A Colorado District Court has ruled against Fort Collins’ hydraulic fracturing ban, following a similar ruling that invalidated Longmont’s hydraulic fracturing ban in July.
On August 7, 2014, the Larimer County District Court ruled that the City of Fort Collins’ ordinance imposing a five-year ban on hydraulic fracturing is preempted by the Colorado Oil and Gas Conservation Act. The Court ruled in favor of the Colorado Oil and Gas Association (COGA), which challenged the Fort Collins ban, and granted COGA’s motion for summary judgment on its First Claim for Relief and denied Fort Collins’ cross-motion. On July 24, the Boulder County District Court invalidated the City of Longmont’s hydraulic fracturing ban citing preemption by state law.
In November 2013, Fort Collins passed a citizen-initiated ordinance that placed a five-year ban on hydraulic fracturing activities and storage of hydraulic fracturing waste within the city boundaries to allow for a study on hydraulic fracturing impacts. COGA claimed that the ordinance impedes its ability to promote, develop, and produce oil and gas in Larimer County in conformity with the Oil and Gas Conservation Act. The ordinance also conflicts a May 2013 five-year agreement between Prospect Energy, LLC and Fort Collins to allow hydraulic fracturing in the city.
Under Article XX (20) of the Colorado Constitution, Fort Collins is a home-rule city that can exercise local zoning authority to control land use within its municipal border. However, the Court noted that Article XX does not permit a home-rule city to enact an ordinance in an area of mixed state and local concern or statewide concern, intruding state law. Under the Oil and Gas Conservation Act, the Colorado Oil and Gas Conservation Commission (COGCC) is authorized to regulate drilling, production, well-plugging, shooting and chemical treatment, well-spacing, and environmental issues, among others. COGCC has adopted comprehensive regulations and has authority to allocate oil or gas production on an equitable basis amongst multiple landowners. Local governments may enact land-use restrictions on oil and gas activity if they do not impermissibly conflict with the Oil and Gas Conservation Act.
The Court found that the Fort Collins ban conflicts state law by prohibiting what COGCC is expressly authorized to permit under the Oil and Gas Conservation Act. The ordinance that imposes the ban is not harmonious with state law and substantially impedes state interest in fostering efficient and equitable oil and gas production. It has also created a situation posing operational conflict with regard to the Prospect Energy contract and the five-year ban.
To determine whether a home-rule city’s ordinance is preempted, the Court considered the Colorado Supreme Court’s four-part examination – the need for statewide regulation uniformity, extraterritorial impact of the concerned municipal regulation, whether the subject matter is traditionally governed by state or local government, and whether the Colorado constitution commits the matter to state or local regulation. Finding that oil and gas activity is an issue of mixed state and local interest, the court detailed that statewide uniformity is needed as pressure characteristics of oil and gas pools require a particular pattern, not necessarily in line with local boundaries; local bans could increase costs outside their boundaries making development infeasible, oil and gas regulation is traditionally state-regulated, and the constitution commits oil and gas development to neither state nor local control.
Originally published by EnerKnol.
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