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Court of Appeals, State of Colorado2 East 14th Ave., Denver, CO 80203

COURT USE ONLY

District Court Boulder County, ColoradoCase Number: 2013CV63The Honorable D. Mallard

Appellant: City of Longmont, Colorado

Intervenors: Our Health, Our Future, Our Longmont; Sierra Club; Food and Water Watch; and Earthworks

v.

Appellees: Colorado Oil & Gas Association and Colorado Oil and Gas Conservation Commission

Appellee-Intervenor: TOP Operating Company

Attorneys for Appellee Colorado Oil & Gas Association: Case No.: 2014CA1759

Name(s): Mark Mathews, #23749Wayne F. Forman, #14082Michael D. Hoke, #41034

Address: Brownstein Hyatt Farber Schreck, LLP410 Seventeenth Street, Suite 2200Denver, CO 80202-4432

Phone:FAX: E-mail:

303.223.1100303.223.1111mmathews@bhfs.comwforman@bhfs.commhoke@bhfs.com

Name(s): Karen L. Spaulding, #16547BEATTY & WOZNIAK, P.C.216 Sixteenth Street, Suite 1100Denver, CO 80202-5115

Phone:Fax:Email:

303-407-4499303-407-4494kspaulding@bwenergylaw.com

COMBINED ANSWER BRIEF

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CERTIFICATE OF COMPLIANCE

I hereby certify that this brief complies with all requirements of C.A.R. 28

and C.A.R. 32, including all formatting requirements set forth in these rules.

Specifically, the undersigned certifies that:

The brief complies with C.A.R. 28(g).

Choose one:It contains 9381 words (excluding the caption, table of contents, table of authorities, this certificate of compliance, certificate of service, signature block and any addendum).It does not exceed 30 pages.

The brief complies with C.A.R. 28(k).

For the party raising the issue:

It contains under a separate heading (1) a concise statement of the applicable standard of appellate review with citation to authority; and (2) a citation to the precise location in the record (R. , p. ), not to an entire document, where the issue was raised and ruled on.

For the party responding to the issue:

It contains, under a separate heading, a statement of whether Appellee Colorado Oil & Gas Association agrees with the statements of Appellants concerning the applicable standard of review and preservation for appeal, and if not, why not.

I acknowledge that my brief may be stricken if it fails to comply with any of the requirements of C.A.R. 28 and C.A.R. 32.

/s/ Mark J. Mathews

Mark J. Mathews

TABLE OF CONTENTS

Page

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STATEMENT OF THE ISSUES PRESENTED FOR REVIEW ............................1

STATEMENT OF THE CASE.................................................................................1

A. Nature of the Case......................................................................1

B. Course of Proceedings and Disposition of the Court Below .........................................................................................2

C. Statement of the Undisputed Facts ............................................4

1. Longmont voters approve Ballot Question 300 ..............4

2. Hydraulic fracturing of oil and gas wells in Colorado ..........................................................................4

SUMMARY OF ARGUMENT................................................................................5

STANDARD OF REVIEW/STATEMENT UNDER C.A.R. 28(k) ........................6

A. Summary judgment is appropriate when material facts are not in dispute........................................................................7

B. COGA need not prove its case beyond a reasonable doubt.........................................................................................7

ARGUMENT..........................................................................................................10

I. The City may not prohibit hydraulic fracturing or the storage and disposal of hydraulic fracturing waste ........................................10

A. A home-rule citys ban of activities that the state allows is preempted, except in matters of purely local concern .........10

B. The state has a significant interest in the regulation of oil and gas and hydraulic fracturing..............................................11

1. Colorado courts have repeatedly recognized the states interest ................................................................11

2. The states comprehensive regulatory scheme demonstrates a significant interest ................................16

C. Judge Mallard appropriately determined that the regulation of hydraulic fracturing is not a matter of purely local concern.................................................................20

Table of Contents(continued)

Page

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II. The Citys ban prohibits conduct that the state allows and is therefore preempted ...........................................................................23

A. The district court applied the proper test for operational conflict .....................................................................................23

B. Defendants misconstrue the application of the operational conflict test...............................................................................27

III. Judge Mallard correctly determined that the regulation was a matter of mixed state and local interests as a matter of law ..............31

A. The Court did not need a fully developed evidentiary record to make its decision.....................................................31

B. Judge Mallard did not improperly resolve disputed issues of material fact .........................................................................35

1. Alleged disputed issues regarding health and safety allegations......................................................................35

2. Alleged disputed issues regarding the use of hydraulic fracturing in Longmont .................................36

3. Alleged disputed issues pertaining to waste and correlative rights ............................................................38

IV. The Citys ban is impliedly preempted by the states sufficiently dominant interests .......................................................41

CONCLUSION.......................................................................................................44

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TABLE OF AUTHORITIES

Page(s)

Cases

Baum v. City of Denver,363 P.2d 688 (Colo. 1961)....................................................................................8

In re Bd. of Cnty. Commrs,891 P.2d 952 (Colo. 1995)..................................................................................44

Bd. of Cnty. Commrs of LaPlata Cnty. v. Bowen/Edwards Assocs.,830 P.2d 1045 (Colo. 1992).........................................................................passim

Bd. of Cnty. Commrs v. BDS Intl, LLC,159 P.3d 773 (Colo. App. 2006)...................................................................29, 32

Board of County Commissioners v. Vandemoer,205 P.3d 423 (Colo. App. 2008) ..................................................................passim

Cherokee Water & Sanitation Dist. v. El Paso Cnty.,770 P.2d 1339 (Colo. App. 1988).........................................................................8

City & Cnty of Denver v. State,788 P.2d 764 (Colo. 1990)..................................................................................25

City of Commerce City v. State,40 P.3d 1273 (Colo. 2002)............................................................................10, 24

City of Northglenn v. Ibarra,62 P.3d 151 (Colo. 2003)..............................................................................23, 24

Colo. Min. Assn v. Bd. of Cnty. Commrs of Summit Cnty.,199 P.3d 718 (Colo. 2009)...........................................................................passim

Combined Commcns Corp. v. City & Cnty. of Denver,542 P.2d 79 (Colo. 1975)....................................................................................30

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Davis v. Cramer,808 P.2d 358 (Colo. 1991)..................................................................................40

Independent Inst. v. Coffman,209 P.3d 1130 (Colo. App. 2008).........................................................................8

JJR v. Mt. Crested Butte,160 P.3d 365 (Colo. App. 2007)...........................................................................8

Jones v. Dressel,623 P.2d 370 (Colo. 1981)....................................................................................7

KN Energy, Inc. v. Great W. Sugar Co.,698 P.2d 769 (Colo. 1985)....................................................................................7

Natl Adver. Co. v. Dept of Highways,751 P.2d 632 (Colo. 1988)..................................................................................25

People v. Emmert,597 P.2d 1025 (Colo. 1979)................................................................................44

People v. Vasquez,84 P.3d 1019 (Colo. 2004)....................................................................................8

Rancho Lobo, Ltd. v. Devargas,303 F.3d 1195 (10th Cir. 2002) ....................................................................26, 27

Ryals v. City of Englewood,962 F. Supp. 2d 1236 (D. Colo. 2013) ...............................................................24

Sanger v. Dennis,148 P.3d 404 (Colo. App. 2006)...........................................................................8

Stell v. Boulder Cnty. Dept of Social Servs.,92 P.3d 910 (Colo. 2004)....................................................................................20

Town of Frederick v. North American Resources Co.,60 P.3d 758 (Colo. App. 2002)...............................................................15, 29, 32

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Town of Telluride v. Lot Thirty-Four Venture, LLC,3 P.3d 30 (Colo. 2000)........................................................................................24

Trinen v. City & Cnty. of Denver,53 P.3d 754 (Colo. App. 2002).............................................................................8

Voss v. Lundvall Bros.,830 P.2d 1061 (Colo. 1992),........................................................................passim

W. Elk Ranch, L.L.C. v. United States,65 P.3d 479 (Colo. 2002)......................................................................................7

Webb v. City of Black Hawk,2013 CO 9....................................................................................................passim

Statutes

C.R.S. 34-60-101 et seq. ................................................................................passim

Other Authorities

Dictionary for the Oil and Gas Industry 244 (Univ. of Texas Ext., 1st ed. 2005) .............................................................................................................17

Pa. Const. art. 1, sec. 27...........................................................................................44

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STATEMENT OF THE ISSUES PRESENTED FOR REVIEW

Whether the district court correctly granted summary judgment in favor of

Plaintiffs.

STATEMENT OF THE CASE

A. Nature of the Case

The Colorado Oil and Gas Conservation Commission (COGCC or

Commission) permits and regulates hydraulic fracturing to complete oil or gas

wells and the associated storage and disposal of wastes created by the hydraulic-

fracturing-completion process. Nonetheless, a majority of the citizens of the City

of Longmont (City or Longmont) voted to adopt Resolution 2012-67 to add

Article XVI to the City Charter (the Charter Amendment or Article XVI),

which bans within the City the hydraulic fracturing of any oil or gas well and the

storage and disposal of waste products created in connection with the hydraulic

fracturing process.

After discovery and full briefing by the parties, the district court held that

the Charter Amendment is invalid and preempted by the Colorado Oil and Gas

Conservation Act (Act), C.R.S. 34-60-101 et seq., as a matter of law. R.CF,

p.2054.

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B. Course of Proceedings and Disposition of the Court Below.

COGA filed its Complaint against Longmont on December 17, 2012, and its

Amended Complaint on January 28, 2013. R.CF, pp.2206,2294. The COGCC,

TOP Operating Company (TOP), and Citizen Intervenors Our Health, Our

Future, Our Longmont, Sierra Club, Food and Water Watch, and Earthworks

(collectively Defendant Intervenors) joined the litigation as parties.

COGA, TOP, and the COGCC filed motions for summary judgment

requesting the district court invalidate the Charter Amendment as preempted by

state law. R.CF, pp.450,547,631,655,729.

The Court granted motions by Defendants to continue the response date to

the motions for summary judgment to allow for discovery. R.CF, p.964.

Defendants propounded discovery and took depositions of the four lay and expert

witnesses who had provided affidavits attached to several of Plaintiffs motions for

summary judgment.

Longmont filed a consolidated response to Plaintiffs summary judgment

motions. R.CF, p.1287. Defendant Intervenors likewise filed a combined response

brief. R.CF, p.993. The court also heard oral argument. R.Tr. (7/9/2014), p.1.

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The district court issued its Order Granting [Plaintiffs] Motions for

Summary Judgment on July 24, 2014. R.CF, p.2038. The Honorable D.D. Mallard

held the Charter Amendment invalid as preempted by state law, and granted

summary judgment in Plaintiffs favor on their claims for declaratory judgment.

The court also enjoined the City from enforcing Article XVI, but stayed the

injunction pending appeal. R.CF, p.2054.

In her ruling, Judge Mallard utilized the Voss Courts four-factor test to

determine that hydraulic fracturing is not a matter of purely local concern. R.CF,

p.204850. Judge Mallard then found there was an operational conflict between the

Act and the Charter Amendment because the Commission permits hydraulic

fracturing and the storage and disposal of fluids, while the Charter Amendment

forbids them entirely. R.CF, p.205154. Judge Mallard further ruled the Charter

Amendment was preempted by the Bowen/Edwards operational conflict test

because a ban on hydraulic fracturing could not be harmonized with the Act. R.CF,

p.2053.

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C. Statement of the Undisputed Facts.

1. Longmont voters approve Ballot Question 300.

The City is a home-rule city which includes portions of Boulder and Weld

Counties. R.CF, p.635. A majority of the Citys voters approved Ballot Question

300, which amended the Citys home-rule charter to create a new Article XVI.

R.CF, p.2298. As a result, the Citys home-rule charter now states:

It shall hereby be the policy of the City of Longmont that it is prohibited to use hydraulic fracturing to extract oil, gas or other hydrocarbons within the City of Longmont. In addition, within the City of Longmont, it is prohibited to store in open pits or dispose of solid or liquid wastes created in connection with the hydraulic fracturing process, including but not limited to flowback or produced wastewater and brine.

R.CF, p.636.

2. Hydraulic fracturing of oil and gas wells in Colorado.

Hydraulic fracturing is a well-completion technique. R.CF, p.623. Fluid is

pumped under high pressure into a cased wellbore creating small fissures in the

target rock formation and allowing trapped hydrocarbons to be produced. R.CF,

p.623. The fluids used in hydraulic fracturing consist primarily of water, with sand

or silica added as a proppant to keep the fissures from re-sealing, and a small

percentage of chemical additives. R.CF, p.623.

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Hydraulic fracturing has been used to complete wells in Colorado for many

decades, and tens of thousands of wells have been hydraulically fractured in

Colorado. R.CF, p.623. The Commission has found that most hydrocarbon-bearing

formations in Colorado would not produce economic quantities of oil or gas

without hydraulic fracturing. R.CF, p.623 (Most of the hydrocarbon bearing

formations in Colorado would not produce economic quantities of hydrocarbons

without hydraulic fracturing), R.CF, p.613 (Hydraulic fracturing . . . is now

standard for virtually all oil and gas wells in our state. Hydraulic fracturing has

made it possible to get this oil and gas out of rocks that were not previously

considered as likely sources for fossil fuels.).

SUMMARY OF ARGUMENT

Cities in Colorado do not have the authority to ban hydraulic fracturing

because the state has a significant, and even dominant, interest in the efficient

production of oil and gas, and in furtherance of that interest the state has chosen to

allow and regulate the practice.

As Judge Mallard determined, the states interest has been confirmed as a

matter of law by the Colorado Supreme Court in Voss v. Lundvall Bros., 830 P.2d

1061 (Colo. 1992), in which the court held [t]here is no question that [the Act]

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evidences a significant interest on the part of the state in the efficient and fair

development, production, and utilization of oil and gas resources in a manner

calculated to prevent waste and to protect the correlative rights of common-source

owners and producers to a fair share of the production profits. Voss, 830 P.2d at

106566 (quoting Bd. of Cnty. Commrs v. Bowen/Edwards Assocs., 830 P.2d

1045, 1058 (Colo. 1992)). This significant state interest, the Voss court held, was

sufficiently dominant to preempt the Town of Greeleys ban on the drilling of oil

and gas wells within its limits. Id. at 1068.

Voss mandates a similar result here. The City did not directly ban oil and gas

drilling, as Greeley had done in Voss, but it did ban the use of hydraulic fracturing.

The relevant question here is whether the state has the authority and has chosen to

regulate hydraulic fracturing activity. If the Court finds that it does, then the

Charter Amendment is preempted.

STANDARD OF REVIEW/STATEMENT UNDER C.A.R. 28(k)

COGA agrees that the issues raised in Defendants appeal are subject to de

novo review, and that Defendants raised the issues in their summary judgment

briefs below. COGA disagrees that Plaintiffs must prove the Charter Amendment

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invalid beyond a reasonable doubt or that the Charter Amendment is presumed

valid.

A. Summary judgment is appropriate when material facts are not in dispute.

Summary judgment is appropriate when there is no dispute of facts material

to the rendering of judgment. See, e.g., W. Elk Ranch, L.L.C. v. United States, 65

P.3d 479, 481 (Colo. 2002). [T]he existence of a difficult or complicated question

of law, when there is no issue as to the facts, is not a bar to summary judgment.

Jones v. Dressel, 623 P.2d 370,373 (Colo. 1981). Even where facts are hotly

disputed, summary judgment is appropriate where the disputed facts are not

material to the courts determination. See KN Energy, Inc. v. Great W. Sugar Co.,

698 P.2d 769, 777 (Colo. 1985). Because Defendants have not identified any

material facts that are in dispute, there was no barrier to the district courts issuing

summary judgment in Plaintiffs favor.

B. COGA need not prove its case beyond a reasonable doubt.

Defendants argue that the Charter Amendment is presumed to be valid and

that Plaintiffs have the burden of proving it invalid beyond a reasonable doubt.

Citys Op. Br. at 15,16,25,38,50; Ints Op. Br. at 34. No Colorado case has ever

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applied the proposed beyond a reasonable doubt standard to resolve state

preemption issues. Rather, the beyond a reasonable doubt standard applies only

to constitutional review of otherwise validly enacted statutes and ordinances and

not to preemption analysis. See, e.g., Trinen v. City & Cnty. of Denver, 53 P.3d

754, 75860 (Colo. App. 2002) (applying beyond a reasonable doubt standard to

constitutional review, but not in preemption analysis); Cherokee Water &

Sanitation Dist. v. El Paso Cnty., 770 P.2d 1339, 134142 (Colo. App. 1988)

(same).1

The reason this heightened standard does not apply in preemption cases is

because the purpose of the preemption doctrine is to establish a priority between

potentially conflicting laws enacted by various levels of government. Colo.

1 Indeed, all the cases cited by Defendants involve constitutional rather than preemption challenges. People v. Vasquez, 84 P.3d 1019 (Colo. 2004) (constitutional challenge to statute setting forth the procedures to be followed when a defendant raises issues of mental retardation in a death penalty case); Baum v. City of Denver, 363 P.2d 688 (Colo. 1961) (reasonable doubt standard used in challenge to the constitutional validity of a zoning ordinance); Independent Inst. v. Coffman, 209 P.3d 1130 (Colo. App. 2008) (constitutional challenge to campaign finance law dispute); JJR v. Mt. Crested Butte, 160 P.3d 365 (Colo. App. 2007) (constitutional challenge to city zoning decision); Sanger v. Dennis, 148 P.3d 404, 411 (Colo. App. 2006) ([A] a facial constitutional challenge . . . must be rejected unless there exists no set of circumstances in which the statute can constitutionally be applied.) (internal quotation marks and citations omitted).

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Mining Assn v. Bd. of Cnty. Commrs, 199 P.3d 718, 723 (Colo. 2009) (citing

Bowen/Edwards, 830 P.2d at 1055). Under Defendants proposed standard, the

outcome of a courts preemption analysis would depend entirely on which party

brought the declaratory claim because the state statutes and regulations under

which a local regulation might be preempted must also be presumed to be valid.

Indeed, contrary to Defendants assertions, the heightened burden here

should fall on Defendants, because the Charter Amendment bans the use of all land

within the City for particular activities. Local regulations which ban an activity

altogether are subject to heightened scrutiny in preemption analysis. Colo.

Mining Assn, 199 P.3d at 725. Courts examine with particular scrutiny those

zoning ordinances that ban certain land uses or activities instead of delineating

appropriate areas for those uses or activities. Id. at 730. These pronouncements in

Colorado Mining Assn were made in the specific context of a preemption

challenge to a local land-use regulation. See infra IV.

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ARGUMENT

I. THE CITY MAY NOT PROHIBIT HYDRAULIC FRACTURING OR THE STORAGE AND DISPOSAL OF HYDRAULIC FRACTURING WASTE.

A. A home-rule citys ban of activities that the state allows is preempted, except in matters of purely local concern.

In evaluating whether legislation by a home-rule municipality, such as the

City, is preempted by state law, the Court must first determine the legal issue of

whether the subject matter of the legislation is of statewide concern, of mixed state

and local concern, or of purely local concern. Webb v. City of Black Hawk, 2013

CO 9, 16. COGA agrees with Longmont that the Colorado Constitution gives

home rule cities authority over matters of purely local concern and the state

authority over matters of state concern. Citys Op. Br. at 17. COGA also agrees

with the City that in matters of mixed state and local concern, state and local

government laws can only coexist if there is no conflict, because state law controls

when the two conflict. Id. The relevant test in matters of mixed state and local

concern is whether the home-rule citys ordinance authorizes what state statute

forbids, or forbids what state statute authorizes. Webb, 43 (citing City of

Commerce City v. State, 40 P.3d 1273, 1284 (Colo. 2002)).

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Thus, the City can only prevail in this appeal if it demonstrates that the

Charter Amendment addresses solely a matter of local concern. The City cannot

make this showing.2

B. The state has a significant interest in the regulation of oil and gas and hydraulic fracturing.

1. Colorado courts have repeatedly recognized the states interest.

Every Colorado case that has considered the issues has held that the state has

a substantial interest in oil and gas regulation. The decision in Voss, which the City

barely acknowledges, is the key preemption case involving a ban of oil and gas

operations. In Voss, the citizens of the City of Greeley, a home-rule municipality,

voted to adopt an ordinance banning the drilling of any oil and gas well within the

2 Indeed, Defendants have admitted in a related case in which COGA and the COGCC challenged certain oil and gas regulations enacted by Longmont that the regulation of oil and gas development is a matter of mixed state and local concern. R.CF, p.638 (citing Longmonts Consolidated Reply in Supp. of Longmonts Cross-Mot. for Partial Summ. J. at 8, COGCC v. City of Longmont, Case No. 2012cv702 (Boulder Cnty. Dist. Ct. Feb. 24, 2014) (The Colorado Supreme Court has allowed local governments to regulate oil and gas development within their jurisdiction, because these are matters of mixed state and local concern.); Def./Int.s Cross-Mot. for Summ. J. at 5, COGCC v. City of Longmont, Case No. 2012cv702 (Boulder Cnty. Dist. Ct. Jan. 21, 2014)).

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city limits. 830 P.2d. at 1063. The Greeley City Council adopted a similar measure.

Id.

The court first analyzed whether the ban on oil and gas wells concerned

local, state or mixed interest. In doing so, the court examined four factors to assess

whether Greeleys ban would be preempted: (1) whether there is a need for state

uniformity of regulation; (2) whether the municipal regulation has an extra-

territorial impact; (3) whether the subject matter is one traditionally governed by

state or local government; and (4) whether the Colorado Constitution specifically

commits a particular matter to state or local regulation. Id. at 1067.

Although the City nowhere discusses the Voss courts examination of the

four factors, that discussion should be dispositive here.3 The court found the first

factor . . . weighs heavily in favor of state preemption of Greeleys total ban on

drilling within city limits. Id. at 1067. The states interest in the efficient and fair

development and production of oil and gas resources in the state, including the

3 This Court should reject the Citys invitation to reexamine Voss, because [m]any material facts have changed dramatically since Voss. Citys Op. Br. at 24. The Colorado Supreme Court reaffirmed the validity of Voss in 2009 in Colorado Mining Assn, 199 P.3d at 724, as discussed in detail below. See infra IV.

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location and spacing of individual wells, militates against a home-rule citys total

ban on drilling within the city limits. Id.

With regard to the second factor, the court held extraterritorial effect of the

Greeley ordinances also weighs in favor of the states interest in effective and fair

development and production. Id. The court relied upon the fact that limiting

production to only one portion of a pool of oil and gas outside the city limits can

result in increased production costs and that the drilling operation may be

economically unfeasible. Id. at 106768. Greeleys drilling ban, the court found,

affected the ability of those with mineral interests both within and outside the city

boundary to obtain an equitable share of production profits in contravention of the

Act. Id. at 1068.

Regarding the third factor, the court found [t]he regulation of oil and gas

development and production has traditionally been a matter of state rather than

local control. Id. In evaluating the fourth factor, the court held that the Colorado

Constitution does not direct that oil and gas operations be regulated at the state or

local level. Id.

As a result of its analysis, the court concluded that Greeleys ban on oil and

gas drilling was preempted by state law:

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[T]he states interest in efficient oil and gas development and production throughout the state, as manifested in the Oil and Gas Conservation Act, is sufficiently dominant to override a home-rule citys imposition of a total ban on the drilling of any oil, gas, or hydrocarbon wells within the city limits.

Id. (emphasis added).

Even outside of the context of a ban on oil and gas development, Colorado

courts have consistently recognized the states significant interest in oil and gas

regulation. Contemporaneously with Voss, the court issued the companion opinion

of Bowen/Edwards, in which it reaffirmed the states interest in efficient and fair

development and production of oil and gas, the prevention of waste, and the

protection of common-source owners and producers. 830 P.2d at 1058. While the

court did not find that the Act evidenced a legislative intent to preempt all aspects

of a countys statutory authority to regulate land use involving oil and gas

operations (emphasis added), it held that a local government could not regulate

matters involving technical aspects of oil and gas or the location of wells:

We hasten to add that there may be instances where the countys regulatory scheme conflicts in operation with the state statutory or regulatory scheme. For example, the operational effect of the county regulations might be to impose technical conditions on the drilling or pumping of wells under circumstances where no such conditions are imposed under the state statutory or regulatory scheme, or to impose safety regulations or land restoration

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requirements contrary to those required by state law or regulation. To the extent such operational conflicts might exist, the county regulations must yield to the state interest.

Id. at 1060.

Similarly, in Town of Frederick v. North American Resources Co., this

Court relied on the states interest in oil and gas development and operations as

expressed in the [Act] to void several of the Towns oil and gas regulations as a

matter of law. 60 P.3d 758, 761 (Colo. App. 2002). Relying on Bowen/Edwards,

the court held that the local imposition of technical conditions on well drilling

where no such conditions are imposed under state regulations, as well as the

imposition of safety regulations or land restoration requirements contrary to those

required by state law, gives rise to operational conflicts and requires that the local

regulations yield to the state interest. Id. at 765.

Finally, the Colorado Supreme Courts decision in Colorado Mining Assn

provides further support of the states significant interest in oil and gas regulation.

199 P.3d at 723. There, Summit County banned the use of cyanide or other toxic or

acidic reagents in heap or vat leach mining, because the County determined those

activities posed unacceptable environmental and public health risks. Id. at 722.

The court relied upon Bowen/Edwards and Voss in holding the Countys ban was

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impliedly preempted by the overriding state interest in regulating toxic chemicals

used in mining, noting the common themes that the state has a significant

interest in both mineral development and in human health and environmental

protection. Id. at 730.

2. The states comprehensive regulatory scheme demonstrates a significant interest.

The states significant interest in hydraulic fracturing and the storage and

disposal of related wastes is also reflected in the Act and the COGCCs extensive

regulatory framework. Defendants argue that the Charter Amendment does not

prohibit what the state permits because the state does not explicitly authorize

hydraulic fracturing. Citys Op. Br. at 35; Ints. Op. Br. at 33. In rejecting this

argument below, Judge Mallard stated the Commission regulates the oil and gas

industry and hydraulic fracturing is a common practice in that industry . . . . [T]he

Court finds there is a comprehensive regulatory structure in place in Colorado to

regulate the oil and gas industry. R.CF, p.2046.

Judge Mallards ruling is amply supported by the Act and COGCC

regulations, which expressly authorize hydraulic fracturing. The Act establishes

the COGCC and vests it with broad authority to enforce the Acts provisions, make

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and enforce rules and orders, and do whatever may be reasonably necessary to

carry out the provisions of the Act. Voss, 830 P.2d at 1065 (citing C.R.S. 34-60-

105(1)). In particular, the Act provides that the COGCC has authority to regulate

the drilling, shooting, and chemical treatment of hydrocarbon wells. C.R.S. 34-

60-106(2)(a), (b). Shooting is the process of fracturing the rock in the target

formation, which once was accomplished by detonating high explosives in the

wellbore, but which now is typically accomplished by hydraulic fracturing. See

The Dictionary for the Oil and Gas Industry 244 (Univ. of Texas Ext., 1st ed.

2005). Chemical treatment refers to any process, including hydraulic fracturing,

that involves the use of a chemical to affect an operation. Id. at 44.4

4 The City argues that, since chemical use is not an integral part of the definition of hydraulic fracturing and since hydraulic fracturing is defined as the use of pressurized fluid to fracture, this statutory section cannot authorize regulation of hydraulic fracturing. Citys Op. Br. at 36. The COGCC, however, relied upon the references in the Act to drilling, shooting and the chemical treatment of wells as specific authority for its new hydraulic fracturing chemical disclosure rules, including the 100 Series, definitions of Chemical(s), Chemical Disclosure Registry, Chemical Family, Hydraulic Fracturing Additive, Hydraulic Fracturing Fluid, and Hydraulic Fracturing Treatment. See R.CF, p.623 (relying on specific statutory authority of sections 34-60-106(2), 34-60-106(4) and 34-60-106(10), CRS.). On this and other issues, COGA incorporates the arguments and authorities in the COGCCs Answer Brief.

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Moreover, the Commission took hydraulic fracturing into consideration

when it comprehensively updated its regulations in 2008, analyzed groundwater

quality trends in 2009, adopted a special notification policy in 2010, and designed

a new groundwater sampling and monitoring program during 2011. R.CF, p.596. It

amended its rules in December 2011 for the specific purpose of addressing

hydraulic fracturing concerns. R.CF, p.623. The Commission employs a technical

staff that receives specific training on hydraulic fracturing technology and

developments. R.CF, p. 60607. As amended, the Commission Rules use the term

hydraulic fracturing at least 41 times.

The Commission requires producers to test their well casings in advance to

verify that they can withstand the pressures that will be applied during hydraulic

fracturing. Rule 317.j. It mandates that the operator design its well to confine

hydraulic fracturing fluids to the objective formations, and monitor and record

pressures continuously during hydraulic fracturing operations to assure that

hydraulic fracturing fluids are confined to the target formation and that wellbore

integrity is maintained. Rules 317 and 341. Within thirty days after completing or

re-stimulating a formation, operators must file a Completed Interval Report (Form

5A) that summarizes the fracturing treatment. Rule 308B.

19

The Commission also regulates the chemicals used in hydraulic fracturing.

See Rule 205. Upon the conclusion of a hydraulic fracturing treatment, producers

must report the total volume of water or other base fluid that was used in the

hydraulic fracturing treatment, information regarding each chemical or additive

used in the hydraulic fracturing fluid, the maximum concentration of each

chemical added to the fracturing fluid, and the chemical abstract service number

for each such chemical. Even if the supplier of the fluid claims that its specific

formula is a trade secret, specific information about the chemicals nevertheless

must be provided to the Commission or to any health care professional who

requires such information. Rules 205A.b.(5) and d.(2).

Producers must notify landowners and local governments in advance of

their intention to hydraulically fracture a well. Additionally, they must provide

landowners with a copy of the Commissions informational brochure on hydraulic

fracturing (see R.CF, p.61314), instruct them on how to access additional

information regarding the proposed well on the Commissions website, and inform

20

them of their right to oppose or comment upon the proposed operations. Rule

305.c.5

Importantly, the COGCC itself has argued that the Act authorizes it to

regulate hydraulic fracturing and the storage and disposal of related wastes, and

that its Rules regulate these practices. See R.CF, p.182732. The Court should

defer to the Commissions interpretation of its rules and the Act. See Stell v.

Boulder Cnty. Dept of Social Servs., 92 P.3d 910, 91516 (Colo. 2004) (in

construing statutes and regulations, court should afford the agency tasked with

carrying out mandate deference in its interpretation thereof).

C. Judge Mallard appropriately determined that the regulation of hydraulic fracturing is not a matter of purely local concern.

After considering the applicable case law, the Act, and the regulations,

Judge Mallard carefully weighed the four Voss factors and appropriately

determined that the regulation of oil and gas in general and hydraulic fracturing in

particular is not a matter of purely local concern. R.CF, p.204850.

5 The Commission also extensively regulates the handling, transportation, and disposal of waste products associated with the drilling and operation of oil and gas wells. See Rules 316A, 323, 324A, 325, 326, and 90108.

21

Judge Mallard first determined that the need for statewide uniformity weighs

in favor of preemption. R.CF, p.2048. While the City states that the court hinted

that regulations governing hydraulic fracturing need not be uniform across the state

(Citys Op. Br. at 22), Judge Mallard in fact determined the opposite: The first

factor, the need for statewide uniformity, weighs in favor of preemption. Just as in

Voss, the oil and gas reserves that exist today still do not conform to local

governmental boundaries. Patchwork regulation can result in uneven production

and waste. R.CF, p.2048; see also Colo. Mining Assn, 199 P.3d at 731 (A

patchwork of county-level bans on certain mining extraction methods would

inhibit what the General Assembly has recognized as a necessary activity and

would impede the orderly development of Colorados mineral resources.).

Judge Mallard concluded that the second factor also weighs in favor of

preemption because Longmonts ban on hydraulic fracturing has extraterritorial

impact. R.CF, p.2048. As with the uniformity element, Voss has already decided

this extraterritorial impact exists as a matter of law in favor of the state, because a

ban can result in increased production costs, which would impact the access of

22

nonresident owners of oil and gas mineral interests located both within and outside

of the City to obtain an equitable share of production. Voss, 830 P.2d at 106768.6

Finally, Judge Mallard determined that the third Voss factor favors

preemption because oil and gas activity has traditionally been governed by the

Commission, a statewide agency. R.CF, p.2049; see also Voss, 830 P.2d at 1068

([T]he regulation of oil and gas development and production has traditionally

been a matter of state rather than local control.).

Defendants claim that this factor does not weigh in COGAs favor because

the State has not traditionally placed any substantive restrictions on fracking and

because governance of the state over oil and gas production set forth by the Act is

silent with regard to fracking. Citys Op. Br. at 22; Ints Op. Br. at 42. But the

state, in fact, does extensively regulate hydraulic fracturing. See supra I.B.2.

Additionally, it is undisputed that since the 1970s, Colorado has authorized and

6 Additionally, the Charter Amendment could have a ripple effect with other jurisdictions that have adopted or may adopt in the future similar ordinances. Other jurisdictions along Colorados Front Range (Boulder, Boulder County, Fort Collins, Broomfield, and Lafayette) have adopted similar bans and moratoria on oil and gas operations, specifically banning hydraulic fracturing. This ripple effect has resulted in a patchwork of local regulations banning the use, storage and disposal of hydraulic fracturing fluids. See Webb, 37 (Black Hawks ordinance may lead to other municipal bicycle bans by local communities).

23

regulated the drilling and completion of oil and gas wells including the use,

disposal and storage of hydraulic fracturing fluids. R.CF, p.176,1898,2039. As the

City has no tradition of regulating hydraulic fracturing of oil and gas wells, this

factor favors the state. R.CF, p.2050.

In light of the states significant interest in oil and gas regulation and the

Voss factors, the Charter Amendment at the very least implicates mixed state and

local concerns, as Judge Mallard determined.

II. THE CITYS BAN PROHIBITS CONDUCT THAT THE STATE ALLOWS AND IS THEREFORE PREEMPTED.

A. The district court applied the proper test for operational conflict.

As Judge Mallard appropriately determined, the test to determine whether

home-rule legislation conflicts with state law is whether the home-rule citys

ordinance authorizes what state statute forbids, or forbids what state statute

authorizes. R.CF, p.2054 (quoting Webb, 43); see also City of Northglenn v.

Ibarra, 62 P.3d 151, 165 (Colo. 2003). Employing this test, Judge Mallard

concluded: The operational conflict in this case is obvious. The Commission

permits hydraulic fracturing and Longmont prohibits it. R.CF, p.2051.

24

Defendants argue that the court erred in employing the Webb conflict test.

Citys Op. Br. at 26; Ints Op. Br. at 32. But Colorado courts have consistently

used this test in determining whether a home-rule municipalitys ordinance,

particularly an ordinance banning certain activity, is preempted by conflicting state

statutes or regulations:

Ryals v. City of Englewood, 962 F. Supp. 2d 1236, 1249 (D. Colo. 2013). Court holds that regulation of sex offender residency is a matter of mixed state and local concern and therefore the citys effective ban on all felony sex offenders living within its boundaries is preempted by conflicting state law.

Webb, 16. Court finds that city ordinance banning bicycles traveling from outside the municipality on streets within municipality regulated in an area of mixed state and local law, and therefore was preempted by state law allowing home-rule cities to prohibit bicycles only if an alternative route is established.

Ibarra, 62 P.3d at 163. Home-rule citys ordinance banning unrelated or unmarried registered sex offenders from living together in a single-family residence was preempted by conflicting state law.

Commerce City, 40 P.3d at 1284. Statutes governing automated vehicle identification systems preempted conflicting provisions of home-rule ordinances because issue was a matter of mixed state and local law in which both cities and the state have important interests at stake.

Town of Telluride v. Lot Thirty-Four Venture, LLC, 3 P.3d 30, 37(Colo. 2000). Rent control for private residential property was held to be a matter of mixed local and statewide concern, and statute prohibiting municipalities from enacting rent control preempted home-

25

rule towns affordable housing mitigation ordinance imposing rent control.

Voss, 830 P.2d at 1068. Court holds that City of Greeleys ban on oil and gas activity was preempted under the states sufficiently dominant interest in oil and gas regulation, despite Citys argument that it had broad land-use authority to regulate oil and gas under its home-rule authority and the LUCEA.

Natl Adver. Co. v. Dept of Highways, 751 P.2d 632, 635 (Colo. 1988). Court holds that control of outdoor advertising signs within home-rule municipality is a matter of mixed state and local concern, and Colorado Outdoor Advertising Act therefore preempted a conflicting city regulation.

In every one of these decisions, the court first determined whether the

subject matter of the home-rule governments ordinance was of statewide concern,

mixed concern, or of local concern. In every case, the courts determined that the

subject matter was a matter of mixed local and state concern and employed the

exact conflict test in Webb to hold that state law preempted the local ordinance.7

7 Defendants cite to one case, City & County of Denver v. State, 788 P.2d 764(Colo. 1990) as an example of where local interests have been deemed to outweigh state interest. Citys Op. Br. at 18; Ints Op. Br. at 2728. In this decision, the court held that a state statute forbidding municipalities from adopting residency requirements for municipal employees unconstitutionally interfered with the power of home-rule municipalities because the Colorado Constitution grants home-rule cities the right to regulate the right of municipal employees. The court reached this holding only after concluding that the residency of the employees of a home rule municipality was solely a matter of local concern.

26

Here, as Judge Mallard noted, the conflict is obvious. The state regulates

hydraulic fracturing and the storage and disposal of associated wastes, and the

Charter Amendment forbids these technical production aspects. Under the Webb

conflict test, the Charter Amendment is flatly preempted. The City, however,

misconstrues the Webb conflict test and argues that preemption can only occur

based upon explicit provisions of state law. Citys Op. Br. at 3237. To the

contrary, what state statutes forbid or authorize may be explicit or implicit: [A]

local regulation and a state regulation conflict if they contain either express or

implied conditions which are inconsistent and irreconcilable with each other.

Colo. Mining Assn, 199 P.3d at 725 (quoting Ray v. City & Cnty. of Denver, 121

P.2d 886, 888 (Colo. 1942)).

Indeed, even Rancho Lobo, Ltd. v. Devargas, 303 F.3d 1195 (10th Cir.

2002), which the City relies upon (Citys Op. Br. at 3334), holds that preemption

under New Mexico law may be based either on what state law explicitly says or

what it implies: A local governmental bodys ability to regulate in an area may be

preempted either expressly, by the language of a statute, or impliedly, due to a

conflict between the local bodys ordinance and the contents, purposes, or

27

pervasive scheme of the statute. Rancho Lobo, 303 F.3d at 1201 (quoting San

Pedro Mining Corp. v. Bd. of Cnty. Commrs, 909 P.2d 754 (N.M. Ct. App. 1995)).

In sum, the Charter Amendment is preempted because state law and

regulations explicitly and implicitly authorize and regulate hydraulic fracturing and

the storage and disposal of related waste.

B. Defendants misconstrue the application of the operational conflict test.

Defendants also argue that Judge Mallard adopted the wrong operational

conflict test and Plaintiffs must prove an operational conflict of the sort described

in Bowen/Edwards. Citys Op. Br. at 27; Ints Op. Br. at 31. Defendants rely upon

the operational conflict standard employed in Bowen/Edwards in arguing that the

Charter Amendment can be harmonized with, and does not materially impede,

the states comprehensive regulations governing oil and gas operations. Citys Op.

Br. at 4, 30; Ints Op. Br. at 15.

As an initial matter, Judge Mallard did analyze the Charter Amendment

under the Bowen/Edwards conflict test, as well as under the Webb test. After

discussing the Bowen/Edwards test, Judge Mallard held: There is no way to

harmonize[] Longmonts fracking ban with the stated goals of the Oil and Gas

28

Conservation Act. As described above, the states interest in production, and

prevention of waste and protection of correlative rights, on the one hand, and

Longmonts interest in banning hydraulic fracturing on the other, present mutually

exclusive positions. There is no common ground upon which to craft a means to

harmonize the state and local interest. R.CF, p.2053.

While Judge Mallard applied both tests out of an abundance of caution, there

is ample ground to conclude that the Bowen/Edwards test should not apply in

analyzing whether a local government ban is preempted. In contrast to the ban in

Voss, Bowen/Edwards involved La Plata Countys adoption of a regulatory scheme

that required oil and gas operators to obtain county permits and comply with

certain performance standards. 830 P.2d at 104850. In finding that the states

interest in oil and gas does not impliedly preempt all aspects of a countys land-

use authority over oil and gas operations, the court held that, outside of areas

involving technical conditions on drilling or pumping or safety or land restoration

requirements, a local government could regulate oil and gas operations unless its

regulations conflicted with state requirements. Id. at 1060.

As the Supreme Courts own distinctions between the Voss and

Bowen/Edwards cases reveal, Colorado courts have applied the Bowen/Edwards

29

operational conflict test in evaluating whether particular oil and gas regulations

enacted by a statutory municipality can be harmonized with state requirements

covering the same conduct. See, e.g., Town of Frederick, 60 P.3d 758; Bd. of Cnty.

Commrs v. BDS Intl, LLC, 159 P.3d 773 (Colo. App. 2006). By contrast, when a

home-rule governments ban is involved, Colorado courts have only employed the

Webb test. See cases including Voss cited at supra II.A.8

The Charter Amendments ban on hydraulic fracturing activities is not an

ordinary land-use regulation; nor does it impose land-use or other specific

regulations like the setbacks, performance standards, or monitoring requirements

addressed in Bowen/Edwards. Colorado courts routinely recognize the distinction

between regulation of a non-technical activity and its total prohibition, finding the

8 Defendants correctly state that the Bowen/Edwards conflict test was employed in Town of Frederick, 60 P.3d at 76364, and Board of County Commissioners v. BDS International, LLC, 159 P.3d 773 (Colo. App. 2006). (Citys Op. Br. at 2728; Ints Op. Br. at 32). These cases are distinguishable in two respects. First, neither case involved a home-rule municipality, and therefore the Webb conflict test was appropriately not employed by the courts. Second, these cases did notinvolve a local government ban or moratorium. Rather, each case analyzed a local government ordinance establishing specific requirements on oil and gas developmentincluding setbacks, water and air quality rules, and noise and visual impact requirementsto determine whether they conflicted in operation with the detailed requirements of the COGCC rules. In that circumstance, the court appropriately employed the Bowen/Edwards conflict test.

30

former to be within a citys authority while the latter is not. The Colorado Supreme

Court has consistently held that the power to regulate does not include any

power, express or inherent, to prohibit. Combined Commcns Corp. v. City &

Cnty. of Denver, 542 P.2d 79, 8283 (Colo. 1975) (quoting Gen. Outdoor Adver.

Co. v. Goodman, 262 P.2d 261 (Colo. 1953)); cf. Colo. Mining Assn, 199 P.3d at

731 (Though counties have broad land use planning authority, that authority does

not generally include the right to ban disfavored uses from all zoning districts.)

(emphasis in original) (citing Combined Commcns).

Finally, even if this Court determines that the Bowen/Edwards operational

conflict test does apply in this case, the Court should uphold the invalidation of the

Charter Amendment because it cannot be harmonized with state law.

Bowen/Edwards, 830 P.2d at 1060. As Judge Mallard determined, the Charter

Amendment flatly prohibits well-completion and operational techniques related to

hydraulic fracturing while state law explicitly allows and regulates them. R.CF,

p.2054.

The Charter Amendment also fails the operational conflict test in

Bowen/Edwards because it regulates, through its ban, technical aspects of oil and

gas operations. As Bowen/Edwards held, the COGCC has exclusive authority to

31

regulate the technical aspects of oil and gas operations and such technical

regulation constitutes a de facto operational conflict. Bowen/Edwards, 830 P.2d at

1060; see also supra I.B.2. Citing Bowen/Edwards, Judge Mallard ruled that the

Charter Amendment was operationally preempted because it banned a technical

process commonly used to bring wells to production, and imposed[d] technical

conditions on the drilling or pumping of wells. R.CF, p.2053. Under the

Bowen/Edwards conflict test, the Charter Amendment is preempted by the

Commissions exclusive authority over technical aspects of oil and gas operations.

III. JUDGE MALLARD CORRECTLY DETERMINED THAT THE REGULATION WAS A MATTER OF MIXED STATE AND LOCAL INTERESTS AS A MATTER OF LAW.

A. The Court did not need a fully developed evidentiary record to make its decision.

Defendants incorrectly argue that the district court was required as a matter

of law to hold a fact-intensive, ad hoc evidentiary hearing to determine whether an

operational conflict exists. Citys Op. Br. at 40; Ints Op. Br. at 31. Defendants

rely upon Bowen/Edwards, but nothing in that case purports to require an ad hoc

evidentiary hearing, or a fully developed factual record, in every preemption

matter. Rather, such a record is required only where the court cannot determine

whether a specific challenged regulation operationally conflicts with state law as a

32

matter of statutory construction. In cases where the municipality bans what the

state allows, no evidentiary record is required because the court can determine the

preemption question on the basis of the texts of the governing statutes and

regulations, as well as the legal holdings in Voss and numerous other cases. As

Judge Mallard determined: This Court, like the courts in Voss, Town of Frederick

and BDS, finds it can resolve this matter in an order of summary judgment. The

operational conflict in this case is obvious and patent on its face. There are no

genuine issues of material fact in dispute. There is no need for an evidentiary

hearing to determine whether the ban on hydraulic fracturing, as a practical matter,

creates operational conflict. R. CF, p.2054.

Bowen/Edwards only determined that an ad hoc evidentiary hearing was

required under the facts of that case because the court could not find an operational

conflict in the language or purposes of the relevant statutes and regulations. Id. at

105960. The complaint had alleged express preemption of the entirety of the

countys regulations and did not allege that any specific sections of the regulations

were preempted through an operational conflict. Id. The court remanded the case to

the district court so that Bowen/Edwards could amend its complaint to specify the

particular regulations it was challenging as preempted. Id. at 1060 (Upon remand

33

of the case to the district court, Bowen/Edwards should be afforded the opportunity

to specify by appropriate pleading those particular county regulations which it

claims are operationally in conflict with, and thus preempted by, the state statutory

or regulatory scheme . . . .). Thus, it is only in this context of comparing the

operational application of two competing sets of regulations and the court is unable

to discern a conflict on its face that Bowen/Edwards requires a fully developed

evidentiary record. Id.

Other Colorado courts have ruled on preemption claims when possible

without first requiring development of a factual record. For example, the Voss

court declared a Greeley ordinance banning oil and gas drilling preempted, despite

the fact that no factual record had been developed. Voss, 830 P.2d at 1063 n.2

(noting that no such [factual] record is before us in this case).9 And in Board of

9 Voss is particularly instructive. Two years after Greeley banned oil and gas drilling entirely in 1985, it amended its municipal code to allow drilling and exploration in certain zones in the city, subject to special review and various requirements. Voss, 830 P.2d at 1063 n.2. The court declined to consider the effect of the 1987 amendments in part because determination of those effects would have required an adequately developed factual record, while evaluation of the 1985 ban on drilling did not require any such record. Id. The difference, of course, is that the court was able to determine as a matter of law that the ban would necessarily conflict with the states interest in oil and gas production, whereas the special review process and other specific restrictions in the 1987 amendments could

34

County Commissioners v. Vandemoer, the court specifically noted that no fully

developed record [is] needed for an operational conflict analysis if on [the] existing

record the issue can be decided on its face. 205 P.3d 423, 428 (Colo. App. 2008)

(citing BDS Intl, 159 P.3d at 779). The court decided that the total prohibition

against moving agricultural sprinklers on county roadsa clear land-use

enactmentoperationally conflicted with state statute, based solely on evaluation

of the statutory terms and the state policy evinced by the statutory regime. Id. at

42829.

Here, Plaintiffs have specifically alleged in their complaints that the Charter

Amendment is preempted as a matter of law because it prohibits and negates what

the state allows and regulates. See generally R.CF, pp.129, 2294. No evidentiary

hearing was required because the preemption question can be decided on the basis

of the texts of the governing statutes and regulations, as well as the legal holdings

in Voss and numerous other cases.

conceivably be implemented in a way that would not prohibit what the state allows or otherwise frustrate the states interest.

35

B. Judge Mallard did not improperly resolve disputed issues of material fact.

1. Alleged disputed issues regarding health and safety allegations.

Defendants argue that the district court should have more closely considered

the Citys evidence regarding the alleged harms to local health, safety, and the

environment caused by hydraulic fracturing. Citys Op. Br. at 1920, 4950; Ints

Op. Br. at 2526. Had Judge Mallard considered this evidence, the City argues, she

would not have concluded that the risks of hydraulic fracturing are insufficient to

completely devalue the States interest. Citys Op. Br. at 20 (quoting R.CF,

p.2050).

But Judge Mallard clearly did weigh state and local interests in oil and gas

regulation, including the Citys allegations of health and safety impacts, carefully

in her ruling. After evaluating a broad range of precedent, Judge Mallard

concluded as a matter of law that the state has a substantial interest in oil and gas

and hydraulic fracturing regulation that was not undermined by the Citys

allegations: [w]hile the Court appreciates the Longmont citizens sincerely-held

beliefs about risks to their health and safety, the Court does not find this is

sufficient to completely devalue the States interest, thereby making the matter one

36

of purely local interest. R.CF, p.2050. Instead, Judge Mallard appropriately

determined that the regulation of hydraulic fracturing was a matter of mixed state

and local concern. Id.

While the City complains that Judge Mallard improperly passed off

weighing health and safety risks to the legislature and state agencies (Citys Op.

Br. at 21), this misconstrues Judge Mallards decision. In fact, Judge Mallard

referred to Defendants raising issues of public policy because Defendants were

asking the court to change the law to give primacy to local government interests:

Longmont and the environmental groups . . . are essentially asking this Court to

establish a public policy that favors protection from health, safety and

environmental risks over the development of mineral resources. Whether public

policy should be changed in that manner is a question for the legislature or a

different court. R.CF, p.2050 (italics in original).

2. Alleged disputed issues regarding the use of hydraulicfracturing in Longmont.

The City also argues that the court erred in not considering its evidence that

some wells in Colorado do not employ hydraulic fracturing or its submitted

affidavit that described the process of underbalanced drilling as a viable alternative

37

to hydraulic fracturing. Citys Op. Br. at 42. While COGA strongly disagrees with

the notion that underbalanced drilling is a viable alternative to hydraulic fracturing,

this dispute was immaterial to Judge Mallards decision. Whether one or more

formations underlying Longmont could theoretically be developed using a

technique other than hydraulic fracturing is simply irrelevant to the operational

conflict issue.

Judge Mallard correctly decided that the Charter Amendment was preempted

as a matter of law. She first determined that the regulation of hydraulic fracturing

was at least a matter of mixed state and local concern. R.CF, p.2050. She then

determined that the COGCC in fact regulates hydraulic fracturing activity. R.CF,

p.2051. Finally, Judge Mallard determined that the operational conflict in this

case is obvious. The Commission permits hydraulic fracturing and Longmont

prohibits it. Id. None of those holdings rested on any factual determination

relating to the viability of underbalanced drilling or any alternative well-

completion technique.

Moreover, any factual determination Judge Mallard may have made

concerned undisputed matters that were unrelated to whether alternatives exist to

hydraulic fracturing. Judge Mallard stated:

38

[V]arious affidavits filed in this case attest to the almost exclusive use of hydraulic fracturing as a well completion process in the Wattenburg [sic] Field, the formation underlying Longmont. R.CF, p.2052.

It is undisputed that fracking results in efficient production of oil and gas. Id.

The fracking ban has ended production in Longmont because TOP will not complete its wells without the ability to conduct hydraulicfracturing. Id.

The Citys claims regarding alternatives to hydraulic fracturing are

immaterial to these factual issues, all of which concern unrebutted evidence

regarding the use of hydraulic fracturing in the Wattenberg Field and the

perception of TOP that the use of hydraulic fracturing was critical to its

development of its wells in Longmont. Accordingly, the Citys evidence regarding

alternatives to hydraulic fracturing was immaterial to her decision.

3. Alleged disputed issues pertaining to waste and correlative rights.

The City also complains that Judge Mallard resolved disputed issues of fact

as to whether the Charter Amendment causes waste and impairs correlative

rights contrary to the states interest. Citys Op. Br. at 4448. Again, Judge

Mallard resolved the preemption issue as a matter of law and any alleged factual

39

findings regarding waste and correlative rights were immaterial to her ruling that

the Charter Amendment is operationally preempted.

Additionally, Judge Mallards factual conclusion regarding waste and

correlative rights also concerned undisputed matters:

Because of the ban, mineral deposits were left in the ground that otherwise could have been extracted in the Synergy well. Mineral deposits are not being drilled due to the fracking ban. R.CF, p.2052.

Longmonts ban on hydraulic fracturing does not protect correlative rights. See . . . affidavit of Synergys President, Edward Holloway (Because proceeds from the well are distributed ratably by acreage, Longmonts ban causes mineral owners in Longmont to receive a higher percentage of the proceeds from their acreage actually contributes to the production. It causes mineral owners outside of Longmont to receive a lesser percentage of the proceeds than their acreage actually contributes to the wells production.) R.CF, p.205253.

These factual determinations concerned undisputed issues pertaining to the

fact that Synergy is not hydraulically fracturing portions of its wells underlying

Longmont due to the ban. R.CF, p.2052.10 As a result, Synergy is paying mineral

10 Defendant Intervenors contend that Synergy agreed contractually not to frack within the city of Longmont. Ints Op. Br. at 41 (citing R. CF, p.1719). Defendant Intervenors contention is incorrect. Synergy agreed to not use hydraulic fracturing within city limits solely with respect to any well accessed by the road that was the subject of the agreement between Synergy and the City. R. CF, p.1450; see also R. CF, p.1719 (responding in the affirmative to the following

40

owners outside of Longmont a smaller percentage of royalties than their mineral

acreage is actually contributing to the production from the wells. The City

presented no evidence to challenge Mr. Holloways affidavit. Id. This is unrebutted

testimony by an operator as to what is actually occurring during the ban. The

Citys evidence that the Charter Amendment prevents waste and protects

correlative rights is irrelevant to these findings.11

question: And Synergy, in the last sentence of paragraph 5(a) [of the agreement between Synergy and the City], agreed not to use hydraulic fracturing within the city limits from any well accessed by this road?) (emphasis added).11 The Citys primary argument that hydraulic fracturing results in waste is not based on a resolution of some disputed factual matter, but is premised on a strained interpretation of the term waste. See Citys Op. Br. at 4445. The City argues that the Charter Amendment does not result in waste because any resource that remains undeveloped as a result of a ban can always be recovered later through some other, possibly as yet undiscovered, means. The Acts legislative declaration (C.R.S. 34-60-102(1)), the definitions of waste ( 34-60-103(11)(13)), the general waste prohibition ( 34-60-107), and Rule 201 together prohibit this type of waste. A reasonable and prudent operator is required to produce oil and gas in economic quantities and protect the correlative rights of mineral owners. Davis v. Cramer, 808 P.2d 358, 360361 (Colo. 1991). The Citys fanciful interpretation of the term waste would render the Acts prohibition against waste entirely toothless.

41

IV. THE CITYS BAN IS IMPLIEDLY PREEMPTED BY THE STATES SUFFICIENTLY DOMINANT INTERESTS.

The Charter Amendment is impliedly preempted by the states dominant

interest in efficient and equitable oil and gas production. Because Judge Mallard

ruled that the Charter Amendment was operationally preempted, she did not reach

whether the states interest in oil and gas regulation impliedly preempted the Citys

ban. R.CF, p.2048. (This Court is not going to go so far as finding that implied

preemption applies in this case, though it recognizes the possibility that implied

preemption may apply.)

In Voss, as mentioned above, the Colorado Supreme Court held that the

states interest in the efficient and equitable development and production of oil

and gas, as manifested in the Act, was sufficiently dominant to override

Greeleys ban on oil and gas operations. Voss, 830 P.2d at 1068. The Voss court,

though, did not make clear whether the home-rule citys ban was impliedly

preempted due the states dominant interest, or whether the ban was preempted due

to its irreconcilable conflict with state law.

The answer to the precise basis for the Voss decision came 17 years later in

Colorado Mining Assn, 199 P.3d at 718. In that case, the court held that Summit

42

Countys ban on the use of cyanide in heap and vat leach mining operations was

impliedly preempted by the states sufficiently dominant authority in the

controlled use of chemicals in mining operations. Id. at 732. The court extensively

discussed and relied on its decision in Voss to void the countys ban as impliedly

preempted: We find Voss particularly instructive because, if a home-rule city may

not enact a ban prohibiting what the state agency may authorize under the statute,

surely a statutory county may not do so. Id. The court confirmed that its holding

in Voss was based on implied preemption: We found [Greeleys] ban to be

unenforceable because the states interest in efficient development and production

of oil and gas in a manner preventative of waste and protective of correlative rights

. . . preempts a home-rule city from totally excluding all drilling operations within

the city limits. [Citation omitted.] We held [in Voss] that the state interest

manifested in the state act was sufficiently dominant to override the local

ordinance. . . . Sufficient dominancy is one of the several grounds for implied state

preemption of a local ordinance. Id. at 724 (quoting Voss, 830 P.2d at 1061).

Defendants will argue that implied preemption does not apply here because

of the courts pronouncement in Bowen/Edwards that the Act does not preempt all

aspects of a home-rule municipalitys land-use authority. COGA agrees that the

43

Act does impliedly preempt the ability of local governments to regulate some

aspects of oil and gas activity. But under Voss, local governments are impliedly

preempted from enacting regulations that impact the states interest in the

efficient and equitable development and production of oil and gas. Voss, 830 P.2d

at 1068. In fact, the Citys ban impacts directly the states interest in promoting

efficiency of production and the avoidance of waste of these valuable mineral

resources. See Voss 830 P.2d at 1067; see also C.R.S. 34-60-102(1) (protect

against waste); 34-60-103(11) (defining waste to include the unreasonable

diminishment of quantities of oil and gas that can be produced), 103(12) &103(13);

34-60-107 (expressly prohibiting waste of oil and gas); 34-60-116(1)

(establishing drilling units to prevent waste); and 34-60-117 (prevention of waste

and protection of correlative rights). Accordingly, the Charter Amendment is

impliedly preempted.12

12 The Defendant Intervenors argue that the Charter Amendment is not preempted by state law because it is necessary to protect the inalienable rights of Longmonts citizens. Ints Op. Br. at 1622. As an initial matter, Defendant Intervenors asserted no counterclaim or defense as to the unconstitutionality of the Act. Therefore, the issue is not properly before the Court. Moreover, Defendant Intervenors acknowledge that they have no Colorado case law to support their argument. They provide no history of the Inalienable Rights Clause in the Colorado Constitution, and no legal discussion other than citations to a

44

CONCLUSION

For the foregoing reasons, COGA respectfully requests that the Court affirm

the district courts order granting Plaintiffs motions for summary judgment.

Dated: March 5, 2015

Pennsylvania case interpreting a Pennsylvania constitutional provision stating that: The people have a right to clean air, pure water, and to the preservation . . . of the environment. . . . As trustee of these resources, the Commonwealth shall conserve and maintain them for the benefit of all the people. Pa. Const. art. 1, sec. 27. The Colorado Constitution contains nothing remotely similar, and the public trust doctrine has been rejected here numerous times at the ballot and in Colorado case law. See In re Bd. of Cnty. Commrs, 891 P.2d 952 (Colo. 1995); People v. Emmert, 597 P.2d 1025 (Colo. 1979).

45

Brownstein Hyatt Farber Schreck, LLP

By: /s/ Mark MathewsMark Mathews, #23749Wayne F. Forman, #14082Michael D. Hoke, #41034

Beatty & Wozniak, P.C.

Karen L. Spaulding, #16547

ATTORNEYS FOR APPELLEE COLORADO OIL & GAS ASSOCIATION

46

CERTIFICATE OF SERVICE

I certify that on March 5, 2015, I electronically filed a true and correct copy

of the foregoing APPELLEE COLORADO OIL & GAS ASSOCIATIONS

COMBINED ANSWER BRIEF with the Clerk of Court via the Colorado ICCES

program which will send notification of such filing and service upon the following

counsel of record:

Devorah Ancel John E. MatterSierra Club Environmental Julie M. Murphy Law Program Asst Attorney Generals85 Second Street, 2ndFloor 1300 Broadway, 10th Fl.San Francisco, CA 94105 Denver, CO 80203

Thomas J. Kimmell Eric HuberZarlengo & Kimmell, PC 1650 38th Street, Suite 102W700 N. Colorado Blvd. Suite 598 Boulder, CO 80301Denver, CO 80206

Kevin J. Lynch Eugene MeiEnvironmental Law Clinic Daniel E. KramerSturm College of Law City of Longmont2255 East Evans Ave., Ste 33 Civic Center ComplexDenver, CO 80208 408 3rd Avenue

Longmont, CO 80501Phillip D. Barber1675 Larimer Street, Suite 620Denver, CO 80202

/s/ Paulette M. ChessonPaulette M. Chesson, Paralegal

011520\0009\11888284.15