CO Supreme Court Rejects New Oil and Gas Drilling Restrictions

Published February 12, 2019

Colorado’s Supreme Court delivered a significant victory to the state’s oil and gas industry, reversing a lower court’s ruling that the Colorado Oil and Gas Conservation Commission (COGCC) must give essential veto power to a goal of zero impact on public health, safety, and environmental concerns over other factors when considering whether to grant new oil and gas permits.

‘Our Children’s Trust’

The state Supreme Court’s ruling stems from a campaign led by a group of teenagers represented by the Oregon-based activist group Our Children’s Trust, which petitioned COGCC in 2013 to deny any new oil or gas drilling permits unless it could show “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.”

COGCC denied Our Children’s Trust’s proposal, saying such a rule would exceed the authority granted it under the law.

Their proposed rule denied, Our Children’s Trust sued COGCC in the state district court in Denver, to force the agency to adopt its rule.

Courts Disagree

Then-Colorado Attorney General Cynthia Coffman defended COGCC’s decision in court, arguing state law requires the commission to encourage oil and gas development and protect the rights of mineral owners and producers while limiting harmful public health, safety, and environmental effects.

The district court ruled in COGCC’s favor, finding the proposed rule was precluded by state law.

The plaintiffs appealed, and the Colorado Court of Appeals overturned the decision, ruling the district court and COGCC misinterpreted state law by balancing oil and gas development with public health, safety, and welfare. The court declared the latter factors should take primacy when considering drilling permits.

In its January 14, 2019 decision, Colorado’s Supreme Court disagreed.

Questioning Authority

The high court determined COGCC acted according to the law in rejecting the plaintiffs’ proposed rule.

“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,” wrote Colorado Supreme Court Justice Richard Gabriel in his unanimous decision for the seven member court. “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.”

‘Outcome Is Positive’

The state Supreme Court’s decision will benefit Colorado, the nation, and the environment, says Tracee Bentley, executive director of the Colorado Petroleum Council, which had filed a friend of the court brief supporting COGCC in the lawsuit.

“Today’s outcome is positive for all Coloradans,” said Bentley in a statement. “The court was right to deny a single out-of-state interest group—one that advocates for ending all energy development across the country—the ability to rewrite our state’s laws.

“We are confident in … the Colorado natural gas and oil industry’s ability to continue to reshape the global energy balance, fueling an American manufacturing revival and leading the world in environmental progress,” Bentley said.

The oil and gas industry is on a winning streak in Colorado, says Amy Oliver Cooke, executive vice president of the Independence Institute.

“Thank goodness the state Supreme Court unanimously rejected the proposed Martinez rule, which was tantamount to a complete ban on energy development in Colorado,” Cooke said. “This is the second time in the last three months anti-energy activists have been shot down in Colorado, because in November voters rejected Proposition 112, which also was a ban.”

Temporary Victory?

Gov. Jared Polis and several legislators responded to the ruling by calling for the legislature to increase public-health and environmental restrictions on the oil and gas industry.

“While I’m disappointed by today’s ruling, it only highlights the need to work with the legislature … to more safely develop our state’s natural resources and protect our citizens from harm,” Polis said in a statement after the state Supreme Court issued its ruling. “I’ve made transitioning to renewable energy a top priority because it is the best way to protect Coloradans’ health and safety, reverse the harmful effects of climate change that threaten our … way of life, and boost our state’s economy by creating green jobs that can never be outsourced.”

Workers or Special Interests

With Democrats in control of both houses of the state’s General Assembly and the governor’s mansion, Colorado’s oil and gas industry remains under threat, Cooke says.

“The future of energy development and nearly 150,000 jobs aren’t in the clear,” Cooke said. “Already, there are threats coming from the Democrat-controlled legislature, and newly elected Gov. Polis has demonstrated hostility toward our fossil fuel industry.

“There are some pro-business, moderate Democrats like Sen. Angela Williams (D-Denver) who understand workers putting food on the table is more important than satisfying ideologically narrow special-interest groups,” said Cooke. “Newly elected state Senate President Leroy Garcia (D-Pueblo) will face the problem of having to choose between his constituency that overwhelmingly voted no on Prop 112 [a referendum to ban virtually all new oil and gas production on private and state lands] and radical members of his caucus who hate everything about oil and gas. Bottom line: Stay tuned to find out if the Democrats will kill Colorado’s golden goose.”

H. Sterling Burnett, Ph.D. ([email protected]) is a senior fellow at The Heartland Institute.