High court reverses appeals court on view of COGCC permitting priorities

On Monday, the Colorado Supreme Court issued its decision on the high-profile case brought to the state judicial system by a group of youth petitioners who sought to stop oil companies from being given drilling permits unless the Colorado Oil & Gas Conservation Commission and the drilling applicants could ensure that the full effects of the permitted oil and gas activity would bring zero-effect to the climate and environment.

Second Big Win for Colorado Oil & Gas:  State Supreme Court Reverses Martinez Decision

COGCC v. Martinez Colorado Supreme Court – photo: Oil & Gas 360

Decision of the Colorado Supreme Court

Here is how today’s high court decision reads:

“We now conclude, contrary to the division majority below, that the Commission [Colorado Oil and Gas Conservation Commission] properly declined to engage in rulemaking to consider Respondents’ proposed rule.

“We reach this conclusion for three primary reasons.

“First, our review of an administrative agency’s decision as to whether to engage in rulemaking is limited and highly deferential.

“Second, in our view, the Commission correctly determined that, under the applicable language of the Act, it could not properly adopt the rule proposed by Respondents. Specifically, as the Commission recognized, the pertinent provisions do not allow it to condition all new oil and gas development on a finding of no cumulative adverse impacts to public health and the environment. Rather, the provisions make clear that the Commission is required (1) to foster the development of oil and gas resources, protecting and enforcing the rights of owners and producers, and (2) in doing so, to prevent and mitigate significant adverse environmental impacts to the extent necessary to protect public health, safety, and welfare, but only after taking into consideration cost-effectiveness and technical feasibility.

“Finally, in declining to engage in rulemaking, the Commission reasonably relied on the facts that it was already working with the CDPHE to address the concerns underlying Respondents’ proposed rule and that other Commission priorities took precedence at this time.

“Accordingly, we reverse the judgment of the division below.

“Whether the Court of Appeals erred in determining that the Colorado Oil and Gas Conservation Commission misinterpreted section 34-60-102(1)(a)(I) as requiring a balance between oil and gas development and public health, safety, and welfare.”

[EDITOR’S NOTE: Download the full 28-page Colorado Supreme Court desicion on Martinez BELOW]

Colorado Supreme Court Reverses Martizez - Oil & Gas 360

Click image to download CSC decision on Martinez. Source: Colorado Supreme Court

Case background

The Martinez case is one of a number of widely publicized cases brought by youth environmental groups in the United States. These youth petitioners are backed, supported and guided by local and global climate movement organizations and their attorneys.

Second Big Win for Colorado Oil & Gas:  State Supreme Court Reverses Martinez Decision - Oil & Gas 360

Climate protestors in front of the Colorado Supreme Court after oral arguments were heard in the Martinez case in October 2018.

In the Martinez case, in 2013 a group of youth petitioners with their environmental lawyers had petitioned the COGCC for a new rulemaking that would prioritize climate protection before issuing drilling permits.

After more than a year of study and putting together 1,400 pages of documents in the process of understanding and assessing the youths’ petition for the new rulemaking, the COGCC concluded that it was not necessary for it to conduct the requested rulemaking, based on its view that it already permits and regulates using a balanced approach.

The petitioners took the matter to court. The lower court ruling favored the Colorado Oil & Gas Conservation Commission (COGCC) decision not to engage in a rulemaking. The effect was that COGCC could continue permitting and regulating oil and gas in Colorado the way it always has—by balancing the fostering of responsible oil and gas development with safeguarding the public health, safety and welfare.

The petitioners then took the case to the Colorado Court of Appeals. Their attorneys argued that the COGCC had a separate duty to protect health, safety and welfare and environment, rather than providing a balance of the commission’s two mandates. Two of the three appellate court judges agreed with the interpretation and overturned the lower court in a two-to-one decision.

The State of Colorado, led by then Colorado Attorney General Cynthia Coffman, petitioned the high court to hear the case, seeking to overturn the appeals court ruling. The court agreed to do so.  Briefs were submitted and in October 2018 the justices heard both sides’ oral arguments.

CSC’s Conclusion

The Colorado Supreme Court conclusion in its 28-page decision reads as follows:

“Because the Commission’s decision to decline to engage in rulemaking to consider Respondents’ proposed rule was consistent with the applicable provisions of the Act and with the Commission’s authority to decide how best to marshal its resources to carry out its statutory duties, we perceive no abuse of discretion in that decision. Accordingly, we reverse the judgment of the division below.”

Oil and gas industry, state coffers and schools dodge second bullet

As a result of today’s supreme court reversal of the appellate court decision on Martinez, the state of Colorado, thousands of oil and gas company employees working in the state and thousands of royalty and mineral rights owners and leaseholders—including the Colorado Land Board, the entity feeding royalty and production income to all of the state’s schools—have dodged two major bullets in the past few months.

The first volley was overcome through the failure of Proposition 112 to garner enough positive votes in the November 2018 statewide election to change setback rules statewide;. Climate groups gathered enough valid signatures in Colorado to land a law on the ballot that would push new oil and gas development 2,500 feet from any structure, waterway or other vulnerable areas. This measure, had it been successful, could have effectively put an end to new drilling on about 90% of the state’s non-federally owned land.

The second win—CSC’s reversal of Martinez—could also have served as a de facto moratorium on drilling while the COGCC and other governmental bodies and the state legislature spent years attempting to re-interpret the Colorado Oil and Gas Act and determined how to retool the current mission of the COGCC and its permitting priorities to comply with the Martinez petition for a rulemaking.

That gentle breeze blowing across downtown Denver on a cold day in January could be the sound of the state’s oil and gas companies letting out a second sigh of relief.

Legal Notice