Weld Air & Water v. Colorado Oil and Gas Conservation Commission , 2019 COA 86 ( 2019 )

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.
SUMMARY
June 6, 2019
2019COA86
No. 18CA1147, Weld Air v. Colo. Oil & Gas Conservation
Comm’n — Courts and Court Procedure — Jurisdiction of
Courts — Standing; Administrative Law — State Administrative
Procedure Act — Oil and Gas Conservation Act — Colorado Oil
and Gas Conservation Commission — Judicial Review
A division of the court of appeals concludes that Colorado’s
Administrative Procedure Act, the Oil and Gas Conservation Act,
and the Colorado Oil & Gas Conservation Commission’s (the
Commission) regulations authorize the subject citizen and
community groups to seek judicial review of the Commission’s Form
2A permit approvals for oil and gas operations. The division also
concludes that the Commission did not act arbitrarily or
capriciously in granting the challenged permits because it (1)
considered relevant public comments — as evidenced by the
administrative record documenting the Commission’s consideration
— and (2) complied with its setback regulations, as the division
holds that Rule 604.c.(2)(E)(i) does not require the Commission to
conduct an alternative site analysis before granting a Form 2A
permit. See Dep’t of Nat. Res. Rule 604.c.(2)(E)(i), 2 Code Colo.
Regs. 404-1. Accordingly, the division affirms the judgment.
COLORADO COURT OF APPEALS 2019COA86
Court of Appeals No. 18CA1147
City and County of Denver District Court No. 17CV31315
Honorable Kenneth M. Laff, Judge
Weld Air & Water, Sierra Club, NAACP Colorado State Conference, and Wall of
Women,
Plaintiffs-Appellants and Cross-Appellees,
v.
Colorado Oil and Gas Conservation Commission,
Defendant-Appellee and Cross-Appellant,
and
Extraction Oil and Gas, Inc.,
Defendant-Appellee and Intervenor.
JUDGMENT AFFIRMED
Division VI
Opinion by JUDGE FOX
Freyre and Welling, JJ., concur
Announced June 6, 2019
Kevin Lynch, Wyatt Sassman, Sarah Matsumoto, Denver, Colorado, for
Plaintiffs-Appellants and Cross-Appellees
Philip J. Weiser, Attorney General, Kyle W. Davenport, Senior Assistant
Attorney General, David A. Beckstrom, Assistant Attorney General, Denver,
Colorado, for Defendant-Appellee and Cross-Appellant
Brownstein Hyatt Farber Schreck, LLP, Mark J. Mathews, Julia E. Rhine,
Denver, Colorado, for Defendant-Appellee and Intervenor
¶1 Appellants, Weld Air & Water, Sierra Club, NAACP Colorado
State Conference, and Wall of Women (Petitioners) and cross-
appellee, the Colorado Oil and Gas Conservation Commission (the
Commission), appeal the district court’s judgment dismissing
Petitioners’ claim and affirming the Commission’s approval of two
permits Extraction Oil and Gas, Inc. (Extraction) requested within
Weld County. Petitioners appeal the permit approvals, and the
Commission cross-appeals the district court’s judgment that
Petitioners had standing to seek judicial review. We affirm.
I. Background
¶2 This appeal arises from the Commission’s approval of
Extraction’s Form 2A permit applications.
¶3 In May 2016, Extraction filed two Form 2A applications with
the Commission seeking approval to conduct oil and gas operations
in Greeley, Colorado at an existing drilling site.1 The proposed site
1 The application requested permission for two Vetting well pads
that would include twenty-four wells, two modular large volume
tanks, eighteen oil tanks, twenty-four separators, four vapor
recovery units, four water tanks, and one lease automatic custody
transfer unit.
1
— called the Vetting well pads — was approximately 1360 feet from
the Bella Romero Academy Middle School buildings.
¶4 In June 2016, the Commission accepted public comments on
Extraction’s applications, including comments from parents of the
Bella Romero students, from neighboring property owners, and
from community and environmental groups. Three concerns raised
in the public comments, and relevant to this appeal, were (1) the
health risk to Bella Romero students playing outdoors where the
proposed development was less than 1000 feet from the school’s
playgrounds and fields; (2) Extraction’s emergency response plan
given the proposed development’s proximity to the school; and (3)
2
consideration of alternative locations farther from the school.
Petitioners asked the Commission to deny the permit applications.
¶5 On March 10, 2017, the Commission, through its Director,
approved Extraction’s Form 2A applications for the Vetting well
pads. Petitioners then sued in district court, arguing that the
Commission acted arbitrarily and capriciously in granting the
permits — because it failed to consider public comments — and
that its decision to grant the permits violated the Commission’s
setback rules.
¶6 On June 20, 2018, after finding that Petitioners had standing
to seek judicial review of the Commission’s permit approvals, the
district court affirmed the Commission’s decision granting the
permits.
¶7 Because standing is a threshold issue, we address the cross-
appeal before addressing Petitioners’ appeal.
II. Cross-Appeal
¶8 The Commission asserts that the district court erred when it
held that Petitioners had standing to seek judicial review of the
3
Commission’s authorization of Extraction’s Form 2A permit
applications. We disagree.
A. Preservation, Standard of Review, and Applicable Law
¶9 Petitioners contend that the Commission cannot argue for the
first time on appeal that they lack standing to seek judicial review
of Form 2A permit approvals. Because questions of standing may
be raised at any time, we disagree. See Hickenlooper v. Freedom
from Religion Found., Inc., 2014 CO 77, ¶ 7 (“Standing is a
jurisdictional prerequisite that can be raised any time during the
proceedings.”).
¶ 10 Because “standing involves a consideration of whether a
plaintiff has asserted a legal basis on which a claim for relief can be
predicated, the question of standing must be determined prior to a
decision on the merits.” Id. (citation omitted). In other words,
standing concerns a court’s subject matter jurisdiction; thus, it is a
question we review de novo. Friends of the Black Forest Reg’l Park,
Inc. v. Bd. of Cty. Comm’rs, 80 P.3d 871, 876 (Colo. App. 2003).
¶ 11 Colorado’s Administrative Procedure Act (APA) provides
judicial review for parties that are “adversely affected or aggrieved”
4
by “[f]inal agency action.” § 24-4-106(1)-(2), C.R.S. 2018. To have
standing, a party must suffer an injury-in-fact to a legally protected
interest; an “interest is legally protected if the constitution, common
law, or a statute, rule, or regulation provides the plaintiff with a
claim for relief.” Reeves v. City of Fort Collins, 170 P.3d 850, 851
(Colo. App. 2007). And while the injury-in-fact cannot be overly
indirect, incidental, or a remote, future possibility, the injury may
be intangible, such as an aesthetic injury. Ainscough v. Owens, 90
P.3d 851, 856 (Colo. 2004).
¶ 12 The Oil and Gas Conservation Act (the Act) provides that “[a]ny
rule, regulation, or final order of the commission shall be subject to
judicial review in accordance with [the APA].” § 34-60-111, C.R.S.
2018 (citing § 24-4-106). And Commission Rule 305.e.(3) states
that if the approval of a Form 2A “is not suspended . . . the
issuance of the approved Form 2 or Form 2A by the Director shall
be deemed a final decision of the Commission, subject to judicial
appeal.” Dep’t of Nat. Res. Rule 305.e.(3), 2 Code Colo. Regs. 404-
1.
5
B. Analysis
¶ 13 The Commission argues that the APA — as a procedural act —
and the Act do not grant Petitioners a legally protected interest;
therefore, they cannot seek judicial review of the Commission’s
Form 2A permit authorizations. The Commission contends that
permits are not “final orders” under section 34-60-111, and thus
are not subject to the Act’s judicial review provision. In making this
argument, it relies on Colo. Oil & Gas Conservation Comm’n v.
Grand Valley Citizens’ All., 2012 CO 52, ¶ 3 (GVC), which held that
because permits are separately governed by section 34-60-106(1)(f),
C.R.S. 2018, section 34-60-108(2), C.R.S. 2018, which provides
that “[n]o rule, regulation, or order . . . shall be made by the
commission without a hearing,” does not apply to permits; thus, a
citizens group was not entitled to request a hearing on a permit-to-
drill application.
¶ 14 The Commission argues that because the APA treats permits
as “licenses,” section 24-4-104, C.R.S. 2018, applies instead, which
6
only contemplates judicial review for permit applicants. 2
Additionally, the Commission contends that Rule 503.b. has
expanded the class of persons who may request a hearing on a
Form 2A application to include (1) the permit applicant, (2) the
owners of the surface rights, and (3) the local government with land
use authority over the proposed development. Dep’t of Nat. Res.
Rule 503.b., 2 Code Colo. Regs. 404-1. However, the Commission
reasons that because citizen groups like Petitioners are not
included in the three classes of persons entitled to request a
hearing, neither the APA, the Act, nor the Commission rules give
Petitioners a legally protected interest to seek judicial review of
permit approvals. The Commission’s brief ignores Rule 305.e.(3) —
designating an approved Form 2A a final Commission decision
subject to judicial review — altogether.
2 Section 24-4-104(9), C.R.S. 2018, provides that “[i]f an application
for a new license is denied without a hearing, the applicant, within
sixty days after the giving of notice of such action, may request a
hearing before the agency as provided in section 24-4-105, and the
action of the agency after any hearing shall be subject to judicial
review as provided in section 24-4-106.”
7
¶ 15 We agree with the Commission that the APA alone does not
provide a substantive claim for relief. 3 See Romer v. Bd. of Cty.
Comm’rs, 956 P.2d 566, 576 (Colo. 1998) (“[T]he APA does not
create substantive legal rights on which a claim for relief can be
based.”). However, the Act provides that any “final order of the
commission shall be subject to judicial review in accordance with
section 24-4-106” where the relevant APA provision states that
parties “adversely affected or aggrieved by agency actions” may seek
judicial review. § 34-60-111 (citing § 24-4-106). Commission Rule
305.e.(3) likewise recognizes, without limitation, that when the
Commission’s Director approves a Form 2A application, his decision
is deemed to be a final Commission decision subject to judicial
3 To the extent that the Commission takes issue with the part of the
district court’s judgment that held that Nat’l Wildlife Fed’n v. Cotter
Corp., 665 P.2d 598 (Colo. 1983), rejected the notion that plaintiffs
must have a private right of action to have standing, we agree with
the Commission that the APA alone cannot provide plaintiffs with a
legally protected interest. See Romer v. Bd. of Cty. Comm’rs, 956
P.2d 566, 576 (Colo. 1998). But, we need not address this
argument further because we affirm the district court’s judgment on
other grounds. See, e.g., Rush Creek Sols., Inc. v. Ute Mountain Ute
Tribe, 107 P.3d 402, 406 (Colo. App. 2004) (recognizing that we may
affirm the trial court’s ruling based on any grounds that are
supported by the record).
8
review. Because Petitioners established injuries-in-fact to legally
protected interests under the APA and section 34-60-111 of the Act,
the district court did not err in holding that Petitioners had
standing to seek judicial review of the Commission’s permit
approvals. 4
¶ 16 To the extent that the Commission relies on Rule 503.b. and
GVC, both are inapplicable here because Petitioners did not request
a hearing. GVC held that non-permit applicants may not seek a
hearing under section 34-60-108 because the term “order” in that
provision does not encompass permits. GVC, ¶ 18. This is a
separate issue from whether section 34-60-111’s judicial review
authorization of “final orders” encompasses permits. GVC also did
not foreclose the possibility that, for APA purposes, a permit can be
an order. See GVC, ¶ 13.
4 Although it is unclear whether the district court found that all
Petitioners established injuries-in-fact to legally protected interests,
we affirm because at least one of the Petitioner organizations
successfully established an injury-in-fact to a legally protected
interest. See Village of Arlington Heights v. Metro. Hous. Dev. Corp.,
429 U.S. 252, 264 n.9 (1977) (recognizing that because “at least one
individual plaintiff” demonstrated standing, the court “need not
consider whether the other individual and corporate plaintiffs have
standing to maintain the suit”).
9
¶ 17 Petitioners are members of organizations that have aesthetic,
recreational, health, and environmental interests in the proposed
development location, and they offered numerous declarations from
members — including nearby residents with children attending
Bella Romero — on how the expected air and noise pollution from
Extraction’s proposed development would negatively impact their
interests. Thus, Petitioners established that the Commission’s
approval of Extraction’s Form 2A applications would create an
injury-in-fact. See Ainscough, 90 P.3d at 856; Nat’l Wildlife Fed’n v.
Cotter Corp., 665 P.2d 598, 604 (Colo. 1983) (holding that unlike
members of an organization with a mere “interest in a problem” that
do not have standing, organization members who face threat of
injury have standing because their “alleged injuries are to personal
health, and are sufficient to establish that [they] are adversely
affected or aggrieved”). This is so especially where Petitioners
effectively challenged the Commission’s compliance with the
governing regulatory framework.5 See Nat’l Courier Ass’n v. Bd. of
5Although Petitioners do not cite Commission Rule 522.a and
522.b(1)(E), that rule could also provide relief. See Dep’t of Nat.
10
Governors of Fed. Reserve Sys., 516 F.2d 1229, 1241 (D.C. Cir.
1975) (“Private parties and reviewing courts alike have a strong
interest in fully knowing the basis and circumstances of an agency’s
decision.”); see also Geer v. Stathopulos, 135 Colo. 146, 154, 309
P.2d 606, 611 (1957) (recognizing that a court reviewing agency
action should have the same information available to the agency to
allow the reviewing court to “be in the same position as the agency”
in considering “the problem successively confronting agency and
court”).
¶ 18 The Commission’s argument that the Act does not offer
Petitioners a legally protected interest — specifically that section
34-60-111, which authorizes judicial review of “final orders,” does
not encompass permits — is unsupported by Colorado law. Cf.
Dep’t of Nat. Res. Rule 305.e.(3), 2 Code Colo. Regs. 404-1. We are
not, of course, bound by an agency’s interpretation that is contrary
to the plain meaning of the governing statute. See People v.
Rockwell, 125 P.3d 410, 420 (Colo. 2005). And, section 34-60-111
Res. Rule 522.a., 522.b.(1)(E), 2 Code Colo. Regs. 404-1 (alleged
violation of a Commission regulation is actionable).
11
authorizes judicial review of final orders “in accordance with” the
APA, and the APA defines an agency “order” as “the whole or any
part of the final disposition (whether affirmative, negative,
injunctive, or declaratory in form) by any agency in any matter
other than rule-making.” § 24-4-102(10), C.R.S. 2018; see also
Dep’t of Nat. Res. Rule 305.e.(3), 2 Code Colo. Regs. 404-1; Marks v.
Gessler, 2013 COA 115, ¶ 29 (“[T]he APA serves as a gap-filler, and
its provisions apply to agency actions unless they conflict with a
specific provision of the agency’s statute or another statutory
provision preempts the provisions of the APA.”) (citation omitted)
(cert. granted June 23, 2014); Roosevelt Tunnel, LLC v. Norton, 89
P.3d 427, 430 (Colo. App. 2003) (holding that because the relevant
substantive statute “expressly incorporate[ed] the APA procedures,”
the plaintiff could obtain judicial review of the Colorado Water
Quality Control Division’s failure to rule on his discharge permit
application because the APA defined “action” to include a “failure to
act”).
¶ 19 Because the Commission’s approval of Extraction’s Form 2A
permit applications allowed Extraction to conduct its operations at
12
the proposed site, it was a “final order” subject to judicial review
under section 34-60-111. See Dep’t of Nat. Res. Rule 305.e.(3), 2
Code Colo. Regs. 404-1; see also Colo. Ground Water Comm’n v.
Eagle Peak Farms, Ltd., 919 P.2d 212, 218-19 (Colo. 1996) (relying
on the APA’s definition of “order” where the relevant substantive
statute did not define the term and the APA defines “orders” to
include agency “‘decisions’ other than rulemaking”); see also
Chittenden v. Colo. Bd. of Soc. Work Exam’rs, 2012 COA 150, ¶ 26
(“For agency action to be final pursuant to section 24-4-106(2), it
must (1) mark the consummation of the agency’s decision-making
process and not be merely tentative or interlocutory in nature, and
(2) constitute an action by which rights or obligations have been
determined or from which legal consequences will flow.”).
¶ 20 Unlike agency action that is “committed to agency discretion
by law” and thus precludes judicial review,6 the express purpose of
6 Here, there is a legal standard for us to apply. See Carter v. Small
Bus. Admin., 40 Colo. App. 271, 273, 573 P.2d 564, 567 ( 1977)
(recognizing that “whether an agency’s action is ‘committed to
agency discretion by law,’ depends upon whether some type of legal
standard can be found or implied by which to hold the agency
accountable” where a “legal standard may be implied from statutory
13
section 34-60-111 is to provide an avenue for “adversely affected or
aggrieved” parties to obtain judicial review of final Commission
decisions. See Marks, ¶ 29 (“[I]f the APA is applicable to a
particular agency, both the APA and statutes specific to that agency
should be read together and harmonized to the extent possible.”)
(citation omitted); Richmond Petroleum, Inc. v. Oil & Gas
Conservation Comm’n, 907 P.2d 732, 734 (Colo. App. 1995)
(recognizing that the “purpose” of section 34-60-111 is to provide
“claims for judicial review” of “final agency action” according to
section 24-4-106 of the APA).
¶ 21 Because the Commission’s authorization of Extraction’s
permits constituted a “final order” under section 34-60-111 and
Rule 305.e.(3), and Petitioners demonstrated that approval of the
permits would result in an injury-in-fact to their aesthetic,
environmental, recreational, and health interests — legitimate
interests for purposes of standing — the Act allows Petitioners to
challenge the Commission’s permit approvals via the APA. See
language, underlying legislative objectives, and the nature of the
action authorized or regulated”).
14
Franklin v. Massachusetts, 505 U.S. 788, 796 (1992) (recognizing
that the purpose of the federal APA is to set forth the procedures by
which agencies “are accountable to the public and their actions
subject to review by the courts”); Colo. Envtl. Coal. v. Wenker, 353
F.3d 1221, 1228 (10th Cir. 2004) (“Exemption from judicial review
of agency decisions is narrow.”).
¶ 22 Accordingly, because Petitioners established an injury-in-fact
to a legally protected interest, the district court properly held that
Petitioners had standing to seek judicial review of the Commission’s
permit approvals.
III. Petitioners’ Appeal
¶ 23 Petitioners argue that the district court erred when it found
that the Commission did not act arbitrarily and capriciously by
failing to (1) consider public comments, and (2) comply with its own
setback rules. We disagree.
A. Additional Background
¶ 24 The Commission is charged with regulating oil and gas
resource production in Colorado. See § 34-60-105, C.R.S. 2018.
Specifically, the Act authorizes the Commission to regulate “[t]he
drilling, producing, and plugging of wells and all other operations
15
for the production of oil and gas.” § 34-60-106(2)(a). And the
General Assembly has declared that it is in the public interest to
“[f]oster 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.” § 34-60-102(1)(a)(I), C.R.S. 2018.
¶ 25 Following an amendment to the Act, the Commission amended
its rules, including Rule 305, see Dep’t of Nat. Res. Rule 305, 2
Code Colo. Regs. 404-1, to allow for public comment on permit
applications to ensure that permitting decisions “are better
informed and more protective of public health, safety, and welfare,
including the environment and wildlife resources.” Oil & Gas
Conservation Comm’n, Statement of Basis, Specific Authority, and
Purpose, 2 Code Colo. Regs. 404-1 (superseded May 30, 2011). 7
¶ 26 The Commission’s purpose statement — discussing Rule 305’s
amendment — stated,
7 The Commission’s purpose statement explains its amendments to
the old rule.
16
Amended Rule 305 significantly enhances the
transparency of the permitting process by
providing that the entire Form 2A will be
posted on the [Commission’s] web-site, by
extending individualized notice to the CDPHE,
CDOW, surface owners, and the owners of
surface property within 500 feet of the
location, and by providing at least a 20 day
period for receipt and consideration public
comment.
Id. The Commission also stated that it
will accept and post any comments it receives
on the Form 2A or any associated Form 2.
Although [the Commission] will consider such
comments, it does not anticipate responding to
them.
Id.
¶ 27 Also relevant to this appeal, in 2013, the Commission
promulgated “setback” rules, see Dep’t of Nat. Res. Rule 604, 2
Code Colo. Regs. 404-1, concerning siting requirements for oil and
gas facilities. The express purpose of the setback rules was to
provide strong protective measures, including
notice and communication requirements,
without imposing undue costs or restrictions
on oil and gas exploration and production
activities in the state.
The Setback Rules are intended to require
Operators to eliminate, minimize, or mitigate
the impacts of oil and gas operations
conducted in Designated Setback Locations by
17
utilizing technically feasible and economically
practicable protective measures.
....
These Setback Rules are not intended to
address potential human health impacts
associated with air emissions related to oil and
gas development.
See Oil & Gas Conservation Comm’n, Statement of Basis, Specific
Authority, and Purpose, 2 Code Colo. Regs. 404-1 (superseded
February 11, 2013).
¶ 28 The Commission defined “designated setback location” as “a
term of art for all proposed Oil and Gas Locations located within, or
proposed to be located in, any Buffer Zone Setback, an Exception
Zone, within [1000 feet] of a High Occupancy Building Unit, or
within 350’ of a Designated Outside Activity Area.” Id.
¶ 29 After receiving public comments on Extraction’s two Form 2A
applications, the Commission requested additional information from
Extraction, which revised several of its best management practices
(BMPs) to respond to the issues the Commission identified.
¶ 30 Extraction provided a siting rationale explanation to the
Commission and discussed its compliance with the setback
regulations:
18
The facility for the Vetting 15-H well pad has
been positioned to meet [the Commission]
setbacks from both Building Units and High
Occupancy Building Units. The facility is
located over 1,300 feet from the closest high
occupancy building unit and over 700’ from
the two closest building units. Additionally the
facility has been located to achieve the greatest
setback possible from the limits of the school
property located to the northwest, yet as far as
possible from the residential homes located to
the south and east.
Extraction’s siting rationale also discussed the alternative locations
it considered:
The Vetting location is the alternate location to
previously permitted locations, the South
Greeley Directional and Gilbert pads. The
Vetting Location was chosen as the best site
available because we are able to utilize more of
our preferred [BMPs], many of which are
mutually beneficial for the community and for
Extraction[.]
B. Preservation, Standard of Review, and Applicable Law
¶ 31 The parties agree that Petitioners preserved both issues for
appeal.
¶ 32 We review a district court’s decision under the APA and
whether the record contains sufficient evidence to support the
agency’s decision de novo. Farmer v. Colo. Parks & Wildlife Comm’n,
2016 COA 120, ¶ 12; Chase v. Colo. Oil & Gas Conservation
19
Comm’n, 2012 COA 94, ¶ 21. Accordingly, we “sit in the same
position as the district court and review the agency’s decision for
abuse of discretion.” Farmer, ¶ 12.
¶ 33 In reviewing an agency’s decision, we view the record in the
light most favorable to the agency, and we defer to the agency’s
factual findings unless they are unsupported by the record or fail to
abide by the statutory scheme. Id. at ¶ 13; Chase, ¶ 21.
Additionally, we defer to an agency decision that involves “factual
and evidentiary matters within an agency’s specialized or technical
expertise.” Rags Over the Ark. River, Inc. v. Colo. Parks & Wildlife
Bd., 2015 COA 11M, ¶ 55. Thus, if conflicting inferences can be
drawn from the record evidence, we will not second guess an
agency’s choice between two opposing views. Colo. Motor Vehicle
Dealer Licensing Bd. v. Northglenn Dodge, Inc., 972 P.2d 707, 715
(Colo. App. 1998).
¶ 34 The Commission is a creature of state statute and has only the
powers conferred on it by the Act. Chase, ¶ 26. The Act grants the
Commission broad jurisdiction and empowers it to “make and
enforce rules, regulations, and orders” and “do whatever may
20
reasonably be necessary to carry out the provisions” of the Act. §
34-60-105(1). After enacting regulations, an agency is bound by
them. Rags Over the Ark. River, Inc., ¶ 25.
¶ 35 We overturn an administrative agency’s determination only if
we conclude that the agency “abused its discretion or when the
decision was arbitrary and capricious, based on findings of fact that
were clearly erroneous, unsupported by substantial evidence, or
otherwise contrary to law.” Farmer, ¶ 13. An agency acts
arbitrarily and capriciously when it fails to comply with its own
regulations. Rags Over the Ark. River, Inc., ¶ 26. We afford an
agency’s interpretation of its own rules great deference and accept
the interpretation “if it has a reasonable basis in law and is
warranted by the record, but not if the rule clearly compels the
contrary result.” Chase, ¶ 23.
¶ 36 When construing an agency’s regulation, we follow principles
of statutory interpretation by looking first to the rule’s language to
analyze the words and phrases according to their plain and
ordinary meaning. Id. at ¶ 22. “This is consistent with
[Commission] Rule 100, which states that all words not otherwise
21
defined but used in [the Commission] rules ‘shall be given their
usual customary and accepted meaning, and all words of a
technical nature, or peculiar to the oil and gas industry, shall be
given that meaning which is generally accepted in said oil and gas
industry.’” Id.
C. Analysis
1. Public Comments
¶ 37 Petitioners argue that the district court erred when it held that
the Commission was not required to respond to substantive public
comments. They contend that the Commission was obligated to
respond to substantive public comments because it must make a
record of its decision-making process to show that it considered
public comments, as required by its rules. See Dep’t of Nat. Res.
Rule 305.b.(1)(B), 2 Code Colo. Regs. 404-1 (setting Form 2A
deadlines “by which public comments must be received to be
considered”); see also Chase, ¶ 59 (reversing the Commission’s
decision because the court lacked “sufficiently detailed findings of
facts, including assessments of the evidence and testimony, and
conclusions of law . . . to allow meaningful review on appeal”).
22
¶ 38 Petitioners further contend that the Commission failed to
adequately address public concerns regarding (1) health threats to
the Bella Romero students, (2) the need for an emergency response
plan to protect students and faculty, and (3) the need to consider
alternative locations; thus, the Commission failed to make a
sufficient record showing consideration of these site-specific public
concerns.
¶ 39 We agree that the Commission is required to document its
decision-making process but conclude that here the Commission
fulfilled its obligations to document its consideration of public
comments.
¶ 40 The administrative record reflects that the Commission
considered and responded to public concerns regarding (1) Bella
Romero students’ health, (2) Extraction’s emergency response plan,
and (3) alternative siting.
¶ 41 First, the Commission’s “Memo to File” discussed public
comments regarding Bella Romero students’ health and the
measures taken by Extraction to protect public health and safety.
Specifically, the Commission “prescribed Condition[s] of Approval
23
(COAs) to eliminate, minimize or mitigate potential adverse impacts
to public health, safety, and welfare, including the environment,
that were not otherwise addressed by [Commission] Rules or
operator proposed [BMPs].” The Commission also noted that the
location complied with the agency’s setback rules as the “nearest
production facility on the Vetting Facility location will be [1364] feet
from the Bella Romero School building,” and thus the facilities’
location did not require a hearing. See Dep’t of Nat. Res. Rule
604.a.(3), 2 Code Colo. Regs. 404-1 (stating that no production
facility “shall be located one thousand [1000] feet or less from a
High Occupancy Building Unit without Commission approval
following Application and Hearing”). The Commission
acknowledged that the public was concerned that the school’s
playground and sporting fields were less than 1000 feet from the
proposed development, but it explained that its setback rules “do
not address a setback to the property boundary or playground
associated with High Occupancy Building Units, only the building
itself.”
24
¶ 42 Second, regarding an emergency response plan, the
Commission requested further information from Extraction on how
it proposed to ensure “the safety and welfare of the students and
faculty of the Bella Romero school during an emergency.” In
response, Extraction discussed how it would continue to work with
the Greeley Fire Department “to add training, tours, drills,
inspection or other components” benefiting the students’ safety in
the event of an emergency. The Commission aptly noted — and
Petitioners could not contradict — that it was not the appropriate
agency to carry out these emergency measures.
¶ 43 Third, the Commission requested further information from
Extraction on “alternative locations further away . . . and why those
other locations were not chosen.” In response, Extraction
discussed the alternative “previously permitted locations” that it
considered — the South Greeley Directional and Gilbert pads — but
Extraction ultimately decided the requested location was “the best
site available because we are able to utilize more of our preferred
[BMPs], many of which are mutually beneficial for the community
and for Extraction.” Specifically, the Vetting location allowed
25
Extraction to reduce noise and traffic pollution as compared to the
other considered locations because the Vetting location allowed for
(1) easy access to Highway 34, allowing truck traffic to avoid driving
by Bella Romero; (2) closer proximity to irrigation ditches,
eliminating the need for water trucks to drive to the Vetting
location; (3) closer proximity to existing electric infrastructure,
eliminating noise that would result if combustion generators were
used; and (4) closer proximity to existing oil and gas pipeline
infrastructure, allowing Extraction to move the oil by pipeline
instead of relying upon trucks.
¶ 44 Additionally, Extraction altered several of its BMPs because of
Commission concerns and requests for more detailed information
following public comments. For example, the Commission asked
Extraction if it would commit to using remote shut-off capabilities
of the production facilities to protect the health and safety of nearby
residents in case of an emergency. Extraction added a BMP to its
operational system “to allow remote shut in, remote monitoring, and
off-site response to emergencies.” Several of the approved BMPs
were in direct response to Petitioners’ requests. For example, in
26
Sierra Club’s comments on the Form 2A applications, it stated that
the facilities should be subjected to an instrument-based leak
detection and repair inspection at least once a year and use volatile
organic compound (VOC) destruction with at least 95% efficiency on
all tanks capable of emitting over two tons of VOCs annually. The
Commission’s file memorandum noted that Extraction’s BMPs
included “conducting regularly scheduled inspections of equipment
to identify liquid leaks, using a low VOC level base fluid for their oil-
based mud drilling fluid . . . and using Emission Control Devices
and Vapor Recovery Units capable of reducing VOC emissions by at
least 95%.”
¶ 45 To the extent that Petitioners argue that the Commission’s
decision runs counter to the evidence because the Commission
failed to provide a written response to studies submitted by
Petitioners, the agency implicitly considered and rejected those
studies as irrelevant to the permits at issue. See Northglenn Dodge,
Inc., 972 P.2d at 716 (“The absence of [specific] findings by an
administrative board is not fatal to a decision if there is evidence in
the record which supports its decision” where an agency’s “express
27
findings, taken together with reasonable implications based upon
its assessment of the totality of the evidence presented” provide
sufficient basis for the decision.) (citation omitted); Hudspeth v. Bd.
of Cty. Comm’rs, 667 P.2d 775, 778 (Colo. App. 1983) (“The absence
of express findings by [an agency] does not affect the validity of the
decision where the necessary findings are implicit in the action
taken.”). The record discloses that several of the referenced studies
related to locations outside of Weld County; indeed, some studies
discussed impacts from out-of-state oil and gas development.
Additionally, Petitioners’ less recent submitted studies could have
less relevance to the Commission’s 2017 permit approvals.
¶ 46 While Petitioners may believe that the Commission wrongly
concluded that Extraction took sufficient mitigation measures to
protect public health and safety, we may not substitute our
judgment for the Commission’s. See Rags Over the Ark. River, Inc.,
¶ 55; Chase, ¶ 21. Because the record evidences the Commission’s
consideration of public comments on site-specific concerns, as
required by Rule 305, we cannot conclude that the district court
28
erred in concluding that the Commission did not act arbitrarily and
capriciously in authorizing the Form 2A permits. See Farmer, ¶ 13.
2. Setback
¶ 47 Petitioners next argue that the district court erred when it
found that the Commission complied with its own setback rules.
See Dep’t of Nat. Res. Rule 604.c.(2)(E)(i), 2 Code Colo. Regs. 404-1
(“Multi-well production facilities shall be located as far as possible
from Building Units.”). Petitioners contend that Rule 604.c.(2)(E)(i)
— as previously interpreted by the Commission — requires an
alternative site analysis, and thus the Commission acted arbitrarily
and capriciously by not requiring Extraction to conduct an
alternative site analysis before granting the permits. Petitioners
also contend that Commission Rule 305A supports this argument
because it requires that a Large Urban Mitigation Area (LUMA)
facility’s siting rationale include “a description of other sites
considered and the reasons such alternate sites were rejected.”
Dep’t of Nat. Res. Rule 305A.b.(2), 2 Code Colo. Regs. 404-1.
¶ 48 Petitioners cite no previous Commission decision or
rulemaking statement to support their argument that the
29
Commission has previously interpreted Rule 604.c.(2)(E)(i) as
requiring an alternative site analysis. Rather, Petitioners rely on
Form 2A to support their argument. Form 2A states that if permit
applicants’ proposed production facilities are to be located less than
1000 feet from a building unit, Rule 604.c.(2)(E)(i) requires that “the
operator must evaluate alternative locations for Production
Facilities that are farther from the Building Unit.”
¶ 49 But Form 2A also states that in conducting this “alternative
location” evaluation, the applicant must “certify that no alternative
placements for the Production Facilities, farther from the nearest
Building Unit, were available based on the analysis conducted
pursuant to Rule 604.c.(2)(E)(i).” Thus, Form 2A clarifies the
meaning of “alternative locations” to require only an analysis of
whether “alternative placements” exist within the proposed location.
See Oil & Gas Conservation Comm’n, Statement of Basis, Specific
Authority, and Purpose, 2 Code Colo. Regs. 404-1 (superseded
February 11, 2013) (stating that Rule 604.c.(2)(E)(i) is intended to
require permit applicants “to eliminate, minimize, or mitigate the
impacts of oil and gas operations conducted in Designated Setback
30
Locations”) (emphasis added). Rule 604.c.(2)(E)(i)’s plain language
also supports this interpretation, as it requires sites to be located
“as far as possible” from a building unit. In contrast, Rule 305A
requires “a description of other sites considered and the reasons
such alternate sites were rejected.” See Chase, ¶ 22. The record
shows that locating the permitted facilities farther from the school
would only place the facilities closer to residences or to land the
City of Greeley had designated for other use.
¶ 50 And we disagree with Petitioners that the district court erred
when it found that Rule 305A was inapplicable here and that it did
not support Petitioners’ argument that an alternative site analysis
was required. As Petitioners acknowledge in their opening brief,
Rule 305A serves a distinct purpose from Rule 604 and contains
separate requirements. Rule 305A serves to ensure adequate local
government notification and consultation for LUMA facilities. See
Dep’t of Nat. Res. Rule 305A, 2 Code Colo. Regs. 404-1. The
subject site is not a LUMA, and Extraction previously reached an
31
agreement with the City of Greeley regarding the facilities’ location.
Rule 305A’s requirements were simply inapplicable here.8
¶ 51 We also reject Petitioners’ contention that the district court
erred by relying on a prior district court decision — Neighbors
Affected by Triple Creek v. Colo. Oil & Gas Conservation Comm’n,
(Dist. Ct. No. 16CV34274, Aug. 23, 2017) (unpublished order)
(Triple Creek) — in holding that Rule 604.c.(2)(E)(i) does not require
an alternative site analysis. Petitioners reason that because Triple
Creek involved a LUMA site, whereas Extraction’s permit
applications did not, the court erred in relying on Triple Creek.
¶ 52 The district court only relied on relevant portions of Triple
Creek. Triple Creek involved a similar analysis where the court
rejected the plaintiff’s argument that Rule 604 required an
alternative site analysis to ensure that the production facility was
8 Even though Extraction was not required to justify why the
Vetting location was selected over the South Greeley Directional and
Gilbert pad sites, the record reveals that Extraction considered, but
ultimately rejected, two other sites, in part because of (1) better
highway access to allow Extraction’s trucks to get off local roads
faster and potentially avoid local roads altogether; (2) closer
proximity to electric infrastructure to avoid using combustion
generators to power the drilling rig; and (3) technical concerns with
accessing the mineral reserves at the other two sites.
32
sited “as far as possible” from building units. See Triple Creek, No.
16CV34274, slip op. at 4 (“The requirements of Rule 305 specifically
relate to the location of the entire site, whereas Rule 604 relates to
the siting of the production facilities once the site has already been
chosen. This is supported by the language of Form 2A and the
language of the Rules.”). Additionally, Petitioners cannot
simultaneously argue that Rule 305A — governing LUMA facilities
— applies here and supports their argument that Rule 604.c.(2)(E)(i)
requires an alternative site analysis, while also arguing that the
court erred in relying on Triple Creek because it involved a Rule
305A analysis. See Erskine v. Beim, 197 P.3d 225, 229 (Colo. App.
2008) (recognizing that parties are required to maintain consistent
positions throughout litigation to assure the promotion of truth and
prevent parties from “deliberately shifting positions to suit the
exigencies of the moment”) (citation omitted). Even assuming that
the district court erred in relying on Triple Creek, we need not
address this argument further because, as explained here, we
affirm the court’s judgment on other grounds. See, e.g., Rush Creek
Sols., Inc. v. Ute Mountain Ute Tribe, 107 P.3d 402, 406 (Colo. App.
33
2004) (recognizing that we may affirm the trial court’s ruling based
on any grounds that are supported by the record).
¶ 53 Given that (1) the agency’s proffered interpretation is
reasonable in light of the Form 2A language and requirements of
Rule 604.c.(2)(E)(i), and (2) Petitioners failed to identify an instance
where the Commission previously interpreted Rule 604.c.(2)(E)(i) as
requiring an alternative site analysis, we cannot conclude that the
agency failed to comply with its own regulations in authorizing
Extraction’s Form 2A permits without requiring Extraction to
conduct an alternative site analysis. See Chase, ¶¶ 22-23.
¶ 54 Accordingly, we affirm the district court’s judgment that the
Commission did not act arbitrarily and capriciously in authorizing
the Form 2A permits. See Farmer, ¶ 13.
IV. Conclusion
¶ 55 The judgment is affirmed.
JUDGE FREYRE and JUDGE WELLING concur.
34