Local Governments Make Case For Halting Fracking At Colorado Supreme Court

Dec 8, 2015

Three decades ago, a gas well exploded near Greeley, Colorado. That event spurred voters to ban oil and gas drilling in the city limits. The ban was overturned by the state Supreme Court in 1992, setting a precedent that local governments in Colorado could not ban energy development.

You'd be forgiven for thinking that case put the kibosh on local drilling prohibitions. Au contraire, Dear Reader: Bans, moratoriums and other controls have sprung up across the state almost as fast as drill rigs during the boom of the late 2000s. Many of these cases are testing the boundaries of the Greeley decision, and two such cases have been making their way through the court system.

On Dec. 9, 2015, the state Supreme Court will hear arguments from two cities: Longmont and Fort Collins. Here's why these cases are different enough from the Greeley case to warrant another hearing in front of the state's highest court.

First, a bit of background. Greeley's ban, passed in 1985, prohibited oil and gas drilling in city limits. That decision, Voss v. Lundvall Bros., looms large over more recent municipal attempts to limit energy development. Importantly, though the decision affirmed local governments ability to regulate oil and gas through land use policies, as long as it didn't get in the way of the state's interest in developing oil and gas, said Susan Daggett, a law professor at the University of Denver law school and head of the Rocky Mountain Land Use Institute. Daggett called this a "muddy area," since it's open to "experimentation" by local governments.

In the Voss v Lundvall Bros. decision, the justices write that the state Constitution " ...neither commits the development and production of oil and gas resources to state regulation, nor relegates land-use control exclusively to local governments."

Ever since then, towns and counties in the state have been trying to see just how much authority they can wield over oil and gas without actually banning it, or crossing what one might call the Voss v. Lundvall Bros. line.

In the case of Longmont, voters approved a ban in 2012. You might think to yourself: "That crosses the line!"  But the ban is not on oil and gas drilling. It's on a technology, hydraulic fracturing.

The argument from Longmont's side, noted Daggett, is that "we're not banning development, we are simply banning this technology." The other side, headed by the Colorado Oil and Gas Association, the major industry trade group, will argue that banning fracking is effectively a ban on oil and gas, since hydraulic fracturing is a mainstream drilling technology. (Other Colorado cities have also passed bans and moratoriums or attempted to; here's a chart of these votes and their outcomes to date.)

Past case law doesn't necessarily work in Longmont's favor. In 2009, the state Supreme Court said Summit County couldn't ban a certain mining technology called cyanide-leach mining. In that ruling, the court said a local government could not prohibit a mining technology that the state permits.

On the Fort Collins side, the arguments are a little different, said Daggett. City voters passed a moratorium, not a ban, on hydraulic fracturing. That's "legally distinct" from a ban, she said. That's because moratoriums are a common form of land use planning. Towns and counties successfully place moratoriums on all kinds of activities all the time, from the construction of a new Walmart, while they study traffic impacts, to the opening of marijuana dispensaries, while they write local land use code to prohibit dispensaries in certain areas.

Given that hydraulic fracturing does impact traffic and air quality, on a scale that local governments have not previously dealt with, Fort Collins will argue that a moratorium is a reasonable response.

"And so I think one thing for people in Colorado to be watching is the extent to which the Supreme Court distinguishes between a ban and a moratorium," said Daggett.

The court does not have a timeline for its decision on the two cases, but it's not likely for many months - perhaps sometime in late 2016. Since the cases are being heard separately (although on the same day), there could be a different outcome for each city.

Daggett said a win on the cities' side would be if the court remanded the case back down to the lower court, for a hearing of evidence - a trial, where the cities make the case that their policies do not create a de facto ban, and the industry makes the case that it does.

A win for industry could come a couple ways. The court could decide that the ban on fracking and the five-year moratorium are conflicts that "materially impede" the state's interest in extracting minerals. That decision leaves the door open for cities and counties to continue to try various ways to regulate oil and gas, just not by banning fracking or using a five-year moratorium.

Or, the court could decide that a swath of new rules put in place in recent years by the Colorado Oil and Gas Conservation Commission have preempted most local authority, giving the state most of the say over oil and gas extraction and how it happens. This "implied preemption," said Daggett, would limit local governments even further in their ability to regulate oil and gas, placing it further under the prerogative of the state. That would be a bigger loss for local governments.

The reason the oil and gas issue is so difficult, Daggett added, is because it conflicts with something local governments do all the time - zone industrial activity to protect citizens.

"So there's a long and rich, hundred year history of local governments having as their central role, to use their zoning powers and their police powers to separate out those conflicting uses -- to allow everything to happen in their community but everything in its place," she said. When oil and gas development comes in and conflicts with the zoned uses, "it creates, obviously, enormous controversy," Daggett said.

Even if the cities' lose their cases, the debate over who can regulate oil and gas activity in the state won't end. Other towns considering bans will try to come up with creative ways to regulate industry - this has already happened in La Plata and Gunnison counties, which have stricter regulations than the state that have been upheld in court. As long as drilling continues to take place near where people live, nearby governments will keep trying to regulate it.