News & Alerts
October 31, 2019 DENVER DISTRICT COURT UPHOLDS VICTORY FOR CRESTONE PEAK RESOURCES
On October 30, 2019, the Denver District Court (the “Court”) upheld two Colorado Oil and Gas Conservation Commission’s (“COGCC”) Orders establishing an approximate 1,920-acre drilling and spacing unit for the E½ of Sections 22 and 27, and all of Sections 23 and 26, Township 1 North, Range 68 West, 6th P.M. and allowing for increased density in a 1,920-acre drilling and spacing unit in favor of Crestone Peak Resources Operating LLC.
Although the City and County of Broomfield (“Broomfield”) was neither a mineral interest owner nor a leasehold interest owner in the unit, Broomfield filed a Protest to Crestone’s COGCC applications. In the Protest, Broomfield alleged that the spacing application violated the “one well” rule in C.R.S. 34-60-116 (3); that the application raised public issues which reasonably related to potential significant adverse impacts to Broomfield’s interest and the public health, safety and welfare of its citizens including the environment and wildlife resources; that the potential impacts were not adequately addressed by the application; and that the potential individual and cumulative well impacts were not adequately addressed by the Rules and Regulations of the Commission. Broomfield also objected to the number of wellpads within the unit as the application did not include the specific location of the wellpads. Finally, Broomfield alleged that the application did not comply with the standards set by Martinez v. Colo. Oil and Gas Conservation Comm’n, et al., 434 P.3d 689 (Colo. App. 2017), which was overturned by the Colorado Supreme Court in Colo. Oil and Gas Conservation Comm’n, et al. v. Martinez, 433 P.3d 22 (Colo. 2017). At the end of a two-day contested hearing, the COGCC approved Crestone’s applications to establish the 1,920-acre drilling and spacing unit with one horizontal well and also approved up to 40 horizontal wells within the unit.
Broomfield appealed the decision to the Denver District Court and argued (1) the Commission should have denied Crestone’s applications because of a violation of the “one-well” rule in C.R.S. § 34-60-116(3); (2) the Orders should be set aside because Crestone failed to present any evidence to prove that its operations were “consistent with protection of public health, safety and welfare, including the environment and wildlife resources”; (3) the Orders should be set aside because the Hearing Officer denied Appellant “modest discovery,” and excluded certain pieces of evidence; and (4) the Orders should be remanded to the Commission for reconsideration given changes to the Colorado Oil and Gas Conservation Act signed into law on April 16, 2019.
The Denver District Court upheld the COGCC’s decisions and expressly found that:
- The Commission’s long-standing practice of considering increased well applications before one well is producing represents the Commission’s interpretation of its own statute, and that interpretation is entitled to deference from the Court.
- The Commission’s stance that issues of public health, safety, welfare, and environmental concerns are not addressed at the application stage, the Court sees no reason why evidence such as articles relating to public health, safety and welfare should have been admitted by the Hearing Officer.
- Senate Bill 19-181’s own language provided that it only applied to “conduct occurring on or after the effective date of this act, including determinations of applications pending on the effective date.”
In so affirming the COGCC’s decision, the District Court found that there was no reversible error in the Commission’s process, or the Orders entered by the COGCC. For further information regarding this case or other matters relating to the COGCC, please contact Jamie Jost, Kelsey Wasylenky or Jill Dorancy.