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March 01, 2019 Articles

Oil and Gas Development and the Environment: A Balance of Interests

The Colorado Oil and Gas Conservation Commission, according to the Martinez court, must balance the interests of oil and gas development and environmental protection.

By Andrew Glenn

The Colorado Supreme Court recently issued its long-awaited ruling on the authority of the Colorado Oil and Gas Conservation Commission (COGCC) to prioritize environmental protection over oil and gas development. In COGCC v. Martinez, the court rejected the assertion that environmental protection must take precedence. Instead, it concluded that, in crafting the Colorado Oil and Gas Conservation Act,

the legislature’s intent was not to create a condition precedent to further oil and gas development. Rather, its intent was to minimize adverse impacts to public health and the environment while at the same time ensuring that oil and gas development, production, and utilization could proceed in an economical manner.

Case No. 17SC297, 2019 CO 3, ¶ 44 (Jan. 14, 2019); see Oil and Gas Conservation Act, Colo. Rev. Stat. § 34-60-101 et al.

Impetus for Case

The genesis of Martinez was the COGCC’s decision not to consider a rule proposed by a group of environmentally conscious students. Their proposed rule explicitly required that no drilling permit may be issued unless it is scientifically shown that the proposed development will not result in a cumulative adverse impact on health and the environment:

The [COGCC] shall not issue any permits for the drilling of a well for oil and gas unless the best available science demonstrates, and an independent, third-party organization confirms, that drilling can occur in a manner that does not cumulatively, with other actions, impair Colorado’s atmosphere, water, wildlife, and land resources, does not adversely impact human health, and does not contribute to climate change.

Martinez, supra, ¶ 7.

In declining to institute rulemaking, the COGCC determined that the rule contradicted the act and that the agency’s resources should be used on other rulemakings already underway.

Martinez Ruling

Martinez is significant for two reasons. First, the Colorado Supreme Court grappled with the meaning of the act and the state legislature’s intent regarding the treatment of the interests of environmental protection and oil and gas development. Second, in construing the act, the court resolved a challenge to the COGCC’s decision not to consider the students’ proposed rule.

The decision centered in part on the act’s legislative declaration contemplating a balance between various identified public interests affecting oil and gas development and the environment. The public interests expressly declared under the act are the following:

(I) 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;
(II) Protect the public and private interests against waste in the production and utilization of oil and gas;
(III) Safeguard, protect, and enforce the coequal and correlative rights of owners and producers in a common source or pool of oil and gas . . . ;
(IV) Plan and manage oil and gas operations in a manner that balances development with wildlife conservation. . . .

Id. ¶ 20 (quoting Colo. Rev. Stat. § 34-60-10) (emphasis added).

The court read these public policy concerns in light of the statutory authority conferred to the COGCC under the act, which gives the COGCC the power to regulate

[o]il and gas operations so as to prevent and mitigate significant adverse environmental impacts on any air, water, soil, or biological resource resulting from oil and gas operations to the extent necessary to protect public health, safety, and welfare, including protection of the environment and wildlife resources, taking into consideration cost-effectiveness and technical feasibility.

Id. ¶ 20 (quoting Colo. Rev. Stat. § 34-60-106(d)) (emphasis added).

The court, in light of this statutory context, concluded that the act is ambiguous with respect to its treatment of environmental and developmental interests. In particular, the court found that the act’s use of the language in a manner consistent with and taking into consideration cost-effectiveness and technical feasibility created that uncertainty.

As a result, it looked at the evolution of the act’s text since its creation and the statements of those state representatives sponsoring the operative amendments to the act. On the basis of these factors, the court reasoned that the COGCC cannot “condition all new oil and gas development on a finding of no cumulative adverse impacts to public health and the environment. . . .” Id. ¶ 5.

To the contrary, the court concluded that “we do not believe that the pertinent provisions of the act allow the Commission to condition one legislative priority (here, oil and gas development) on another (here, the protection of public health and the environment).” Id. ¶ 50. Therefore, although the COGCC must mitigate environmental impacts, it must also consider the cost-effectiveness and technical feasibility of mitigation measures.


The act, according to the Martinez court, does not allow the COGCC to promote one policy goal over the other; rather, consideration of each is the objective. The court agreed with the COGCC’s determination that the Act precludes it from adopting the proposed rule.

The Martinez decision, however, does not delve into the precise manner in which the COGCC must balance the interests of development and environmental protection. Instead, it likely opens the door to increased challenges to the environmental impact of drilling permits and raises the prospect of legislation or additional COGCC rulemaking pertaining to the manner in which the agency resolves those challenges.

Andrew Glenn is an associate in the Denver, Colorado, office of Beatty & Wozniak, P.C.

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