In late 2013, several minors, through their legal guardians, filed a petition for rulemaking with the Colorado Oil and Gas Conservation Commission, which is tasked with regulating oil and gas production throughout Colorado. The minors sought to ban all new oil and gas drilling permits in the State of Colorado unless the Commission could prove that drilling would not adversely impact human health and does not contribute to climate change. Both the Commission and the Denver District Court agreed the Commission lacks legal authority to issue such a rule. On appeal, however, the Colorado Court of Appeals ruled that, under Colorado law, the right to develop oil and gas resources is totally subordinate to environmental fears.
The Colorado Oil and Gas Conservation Act requires the Commission to balance the need for energy development with environmental and public health concerns. In fact, it directs the Commission to “[f]oster the responsible, balanced development, production, and utilization of … oil and gas … in a manner consistent with protection of public health, safety and welfare, including protection of the environment and wildlife.” In its ruling, for the first time ever, the Court of Appeals interpreted the phrase “in manner consistent with” as meaning “subject to,” which abandoned the General Assembly’s balancing test and instituted a new scheme requiring the Commission to deny all drilling permits unless property owners can prove that exploration and development will have no environmental effects—a nearly impossible hurdle.
In addition to violating well-established rules for how courts interpret laws, the Court of Appeals’ ruling deprives existing oil and gas property owners of their constitutionally protected property rights. It also potentially subjects Colorado taxpayers to billions of dollars in liability for the government’s seizure (“unconstitutional taking”) of their property rights.