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Colorado Supreme Court sides with oil and gas in major ruling on environmental regulations

In the closely watched Martinez case, the court says the Colorado Oil and Gas Conservation Commission doesn't have the power to make health concerns a priority

Oil and gas activities have moved closer to neighborhoods in Colorado, including this Crestone Peak site known as the Pratt pad in Erie. (Doug Conarroe, The Colorado Sun)
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In a big — but, perhaps, temporary — victory for the oil and  gas industry in Colorado, the state Supreme Court ruled Monday that regulators don’t have to prove a new well wouldn’t hurt the environment before issuing a permit.

The landmark decision in the closely watched case, known as the Martinez case, preserves the status quo for oil and gas development in the state. But, with Democratic lawmakers in control at the state Capitol, further efforts this year to place environmental restrictions on oil and gas activity are almost guaranteed.

The case’s name comes from its lead plaintiff, Xiuhtezcatl Martinez, a now 18-year-old Boulder student and activist who, in 2013, joined together with six other young environmental activists to file a petition with state regulators at the Colorado Oil and Gas Conservation Commission, which approves all new drilling activity in the state.

MORE: Colorado Supreme Court hears high-stakes “Martinez case” lawsuit around oil and gas

The petition asked for a rule requiring regulators not to issue a new oil and gas permit unless, “the best available science demonstrates, and an independent, third party organization confirms,” the activity wouldn’t hurt the environment. The commission denied the petition, saying its job is to balance industry and environmental concerns and not place one before the other.

The activists sued and lost at the trial-court level. But in 2017, a panel of Colorado Court of Appeals judges shook Colorado’s energy industry by reversing the trial court’s ruling and siding with the young activists.

That ruling hinged on a 41-word section of Colorado law instructing regulators to:

Foster the responsible, balanced development, production, and utilization of the natural resources of oil and gas in the state of Colorado in a manner consistent with protection of public health, safety, and welfare, including protection of the environment and wildlife resources

To the appellate judges, the words “consistent with” created a prerequisite to approving a new permit. But, in its unanimous decision on Monday, the state Supreme Court read that passage as striking a balance between competing interests, not creating a sequential order of priority.

“The pertinent provisions do not allow (regulators) to condition all new oil and gas development on a finding of no cumulative adverse impacts to public health and the environment,” the Supreme Court’s ruling states.

While Martinez said he wasn’t surprised by the ruling, he said he was disappointed.

“I think this kind of confirms what we have seen over the last several years,” he said, referring to what he called a “gross neglect” by state government to address environmental concerns around oil and gas.

Environmental groups and the oil and gas industry, predictably, took different views on the ruling Monday.

“The Supreme Court’s job is to decide what the law says, not if it is correct or moral,” Anne Lee Foster, of the group Colorado Rising, which last fall backed a campaign to increase setback requirements for oil and gas activity, said in a statement. “This decision validates all of our concerns that the state is not adequately protecting public health and the regulations are insufficient.”

“Today’s outcome is positive for all Coloradans,” Tracee Bentley, the executive director of the Colorado Petroleum Council, said in her own statement. “This case has dragged on for over five years and it’s time to focus on uniting to encourage energy development in the United States, and, specifically, in Colorado.”

This will hardly be the last word on oil and gas regulation in Colorado this year, though. The court’s ruling will likely motivate the Democratic-majority at the state Capitol to overhaul how oil and gas operations are permitted in Colorado.

Democratic lawmakers are drafting legislation to require the commission to make health and safety factors a more prominent consideration in their deliberations on where to allow drilling operations. 

MORE: The top 10 issues to watch in Colorado’s 2019 legislative session

“Communities all up and down the Front Range and on the Western Slope, they want to know that health and safety is getting a serious look,” said House Speaker KC Becker, a Boulder Democrat. “That goes for air quality, water quality, siting, smells, odors, and, you know, explosions.”

“I don’t think the existing law right now — the way COGCC is implementing it — gives a strong enough consideration to those things,” Becker added.

The effort is part of a larger bill that is expected to give local governments more power about whether to allow oil and gas operations in their area.

Following Monday’s ruling, Gov. Jared Polis also said he favors new laws on oil and gas safety.

“While I’m disappointed by today’s ruling,” he said in a statement, “it only highlights the need to work with the Legislature and the Colorado Oil & Gas Conservation Commission to more safely develop our state’s natural resources and protect our citizens from harm.”

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