Shale & Fracking Tracker

Colorado Supreme Court Affirms COGCC Role In Fostering Oil and Gas Development

On January 14, 2019, the Colorado Supreme Court issued an opinion in Colorado Oil and Gas Conservation Commission (“COGCC”) v. Martinez, No. 17SC297, clarifying the role of the COGCC in implementing the Colorado Oil and Gas Conservation Act (the “Act”). The Court had granted certiorari to determine whether the COGCC had “misinterpreted” its statutory authority under the Act “as requiring a balance between oil and gas development and public health, safety, and welfare.” The Court’s opinion confirms the common sense result that the COGCC is required “to foster the development of oil and gas resources” while “prevent[ing] and mitigat[ing] significant adverse environmental impacts . . . but only after taking into consideration cost-effectiveness and technical feasibility.”

The Martinez lawsuit began in 2013 when Boulder, Colorado teen Xiuhtezcatl Martinez and a group of teenage Colorado citizens requested that the COGCC halt the issuance of any new drilling permits until studies from the best available science could demonstrate that the drilling did not pose a threat to human health or contribute to climate change. After COGCC denied the request, Martinez and the group appealed the decision in July 2014 to the Denver District Court. In February 2016, the district court affirmed COGCC’s refusal of the request, but on appeal in 2017, the Colorado Court of Appeals held that COGCC’s refusal was improper under the Act because, as that court reasoned, it requires COGCC to make and enforce regulations “in a manner consistent with” the protection of public health and safety—“a condition that must be fulfilled.” The Colorado Supreme Court’s opinion expressly rejects this reading in favor of one that requires the COGCC to balance various policy goals, including the development of oil and gas resources.

While the Court’s opinion in Martinez is welcome news for the oil and gas industry, it is likely that it will not be the last chapter in this story. Legislation to codify the holding of the Colorado Court of Appeals was introduced in the Colorado General Assembly in January 2018. While that measure was postponed indefinitely by the Senate Agriculture, Natural Resources, & Energy Committee in March 2018, similar measures could be introduced in the future, and may find a more receptive audience in Colorado’s newly-elected General Assembly and Governor. Read the Court’s opinion in full here.

With Industry Support, Colorado Extends Setbacks from Schools Amid Continued Fight Over Broader Measures

On December 18, 2018, the Colorado Oil and Gas Conservation Commission (“COGCC”) voted unanimously to increase the setback distance from schools for new oil and gas wells or production facilities. The measure approved by the COGCC maintains Colorado’s existing 1,000-foot setback requirement, but measures the setback distance from newly-defined “school facilities,” which may include any “discrete facility or area . . . that students use commonly,” whether indoor or outdoor. Previously, Colorado had applied the 1,000-foot setback from school buildings.

The COGCC’s approval of the school facility setback measure comes roughly six weeks after Colorado voters rejected Proposition 112 (formerly Initiative 97) at the polls. That measure sought to more broadly increase oil and gas facility setback distances on non-federal lands to 2,500 feet, thereby foreclosing oil and gas development on an estimated 54% of Colorado’s total land surface, including 85% of the non-federal lands in the state. Unlike Proposition 112, the school facility setback measure was supported by industry, including the Colorado Petroleum Council.

While environmental groups also praised the COGCC’s approval of the school facility setback measure, it appears that the larger fight over oil and gas setbacks in Colorado will continue for the foreseeable future. 350 Colorado, a “grassroots network focused on taking action to stop climate change,” has released a petition that it intends to deliver to Governor-elect Jared Polis the day before he takes office. The petition calls for the increase of oil and gas facility setback distances to 2,500 feet and the legislative reform of the COGCC to change its focus away from “fostering” oil and gas development, as well as the suspension of further oil and gas permitting until the COGCC reforms have been achieved. Colorado Rising, the organization that sponsored Proposition 112, has also stated that it “definitely” plans another ballot initiative in 2020. While the COGCC’s approval of the school facility setback measure represents a significant moment of collaboration among the various stakeholders in Colorado, the broader debate over oil and gas facility setback distances in the state remains heated, and the potential consequences remain severe.

Read the final draft school facility setback measure here.

Federal Court Issues Injunction Preventing Issuance of Pacific Offshore Hydraulic Fracturing Permits, Pending ESA and CZMA Consultations

On November 9, 2018, the United States District Court for the Central District of California issued an injunction preventing the Bureau of Ocean Energy Management and the Bureau of Safety and Environmental Enforcement (collectively, the “Agencies”) from issuing any plans or permits for well stimulation treatments—namely, hydraulic fracturing and acidizing treatments—on the Pacific Outer Continental Shelf. In Environmental Defense Center et al. v. Bureau of Ocean Energy Management et al., plaintiffs the State of California and several environmental non-governmental organizations (“Plaintiffs”) challenged an Environmental Assessment (“EA”) prepared pursuant to the National Environmental Policy Act (“NEPA”) and issued by the Agencies examining the environmental impacts of well stimulation treatments on the Pacific Outer Continental Shelf. The Plaintiffs also alleged that the Agencies failed to complete necessary consultations under the Endangered Species Act (“ESA”) and Coastal Zone Management Act (“CZMA”) in connection with the Agencies’ proposed action. Both Plaintiffs and defendants (which include both the Agencies as well as industry intervenors) filed cross motions for summary judgment.

The opinion issued on November 9 grants in part and denies in part each of the seven motions for summary judgment. Specifically, the court found that (i) the Agencies’ EA complies with NEPA, (ii) the Agencies completed the required ESA consultation with the National Marine Fisheries Service, (iii) the Agencies began, but did not complete, the required ESA consultation with the U.S. Fish and Wildlife Service (“FWS”), and (iv) the Agencies failed to undertake the required CZMA consultation with the California Coastal Commission (“CCC”), the state agency responsible for managing the ocean up to three miles away from land. Due to the failure to complete the consultations with FWS and CCC, the court issued an injunction prohibiting the Agencies from issuing any plans or permits for well stimulation treatments on the Pacific Outer Continental Shelf until these consultations have been completed. Importantly, the opinion makes clear that the Agencies may proceed to issue such plans and permits once these consultations have been completed. While it remains to be seen whether and when the Agencies will complete the required consultations, the opinion acknowledges that relatively few operations are expected to be delayed as a result of the injunction; throughout the course of the proceedings, the Agencies noted that “operators are only rarely expected” to request permits authorizing well stimulation treatments on the Pacific Outer Continental Shelf. Read the court’s opinion in full here.

Both Proposition 112 and Amendment 76 Rejected by Colorado Voters

On November 6, 2018, Colorado voters rejected both Proposition 112 and Amendment 76, sparing both the oil and gas industry and the state economy more broadly from uncertain and potentially disastrous consequences. Proposition 112 (formerly Initiative 97) sought to increase oil and gas facility setback distances on non-federal lands to 2,500 feet, which would have foreclosed oil and gas development on an estimated 54% of Colorado’s total land surface, including 85% of the non-federal lands in the state. Amendment 74 (formerly Initiative 108), which was widely viewed as a response by the oil and gas industry to Proposition 112, would have required that property owners be compensated for any reduction in property value due to any new governmental law or regulation.

The final voting margins are not yet available. Colorado counties have until December 3 to compile their returns (including any ballots received by mail and any provisional ballots) and submit them to the Colorado Secretary of State. Both Proposition 112 and Amendment 76 will be officially rejected once the Colorado Secretary of State issues the final certification of the election results, an action likely to follow by mid-December.

The voters of Colorado have decided that the status quo will prevail, for now. For oil and gas operators in the state, that means that Colorado’s current setback measure, which requires setback distances of 500 feet from “Residential Building Units” such as single-family residential homes, and 1,000 feet from “High Occupancy Building Units” such as schools, hospitals, and nursing homes, will continue to apply without change.

The broader question moving forward is whether the voters’ rejection of Proposition 112 will be revisited by a future measure, leaving the Colorado oil and gas industry facing some degree of continued uncertainty even after voters’ sound rejection of Proposition 112. In certain jurisdictions, supporters of ballot initiatives seeking to place limits on oil and gas development have continued to push rejected measures in successive election cycles, even in the face of repeated failures. For example, voters going to the polls in Youngstown, Ohio on November 6, 2018 voted on a proposed ban on hydraulic fracturing and related oil and gas activities for the eighth time in five years, having rejected the prior seven attempts. It remains to be seen whether supporters of Proposition 112 in Colorado will pursue a similar approach in future elections and force Colorado voters to regularly reaffirm the results of the 2018 election going forward. Similarly, groups opposed to oil and gas activities in other jurisdictions may copy Proposition 112’s “setback as a sword” approach in an effort to disguise future efforts to all but ban oil and gas activities under the pretext of a “setback” measure that may appear more palatable to voters.

Colorado Secretary of State Certifies Initiatives 97 and 108 for November Ballot

On August 29, 2018, the Colorado Secretary of State (the “Secretary”) certified that Initiative 97, which would increase oil and gas development setback distances to 2,500 feet from “occupied structures” and “vulnerable areas,” had gathered a sufficient number of valid signatures to appear on the ballot this November.  The certification of Initiative 97 comes the day after the Secretary similarly announced that industry-backed Initiative 108 will also appear on the November ballot.  A direct response to Initiative 97, Initiative 108 would provide property owners with just compensation when a state or local government takes action diminishing the “fair market value” of their properties.  Initiative 108 appears designed to provide a compensation mechanism for oil and gas interests on private property that would no longer be exploitable because of setback distances such as those made effective and enforced as a result of Initiative 97, among other things.

The certification of both Initiatives 97 and 108 sets the stage for a showdown on the November ballot which is sure to be preceded by 9 plus weeks of intense campaigning given the significant effects these measures would have on Colorado’s oil and gas industry as well as the state economy more broadly.  For example the Colorado Oil and Gas Conservation Commission has estimated that Initiative 97 would foreclose oil and gas development on 54% of Colorado’s total land surface, including 85% of the non-federal lands in the state.  Although both of Colorado’s gubernatorial candidates—Democrat Jared Polis and Republican Walker Stapleton—have announced publicly that they do not support Initiative 97, the fates of both Initiatives 97 and 108 will lie solely with the voters on November 6.

Read more about the potential consequences of these ballot initiatives on the Colorado oil and gas industry on the Vinson & Elkins Environmental Blog here.

Supporters of Colorado Initiative 97 Submit Signatures to Secretary of State

On August 6, 2018, supporters of Initiative 97 in Colorado, which would increase oil and gas development setback distances to 2,500 feet from “occupied structures” and “vulnerable areas,” submitted approximately 171,000 signatures to Colorado Secretary of State Wayne Williams. In order to appear on the November ballot, Initiative 97 requires 98,492 valid signatures.

Secretary Williams now has thirty days to determine if the 171,000 signatures submitted include 98,492 valid signatures. Although similar initiatives in 2016 initially submitted more than the required 98,492 signatures to the Secretary of State, about 25-28% of those signatures were deemed invalid, keeping those measures off the ballot. However, supporters of Initiative 97 have submitted over 60,000 more supporting signatures compared to the similar measures in 2016. It remains to be seen whether the 171,000 signatures submitted will include enough valid signatures for Initiative 97 to appear on the November ballot.

Read more about the potential effects of Initiative 97 on the available land for oil and gas development in Colorado on the Vinson & Elkins Environmental Blog here.

Pennsylvania Issues Revised General Permits Regulating Methane Emissions from Unconventional Natural Gas Wells

On June 9, 2018, the Pennsylvania Department of Environmental Protection (“DEP”) released revised versions of General Plan Approval and/or General Operating Permits GP-5 and GP-5A (together, the “Revised General Permits”), applicable to “Natural Gas Compression Stations, Processing Plants, and Transmission Stations” and “Unconventional Natural Gas Well Site Operations and Remote Pigging Stations,” respectively. The Revised General Permits are aimed principally at regulating methane emissions from unconventional natural gas wells and midstream facilities, consistent with Governor Tom Wolf’s four point plan for reducing methane emissions announced in January 2016. The Revised General Permits are available to facilities with actual emissions less than 100 tons per year (“tpy”) of criteria pollutants (NOx, CO, SO2, PM10, and PM2.5), less than 50 tpy of VOCs, less than 10 tpy of any single hazardous air pollutant (“HAP”), and less than 25 tpy of total HAPs (use of the Revised General Permits is further restricted in Philadelphia, Bucks, Chester, Montgomery, or Delaware Counties to facilities with less than 25 tpy each of NOx and VOC emissions).

The Revised General Permits, which will apply to new and modified sources constructed on or after August 8, 2018, require compliance with federal New Source Performance Standards (such as 40 C.F.R. Part 63 Subparts OOOO and OOOOa, although EPA has proposed a temporary stay of some of the OOOOa requirements but also include more stringent requirements as well. Specifically, the Revised General Permits contain “Best Available Technology” (“BAT”) standards that apply in addition to federal New Source Performance Standards. Of the thirteen BAT determinations in the GP-5 permit, nine impose requirements more stringent than the federal New Source Performance Standards; eight of the eleven BAT determinations in the GP-5A permit are more stringent than federal New Source Performance Standards. 

Most notably, the Revised General Permits include a 200 tpy limit on methane emissions above which a BAT requirement for methane control applies--the first such numeric threshold applicable to methane emissions from unconventional natural gas wells and midstream facilities. While methane control techniques vary by emissions source, DEP considered “a closed vent system routed to a process or control” the primary control technique for emissions attributable to venting or process emissions, and a leak detection and repair (“LDAR”) program as the primary control technique for fugitive emissions. For fugitive emissions components, the Revised General Permits require LDAR within 60 days of startup and quarterly thereafter to comply with the BAT standard. Additional BAT requirements apply to storage vessels, tanker truck load-out operations, controllers, pumps, enclosed flares, well completion, combustion units, centrifugal natural gas compressors, fractionation process units, and sweetening units, among other sources addressed by GP-5 or GP-5A.

It remains to be seen whether the Revised General Permits requiring control of methane emissions will have any impact on drilling activity in Pennsylvania, where operators drilled 809 new unconventional natural gas wells in 2017. Industry groups may also choose to bring litigation challenging the issuance of the Revised General Permits; an industry challenge to DEP’s Chapter 78a regulations also applicable to the unconventional industry has resulted in a stay that has put many of the Chapter 78a requirements on hold for over twenty months and counting. In the meantime, Governor Wolf’s efforts to reduce methane emissions continue. The remaining items of his four point plan call for promulgation of a regulation aimed at reducing methane emissions from leaks at existing oil and natural gas facilities and the development of best management practices (including LDAR programs) applicable to production, gathering, transmission and distribution lines.

OCC Issues New Seismicity Protocol

On February 27, 2018, the Oklahoma Corporation Commission (“OCC”) issued a new seismicity protocol for oil and gas operators in the South Central Oklahoma Oil Province (“SCOOP”) and the Sooner Trend Anadarko Basin Canadian and Kingfisher counties (“STACK”) plays. The new protocol requires all operators in a certain defined area to have access to a seismic array giving real-time seismicity readings; lowers the minimum level at which operators must take response actions from 2.5 magnitude to a 2.0 magnitude; and requires some operators to pause their operations for 6 hours at when readings exceed 2.5 magnitude, rather than 3.0 magnitude under the previous protocol. (Readings from the seismic array are necessary because tremors of less than magnitude 2.5 generally cannot be felt by humans on the ground surface.)

The new protocol is separate from existing rules addressing wastewater injection in the Arbuckle formation, in the northern area of Oklahoma. Drilling activities in the SCOOP and STACK plays have far less water associated with them than similar activities in the Arbuckle, where the disposal of produced water remains Oklahoma regulators’ “larger concern” in addressing seismic activity, according to an OCC news release. Indeed, seismic activity in the SCOOP and STACK plays is “relatively rare and smaller on average than [that] linked to injection activity. Most importantly, the risk of such events appears to be manageable,” according to the OCC. Read the news release in full here.

Federal Court’s Order Sends BLM Methane Rule into Force, For Now

On February 22, 2018, the United States District Court for the District of California granted a preliminary injunction on the Bureau of Land Management’s (“BLM”) attempt to delay certain requirements of the 2016 Waste Prevention Rule (“Waste Prevention Rule”) for one year. In December 2017, BLM finalized a rule to delay the requirements of the Waste Prevention Rule originally effective January 17, 2018 until January 17, 2019 (the “Postponement”). The states of California and New Mexico (California et al. v. BLM et al., Case No. 17-cv-07186) and several environmental groups (Sierra Club et al. v. Zinke et al., Case No. 17-cv-07187) sued to enjoin the Postponement. 


The states and the environmental groups filed motions for preliminary injunctions, the court held a hearing on February 14, 2018, and the court issued its order the following week. In granting a preliminary injunction, the court considered only the Postponement and not BLM’s February 12, 2018 proposed rule intended to replace the Waste Prevention Rule (the “Proposed Replacement”). The comment period for the Proposed Replacement is ongoing and will end on April 23, 2018. 


The separate legal challenge to the validity of the Waste Prevention Rule in United States District Court for the District of Wyoming (Western Energy Alliance et al. v. Secretary of the U.S. Dep’t of the Interior et al., Case No. 16-cv-00280) remains stayed, although two groups of states have already filed motions with the court to lift the stay. The joint motion of North Dakota and Texas seeks to establish an expedited schedule for further proceeding, while the motion of Wyoming and Montana requests that the court “immediately suspend the implementation deadlines in the Waste Prevention Rule until either the Bureau of Land Management promulgates the replacement rule or the Court rules on the merits of the Petitions for Review.”  For now, the Waste Prevention Rule, including the leak detection and repair, emission reduction, and reporting requirements (originally effective as of January 17, 2018) is in effect.

BLM Proposes to Eliminate Emissions-Related Provisions of Currently-Postponed Waste Prevention Rule

On February 12, 2018, the Bureau of Land Management (“BLM”) released a pre-publication version of a proposed rule (the “Proposed Rule”) to modify the 2016 Waste Prevention Rule (the “Waste Prevention Rule”). The proposed modifications to the Waste Prevention Rule include the elimination of provisions aimed at reducing methane emissions from oil and gas facilities on federal lands. Compliance with these provisions of the Waste Prevention Rule has already been postponed until January 2019 pursuant to a final rule (the “Postponement”) promulgated by BLM on December 8, 2017, though the Postponement remains subject to pending judicial review.

BLM’s Waste Prevention Rule, initially promulgated in November 2016, covers a number of methane emissions sources associated with oil and gas production activities on federal lands, including natural gas emissions from venting or flaring, gas leaks from equipment and facilities located at the well site, and well drilling and completions. The Proposed Rule would eliminate many of the requirements aimed at reducing these emissions, and modify several others to reflect an approach similar to that in effect prior to the promulgation of the Waste Prevention Rule. For example, the Proposed Rule would eliminate the requirement that operators prepare “Waste Minimization Plans” when submitting an Application for Permit to Drill, as well as operational and equipment-related requirements applicable to well drilling operations, well completions, pneumatic controllers, pneumatic diaphragm pumps, storage vessels, and leak detection and repair. Pursuant to the Proposed Rule, the Waste Prevention Rule’s requirements related to gas capture, downhole well maintenance, liquids unloading, and measuring/reporting volumes of gas vented and flared would be “modified and/or replaced” to reflect the policies set forth in BLM’s NTL-4A, which governed venting and flaring from BLM-administered leases prior to the promulgation of the Waste Prevention Rule.

BLM has justified its proposed rule on “overlap” with the Environmental Protection Agency’s (“EPA”) New Source Performance Standards (“NSPS”) and a revised cost-benefit analysis, which concluded that “the value of the conserved gas would not outweigh the costs” of the regulation. Read more about BLM’s justification for the Proposed Rule here.

Meanwhile, the Postponement remains in effect, though it is subject to a pending judicial challenge brought by the states of California and New Mexico (California et al. v. BLM et al., Case No. 17-cv-07186) and several environmental groups (Sierra Club et al. v. Zinke et al., Case No. 17-cv-07187) in the United States District Court for the Northern District of California. Both the states and the environmental groups have filed motions for a preliminary injunction that would reinstate the Waste Prevention Rule’s original January 2018 compliance deadlines. The court heard oral arguments on these motions on February 14, 2018. A separate legal challenge to the validity of the 2016 Waste Prevention Rule brought by several industry groups and states also remains pending in Western Energy Alliance et al. v. Secretary of the U.S. Dep’t of the Interior et al., Case No. 16-cv-00280 in the United States District Court for the District of Wyoming. In that case, the court granted a motion to stay the case pending BLM’s rulemaking to rescind or revise the Waste Prevention Rule, and BLM continues to file status updates with the court in accordance with the court’s order granting the stay.

The Proposed Rule will remain open for public comment for a 60-day period following its publication in the Federal Register. BLM has stated that it intends to conclude this rulemaking effort within the period during which compliance with the Waste Prevention Rule has been suspended pursuant to the Postponement. Nonetheless, the pending motions seeking preliminary injunctions in the litigation challenging the Postponement create continued uncertainty for operators on federal lands, raising the prospect that the Waste Prevention Rule’s original January 2018 compliance deadlines could be reinstated — at least temporarily while BLM finalizes the Proposed Rule — by court order.