5:00am

Mon February 24, 2014
Oil and Gas

Historic Greeley Ruling Looms Large Over Colorado Fracking Challenges

Local Control Colorado wants to place a statewide initiative on the ballot aimed at giving communities more tools to legally limit the practice of hydraulic fracturing. Their initiative seeks to revise Colorado oil and gas law that state and industry leaders confidently say is on their side.

"…any ban on fracking is a ban on oil and gas development, and the state Supreme Court has clearly stated bans are illegal in Colorado,” Colorado Oil and Gas Association President and CEO Tisha Schuller said in a Dec. 3 press release announcing lawsuits against Lafayette and Fort Collins over voter-approved anti-fracking measures. COGA and the state of Colorado have also sued Longmont over a 2012 voter-approved fracking ban.

That clear statement from the state Supreme Court that's often referred to points to particular ruling: Voss v. Lundvall Bros., Inc., which overturned a voter-approved ban on drilling oil and gas wells in 1992.

The case originated in one of the last places you’d expect. A place that is now nearly synonymous with the state’s oil and gas boom: Greeley, Colo.

It Started With A Boom (Literally)

With hundreds of wells inside city limits, Greeley has co-existed with oil and gas development for decades. Today, the boom is credited with bringing in investment, creating jobs and job demand, impressive economic growth and increasing property values – not to mention healthy tax revenue. But back when exploration and drilling started in the ’80s, citizens began raising questions.

A 1984 natural gas explosion at Wickes lumberyard in La Salle, Colo. is what caught people’s attention. The explosion happened overnight and caused no deaths. At the time, the cause was believed to be a poorly drilled well.

When Lundvall Bros. obtained permits and sought permission to drill near the Greeley Westmoor West subdivision, the anti-drilling sentiment was strong.

“The lumberyard went up at night. When’s the best time for a house to go up?” Ken Crumb asked at a 1985 Greeley City Council Meeting. Crumb initiated a petition that ultimately led to a ban.

On Nov. 5, 1985 Greeley residents voted 2-to-1 to ban drilling inside city limits.

“People are very concerned about the safety aspect,” city council member Jack Cochran told the Greeley Tribune after the vote.

Credit City of Greeley Museums

Industry Vs. The People

The Greeley ban was challenged by both the state and oil & gas companies, eventually working its way to the Colorado Supreme Court. In the case of Voss v. Lundvall Bros., the court overturned the ban, June 8, 1992.

Despite the ability of home rule cities like Greeley to self govern, the Colorado Supreme Court reasoned that a ban can’t pre-empt law in the Oil and Gas Conversation Act [.pdf] that ensures efficient development of mineral resources.

"If a local government is prohibiting hydraulic fracking it's in effect prohibiting the development of additional oil and gas wells within the jurisdiction..."

“The reason they didn’t find this a matter of purely local concern is that we impacted people outside the city of Greeley,” explained former Greeley City Attorney Richard Brady. “Oil and gas doesn’t respect property boundaries or city political boundaries. And so the same pool of oil and gas that’s underground may go under several cities or multiple counties or even different states.”

Brady further explained that if Colorado is required to ensure “efficient development” of mineral resources, it can’t have a system that allows dramatically different rules across different cities that share one giant pool of oil or natural gas.

However, the 1992 Voss decision did leave some room for cities to regulate oil and gas development, so long as the rules don’t clash with state law.

So how does a fracking ban or moratorium fit into this framework?

“If a local government is prohibiting hydraulic fracking it’s in effect prohibiting the development of additional oil and gas wells within the jurisdiction in a manner similar to that was invalidated in the Voss Case,” said David Neslin, a partner with law firm Davis, Graham & Stubbs and former head of the Colorado Oil and Gas Conservation Commission. “I think many practioners in Colorado view this as relatively black and white.”

Fitting The Puzzle Pieces Together

One issue that may be less concrete from the court’s perspective is weighing the effect of a fracking ban vs. a moratorium.

That issue is playing out in the Fort Collins case. Voters passed a 5-year moratorium, versus the outright bans found in Longmont [.pdf] and Lafayette. COGA doesn’t see a distinction, it argues in its legal complaint that the moratorium is effectively a ban. Fort Collins disputes that claim.

“It doesn’t mean that oil and gas companies that have mineral interests beneath Fort Collins can’t access them in the future. It just means that we’re going to take a step back, call a timeout, and not rush ahead with fracking,” said Kevin Lynch with the University of Denver Environmental Law Clinic, which is seeking to join Fort Collins in defending the fracking moratorium.

Former COGCC head David Neslin says there may be snags in that logic — especially for moratoriums that last several years.

“Typically moratoriums have been upheld as a timeouts so local governments can adopt land use regulations,” said Neslin. “It’s not clear that moratoriums are being used in these cases in the manner in which they’ve been traditionally been used.”

Credit City of Greeley Museums

Back To The Future

A lot has changed in Greeley since the 1992 Voss ruling. While Greeley spent $388,000 in settlement payments to oil and gas companies, former City Attorney Richard Brady said it wasn’t a complete loss.

“Greeley lost this in the sense that we ended up having to settle out of court and we couldn’t have a total ban on oil and gas drilling,” said Brady. “But we also considered it a victory in that the state didn’t say that it had exclusive control.”

Brady said the court decision spurred a new round of rulemaking with the COGCC that addressed some of the concerns raised by residents in the ’80s.

David Neslin says he sees that same give and take happening today.

“Periodically we have these blow ups and battles over preemption,” said Neslin. “I think the larger trend is that the state, the industry local governments find ways to work together and work together cooperatively and collaboratively to develop these resources and to protect local interests and concerns.”

Credit City of Greeley Museums

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