Colo. Oil & Gas Conservation Comm'n v. Martinez

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ADVANCE SHEET HEADNOTE
January 14, 2019
2019 CO 3
No. 17SC297, COGCC v. Martinez —Administrative Law and Procedure—Mines and
Minerals.
This case requires the court to decide whether, in accordance with the Colorado
Oil and Gas Conservation Act (the “Act”), section 34-60-102(1)(a)(I), C.R.S. (2018), the
Colorado Oil and Gas Conservation Commission (the “Commission”) properly declined
to engage in rulemaking to consider a rule proposed by Respondents.
Respondents proposed a rule that, among other things, would have precluded the
Commission from issuing any permits for the drilling of an oil and gas well “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.”
After soliciting and receiving public comment and allowing interested parties to
be heard, the Commission declined to engage in rulemaking to consider this proposed
rule because, among other things, (1) the rule would have required the Commission to
readjust the balance purportedly crafted by the General Assembly under the Act and
conditioned new oil and gas drilling on a finding of no cumulative adverse impacts, both
of which the Commission believed to be beyond its statutory authority, and (2) the
Commission was already working with the Colorado Department of Public Health and
Environment (“CDPHE”) to address the concerns to which the rule was directed and
other Commission priorities took precedence over the proposed rulemaking at this time.
The Denver District Court upheld the Commission’s decision, but in a split, published
decision, a division of the Court of Appeals reversed the district court’s order. Martinez v.
Colo. Oil & Gas Conservation Comm’n, 2017 COA 37, __ P.3d __.
The supreme court now reverses the division’s judgment and concludes that the
Commission properly declined to engage in rulemaking to consider Respondents’
proposed rule. The court reaches this conclusion for three primary reasons. First, a
court’s review of an administrative agency’s decision as to whether to engage in
rulemaking is limited and highly deferential. Second, the Commission correctly
determined that, under the applicable language of the Act, it could not properly adopt
the rule proposed by Respondents. Specifically, as the Commission recognized, the
pertinent provisions do not allow it to condition all new oil and gas development on a
finding of no cumulative adverse impacts to public health and the environment. Rather,
the provisions make clear that the Commission is required (1) to foster the development
of oil and gas resources, protecting and enforcing the rights of owners and producers,
and (2) in doing so, to prevent and mitigate significant adverse environmental impacts
to the extent necessary to protect public health, safety, and welfare, but only after taking
into consideration cost-effectiveness and technical feasibility. Finally, in declining to
engage in rulemaking, the Commission reasonably relied on the facts that it was already
working with the CDPHE to address the concerns underlying Respondents’ proposed
rule and that other Commission priorities took precedence at this time.
The Supreme Court of the State of Colorado
2 East 14th Avenue • Denver, Colorado 80203
2019 CO 3
Supreme Court Case No. 17SC297
Certiorari to the Colorado Court of Appeals
Court of Appeals Case No. 16CA564
Petitioners:
Colorado Oil and Gas Conservation Commission, American Petroleum Institute, and
Colorado Petroleum Association,
v.
Respondents:
Xiuhtezcatl Martinez, Itzcuahtli Roske-Martinez, Sonora Brinkley, Aerielle Deering,
Trinity Carter, Jamirah DuHamel, and Emma Bray, minors appearing by and through
their legal guardians Tamara Roske, Bindi Brinkley, Eleni Deering, Jasmine Jones, Robin
Ruston, and Diana Bray.
Judgment Reversed
en banc
January 14, 2019
Attorneys for Petitioner Colorado Oil and Gas Conservation Commission:
Philip J. Weiser, Attorney General
John E. Matter, Jr., Senior Assistant Attorney General
Marian C. Larsen, Assistant Attorney General
Kyle W. Davenport, Assistant Attorney General
Denver, Colorado
Attorneys for Petitioners American Petroleum Institute and Colorado Petroleum
Association:
Hogan Lovells US LLP
Jennifer L. Biever
Jessica Black Livingston
Dale Ratliff
Denver, Colorado
Hogan Lovells US LLP
Catherine E. Stetson
Washington, District of Columbia
Ryley Carlock & Applewhite
Richard C. Kaufman
Julie A. Rosen
Matthew K. Tieslau
Denver, Colorado
Attorneys for Respondents:
Katherine Merlin
Boulder, Colorado
Wild Earth Advocates
Julia Olson
Eugene, Oregon
MindDrive Legal Services, LLC
James Daniel Leftwich
Boulder, Colorado
Attorneys for Amici Curiae Alliance of Nurses for Healthy Environments &
Physicians for Social Responsibility:
Earthjustice
Joel Minor
Michael S. Freeman
Denver, Colorado
Attorneys for Amicus Curiae The Board of County Commissioners of Adams County,
Colorado:
Heidi Miller, Adams County Attorney
Brighton, Colorado
Goldman, Robbins, Nicholson & Mack, P.C.
Jeffery P. Robbins
Durango, Colorado
Attorneys for Amicus Curiae The Chamber of Commerce of the United States of
America:
Kittredge LLC
Daniel D. Domenico
Michael Francisco
Denver, Colorado
2
Attorneys for Amicus Curiae The Colorado Alliance Mineral and Royalty Owners:
Visani Bargell LLC
Cynthia L. Bargell
Dillon, Colorado
Attorneys for Amici Curiae Colorado Farm Bureau, Denver Metro Chamber of
Commerce, Associated Governments of Northwest Colorado, and Town of Rangely,
Colorado:
Brownstein Hyatt Farber Schreck, LLP
Julia E. Rhine
Denver, Colorado
Attorneys for Amicus Curiae Colorado League of Women Voters:
Law Offices of Angelique Layton Anderson
Angelique Layton Anderson
Louisville, Colorado
Attorneys for Amicus Curiae Colorado Oil & Gas Association:
Brownstein Hyatt Farber Schreck, LLP
Mark J. Mathews
Denver, Colorado
Attorneys for Amici Curiae Colorado PTA, Together Against Neighborhood Drilling,
Dr. Stephanie Malin, Stacia Ryder, Shirley Smithson, and Ulrike Webster:
Berg Hill Greenleaf Ruscitti LLP
Rudy E. Verner
Megan Gutwein
Boulder, Colorado
Attorneys for Amicus Curiae League of Oil and Gas Impacted Coloradans:
Chiropolos Law
Mike Chiropolos
Boulder, Colorado
Attorneys for Amici Curiae Local Governments:
Boulder County
David Hughes, Deputy County Attorney
Katherine A. Burke, Senior Assistant County Attorney
Boulder, Colorado
City of Boulder
Thomas A. Carr, City Attorney
Boulder, Colorado
3
City and County of Broomfield
Patricia W. Gilbert, City and County Attorney
Broomfield, Colorado
City of Commerce City
Robert D. Sheesley, City Attorney
Commerce City, Colorado
Eagle County
Bryan Treu, Eagle County Attorney
Eagle, Colorado
Town of Erie
Hoffmann, Parker, Wilson, & Carberry, P.C.
Kendra L. Carberry
Evin B. King
Denver, Colorado
City of Fort Collins
Carrie Mineart Daggett, City Attorney
Fort Collins, Colorado
Gunnison County
David Baumgarten, Gunnison County Attorney
Matthew Hoyt, Assistant County Attorney
Gunnison, Colorado
City of Lafayette
Williamson & Hayashi, LLC
David S. Williamson
Boulder, Colorado
City of Longmont
Daniel Kramer, Assistant City Attorney
Longmont, Colorado
City of Louisville
Light Kelly P.C.
Samuel J. Light
Denver, Colorado
Pitkin County
John Ely, Pitkin County Attorney
Aspen, Colorado
4
San Miguel County
Amy T. Markwell, San Miguel County Attorney
Telluride, Colorado
Summit County
Jeffrey L. Huntley, Summit County Attorney
Breckenridge, Colorado
City of Westminster
David Frankel, City Attorney
Westminster, Colorado
Attorney for Amicus Curiae Mountain States Legal Foundation:
Cody J. Wisniewski
Lakewood, Colorado
Attorneys for Amici Curiae The National Association of Manufacturers, the National
Federation of Independent Business Small Business Legal Center, the Colorado
Association of Commerce & Industry, and the Independent Petroleum Association of
America:
Lewis Bess Williams and Weese P.C.
Ezekiel J. Williams
Carlos R. Romo
Denver, Colorado
Attorney for Amicus Curiae Northwest Colorado Council of Governments
Torie Jarvis
Silverthorne, Colorado
Attorneys for Amici Curiae Our Health, Our Future, Our Longmont; Sierra Club;
Earthworks; Food & Water Watch; Conservation Colorado; Weld Air & Water; and
Wall of Women:
Environmental Law Clinic, University of Denver Sturm College of Law
Timothy Estep
Kevin Lynch
Denver, Colorado
5
Attorneys for Amici Curiae 350 Colorado; Be the Change; Broomfield Clean Air and
Water; Broomfield Moms Active Community; Center for Biological Diversity;
Citizens for a Healthy Community; Citizens for Huerfano County; Clean Energy
Action; Colorado Rising; Earth Guardians; Eco-Justice Ministries; Erie Protectors;
Front Range Residents for Environment, Safety and Health; Loretto Earth Network;
North Range Concerned Citizens; Northern Colorado Community Rights Network;
Our Health, Our Future, Our Longmont; Protect Our Loveland; Transition Fort
Collins; and Wall of Women Colorado:
Western Environmental Law Center
Kyle Tisdel
Taos, New Mexico
Attorneys for Amicus Curiae Vital for Colorado:
Holland & Hart LLP
Stephen G. Masciocchi
Denver, Colorado
Robinson, Waters & O’Dorisio PC
Peter T. Moore
Kimberly Bruetsch
Denver Colorado
JUSTICE GABRIEL delivered the Opinion of the Court.
6
¶1 Respondents Xiuhtezcatl Martinez, Itzcuahtli Roske-Martinez, Sonora Brinkley,
Aerielle Deering, Trinity Carter, Jamirah DuHamel, and Emma Bray are youth activists
who have devoted substantial time and effort toward pursuing their goal of protecting
the health of Colorado citizens and Colorado’s environment. The court acknowledges
the civic engagement of these young men and women as well as the concerns that
motivated this action, and nothing in this opinion should be construed as expressing a
view as to the merits of Respondents’ concerns, or, conversely, as to the merits of the
Colorado Oil and Gas Conservation Commission’s (the “Commission’s”) interest in
fostering the responsible, balanced development, production, and utilization of
Colorado’s oil and gas resources. The resolution of these weighty and sometimes
conflicting policy concerns, however, is not the issue before us. Rather, this case requires
us to decide whether, in accordance with the Colorado Oil and Gas Conservation Act (the
“Act”), section 34-60-102(1)(a)(I), C.R.S. (2018), the Commission properly declined to
engage in rulemaking to consider a rule proposed by Respondents, which we view as a
far narrower question.
¶2 Respondents proposed a rule that, among other things, would have precluded the
Commission from issuing any permits for the drilling of an oil and gas well “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.”
7
¶3 After soliciting and receiving public comment and allowing interested parties to
be heard, the Commission declined to engage in rulemaking to consider this proposed
rule because, among other things, (1) the rule would have required the Commission to
readjust the balance purportedly crafted by the General Assembly under the Act and
conditioned new oil and gas drilling on a finding of no cumulative adverse impacts, both
of which the Commission believed to be beyond its statutory authority, and (2) the
Commission was already working with the Colorado Department of Public Health and
Environment (“CDPHE”) to address the concerns to which the rule was directed and
other Commission priorities took precedence over the proposed rulemaking at this time.
¶4 Respondents challenged the Commission’s ruling in the Denver District Court, but
that court ultimately upheld the Commission’s decision. Respondents appealed, and, in
a split, published decision, a division of the court of appeals reversed the district court’s
order. Martinez v. Colo. Oil & Gas Conservation Comm’n, 2017 COA 37, __ P.3d __. We then
granted certiorari.1
¶5 We now conclude, contrary to the division majority below, that the Commission
properly declined to engage in rulemaking to consider Respondents’ proposed rule. We
1 We granted certiorari to review the following issue:
Whether the Court of Appeals erred in determining that the Colorado Oil
and Gas Conservation Commission misinterpreted section
34-60-102(1)(a)(I) as requiring a balance between oil and gas development
and public health, safety, and welfare.
8
reach this conclusion for three primary reasons. First, our review of an administrative
agency’s decision as to whether to engage in rulemaking is limited and highly deferential.
Second, in our view, the Commission correctly determined that, under the applicable
language of the Act, it could not properly adopt the rule proposed by Respondents.
Specifically, as the Commission recognized, the pertinent provisions do not allow it to
condition all new oil and gas development on a finding of no cumulative adverse impacts
to public health and the environment. Rather, the provisions make clear that the
Commission is required (1) to foster the development of oil and gas resources, protecting
and enforcing the rights of owners and producers, and (2) in doing so, to prevent and
mitigate significant adverse environmental impacts to the extent necessary to protect
public health, safety, and welfare, but only after taking into consideration
cost-effectiveness and technical feasibility. Finally, in declining to engage in rulemaking,
the Commission reasonably relied on the facts that it was already working with the
CDPHE to address the concerns underlying Respondents’ proposed rule and that other
Commission priorities took precedence at this time.
¶6 Accordingly, we reverse the judgment of the division below.
I. Facts and Procedural History
¶7 In 2013, Respondents petitioned the Commission to promulgate a rule providing,
as pertinent here, that
[t]he Commission 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
9
atmosphere, water, wildlife, and land resources, does not adversely impact
human health, and does not contribute to climate change.
¶8 In support of their petition, Respondents asserted, among other things, that
“hydraulic fracturing is adversely impacting human health,” as well as impairing
“Colorado’s atmosphere, water, soil, and wildlife resources,” and that “[t]he science
unequivocally shows that anthropogenic climate change is occurring and is threatening
the stability of the global climate.” The petition further claimed that “[t]he Public Trust
Doctrine demands that Colorado act to preserve the atmosphere and provide a livable
future for present and future generations of Colorado residents.”
¶9 After receiving the Petition, the Commission solicited written comments from
interested persons and parties, held a public hearing at which numerous parties testified
for and against the proposed rule, and then engaged in deliberations based on the over
1,100-page administrative record that had been created as a result of this process.
Ultimately, by unanimous vote, the Commissioners issued a written order declining to
engage in rulemaking to consider adopting Respondents’ proposed rule. In so ruling, the
Commission found and concluded, as pertinent here, that (1) “[t]he Proposed Rule, if
adopted, would have required the Commission to readjust the balance crafted by the
General Assembly under the Act, and is therefore beyond the Commission’s limited grant
of statutory authority”; (2) “the Proposed Rule hinges on conditioning new oil and gas
drilling on a finding of no cumulative adverse impacts, which is beyond the
Commission’s limited statutory authority”; (3) Colorado courts have expressly rejected
the public trust doctrine; (4) “[t]he Commission, in cooperation with the [CDPHE] is
10
currently addressing many of the concerns in the Petition”; (5) “[m]ost, if not all, of the
relief sought in the Petition related to air quality is within CDPHE’s jurisdiction, and not
[the Commission’s] jurisdiction”; and (6) “[t]here are other Commission priorities that
must take precedence over the proposed rulemaking at this time.”
¶10 Respondents challenged the Commission’s order in the Denver District Court,
after which the American Petroleum Institute and the Colorado Petroleum Association
intervened as defendants. As pertinent here, Respondents argued in the district court
that the Commission’s order was arbitrary and capricious, an abuse of discretion, and
otherwise contrary to law. In doing so, Respondents principally relied on the first
subsection of the Act’s legislative declaration, which states 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) (emphasis added). According to Respondents, “in a manner
consistent with” indicates that the General Assembly “set out a mandatory condition that
must be satisfied,” rather than a balancing test, as Respondents read the Commission’s
order to require.
¶11 The district court ultimately disagreed and, applying the two-part test articulated
in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842–43
(1984), concluded that the pertinent statutory language is clear and requires the
11
Commission to “strike a balance between the regulation of oil and gas operations and
protecting public health, the environment, and wildlife resources.”
¶12 Respondents then appealed the district court’s order, and, in a split, published
decision, a division of the court of appeals agreed that the Act’s plain language is clear
and unambiguous but concluded that this language “supports a conclusion different
from that reached by the Commission and the district court.” Martinez, ¶ 19. Specifically,
in the majority’s view, “in a manner consistent with” protection of public health, safety,
and welfare did not indicate a balancing test weighing public health, safety, and welfare
against oil and gas production. Id. at ¶¶ 17, 21. Rather, “in a manner consistent with”
indicated “a condition that must be fulfilled.” Id. at ¶ 21.
¶13 In support of this conclusion, the majority opined that the term “balanced” in
section 34-60-102(1)(a)(I) relates to and modifies “development, production, and
utilization” but does not affect the remaining provisions in that section, including the
language relating to public health, safety, and welfare. Id. at ¶ 20. The majority further
observed that numerous Colorado cases use the phrase “in a manner consistent with” to
mean “subject to,” rather than “balanced with.” Id. at ¶¶ 22–24. And the majority stated
that the Act’s legislative history reveals the legislature’s “general movement away from
unfettered oil and gas production and [its] incorporation of public health, safety, and
welfare as a check on that development.” Id. at ¶ 30.
¶14 Judge Booras dissented. She began by noting that the language, “in a manner
consistent with,” appears in the Act’s legislative declaration and that this language
therefore could be used only to interpret an ambiguous statute; it could not override the
12
Act’s operative language. Id. at ¶ 41 (Booras, J., dissenting). She then explained that the
“actual authority” of the Commission to regulate oil and gas is set out in section
34-60-106(2)(d), C.R.S. (2018), which provides that the Commission is authorized to
regulate oil 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. at ¶ 42. In Judge Booras’s view, the fact that the Act instructs the Commission to
consider cost-effectiveness and technical feasibility suggests that the protection of public
health, safety, and welfare is not, by itself, a determinative consideration. Id. at ¶ 43.
¶15 The Commission and Intervenors independently petitioned this court to review
the division’s decision. Respondents opposed the petitions, the Commission and
Intervenors filed reply briefs, and numerous parties filed amicus briefs. We granted
review.
II. Analysis
¶16 We begin by setting forth the applicable standard of review and principles of
statutory construction. We then discuss the pertinent provisions of the Act, and,
perceiving those provisions to be ambiguous, we proceed to construe them. We end by
considering, in light of our statutory construction, whether the Commission properly
declined to engage in rulemaking to consider Respondents’ proposed rule, and we
conclude that it did.
13
A. Standard of Review and Principles of Statutory Construction
¶17 We review an agency’s refusal to engage in rulemaking under Colorado’s
Administrative Procedure Act, section 24-4-106(7)(b), C.R.S. (2018). This statute requires
us to hold unlawful and set aside agency actions found to be, among other things,
arbitrary or capricious; in excess of statutory jurisdiction, authority, purposes, or
limitations; an abuse of discretion; unsupported by substantial evidence when the record
is considered as a whole; or otherwise contrary to law. Id.
¶18 An agency has broad discretion to decide whether to engage in rulemaking, and,
thus, our review of its decision as to whether to do so is “‘extremely limited’ and ‘highly
deferential.’” Massachusetts v. EPA, 549 U.S. 497, 527–28 (2007) (quoting Nat’l Customs
Brokers & Forwarders Ass’n. of Am., Inc. v. United States, 883 F.2d 93, 96 (D.C. Cir. 1989));
see also Nat’l Mining Ass’n v. Mine Safety & Health Admin., 599 F.3d 662, 667 (D.C. Cir. 2010)
(“‘[A]n agency’s refusal to institute rulemaking proceedings is at the high end of the
range’ of levels of deference we give to agency action under our ‘arbitrary and capricious’
review.”) (quoting Defenders of Wildlife v. Gutierrez, 532 F.3d 913, 919 (D.C. Cir. 2008));
WildEarth Guardians v. Salazar, 741 F. Supp. 2d 89, 103 (D.D.C. 2010) (explaining that an
agency’s refusal to promulgate a rule “is to be overturned only in the rarest and most
compelling of circumstances . . . which have primarily involved plain errors of law,
suggesting that the agency has been blind to the source of its delegated power”) (quoting
Am. Horse Prot. Ass’n v. Lyng, 812 F.2d 1, 5 (D.C. Cir. 1987)). One of the main purposes of
limitations such as these is “to avoid judicial entanglement in abstract policy
14
disagreements which courts lack both expertise and information to resolve.” Norton v.
S. Utah Wilderness All., 542 U.S. 55, 66 (2004).
¶19 We review issues of statutory interpretation de novo. UMB Bank, N.A. v. Landmark
Towers Ass’n, 2017 CO 107, ¶ 22, 408 P.3d 836, 840. In doing so, we look to the entire
statutory scheme in order to give consistent, harmonious, and sensible effect to all of its
parts, and we apply words and phrases in accordance with their plain and ordinary
meanings. Id. When the statutory language is clear, we apply it as written and need not
resort to other rules of statutory construction. Id. When, however, the statutory language
is ambiguous, we may examine the legislative intent, the circumstances surrounding the
statute’s adoption, and the possible consequences of different interpretations to
determine the proper construction of the statute. Coffman v. Williamson, 2015 CO 35, ¶ 23,
348 P.3d 929, 936. A statute is ambiguous when it is reasonably susceptible of multiple
interpretations. Id.
B. Applicable Provisions of the Act
¶20 Section 34-60-102(1) sets forth the Act’s legislative declaration and provides, in
pertinent part:
(1)(a) It is declared to be in the public interest to:
(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;
15
(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 . . . ;
(b) . . . It is the intent and purpose of this article to permit each oil and gas
pool in Colorado to produce up to its maximum efficient rate of production,
subject to the prevention of waste, consistent with the protection of public
health, safety, and welfare, including protection of the environment and
wildlife resources, and subject further to the enforcement and protection of
the coequal and correlative rights of the owners and producers of a
common source of oil and gas . . . .
¶21 Section 34-60-105(1), C.R.S. (2018), provides the Commission with “the power to
make and enforce rules, regulations, and orders pursuant to this article, and to do
whatever may reasonably be necessary to carry out the provisions of this article.”
¶22 Section 34-60-106(2)(d), in turn, sets forth additional powers of the Commission,
including, as pertinent here, 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.
¶23 Petitioners assert that the foregoing statutory language makes clear that the
Commission must balance oil and gas development with the protection of public health
and the environment. They emphasize that the words “in a manner consistent with” in
the legislative declaration cannot override the Act’s substantive provisions, which,
petitioners say, unambiguously require a balanced regulatory approach and command
the Commission to pursue a number of different policy goals, including both the
16
production, development, and utilization of oil and gas resources and the protection of
public health and the environment.
¶24 Petitioners further contend that even if it were proper to focus exclusively on the
legislative declaration, “consistent with” cannot mean the same as “subject to” because it
would effectively re-write section 34-60-102(1)(b), which uses both phrases in the same
sentence:
(b) . . . It is the intent and purpose of this article to permit each oil and gas
pool in Colorado to produce up to its maximum efficient rate of production,
subject to the prevention of waste, consistent with the protection of public
health, safety, and welfare, including protection of the environment and
wildlife resources, and subject further to the enforcement and protection of
the coequal and correlative rights of the owners and producers of a
common source of oil and gas . . . .
(Emphases added.)
¶25 And Petitioners contend that the construction adopted by the division majority
below arguably ignores other provisions of the Act, as well as the Act’s legislative history,
which Petitioners assert shows that the Act aims, at least in part, to foster oil and gas
development in this state.
¶26 Respondents reply that the division correctly concluded that the phrase “in a
manner consistent with public health, safety, and welfare” in section 34-60-102(1)(a)(I)
does not indicate a balancing test but rather establishes a condition that must be fulfilled.
See Martinez, ¶ 21. In support of this argument, Respondents first point out that the
words “responsible, balanced” relate to and modify the immediately following nouns,
namely, “development, production, and utilization,” but not any subsequent words in
the section. Thus, “responsible” and “balanced” do not indicate a balancing of oil and
17
gas development against public health. Rather, those words refer to the development,
production, and utilization of oil and gas in a manner that does not waste those resources
and that protects correlative rights.
¶27 Respondents further assert that, contrary to Petitioners’ contentions, the legislative
declaration provides the Commission “an uncontroverted mandate to regulate oil and
gas development and operations in a certain manner” and “[t]he substantive provisions
of the Act give the Commission the statutory authority to effectuate that mandate.”
¶28 Finally, Respondents assert that (1) other portions of the Act support a
construction that mandates protection of public health, safety, and welfare;
(2) interpreting “consistent with” to mean “subject to” does not re-write portions of the
Act because both phrases merely indicate conditions that must be fulfilled; and (3) the
division majority’s interpretation of the Act is consistent with other cases interpreting the
Act.
¶29 In our view, the above-quoted statutory language is reasonably susceptible of the
interpretations proffered by both Petitioners and Respondents in this case, a conclusion
that we believe to be supported by the fact that the district court and Judge Booras agreed
with Petitioners’ interpretation while the division majority below agreed with
Respondents’ interpretation (notwithstanding the fact that all of those jurists believed
that their respective interpretations were supported by the Act’s unambiguous
language).
¶30 Because we believe that the applicable statutory language is reasonably
susceptible of multiple interpretations, we conclude that that language is ambiguous. See
18
Coffman, ¶ 23, 348 P.3d at 936. We thus turn to other tools of statutory construction,
including the Act’s statutory and legislative history, to aid us in interpreting the Act’s
pertinent provisions. See id.2
C. History of the Act and Statutory Construction
¶31 The statutory history of the Act informs our understanding of legislative intent
here. The General Assembly first passed the Act in 1951 to “defin[e] and prohibit[] the
waste of oil and gas in the state of Colorado” and to establish and set forth the authority
of the Commission. Ch. 230, 1951 Colo. Sess. Laws 651, 651.
¶32 In 1955, the General Assembly added a declaration of purpose, and, for the next
three decades, the Act’s primary policy goal was to “foster, encourage and promote the
development, production and utilization of the natural resources of oil and gas in the
state of Colorado.” Ch. 208, sec. 10, § 100-6-22, 1955 Colo. Sess. Laws 648, 657.
¶33 In 1985, the General Assembly amended the Act and for the first time expressly
addressed concerns regarding public health, safety, and welfare. Ch. 272, sec. 1,
2 For purposes here, we use “statutory history” to refer to the evolution of a statute as it
is amended over time by the legislature and “legislative history” to refer to the
development of a statute during the legislative process and prior to enactment or
amendment. “Legislative history” thus encompasses, for example, bill drafts and bill
sponsor comments. By examining the statutory history of the Act as we proceed to do
below, we do not mean to suggest that we necessarily must deem a statute ambiguous
before considering its statutory history. See, e.g., Denver Publ’g Co. v. Bd. of Cty. Comm’rs,
121 P.3d 190, 197–98 (Colo. 2005) (examining the statutory history of the Colorado Open
Records Act without declaring it to be ambiguous); see also Powerex Corp. v. Reliant Energy
Servs., Inc., 551 U.S. 224, 231 (2007) (relying on the statutory history of 28 U.S.C. § 1447 to
assist in its interpretation without declaring that provision to be ambiguous).
19
§ 34-60-106(10)–(11), 1985 Colo. Sess. Laws 1129, 1129. Specifically, at that time, the
legislature authorized the Commission to promulgate rules and regulations to protect the
health, safety, and welfare of any person at an oil and gas well and of the general public
in the drilling, completion, and operation of oil and gas wells and production facilities.
Id. The legislature did not, however, alter any of its previously established legislative
purposes.
¶34 The legislature again noted the importance of public health, safety, and welfare
when it amended the Act in 1994, to add that it is in the public interest to foster,
encourage, and promote the development, production, and utilization of the natural
resources of oil and gas in Colorado “in a manner consistent with protection of public
health, safety, and welfare.” Ch. 317, sec. 2, § 34-60-102(1), 1994 Colo. Sess. Laws 1978,
1978.
¶35 And the legislature expressed its concern for public health, safety, and welfare
when it amended the Act in 2007, to include “protection of the environment and wildlife
resources” as a component of public health, safety, and welfare. Ch. 320, sec. 2,
§ 34-60-102(1), 2007 Colo. Sess. Laws 1357, 1357. Notably, in 2007, the legislature also
amended subsection 34-60-102(1)(a)(I)’s language to note that it is in the public interest
to “foster the responsible, balanced development” of oil and gas. Ch. 320, sec. 2,
§ 34-60-102(1), 2007 Colo. Sess. Laws 1357, 1357 (emphasis added).
¶36 Unlike the division majority below, we do not read this lengthy statutory history
as reflecting a legislative intention to establish the protection of public health, safety, and
welfare as a check on oil and gas development. Nor do we perceive in this history an
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intention to condition further oil and gas development on a finding of no cumulative
adverse impacts to public health or the environment. Rather, we view this history as
reflecting a legislative intent to promote multiple policy objectives, including the
continued development of oil and gas resources and the protection of public health and
the environment, without conditioning one policy objective on the satisfaction of any
other.
¶37 Our view in this regard finds substantial support in the legislative history of the
Act, and particularly in the testimony of the representatives who sponsored and
introduced the legislative bills that added health, safety, and welfare concerns to the Act’s
legislative declaration. See Vensor v. People, 151 P.3d 1274, 1279 (Colo. 2007) (“While by
no means conclusive, the testimony of a bill’s sponsor concerning its purpose and
anticipated effect can be powerful evidence of legislative intent.”).
¶38 For example, in introducing to the Agriculture, Natural Resources, and Energy
Committee the bill that added the language “in a manner consistent with” to the Act’s
legislative declaration, Representative Jerke explained that the added language
gets us a long way in the direction that I think that we need to go in making
sure that the oil industry can still operate in an economical manner. We’re
not putting them out of business through this. We’re taking far, far better
care of our land, our water, even our air as a result of this legislation.
Hearings on S.B. 94-177 before the Agric., Nat. Res., and Energy Comm., 64th Gen.
Assemb., 2d Sess. (Mar. 24, 1994) (statement of Rep. Jerke).
¶39 Similarly, when Representative Jerke introduced the Bill to the House, he
explained that the Commission “will indeed have the ability to foster, encourage, and
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promote the development and production and utilization of oil and gas . . . . [W]e’re
giving them the ability not just to advance the industry, as they’ve done in the past, but
to also deal with public health, safety, welfare, those kinds of issues.” Hearings on
S.B. 94-177 before the House, 64th Gen. Assemb., 2d Sess. (Apr. 26, 1994) (statement of
Rep. Jerke).
¶40 And when Representative Curry introduced the House Bill that added “protection
of the environment and wildlife resources” to section 34-60-102(1)(a)(I), she explained:
Energy development can occur in a manner that minimizes adverse impact
to the public health and environment. In fact, it is. Certain operators are
taking aggressive steps to make sure that we are protecting those other
values. It does not have to be a zero-sum game with the winner taking all.
We need a regulatory framework, however, that will provide a mechanism
for considering these other impacts, both positive and negative.
Hearings on H.B. 07-1341 before the H. Agric. Comm., 66th Gen. Assemb., 1st Sess.
(Mar. 14, 2007) (statement of Rep. Curry).
¶41 Reading the above-quoted portions of the Act in light of this legislative history and
in the context of the Act as a whole leads us to conclude that these provisions do not allow
the Commission to condition all new oil and gas development on a finding of no
cumulative adverse impacts to public health and the environment, as Respondents assert
the Commission must do. Nor do we perceive the statutory language as creating a
balancing test by which the public’s interest in oil and gas development is weighed
against its interest in public health and the environment, as Petitioners seem to suggest.
Rather, in our view, the pertinent provisions make clear that the Commission is required
(1) to foster the development of oil and gas resources, protecting and enforcing the rights
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of owners and producers, and (2) in doing so, to prevent and mitigate significant adverse
environmental impacts to the extent necessary to protect public health, safety, and
welfare, but only after taking into consideration cost-effectiveness and technical
feasibility. We reach this conclusion for several reasons.
¶42 First, sections 34-60-105(1) and 34-60-106(2)(d) provide the Commission with
authority to regulate public health, safety, welfare, and environmental concerns as an
important component of its role in overseeing oil and gas development. Hence, section
34-60-106(2)(d) authorizes the Commission to regulate oil and gas operations so as to
avoid “and mitigate significant” adverse environmental impacts to the extent necessary to
protect public health, safety, and welfare, “taking into consideration cost-effectiveness and
technical feasibility.” Id. (emphases added). In our view, this statutory language envisions
some possible environmental and public health risks. Had the legislature intended to
preclude any cumulative adverse impacts, as Respondents claim, the statute would not
have included the language “and mitigate significant” or “taking into consideration
cost-effectiveness and technical feasibility.” Rather, the provision would have required
the Commission to regulate oil and gas operations so as to avoid adverse environmental
impacts on any air, water, soil, or biological resource, to the extent necessary to protect
public health, safety, and welfare, including protection of the environment and wildlife
resources.
¶43 Second, the Act’s legislative declaration, when read as a whole, evinces the
General Assembly’s intent that the Commission pursue multiple policy goals and not
condition one legislative objective on the satisfaction of another. As explained above, the
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declaration begins by stating 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). But this is not the only policy goal set forth in that section. The
declaration also directs the Commission to (1) “[p]rotect the public and private interests
against waste in the production and utilization of oil and gas”; (2) “[s]afeguard, protect,
and enforce the coequal and correlative rights of owners and producers in a common
source or pool of oil and gas”; (3) “[p]lan and manage oil and gas operations in a manner
that balances development with wildlife conservation”; and (4) “permit each oil and gas
pool in Colorado to produce up to its maximum efficient rate of production, subject to
the prevention of waste, consistent with the protection of public health, safety, and
welfare.” § 34-60-102(1).
¶44 Third, the above-described legislative history, and particularly the testimony of
the legislators who sponsored the bills adding the words “in a manner consistent with”
and “protection of the environment and wildlife resources” to the legislative declaration,
makes clear that, in adding this language, 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
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ensuring that oil and gas development, production, and utilization could proceed in an
economical manner.3
D. The Current Rulemaking Petition
¶45 Against this background, we turn to the ultimate question before us, namely,
whether the Commission properly declined to engage in rulemaking to consider the rule
proposed by Respondents.
¶46 As noted above, the Commission declined to engage in rulemaking because,
among other things, (1) it believed that adopting the rule proposed by Respondents
would be beyond the Commission’s statutory authority and (2) it was already working
with the CDPHE to address the concerns to which the proposed rule was directed and
other Commission priorities took precedence at this time. In our view, the Commission’s
decision was well within its discretion.
¶47 With respect to the Commission’s understanding of its authority, we note, as an
initial matter, that the briefing in this case sometimes conflates the terms “authority” and
“jurisdiction.” We, however, do not read the Commission’s order as concluding that it
lacked subject matter jurisdiction to consider Respondents’ proposed rule. Rather, we
3 In reaching this conclusion, we hasten to add that we do not intend to decide here the
full range or limits of the Commission’s statutory authority. Rather, we decide only the
issues that the parties have presented to us, namely, (1) the proper construction of the
Act’s legislative declaration and (2) whether, in light of that construction and the
deference due to an administrative agency’s decision as to whether to engage in
rulemaking, the Commission properly declined to engage in rulemaking to consider the
proposed rule at issue in this case.
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understand the Commission’s focus to have been on whether, consistent with its
statutory mandate, it could adopt the rule proposed by Respondents.
¶48 With that understanding, we cannot say that the Commission’s decision to decline
to engage in rulemaking to consider Respondents’ proposed rule was arbitrary or
capricious; in excess of statutory jurisdiction, authority, purposes, or limitations; an abuse
of discretion; unsupported by substantial evidence when the record is considered as a
whole; or otherwise contrary to law. See § 24-4-106(7)(b).
¶49 As previously noted, Respondents’ proposed rule would have precluded new oil
and gas development unless it could 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.”
¶50 In light of our above-described construction of the pertinent provisions of the Act,
we conclude that the Commission correctly determined that it could not, consistent with
those provisions, adopt such a rule. Specifically, as set forth above, 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). Accordingly, in our view, the Commission properly exercised its
discretion in declining to engage in rulemaking to consider Respondents’ proposed rule.
¶51 But this was not the sole basis for the Commission’s decision. Equally significant,
the Commission declined to engage in rulemaking because it was already working with
the CDPHE to address many of the concerns implicated by Respondents’ petition and
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other regulatory priorities took precedence at this time. In our view, the Commission
again acted within its discretion in making such a decision.
¶52 Here, the Commission’s finding that the issues implicated by Respondents’
petition are being addressed elsewhere is amply supported by the record, and this is
precisely the kind of agency action to which courts owe deference. See Massachusetts,
549 U.S. at 527 (noting that “an agency has broad discretion to choose how best to marshal
its limited resources and personnel to carry out its delegated responsibilities”); see also
Compassion Over Killing v. FDA, 849 F.3d 849, 857 (9th Cir. 2017) (“[T]he agency’s decision
to prioritize other projects is entitled to great deference by a reviewing court.”); Simpson v.
Cotton Creek Circles, LLC, 181 P.3d 252, 261 (Colo. 2008) (noting that “courts defer to policy
determinations in rule-making proceedings”). This is particularly true in this case, where
the Commission specifically indicated that it was collaborating with the CDPHE to
address the matters implicated by Respondents’ proposed rule and where the
Commission noted, with record support, that other priorities took precedence over the
proposed rulemaking.
¶53 Because the Commission’s decision to decline to conduct a rulemaking proceeding
to consider Respondent’s proposed rule was based on a correct understanding of the
Commission’s statutory charge and on an amply supported finding as to the proper use
of the Commission’s resources, we perceive no abuse of discretion in the Commission’s
decision to decline to engage in rulemaking to consider the specific rule at issue here.
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III. Conclusion
¶54 Because the Commission’s decision to decline to engage in rulemaking to consider
Respondents’ proposed rule was consistent with the applicable provisions of the Act and
with the Commission’s authority to decide how best to marshal its resources to carry out
its statutory duties, we perceive no abuse of discretion in that decision. Accordingly, we
reverse the judgment of the division below.
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