Outcome could have ‘profound effect’ on how or whether oil and gas operations are permitted in Colorado

Colorado Attorney General Cynthia Coffman has sent what could turn into a landmark oil and gas ruling to the Colorado Supreme Court for review.

An earlier ruling by the appellate court in the case of Martinez v. COGCC could change the parameters under which future oil and gas development would be permitted and/or denied in Colorado. The Martinez plaintiffs demanded that the COGCC must ensure that drilling which it permits in the state “can occur in a manner that does not cumulatively, with other actions, impair Colorado’s atmosphere, water, wildlife, and land resources, does not adversely impact human health, and does not contribute to climate change.”

Yesterday’s petition to the Colorado Supreme Court recalls that Martinez and the other respondents filed a request for rulemaking that disregarded a key objective of the Colorado Oil and Gas Conservation Act.

The COGCC petition recounts the case as follows:

“In November 2013, a group of youth activists opposed to oil and gas production (“Respondents”) petitioned the Commission to engage in rulemaking. Their rulemaking request focused solely on a policy of environmental protection. It disregarded the Act’s directive to “[f]oster the responsible, balanced development, production, and utilization of the natural resources of oil and gas in the state.” § 34-60-102(1)(a)(I), C.R.S.

“The request called on the Commission to “take immediate and extraordinary action” with respect to the environment and climate change. App. C at 41 (Petition for Rulemaking).

“It asserted that the Commission is governed by the “public trust doctrine,” which, according to Respondents, “holds the government responsible, as perpetual trustee, for the protection and preservation of the atmosphere for the benefit of both present and future generations.” Id.

“Respondents urged the Commission to adopt a rule that would halt all oil and gas production in Colorado. Production would resume only if a “third-party organization” decided that oil and gas activity may be conducted without any effect on the environment: ‘The Commission shall not issue any permits for the drilling of a well for oil and gas unless the best available science demonstrates, and an independent, third-party organization confirms, that drilling can occur in a manner that does not cumulatively, with other actions, impair Colorado’s atmosphere, water, wildlife, and land resources, does not adversely impact human health, and does not contribute to climate change.’

FOOTNOTE: 1 For example, “Colorado has some of the most robust regulations in the country that apply to hydraulic fracturing.” Stephen Del Percio & J. Cullen Howe, The Legal and Regulatory Landscape of Hydraulic Fracturing 33 (2014).

Environmentalists, municipalities, governor lobbied for no review

Environmental groups, several northern Colorado municipalities and the governor of Colorado had lobbied against a Colorado Supreme Court review of the Martinez case after an earlier ruling in favor of the COGCC was overturned by the Colorado Court of Appeals. But yesterday the Colorado AG made her decision to have the state’s high court review the appellate court ruling.

From the Colorado Oil and Gas Conservation Commission (COGCC) petition to the Colorado Supreme Court:

“…the court of appeals rejected the Commission’s long-settled interpretation [of its mandate set forth by the Colorado Oil and Gas Conservation Act]. In a published 2–1 decision, the court held that rather than balancing competing public policies, the Act prioritizes one policy at the expense of others. Under this view, the Commission is permitted to disregard the Act’s directive to foster responsible oil and gas development and enact rules that would entirely prohibit oil and gas related activity unless it can occur with zero direct or cumulative environmental impact.”

The introduction to the COGCC petition sums it up like this: “The question presented is as follows: When the Commission engages in rulemaking, is it permitted to disregard the Act’s policy of fostering oil and gas development in Colorado?”

Colorado AG Cynthia Coffman explained yesterday’s decision in a statement.

“The Colorado Oil & Gas Conservation Commission unanimously voted to defend its legal position in court, and I agree that the Colorado Supreme Court should review the case due to its legal significance,” Coffman said.

“My office will continue to move forward with the case by seeking Supreme Court review.

“This appeal is not intended to be a statement on complex energy policy issues. Rather it is a legal challenge to a court decision that stands to have a profound effect on regulation and administrative decision making by government entities.

“My office will move forward with the case on behalf of our client, the Colorado Oil & Gas Conservation Commission, and pursuant to the Attorney General’s independent authority to defend Colorado law.  We will work to expeditiously obtain an outcome in this matter. Further details regarding the Martinez appeal can be found in my letter to Gov. Hickenlooper.”

AG letter to Gov. Hickenlooper

The content of the letter is republished below.

Office of the Attorney General                                                                                                                May 18, 2017

Governor John W. Hickenlooper

RE: Your request to abandon an appeal on behalf of the Colorado Oil and Gas Conservation Commission

Governor Hickenlooper:

Yesterday, your senior staff sent an e-mail message to Deputy Attorney General Laura Chartrand, “ask[ing] that [my] office not proceed” with the appeal in Martinez v. Colorado Oil and Gas Conservation Commission. Your request conflicts with an official decision of the Commission, which you do not have authority to countermand.

On May 1, 2017, the Commission convened a regular meeting to discuss various items of business. At the meeting, and I have heard at your request, the Commission called an executive session to receive legal advice regarding the Martinez appeal, which raises important legal questions about the meaning of the Colorado Oil and Gas Conservation Act. With the benefit of the legal advice it received, the Commission ended its executive session and, in public, deliberated the issue and unanimously voted to proceed with the Martinez appeal in the Colorado Supreme Court. Now your senior staff suggests that the Commission’s vote was “only advisory” and that the Commission lacks statutory authority “to challenge a court’s interpretation of its organic statute.” This quite simply is an incorrect reading of Colorado Law.

The Commission’s vote to proceed with the Martinez appeal was within its statutory authority. The General Assembly expressly granted the Commission power to “make and enforce rules, regulations, and orders … and to do whatever may be reasonably necessary to carry out the provisions of [the Act].” § 34-60-105(1), C.R.S. In the Martinez appeal, the Commission is defending its own order disposing of a request for rulemaking. Pursuing the appeal to completion is “reasonably necessary” to “enforce” the Commission’s order. Id. Additionally, the Act makes clear that “[p]roceedings for appellate review … may be taken from any judgment, decree, or order in any action under this article.” § 34-60-109, C.R.S. The Commission’s order, and the Martinez appeal itself, fall within that provision. Because the Commission is a statutory client of my office, it is my office’s “duty to represent the commission in all court proceedings.” § 34-60-105(3), C.R.S. That includes court proceedings initiated by an adverse party seeking to overturn a Commission order issued under its express statutory powers.1

The Commission is an independent agency with independent powers. § 24-1-105(1), C.R.S. (explaining that agencies like the Commission “exercise [their] prescribed statutory powers, duties, and functions, … independently”); see also § 24-1-124(3)(f), C.R.S. (explaining that the Commission, when transferred to the Department of Natural Resources, retained its independent powers). The Colorado Supreme Court has explicitly rejected attempts by past Governors to “countermand[ ]” the actions of independent agencies. State Highway Comm’n v. Haase, 537 P.2d 300, 301 (Colo. 1975). Attempts to do so are “a nullity” because an agency like the Commission “exercises its prescribed statutory powers independently.” Id. at 302. Your staff’s assertion that a decision to proceed with the Martinez appeal is “more properly made by the Governor’s office” than by the Commission itself is contrary to several provisions of the Act. E.g., § 34-60-105(1), C.R.S. (“Any delegation of authority to any other state officer … to administer any other laws of this state relating to the conservation of oil or gas … is hereby rescinded and withdrawn and such authority is unqualifiedly conferred upon the commission ….”); § 34-60-106(4), C.R.S. (“The grant of any specific power or authority to the commission shall not be construed in this article to be in derogation of any of the general powers and authority granted under this article.”).

The Act specifies the geographical, political, and technical qualifications that Commissioners must possess in order to make appropriate, bi-partisan policy decisions on behalf of the State. § 34-60-104(2)(a)(I), C.R.S. While the Act gives you appointment and removal authority over the Commissioners, § 34-60- 104(2)(b), C.R.S., it does not permit you to disregard the independent judgment of the Commission and direct its decision-making.

As a separate matter, the Martinez appeal raises issues of great significance to the State, and I have determined independently that the Colorado Supreme Court is the proper body to resolve them. See § 24-31-101(1)(a), C.R.S. (stating that the Attorney General “shall prosecute and defend for the state all causes in the appellate courts in which the state is a party or interested”). In Martinez, a group of litigants has called into question an interpretation of the law that has governed the Commission’s functions for nearly 25 years. Whether the Colorado Supreme Court agrees or disagrees with that interpretation, the case should be heard and decided by our highest court to ensure consistency with its own case law and to confirm that the law, as enacted and intended by the General Assembly, is given effect.



Attorney General

FOOTNOTE:  1 In the past, parties have attempted to challenge the Commission’s independent authority to participate in court proceedings. For example, in 2012 the Commission voted to initiate litigation in Colorado Oil and Gas Conservation Commission v. City of Longmont, No. 12 cv 702 (D. Ct. Boulder Cnty.). The court rejected the argument that the lawsuit was beyond the Commission’s authority.

The COGCC’s Petition to the Colorado Supreme Court is here.



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