It is Not Just a Question of Federal vs. State Regulation – Local Power to Regulate Oil and Gas Industry Challenged in Colorado
The oil and gas industry has commenced a legal challenge to two local ballot initiatives in Colorado where voters approved extended moratoriums against the use of hydraulic fracturing within their jurisdictions. The Colorado Oil & Gas Association (COGA) has filed actions in Boulder County and Larimer County to strike down a five-year moratorium in the city of Fort Collins and an indefinite ban in the city of Lafayette. Colorado Supreme Court precedent and state law support COGA’s position that fracing cannot be blocked by municipalities because such bans conflict with and are superseded by existing state energy regulations which allow the practice.
More than 9 in 10 wells in Colorado use the process of hydraulic fracturing and the growing use of local moratoriums to attempt to regulate, if not to entirely prevent the use of, the process is posing an increasing danger to future industry development in the state.
Lafayette’s measure features the strongest wording, making it unlawful for companies to deposit, store or even transport fracing wastewater through “the land, air or waters” of the city. It also declares that state and federal laws cannot trump the city charter.
COGA’s complaint contends that the state’s Oil and Gas Conservation Act and Colorado Oil and Gas Conservation Commission regulations preempt both ballot initiatives.
While the Colorado Supreme Court has ruled in the past that state law supersedes local restrictions when the issue is of both state and local concern, the court has not addressed the issue of hydraulic fracturing and ballot initiatives meant to regulate the process through a city’s power to regulate health and safety. These cases now join an existing challenge to a ban on hydraulic fracturing passed by the city of Longmont in 2012.
The ability of local governments to regulate or control oil and gas development within their jurisdictions is a matter of contention in the Marcellus region as well. In fact, the ability of localities to pass limitations on oil and gas development was a large component of legislation commonly referred to as Act 13 in Pennsylvania passed by the state in order to pre-empt localities from regulating the industry.
Those restrictions have been successfully challenged in state court by municipal entities where a lower court ruled provisions of Act 13 which limited local authority to regulate the oil and gas industry unconstitutional, but a final adjudication of the fate of Act 13 and the authority of local government to place sometimes extreme limitations on oil and gas development stills awaits a decision by the state Supreme Court.