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Colorado Appeals Court Ruling Casts Doubt on Future Oil, Gas Drilling

In a second appeal of court denials, an anti-oil/natural gas hydraulic fracturing (fracking) initiative from a group of Colorado teenagers gained traction last week as a three-judge panel at the state Court of Appeals supported the teenagers' contention in a 2-1 decision that public health and environmental protections must be clearly in place before any new drilling is allowed. The ruling has no immediate impact on the state's energy regulatory approach.

However, this appellate reversal of lower court rulings is a potential blow to Colorado oil/gas regulators and industry associations who have long clung to a state regulatory system that seeks to balance energy development with environmental protections. According to the state appeals court, that is not enough.

Regulators on the Colorado Oil and Gas Conservation Commission (COGCC) originally denied a 2013 proposal by Boulder, CO, teenagers and a state district court in Denver subsequently upheld the COGCC's action.

However, the Colorado Court of Appeals last Thursday found that the COGCC did not follow state law correctly and remanded the case to the district court. COGCC may decide to appeal to the state Supreme Court.

A COGCC spokesperson told NGI's Shale Daily that the commission is still assessing potential next steps. "The commission believes its existing rules and permitting requirements are protective of public health, safety and welfare, and as such, we don't see a near-term effect on our regulatory approach."

Colorado Oil and Gas Association (COGA) CEO Dan Haley reiterated COGCC's authority under state law and argued that this statutory authority specifically directs the state commission "to prevent and mitigate adverse environmental impacts...to the extent necessary to protect public health, safety and welfare." The ruling tosses away what Haley called "decades of precedent encouraging the 'balancing' test" while the dissenting opinion on the panel of judges "got it right" by referencing the direction to COGCC coming from existing state law.

"We encourage the COGCC to appeal this decision to the Colorado Supreme Court."

Colorado Petroleum Council Executive Director Tracee Bentley called the state a "national leader" in oil/gas production, saying Colorado is the seventh largest producing state that has operated a successful collaborative regulatory process. The legal case has been sparked by "activists backed by extreme interest groups,” Bentley said.

"For Colorado residents, achieving environmental protection with economic security is not about politics; it's about our daily life and livelihood, and preserving the land where we live and work. Oil and gas activity in the state supports more than 200,000 jobs, providing $26 billion in annual economic activity.”

The teen group, led by hip-hop artist Xiuhtezcatl Martinez, led anti-fracking demonstrations earlier this year. In February, state Attorney General Cynthia Coffman filed a lawsuit challenging Boulder County's continuing oil/gas drilling moratorium.

Since 2014 the teenage activists, bolstered by more than a dozen advocacy groups, appealed earlier decisions supporting Coffman and the COGCC. A majority of the three appellate judges agreed with the groups' contention that more than a so-called "balancing test" needs to be applied to decisions regarding oil/gas drilling permits. The plaintiffs have sought to require the COGCC to require proof by the best available science confirmed by independent third parties that drilling can be done without harming the environment.

According to initial legal interpretations, the appellate decision sends the case back to the district court; it does not require the COGCC to begin applying a tougher standards to drilling requests.

Environmental groups such as Earthworks praised the appeals court ruling, and industry groups, such as the Western Energy Alliance (WEA) had no immediate reaction when contacted by NGI's Shale Daily. A WEA spokesperson for the federally focused group said his alliance would defer to COGA on this issue since it involved state courts.

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