Reason Prevails in Colorado Oil and Gas Case

Date: January 25, 2019

Related Content: Legal - Blog Energy

As we’ve seen time and again, environmental groups’ insatiable crusade for more and more regulation comes at the cost of jobs and economic growth. While lawmakers generally attempt to strike a reasonable balance between encouraging business development and conservation of environmental resources, too often environmental groups push federal and state agencies for draconian restrictions. Case in point, environmental activists nearly succeeded in forcing a rulemaking that would have essentially shutdown all oil and gas operations in Colorado.

This would have directly affected many small businesses operating within (or servicing) Colorado’s oil and gas industry and contributed to higher energy costs across industry lines. Our brief in COGCC v. Martinez emphasized that the environmentalists’ proposed Colorado Gas & Oil Conservation Commission rule – that would have categorically prohibited new oil and gas permits unless it could be proven that issuance of a permit would not contribute to climate change in any way – would inappropriately rewrite the law in Colorado.

Under the proposal, the Commission would have been required to deny all new permit applications because all industrial activity results in the emission of some greenhouse gases—even where companies are utilizing best available technologies to control emissions. The Commission appropriately denied this petition for rulemaking on the ground that it would violate state law. And when the environmentalists went to court, we were pleased that the district court judge held that their proposed rule would upset the balance that the Colorado Legislature intended. But the Colorado Court of Appeals reversed, and we urged the Colorado Supreme Court to take this case.

The Colorado Supreme Court decision, issued in January, 2019, holds that Colorado law requires the Commission “to foster the development of oil and gas resources, protecting and enforcing the rights of owners and producers” while also “prevent[ing] and mitigat[ing] significant adverse environmental impacts to the extent necessary to protect public health, safety, and welfare, but only after taking into consideration cost-effectiveness and technical feasibility.” In other words, Colorado law may require companies to take steps, or to implement technology, to minimize environmental impacts—but state law fundamentally encourages industrial activity. So, as Shakespeare would say: “All’s well that ends well.”

Related Content: Legal - Blog | Energy

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