Posted by: Patricia Salkin | September 27, 2014

CO Dist. Court Rules Five Year Moratorium on Fracking is Impliedly Preempted by State Law

At issue was whether a five year moratorium enacted in the City of Fort Collins, Co is preempted by the rules of the Colorado Oil and Gas Conservation Commission, a body created by the Oil and Gas Conservation Act. The trial court held athough the State Oil and Gas Conservation Act does not expressly preempt all local regulation of drilling, the five year moratorium substantially impedes the state’s significant interest in oil and gas development and production. As such, the ban is impliedly preempted. In addition, the ban prohibits a technique to chemically treat wells that the Act expressly allows. As such, the ban is also preempted by operational conflict.

As in the Longmont County case decided a month earlier, the court applied the four-part test set forth by the Colorado Supreme Court: whether there is a need for statewide uniformity of regulation; whether the municipal regulation has an extraterritorial impact; whether the subject matter is one traditionally governed by state or local government; and whether the Colorado Constitution specifically commits the particular matter to state or local regulation. The court also considered the three forms of preemption: a) express preemption; b) implied preemption; and c) operational conflict preemption, and granted summary judgment to the challengers of the ordinance.

The Court determined that the municipal ordinance was impliedly preempted by the State’s Oil and Gas Conservation Act, which authorized the Commission “to comprehensively regulate the production and development of oil and gas.” The Court said, “the Ordinance does not attempt to exercise any land-use authority that is harmonious with the Act. The Act is a total ban. Second, although the Ordinance expires after five years, the preemption analysis
does not change. A city ordinance is preempted by state law regardless of how long that
ordinance has legal effect. …A city can no more pass a preempted ordinance that lasts for five years than it can pass a preempted ordinance that lasts indefinitely.”

Lastly, the Court held that even if there was no implied preemption, there was an operational conflict because the ordinance “prohibits what the Act expressly authorizes the Commission to permit.”

Colorado Oil and Gas Association v. City of Fort Collins, Slip Op. (D.C. Larimer Co. 13CV31385, 8/7/2014).

The opinion can be accessed at: http://media.bizj.us/view/img/3401521/order-grant.pdf


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