted

because they forbid what the Act and Commission Rules authorize and

regulate. Webb, 295 P.3d at 492.13 This argument was preserved. CF,

p.745-749.

The following illustrate a longstanding tradition of

intergovernmental cooperation in the field of E&P Waste management

and preclude a finding that Longmonts E&P Waste bans are matters of

purely local concern:

The Colorado Solid Waste Act explicitly provides the proper disposal of solid wastes is a matter of mixed statewide and local concern. 30-20-100.5, C.R.S. See also, 30-20-

13 As stated in section IV, infra, the Citys ban on Class II disposal wells is subject to field preemption under federal law. See Bath Petroleum Storage, Inc. v. Sovas, 309 F. Supp. 2d 357, 366 (N.D.N.Y 2004).

46

101(6)(b)(VI), CRS (Solid waste does not include: Exploration and production wastes, as defined in section 34-60-103 (4.5), C.R.S., except as such wastes may be deposited at a commercial solid waste facility.); Town of Telluride v. Thirty-Four Venture, 3 P. 3d 30 (Colo. 2000) (General Assemblys determination that something is a matter of local, mixed or state concern is afforded deference in recognition of the legislatures authority to declare the public policy of the state in matters of statewide concern.).

Commission Rule 908.h. provides Operators may be subject

to local requirements for zoning and construction of centralized E&P Waste management facilities.

Banning the open pit storage of wastes associated with hydraulic

fracturing and the disposal of such wastes anywhere in the City negates

the Commissions specific statutory authority to regulate the

generation, transportation, storage, treatment, or disposal of

exploration and production wastes. 34-60-103(6.5), C.R.S.; 34-60-

103 (4.5), C.R.S. (defining E&P Waste). Such bans also negate

numerous Commission Rules and are therefore invalid under Webb. See

Rules listed in Statement of Facts, supra.

47

III. Longmonts ban on hydraulic fracturing is void under the Areas and Activities of State Interest Act because it prevents the extraction and exploration of minerals.

Standard of Review: De novo review applies. See section I above.

The issue was preserved. CF, p.744-45.

The Areas and Activities of State Interest Act (AASIA) enables

local governments to designate mineral resource areas as areas of

state interest, see 24-65.1-202(1)(a),C.R.S., and to then enact certain

regulations in the properly designated zone. In fact, local governments

may be able to prevent the extraction of minerals from mineral resource

areas if, after weighing sufficient technical or other evidence, [the local

government] finds that the economic value of the minerals present

therein is less than the value of another existing or requested use. Id.

Local governmental power to designate an area of oil and gas

development as an area of state interest, and therefore prevent

extraction and exploration pursuant to 24-65.1-202(1)(a), C.R.S., is

expressly limited by 24-65.1-202(1)(d), C.R.S., which provides: (d) Unless an activity of state interest has been designated or identified or unless it includes part or all of another area of state interest, an area of oil and gas development shall not be designated as an area of state interest unless the state oil and gas conservation commission identifies such area for designation [pursuant to 24-65.1-302(3), C.R.S.].

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24-65.1-202(1)(d), C.R.S.

Thus, the AASIA, 24-65.1-202, C.R.S., provides an explicit and

exclusive means for local governments to ban oil and gas extraction and

exploration. Critically, no such ban may be enacted by a local

government unless the Commission first designates a defined area of oil

and gas development as an area of state interest that may be regulated

by the local government. 24-65.1-202(1)(d), C.R.S. It is undisputed

that the Commission has not done so in Longmont. CF, p.735. The

Citys ban on hydraulic fracturing is therefore void under AASIA. This

additional hurdle provides an alternative basis to affirm the court

below.

IV. Longmonts ban on disposal of fracking fluids is void under the federal Safe Drinking Water Act.

Standard of Review: De novo review applies. See section I above.

This issue was preserved. CF, p.745-46; Order at 15, fn.10; CF, 2052.

Disposal of hydraulic fracturing wastewater through underground

injection is a technical aspect of oil and gas operations. See Commn

Rule 325. In addition, the Federal Safe Drinking Water Act, 42 U.S.C.

300f et seq. (SDWA), authorizes the disposal of such wastes via

Class II injection wells (Class II Wells). Class II Wells are regulated

49

by the Commission pursuant to a delegation of federal authority from

the U.S. Environmental Protection Agency. CF, p.551-59.

The Citys outright ban on disposal of oil field wastes is a total ban

on Class II Wells. The SDWA preempts the field of underground

injection of oilfield waste and impliedly preempts the Citys disposal

ban insofar as it concerns Class II Wells. Bath Petroleum Storage, Inc.

v. Sovas, 309 F. Supp. 2d 357, 366 (N.D. N.Y 2004). This alternative

basis for preemption applies to Longmonts disposal ban.

CONCLUSION

The Commission requests the Court enter an order affirming the

district courts Order granting summary judgment in favor of the

Commission and finding the Longmont bans to be preempted.

Respectfully submitted this March 5, 2015.

CYNTHIA H. COFFMAN, Attorney General

/s/ Michael Francisco

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MICHAEL FRANCISCO, 39111* Assistant Solicitor General, JAKE MATTER, 32155* Assistant Attorney General JULIE M. MURPHY, 40683* Assistant Attorney General Resource Conservation Unit, Natural Resources & Environment Section Attorneys for Colorado Oil and Gas Conservation Commission *Counsel of Record

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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:

x It contains 9,439 words. It does not exceed 30 pages.

The brief complies with C.A.R. 28(k).

X For the party raising the issue: It contains under a separate heading (1) a concise statement of the applicable standard of review with citation to authority; and (2) a 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 such party agrees with the opponents statements concerning the standard of review and preservation for appeal, and if not, why not.

X 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/ Michael Francisco____

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CERTIFICATE OF SERVICE

This is to certify that I have duly served the foregoing upon all parties herein electronically via Integrated Colorado Courts E-Filing System or by U.S. Mail, postage prepaid, this March 5, 2015, addressed as follows:

Karen L. Spaulding, Esq. Beatty & Wozniak, P.C. 216 16th Street, Suite 1100 Denver, CO 80202 [email protected]

Thomas J. Kimmell, Esq. Zarlengo & Kimmell, PC 700 North Colorado Boulevard, Suite 598 Denver, CO 80206 [email protected]

Eugene Mei, Esq. Daniel E. Kramer, Esq. City Attorneys City of Longmont 408 3rd Avenue Longmont, CO 80501 [email protected] [email protected]

Phillip D. Barber, Esq. 1675 Larimer Street, Suite 620 Denver, CO 80202 [email protected]

Mark Mathews, Esq. Wayne F. Forman, Esq. Michael D. Hoke, Esq. Brownstein Hyatt Farber Schreck LLP 410 17th Street, Ste. 2200 Denver, CO 80202 [email protected]

Jeffery Philip Robbins Goldman Robbins & Nicholson P.C. 679 E. 2nd Ave., Suite C P.O. Box 2270 Durango, CO 81301

Thomas A. Carr Boulder County Attorneys Office P.O. Box 791 Boulder, CO 80306 [email protected]

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[email protected]

Kevin Lynch Brad Arthur Bartlett Sturm College of Law 2255 East Evans Ave., Ste. 33 Denver, CO 80301 [email protected]

Eric Huber 1650 38th Street, Suite 102 Boulder, CO 80301 [email protected]

/s/Linda Miller

INTRODUCTIONISSUES PRESENTED FOR REVIEWSTATEMENT OF THE CASE AND FACTSSUMMARY OF THE ARGUMENTARGUMENTI. The Longmont bans are impliedly preempted, just like Greeleys ban was in Voss.A. The State has a sufficiently dominant interest in regulating hydraulic fracturing and the storage and disposal of E&P Waste to preempt the Longmont bans.B. The Longmont charter amendment is inconsistent with and irreconcilable with the State regulatory scheme.

II. Longmonts fracking ban is preempted by operational conflict as a matter of statewide concern, or alternatively, mixed statewide and local concern.A. Regulating hydraulic fracturing is a matter of statewide concern.B. Even if considered a matter of mixed concern, Longmonts fracking ban impermissibly conflicts with state law.C. Longmonts claimed factual dispute does not undermine the case for operational conflict preemption.D. Longmonts E&P Waste storage and disposal bans are preempted as matters of mixed concern.

III. Longmonts ban on hydraulic fracturing is void under the Areas and Activities of State Interest Act because it prevents the extraction and exploration of minerals.IV. Longmonts ban on disposal of fracking fluids is void under the federal Safe Drinking Water Act.

CERTIFICATE OF COMPLIANCECERTIFICATE OF SERVICE