August 25, 2019

Colorado Supreme Court: Oil and Gas Commission Properly Declined to Adopt Proposed Rule

The Colorado Supreme Court issued its opinion in Colorado Oil and Gas Conservation Commission v. Martinez on Monday, January 14, 2019.

Administrative Law and Procedure—Mines and Minerals.

This case required the court to decide whether, in accordance with the Colorado Oil and Gas Conservation Act (the Act), C.R.S. § 34-60-102(1)(a)(I), the Colorado Oil and Gas Conservation Commission (the Commission) properly declined to engage in rulemaking to consider a rule proposed by respondents.

Respondents proposed a rule that, among other things, would have precluded the Commission from issuing any permits for the drilling of an oil and gas well “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.”

After soliciting and receiving public comment and allowing interested parties to be heard, the Commission declined to engage in rulemaking to consider this proposed rule because, among other things, (1) the rule would have required the Commission to readjust the balance purportedly crafted by the General Assembly under the Act and conditioned new oil and gas drilling on a finding of no cumulative adverse impacts, both of which the Commission believed to be beyond its statutory authority, and (2) the Commission was already working with the Colorado Department of Public Health and Environment (CDPHE) to address the concerns to which the rule was directed and other Commission priorities took precedence over the proposed rulemaking at this time. The Denver District Court upheld the Commission’s decision, but in a split, published decision, a division of the court of appeals reversed the district court’s order in Martinez v. Colorado Oil and Gas Conservation Commission, 2017 COA 37, __ P.3d __.

The supreme court reversed the division’s judgment and concluded that the Commission properly declined to engage in rulemaking to consider respondents’ proposed rule. The court reached this conclusion for three primary reasons. First, a court’s review of an administrative agency’s decision as to whether to engage in rulemaking is limited and highly deferential. Second, 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.

Summary provided courtesy of Colorado Lawyer.

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