On May 2, 2016, the Colorado Supreme Court issued opinions in two separate cases challenging local bans on hydraulic fracturing (“fracking”). A win for the oil and gas industry in the state, the Supreme Court held that the challenged fracking bans were preempted by state law in both cases. These decisions highlight the legal principle or doctrine of “preemption” – if state law allows a process, like fracking, a local government is not permitted to ban or outlaw it.
In City of Fort Collins v. Colorado Oil and Gas Association (No. 15SC668, 2016), the Colorado Oil and Gas Association, an industry trade association, sued the City of Fort Collins seeking a declaratory judgment that Fort Collins’ moratorium on fracking was preempted by state law. In November 2013, the citizens of Fort Collins approved a citizen-initiated ordinance that placed a moratorium on “hydraulic fracturing and the storage of its waste products within the City of Fort Collins or on lands under its jurisdiction for a period of five years, without exemption or exception, in order to fully study the impacts of this process . . .” Opinion, at 5. In finding that the State of Colorado has an interest in regulating fracking, the court held that Fort Collins’ fracking moratorium “renders the state’s statutory and regulatory scheme superfluous” because it prevents oil and gas operators from complying with state law that permits and regulates fracking. “In doing so, the moratorium materially impedes the effectuation of the state’s interest in the efficient and responsible development of oil and gas resources.” Id. at 14.
Decided on the same day, the court in City of Longmont v. Colorado Oil and Gas Association (No. 15SC667, 2016) held that the City of Longmont’s fracking ban “operationally conflicts with applicable state law.” In 2012, the citizens of Longmont voted to add Article XVI to Longmont’s municipal charter. Similar to Fort Collins’ moratorium, Article XVI banned fracking within the city and prohibited storage and disposal of fracking wastes. The court analyzed the Colorado Oil and Gas Conservation Act which states “[i]t 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 . . .” § 34-60-102. By prohibiting fracking, Article XVI also conflicted with state law, and was thus ruled invalid by preemption.
This is not the first time that a state court has ruled a local fracking ban invalid based on the principle of “preemption.” In January 2015, a federal district court in New Mexico held that a local ban conflicted with state and federal law. These decisions undermine the legality of localized bans on hydraulic fracturing in states that otherwise have allowed or encouraged the enhanced hydrocarbon recovery technique as a matter of state law.