February 13, 2018

Colorado House Passes Fracking Measure, Supports More Local Input Over Projects

Holland & Knight Energy and Natural Resources Blog
Leah E. Capritta

The Colorado legislature took an important step toward solidifying greater community-control leverage over fracking operations via HB18-1071, introduced by State Rep. Joe Salazar (D-Adams) in January 2018. The bill would amend the Oil and Gas Conservation Act, C.R.S. §§ 34-60-101, et seq. (the “Act”), by expressly mandating regulation of oil and gas operations “so as to prevent and mitigate significant adverse environmental impacts.” HB18-1071 seeks to codify a recent decision from the Colorado Court of Appeals, Martinez v. Colorado Oil & Gas Conservation Comm’n, 201 COA 37, 2017 WL 1089556 (March 23, 2017).

All this arises from the regulatory authority of the Colorado Oil and Gas Conservation Commission under the Act. The statute broadly empowers the Commission to “make and enforce rules, regulations, and orders [and] do whatever may be reasonably necessary” (C.R.S. § 34-60-105(1)) to “[f]oster 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 (C.R.S. § 34-60-105(1)(emphasis added)).”

In Martinez, the Commission and the Colorado Attorney General Office argued that the Commission must balance the interests of development against the interest of public health and environmental protection, specifically noting that the Commission lacked the power to withhold drilling permits pending impact reviews.

The Court of Appeals sided with the petitioners — and against the Commission and the Colorado Attorney General’s Office — noting that the phrase “in a manner consistent with” does not indicate a balancing test but rather a condition that must be fulfilled. Further, the court found that the amendments to the Act over time “reflect the General Assembly’s general movement away from unfettered oil and gas production and incorporation of public health, safety, and welfare as a check on that development.” Consequently, the Act contradicted the Commission’s adoption of a “balancing test.”

The Colorado Supreme Court granted cert to hear Martinez on Jan. 29, 2018.

On Feb. 8, 2018, HB18-1071 passed the state House on its way to the Senate, where Republicans hold a two-vote majority and will likely kill it. Nevertheless, the bill represents on-going skirmishes between cities and counties in Colorado, which increasingly want a say (or even a veto) in oil and gas development impacting their residents, and developers, together with Colorado Attorney General Cynthia Coffman, who appears to marginalize such input in favor of harvesting mineral rights.

HB18 1071 together with the legislative status may be found here.

Related Insights