A lawsuit has been filed against Colorado oil and gas regulators by groups hoping to pause the permitting process for new drilling statewide.
The head of an oil and gas industry group says the suit is part of an effort to "shut down natural gas and oil production in the state."
Filed by Colorado Rising for Communities and Wildgrass Oil and Gas Committee in Denver District Court on Tuesday, the suit against the Colorado Oil and Gas Conservation Commission challenges a permit filed by Extraction Oil and Gas on July 3 for an 880-acre horizontal wellbore spacing unit (an area designed for drilling) for the company's Livingston well site near Broomfield.
Wildgrass is the neighborhood near the site.
The complaint noted that despite the rules changes required under Senate Bill 19-181, the rewrite of the state's oil and gas commission's regulations and mission, none of the rules had changed when Extraction filed its permitting request.
The rule in question -- Rule 318A.e(5) -- had not been updated since the passage of SB 181, the lawsuit said, to take into consideration public health and safety, the major shift to the COGCC's mission. Previously, the COGCC's mission focused on fostering the development of oil and gas.
Extraction failed to properly notify all the homeowners in the Wildgrass subdivision as required by COGCC's rules, according to the complaint. Extraction also did not obtain the consent of the majority of those homeowners, another requirement of SB 181, the lawsuit said. Extraction is not named as a defendant in the lawsuit.
The Wildgrass plaintiffs want the COGCC to reject Extraction's permit application, as well as any permit application involving drilling, forced pooling or spacing units until the rulemaking is complete.
The COGCC is in something akin to limbo, between the requirements of the law signed by Gov. Jared Polis last April and rules that deal with oil and gas activity that won't be finalized until next year. That came out in a July 22 prehearing conference that included representatives from Wildgrass and Boulder County, according to the lawsuit.
The COGCC's hearing officer, who wasn't identified by name in the complaint, said "we are kind of in this awkward stage, shall we say. The commission and the director have determined that the statute does not require a complete shutdown until all the regulations are retooled. So I’m working with old regulations and trying to superimpose the gloss of SB 181 health, safety, welfare, that sort of thing on it."
The Wildgrass committee filed a request for discovery with the COGCC regarding Extraction's financial condition and health and safety issues on August 1. SB 181 allows the COGCC to require an oil and gas company to provide financial assurances that it can meet every obligation of the law.
In that pleading, the Wildgrass committee said that "with the hearing officer and the parties at a loss about the effects of SB 19-181 and the director’s objective criteria on the current rules, it should not be left up to the parties to divine what conduct the rules prohibit or allow, and there is a very real possibility of arbitrary and discriminatory enforcement."
The Director's Objective Criteria, developed by COGCC's Jeff Robbins, is intended to address that in-between place the COGCC finds itself in with regard to permitting. Robbins has maintained that the law does not require the commission to halt permitting applications while the rulemaking is in process, a sore spot for Colorado Rising and other anti-fracking and environmental groups, especially those in Boulder and Broomfield counties. The criteria, which was mandated under SB 181, allows the director to delay decisions on permit applications to conduct additional analysis on an application. That delay would be based on factors such as public health and safety and environmental impact.
On Sept. 4, the complaint continues, the COGCC's hearing officer denied the Wildgrass committee's discovery request, which the lawsuit called "arbitrary and capricious."
"Continuing this hearing without a clear set of rules and rules that comply with SB 19-181 will result in a violation of [Wildgrass members'] constitutional rights to due process and statutory rights under SB 19-181 and will cause irreparable injury," the lawsuit said.
In a news conference Wednesday morning, Colorado Rising's executive director, attorney and former lawmaker Joe Salazar said his clients are bypassing the COGCC's appeals process and headed to court.
"It would be futile to appeal this to the commission. It's very well known ... that [Robbins and Polis] have said there would be no pause of permits." The governor is "absolutely wrong" in allowing permitting to continue, Salazar said.
Wildgrass meets multiple criteria for additional analysis under the objective criteria, Salazar said. However, he said, Extraction has said that criteria doesn't apply until after the rulemaking is complete and Extraction may be right on that, Salazar said.
"We just can't move forward" until the rulemaking is completed, Salazar said, adding he hopes to see a speedy decision by the court. This will be "a situation where the rubber meets the road for this administration on their environmental stance."
In a statement to Colorado Politics, Colorado Petroleum Council Executive Director Lynn Granger said, "Proponents of Senate Bill 181 have repeatedly assured both the natural gas and oil industry and the public that the measure was not written or intended to pause or halt new energy development in Colorado. We are grateful to the COGCC for largely honoring this assurance, and are disappointed that certain actors seek to circumvent a process that is already underway in their effort to shut down natural gas and oil production in the state.
"Our industry is proud to play a leading, innovative role in protecting and enhancing public health, safety, and the environment. Nothing about Senate Bill 181 has changed our commitments to these ends. We look forward to continuing good faith discussions with the COGCC and all interested stakeholders in finding solutions that benefit the state that we all call home," Granger said.
COGCC spokeswoman Megan Castle said Wednesday that "regarding the claim that the commission must cease all permitting until rules are promulgated, it has repeatedly been stated publicly that the commission will continue to conduct its business under SB 19-181 while the commission conducts rulemaking."