Posted by: Patricia Salkin | August 28, 2014

CO Trial Court Holds State Law Preempts Ban on Hydraulic Fracturing and the Storage and Disposal of Hydraulic Fracturing Waste

In 2012, voters in Longmont County, CO enacted a ban on hydrofracking. At issue was whether the rules of the Colorado Oil and Gas Conservation Commission (“Commission”), a body created by the Oil and Gas Conservation Act, preempt a local ban. In finding that the local ban is preempted by State Law, the Court said, “Longmont’s ban on hydraulic fracturing creates a patchwork of oil and gas extraction methods that inhibits what the General Assembly has recognized as a necessary activity in the Oil and Gas Conservation Act and it impedes the orderly development of Colorado’s mineral resources.”

The Court applied the four-part test set forth by the State Supreme Court in Voss v. Lundvall Bros, Inc., whether there is a need for statewide uniformity of regulation; ii) whether the municipal regulation has an extraterritorial impact; iii) whether the subject matter is one traditionally governed by state or local government; and iv) whether the Colorado Constitution specifically commit the particular matter to state or local regulation. In the Voss case, the court struck down a drilling ban in Greeley, CO, finding that the Oil and Gas Conservation Act prevented a home-rule city from passing land-use ordinances that ban oil and gas drilling within its boundaries. But that court held that state law “does not totally preempt a home-rule city’s exercise of land-use authority over oil and gas development and operations” within the city limits.

The Court also considered the three forms of preemption: a) express preemption; b) implied preemption; and c) operational conflict preemption (see, County Commissioners of La Plata County v. Bowen/Edwards Assoc. Inc. The Court here said, state preemption can arise “by reason of operational conflict” where the “effectuation of a local interest would materially impede or destroy the state interest.” Determining that there was no implied preemption, the Court concluded that there was no way to harmonize the local ban on fracking with the stated goals of the Oil and Gas Conservation Act. The Court noted that the state interest in production, prevention of waste and protection of correlative rights, and the County’s interest in banning hydraulic fracturing presented mutually exclusive positions. Finding no common ground upon which to craft a means to harmonize the state and local interest, the Court concluded that the conflict was irreconcilable.

The Court enjoined the County’s ban but stayed the decision to allow the city to file notice of appeal. “In other words, there shall be no hydraulic fracturing activity in the City of Longmont until further order of Court, either from this Court or a higher court.”

Colorado Oil and Gas Association v. City of Longmont, 2014 WL 3690665 (Colo.Dist.Ct. 7/24/2014)

The opinion can be accessed at: http://www.courts.state.co.us/userfiles/file/Court_Probation/20th_Judicial_District/Cases_of_Interest/13CV63%20Order%20Granting%20Motions%20for%20Summary%20Judgment.pdf


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