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Colorado Court Rejects Longmont Drilling Ban

As a backdrop to a larger drama that appears headed toward a statewide electoral stage, a Boulder County District Court judge on Thursday rejected a ban on hydraulic fracturing (fracking) by the city of Longmont, CO, but allowed the ban to stay in place while the city considers an appeal.

Judge D.D. Mallard issued the summary judgment Thursday, concluding that Longmont's charter amendment clearly runs counter to the state's regulations and its strong interest in the efficient development of oil and gas deposits as articulated by Gov. John Hickenlooper and other state officials.

Mallard granted a request from the Colorado Oil and Gas Association (COGA), the Colorado Oil and Gas Conservation Commission (COGCC) and the TOP Operating Co., an oil/gas operator, for a summary judgment against Longmont, while still allowing Longmont to request a stay in implementing the action pending an appeal.

"While the court appreciates the Longmont citizens' sincerely held beliefs about risks to their health and safety, the court does not find this is sufficient to completely devalue the state's interest," Mallard wrote.

COGA CEO Tisha Schuller called the judge's ruling "not just a win for the energy industry but for the people of Colorado." And Schuller added that "the more than two-dozen communities that have invested in legal regulations, memoranda of understanding and ongoing stakeholder dialogues to create responsible energy development also get a win."

According to local news reports, Longmont has spent more than $116,000 defending the ban, which forbids fracking within its city jurisdiction. COGA originally challenged the ban in court in 2012 and was joined by COGCC and TOP.

State officials from the governor on down, COGA and various major exploration/production companies have worked for months without success to find a compromise solution to the issue of cities and counties wanting more control over oil/gas development within their jurisdictions (see Shale Daily, July 17).

It now appears that statewide initiatives, assuming backers obtain the required valid voter signatures, will be on the November ballot (see Shale Daily, July 2). Industry is urging voters to reject two initiatives -- one of which (No. 88) would establish a 2,000-foot setback requirement and another (No. 89) that would grant local governments the ability to oversee oil/gas drilling activity in their jurisdictions.

Industry has some counter-proposals (Initiatives 121 and 137) that prohibit any local government banning drilling to receive tax revenues from the oil/gas industry and requiring future ballot measures to be required to divulge their potential fiscal impact on the state, respectively.

During a 2Q2014 earnings conference call earlier this week, Encana Corp. CEO Doug Suttles said the fact that the governor and business leaders oppose the proposed ballot measures is an indication that "people realize this is not an oil/gas issue; this is an economic issue for Colorado." Suttles and other oil/gas executives are warning that the proposed measures, particularly the setback proposal, would be "very detrimental."

Noble Energy Inc. CEO Charles Davidson on a conference call Thursday outlined the ballot initiative issues and pledged an aggressive effort by his company and employees to turn back the anti-fracking movement. "The ballot measure proposing a setback of 2,000 feet is a step in the wrong direction for Colorado," said Davidson, adding that the current COGCC-regulated setback rules for 500 to 1,000 feet were only made effective last year.

Suttles, Davidson and other oil/gas executives maintain, as do state officials, that Colorado has "some of the most aggressive oil/gas regulations in the nation."

One of the groups supporting the local bans, Earthworks Energy Program, told local news media that Mallard's ruling was encouraging advocates to seek a solution through higher courts or the state legislature.

U.S. Rep. Jared Polis (D-CO) continues to back the two statewide ballot measure while lauding Hickenlooper for attempting to find a legislative compromise that would have negated the need for the ballot measures. U.S. Sen. Mark Udall (D-CO) recently came out against the ballot measures and supporting the governor's efforts.

Also in the mix is litigation between local control advocates and the industry/state organizations. For example, earlier this week, COGA filed a motion to dismiss a lawsuit brought by local control activists against the industry group, the state and Hickenlooper (see Shale Daily, July 24). COGA also is seeking court sanctions against the activists for the allegedly frivolous lawsuits.

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