State sues over control of oil and gas regs

City of Longmont is charged with overstepping its authority
The Colorado Statesman

Failed attempts at the legislature this year to define local versus state control of oil and gas regulations in Colorado has spilled into the courts, as the state has filed suit against the City of Longmont for having enacted its own set of rules.

State attorneys for the Colorado Oil and Gas Conservation Commission, or the COGCC, filed the case in Boulder County District Court on Monday afternoon, seeking to overturn the rules enacted by the Longmont City Council on July 17. The case is believed to be the first time the state has initiated a lawsuit against local government regarding oil and gas regulation.

The Longmont ordinance itself is not considered to be overly burdensome to the oil and gas industry, as environmental groups have even called it “weak.” A few controversial provisions address setbacks and residential zoning for wells associated with the drilling process known as hydraulic fracturing.

Diana Caile and Jodee Brekke, founders of The Mothers Project in Colorado, recently traveled to Washington, D.C. to present U.S. Sens. Mark Udall and Michael Bennet with a letter urging a moratorium on fracking.

Much more controversial is the legal case tied to it, which could set an important precedent in Colorado for defining local versus state control of oil and gas regulations.

The state believes that it — through the Colorado Oil and Gas Conservation Commission — has the executive authority to impose rules with input from local representatives to the commission. As a result, the state is arguing that many of the rules enacted by Longmont contradict state law and therefore should be overturned.
Of issue to the state concerning Longmont’s ordinance is:

• Additional water sampling/testing requirements;
• A ban on oil and gas well facilities and operations in residential zones;
• Imposing a well setback of at least 150 feet;
• Independent rules governing wildlife protection;
• An authority declared by Longmont to determine whether development should proceed on multi-well sites;
• An independent chemical disclosure rule, which the COGCC believes conflicts with state law; and
• An authority declared by Longmont to conduct its own inspections of oil and gas operations.

Mike King, executive director of the Colorado Department of Natural Resources, defended the lawsuit, stating that it is a “necessary step to get guidance from the courts.”

“We’ve collaborated successfully with communities for decades on oil and gas development, and parties have traditionally been able to work through issues without drawing hard lines,” King said in a statement. “In the case of Longmont, the community has taken a position we think jeopardizes efficient and orderly development of a resource all citizens depend upon. Citizens in Longmont and across the state deserve a clearer sense of authority on this matter, and so we think it’s time to turn to the courts for direction and resolution.

“From a governing standpoint, we are concerned about a tangled patchwork of rules from jurisdiction to jurisdiction that create inconsistency, uncertainty and undermine the responsible development of our important oil and gas resources — resources we all consume — the jobs they afford and critical revenues to local and state governments across Colorado,” continued King.

Longmont city officials supporting the ordinance declined to speak with The Colorado Statesman, citing the ongoing lawsuit. But a spokesman for the city, Rigo Leal, said Longmont officials believe the ordinance they passed simply updates aging 10-year-old rules in order to conform to state regulations.

Leal points out that the city passed two separate moratoriums on hydraulic fracturing during the rule-making process in order to take its time in crafting regulations that protect the community. He said that when in April state attorneys sent a letter to Longmont officials cautioning them against enacting their own rules, City Council members paused from crafting the ordinance to work with city attorneys and to evaluate the proposal.

But in the end — even after King also warned the Council against enacting the rules — the City Council went through with the new regulations by a vote of 5-2.

“The City Council has gone on record very publicly in stating that it’s doing what it thinks is best for its residents,” said Leal.

But not everyone on the Longmont City Council agrees.

Councilwoman Bonnie Finley voted against the proposal, concerned that the ordinance would result in an expensive lawsuit, which did not come as a surprise to her following the repeated warnings from the state.

“It did frustrate me. I think some members of Council thought that it was an empty threat,” said Finley. “I tried to say that I don’t know of an attorney general to make idle threats, and that indeed it would happen, and it certainly has.”

Patchwork of rules and regs

Adding to Finley’s concerns was the fear of establishing a complicated patchwork of rules and regulations that would add uncertainty to the oil and gas industry and discourage production in Colorado.

“I really view it as very similar to water rights, and you cannot have an industry that impacts our economy to this extent, and have all of our individual cities having different rules — it just doesn’t work,” said Finley. “In order for that industry to be successful they need to have stability across the state in order to make their decisions.”

The issue of a “patchwork of rules” arose during debate of legislation sponsored this year by Rep. Matt Jones, D-Louisville, which sought to give some control over oil and gas regulations to local governments. House Bill 1277 would have still clarified that local governments are required to work with the COGCC. The bill died in committee.

Jones had hoped to place the rule-making authority where he believes it belongs — with local governments — and to avoid costly lawsuits. He was “disappointed” to learn that the state had sued Longmont over its attempt to enact their own set of rules and regulations.

“No one can remember a time when the state has initiated a suit about local land use control in oil and gas rules,” said Jones. “Oil and gas companies typically do that and the state does get involved in some of those cases, but they don’t initiate it. It makes me very disappointed and frustrated that the state would use state money to initiate lawsuits to sue local governments.”

Sen. Ted Harvey, R-Highlands Ranch, has a different opinion. He ran a bill this year, Senate Bill 88, which would have stated that state law preempts local regulation of oil and gas operations. The bill also died in committee.

Harvey believes that had his bill passed, there would have been clearer guidance to local governments and less of a need to file lawsuits.

“My legislation was simply codifying that which has already been affirmed through case law, and I think had we gotten that legislation passed, it would have eliminated a lot of the gray areas that are out there that’s going to lead to more lawsuits and more unnecessary costs to the taxpayer both at the local and state level,” he said.

Environmental and health concerns

Much of the debate stems from concerns over the controversial drilling process known as hydraulic fracturing, or fracking. The process fractures rock by employing the pressure of a fluid — often times including chemicals, sand and water — to increase the extraction rates in recovering oil and natural gas. Fears have grown that some of those chemicals can leak into groundwater.

Many in the industry and outside the industry have worked to debunk those claims, pointing out that in Colorado there has never been a recorded instance of fracking contaminating groundwater.

Gov. John Hickenlooper, who supports fracking, worked to alleviate fears by requiring the oil and gas industry to disclose ingredients used in the hydraulic fracturing process, and by establishing a task force to make recommendations related to oil and gas operations in Colorado. The task force recommended increased collaboration with local governments.

The Independence Institute, a Libertarian-leaning think tank in Denver, released an issue paper last week stating that the debate over fracking “suffers from misinformation.” Called “Frack Attack: Cracking the Case Against Hydraulic Fracturing,” the paper contends that fracking does not contaminate drinking water, but that the fluid handling that accompanies fracking can cause specific, limited types of contamination.

The issue paper also addressed a concern over depleting water sources, stating, “The relative amounts of water involved and existing regulations make this a virtual impossibility.”

“If we understood fracking as well as we understand cars, food and football, there would be nowhere near the same level of opposition that there is today,” said Donovan Schafer, author of the Independence Institute’s issue paper. “In my experience, the more people know about fracking, the less concerned they tend to be.”

Amy Oliver, director of the Independence Institute’s Energy Policy Center, takes the debate one step further, arguing that it is a private property issue.

“If I held mineral rights, I ought to be able to utilize them…” she said. “That’s a private property issue. And much like we have a uniformed concealed carry law, this is one of those places where oil and gas companies, to be able to develop their mineral rights or somebody else’s if it’s leased to them, they need to be able to operate with roughly the same regulations when you cross going from one municipality to the next.”

But fears surrounding fracking do not appear to be diminishing. In Erie, Colo. a coalition of parents and consumer and environmental organizations — called Erie Rising — have been protesting Encana Corporation’s plans to frack for natural gas near three schools, as well as the state’s “inadequate” rules and regulations.

And recently, two Colorado mothers, Jodee Brekke of Denver and Diana Caile of Boulder — founders of The Mothers Project in Colorado — traveled to Washington, D.C. to join a nationwide coalition of citizens, communities and organizations for the Stop the Frack Attack events, ongoing since July 25.

The coalition is frustrated with Republicans and Democrats alike, even calling out environmental leaders for not taking a hard stance against fracking. The group would like all sides to discontinue “rhetoric” about the benefits of oil and natural gas extraction. A letter was distributed recently to Democratic U.S. Sens. Mark Udall and Michael Bennet calling for a national moratorium on fracking.

Activists believe that there is more than one spill of fluids associated with oil and gas activity every day in Colorado, according to COGCC data. They also point out that in 2008, a wastewater pit in the state leaked 1.6 million gallons of fluid, which migrated to the Colorado River.

“I think that Colorado has been sold down the river to the oil and gas industry by our politicians and even a lot of state environmental leaders,” said Caile.

She said she doesn’t have a lot of faith that the legislature or state depar-tments will enact any laws or rules that can adequately protect citizens.

“When people tell me we have to solve this issue at the state legislature, my reaction is, ‘Who in the state legislature is going to champion this issue for you?’” said Caile. “There’s nobody there.”

Peter@coloradostatesman.com