Colorado Supreme Court hears both sides in cities’ fracking cases

DENVER – Attorneys for the cities of Longmont and Fort Collins made their pitches to the Colorado Supreme Court on Wednesday about why lower courts erred in striking down the cities’ respective bans on fracking within their borders.

The Longmont and Fort Collins cases were heard separately in back-to-back proceedings in front of a packed courtroom. But the two cases are largely regarding the same central issue: whether home-rule cities are pre-empted from prohibiting a practice that is regulated by the state.

The cities and representatives from the oil and gas industry, not surprisingly, clashed over what legal standards should be used to reach decisions in the cases.

Fracking, or hydraulic fracturing, involves pumping water mixed with sand and chemicals into a drilled hole to retrieve oil and natural gas from shale deep underground. The practice is one that has caused many to worry about the environmental impacts it might have.

Longmont voters voted to ban fracking in 2012, while Fort Collins voters imposed a five-year moratorium in 2013 to give the city time to study what impacts the practice might have for the city.

District court judges in Boulder and Larimer counties struck down both, concluding that the resolutions indeed were pre-empted by state law. Both cities appealed, and the Colorado Court of Appeals earlier this year asked the Supreme Court to hear the cases because of the potential for more such cases around the state.

Both proceedings Wednesday included 30 minutes of testimony from each side, with judges questioning the attorneys about their positions. There is no set time frame for the seven-judge panel to issue a decision, and attorneys for both sides said they expect it could take three to six months.

Attorneys on each side of the argument spoke largely of two tests that could be applied by the court in determining the outcome of the proceedings.

The first, a “forbid-authorize” test, looks at whether local government forbids an activity that is expressly authorized by state law.

The cities of Longmont and Fort Collins asserted that while Colorado Oil and Gas Conservation Commission regulations cover fracking, they do not expressly authorize it.

“Just because it (regulates) fracking doesn’t authorize it,” said Barbara Green, special counsel to the city of Fort Collins.

But Mark Matthews, outside counsel for the Colorado Oil and Gas Association, said the mere fact that fracking is mentioned over and over in the COGCC regulations should be an indication that fracking is authorized by state law, even if there is no explicit statement that says, as he put it, “Thou Shalt Frack.”

Beyond the forbid-authorize test, Longmont assistant city attorney Dan Kramer, in particular, argued that another test, established in the 1992 case of the La Plata County Commissioners versus Bowen/Edwards Associates Inc., should come into play. The Bowen/Edwards test would look at whether a local ordinance would materially impede, in this case, the state’s interests set forth in the Oil and Gas Conservation Act to foster fair and efficient development of oil and gas resources while also protecting public health and the environment.

The city of Longmont is asking that the Supreme Court remand the case back to the Boulder County district court for further review, specifically to conduct an evidentiary hearing to create a factual record weighing both the city’s and state’s interests to determine whether Longmont’s ban would indeed impede state interest.

Kramer argued to the court that oil and gas operators have been drilling in Colorado for 100 years, and fracking isn’t necessarily vital to that effort. He mentioned that there are other methods, such as underbalanced drilling, a method used in the state of New York where fracking is banned. Kramer asserted that underbalanced drilling is even more efficient than fracking.

Fracking, however, is the primary method used by oil and gas producers in Northern Colorado, and is widely credited with helping create record production volumes in recent years. To wipe out that practice, Mathews argued for COGA, would absolutely impede state interests.

“It’s not practical for operators,” Mathews told reporters after the proceedings. “The vast majority of wells use hydraulic fracturing.”

Green, meanwhile, argued that Fort Collins’ moratorium does not impede the industry because it is temporary and merely causes a delay for oil and gas operators. She said operators who wanted to frack in Fort Collins could still in the meantime get state approvals, negotiate agreements with the city and drill wells. They would just have to wait on the fracking phase.

“Every time a local government regulates, it causes some kind of delay,” Green said.

Mathews, though, said a moratorium of any length is essentially the same as a ban and should be treated as such since it prohibits an activity allowed by the state.

“It forbids something that the state has spent a great deal of time regulating,” Mathews told the court.

If the Supreme Court upholds the District Court rulings, any other attempts by cities or counties in Colorado to ban or place moratoria on fracking would be wiped out. Voters also approved bans and moratoria in Boulder, Broomfield and Lafayette. Lafayette’s vote was overturned by a district court. The case regarding Broomfield’s moratorium is being held in abeyance until a decision is rendered on the Fort Collins case. Boulder’s ban hasn’t yet been challenged by COGA.

In addition to fracking bans, though, both sides Wednesday said the Supreme Court’s rulings in the Longmont and Fort Collins cases could have implications that impact far more industries than just oil and gas as it relates to what authority local jurisdictions have to enact rules that go against state law.

“It does have a broad range of implications and affects the balance of power between state and local authority,” Longmont city attorney Eugene Mei said.

Mathews said victories by Longmont and Fort Collins would cause major harm to the oil and gas industry. If cities can ban something that is expressly authorized by the state, then they also could presumably regulate it heavily themselves. The purpose of the state’s pre-emption law, he said, is to allow the state to make certain decisions based on the need for uniform regulation.

“I think there are a total of 300 jurisdictional entities in Colorado and you would have presumably 300 regulatory regimes if moratoria and bans are allowed,” Mathews said. “It would be a nightmare to administer. It would be a nightmare for oil and gas operators.”