By: Steve M. Nagy, Esq. and Katherine E. McAuley, Esq.
In 2013, the City of Longmont banned hydraulic fracturing, and the City of Fort Collins enacted a 5-year moratorium on the practice. The Colorado Oil and Gas Association (“COGA”) challenged these ordinances in Boulder and Larimer County district court, with the Colorado Oil and Gas Conservation Commission (COGCC) and TOP Operating, LLC, also joining in the suit against Longmont’s ban. Both district courts overturned the cities’ ordinances on preemption grounds. The cities appealed to the Colorado Court of Appeals, which deferred to the Colorado Supreme Court, citing the issue’s extreme importance. On Wednesday, December 11, 2015, the Colorado Supreme Court heard oral arguments on both cases.
Fort Collins and Longmont are home-rule cities, meaning that they have sovereignty over matters deemed to be of purely “local concern.” If hydraulic fracturing is of pure local concern, then the cities’ ordinances trump the state’s laws. If hydraulic fracturing is a topic of pure state concern, then the state’s laws preempt the cities’ ordinances. If hydraulic fracturing is of mixed state and local concern, then the city ordinances can stand so long as they do not impermissibly conflict with state law. The question of whether hydraulic fracturing is a state, local, or mixed concern is a crucial threshold consideration.
Longmont began by arguing that hydraulic fracturing is a matter of primarily local concern. However, some of the justices appeared to balk at Longmont’s assertion that hydraulic fracturing was a purely local concern, noting that the COGCC’s regulations and enabling statute contain multiple provisions indicating statewide interest in oil and gas development in general, and hydraulic fracturing in particular. Longmont then suggested that, if the matter was a mixed concern, then an operational conflict analysis should apply. The city suggested that the local ban should be preempted only if it materially impedes a state interest, a test from Board of County Commissioners v. Bowen/Edwards Associates, 830 P.2d 1045 (Colo. 1992). This test would require substantial analysis of the facts to determine if there is a material impediment.
The attorneys appearing on behalf of COGA, the COGCC, and TOP Operating, LLC noted specific statutory language and dozens of regulatory provisions related to fracking, and argued that the process was a subject of clear statewide concern. As such, any ban would be clearly preempted according to the Court’s decision in Voss v. Lundvall Brothers, Inc., 830 P.2d 1061 (Colo. 1992), which invalidated a ban on oil and gas drilling by the City of Greeley. They then focused their arguments on the tests applicable should the Court find fracturing to be a matter of mixed state and local concern. The appellants urged an implied conflict analysis, the forbid/authorize standard expressed in Webb v. City of Black Hawk, 2013 SC 9, which nullifies local ordinances that forbid what the state authorizes. This test strikes a brighter line than the materially impedes test advocated by the Longmont. COGA went on to discuss how Colorado courts have applied the forbid/authorize test to virtually every case involving a home-rule city.
The hearing on Fort Collins’ moratorium picked up where Longmont’s left off, focusing on whether a moratorium is effectively the same thing as a ban. Fort Collins argued that a moratorium merely amounts to permissible delay in permitting where the length of the moratorium is reasonably related to the purpose for the moratorium. However, Fort Collins conceded that whether the moratorium is a ban or mere delay, if Longmont’s ordinance is preempted, then Fort Collins’ moratorium will be preempted as well.
The Court heard strong arguments for statewide control over the hydraulic fracturing process. The outcome of the case will likely turn on whether the Court views the matter as a state, local, or mixed concern – and, if mixed, what test it applies to evaluate conflict. If the Court overturns the district court decisions, the result will likely be a remand in the short term, and potentially decisions permitting local bans, moratoriums, or burdensome regulations in the long term. If the Court upholds the district court decisions, proponents of local control may pursue other avenues including ballot measures (some are already pursuing a ballot initiative to amend the state constitution). The attorneys at Burns, Figa, & Will, PC, will continue to monitor these important issues going forward.
