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AN ORDINANCE ENACTING A TEMPORARY MORATORIUM ON THE SUBMISSION, ACCEPTANCE, PROCESSING, AND APPROVAL OF OIL AND GAS PERMITS AND OTHER LAND USE APPLICATIONS RELATED TO THE USE OF PROPERTY FOR EXPLORATION FOR AND EXTRACTION OF OIL AND GAS WITHIN THE CITY OF COMMERCE CITY, COLORADO
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Summary and Background Information: Local governments throughout Colorado are struggling to address the potential adverse impacts of proliferating oil and gas exploration and extraction uses in urban and suburban environments on their citizens’ health, safety, and welfare, their communities, and their public infrastructure. On May 21, 2018, the City Council voted to direct staff to prepare an ordinance for consideration at the June 4 regular meeting to impose a 6-month moratorium on oil and gas development in Commerce City.
Authority & Existing Regulation: Commerce City, as a home rule municipality, has broad authority to exercise zoning and police powers to promote and protect the health, safety, and welfare of the community and its citizens, including with respect to oil and gas exploration and extraction activities and land uses. Through Ordinance 1891, Commerce City enacted regulations relating Oil and Gas Permits and Subsurface Extraction in 2012, which regulations were codified primarily at Section 21-3216 and 21-5266 of the Land Development Code. All subsurface extraction activities in the city require an Oil and Gas Permit. Commerce City also has established generally applicable regulations relating to zoning and land use, building safety, nuisances, streets and public rights-of-way, storm drainage, and motor vehicles and traffic.
Oil and gas development, production, and utilization is also regulated by the State of Colorado through by the Department of Natural Resources, Oil and Gas Conservation Commission (“COGCC”) under the authority of the Oil and Gas Conservation Act, C.R.S. §§ 34-60-101 et seq. (“Act”). The COGCC has implemented regulations, 2 C.C.R. 404-1, amended effective May 1, 2018, and 2 C.C.R. 404-3, amended effective August 21, 2009.
Recent Developments: Since March 1, 2018, Commerce City has been notified of approximately 24 discrete applications to the COGCC relating to proposed oil and gas development within Commerce City, including 11 spacing applications, 8 discrete Form 2 (Permit to Drill) applications (consisting of 168 individual applications), and 5 Form 2A (Location Assessment Permit) applications. Before that date, Commerce City had received no similar applications indicating significant impending oil and gas exploration or extraction development within the city.
Since Commerce City enacted its regulations in 2012:
1) the city’s population has increased by 13%;
2) no applications for any Oil and Gas Permit or Subsurface Extraction have been received;
3) several Colorado court decisions have called into question the regulations of other home rule cities seeking to address the direct local impacts of oil and gas development on the communities in which the development occurs, including the decision in City of Longmont v. Colorado Oil and Gas Association, 369 P.3d 573 (Colo. 2016) and the recent decision in Colorado Oil and Gas Association and American Petroleum Institute v. City of Thornton, 2017-CV-31640, District Court, Adams County, State of Colorado (April 24, 2018) (Order Granting in Part and Denying in Part Plaintiff’s Motion for Partial Summary Judgment);
4) the Supreme Court of Colorado is considering an appeal of the Court of Appeals’ decision in Martinez v. Colorado Oil and Gas Conservation Commission, 2016-CA-564, Court of Appeals, State of Colorado (March 23, 2017) (unpublished opinion), the result of which appeal may call the COGCC Rules into question and could impact the nature and extent of local regulations of oil and gas activity;
5) incidents resulting in death, personal injury, and property damage have occurred in Colorado in connection with oil and gas exploration and extraction activity, including injury from a fire and explosion at a well site in Weld County, Colorado on December 22, 2017; one death from a fire occurring during work on an oil and gas pipeline near Galeton, Colorado on November 16, 2017; fire occurring from a spill at an oil and gas facility in Weld County, Colorado on November 7, 2017; injury from a fire at an oil and gas facility in Brighton, Colorado on October 12, 2017; tank explosions in Garfield County, Colorado on September 12, 2017; injury from the ignition of fumes from a storage tank in Greeley, Colorado on May 8, 2017; and two deaths in the explosion of a home near a pipeline in Firestone, Colorado on April 17, 2017;
6) studies have been conducted with disparate results regarding health impacts of oil and gas operations and the COGCC’s response to these studies is not clear, including McKenzie, L.M. et al. (2018). Ambient Nonmethane Hydrocarbon Levels Along Colorado’s Northern Front Range: Acute and Chronic Health Risks. Environmental Science & Technology, 52(8), pp. 4514-4525); and
7) Commerce City remains adjacent to the Rocky Mountain Arsenal National Wildlife Refuge, which contains sizeable deposits of hazardous materials.
Effect: The ordinance implements a six-month moratorium effective 5 days after after posting and publication after second reading, pursuant to Section 5.6 of the Charter (Section 3). (An emergency ordinance approved by 7 votes could be made effective immediately). The ordinance and moratorium could be extended or repealed by ordinance.
The moratorium (Section 2) is imposed on the submission, acceptance, processing, and approval by the Commerce City of all Oil and Gas Permit/Subsurface Extraction applications pursuant to Section 21-3216 or 21-52166 of the Commerce City Revised Municipal Code and any other land use applications relative to the permitting of oil and gas exploration or subsurface extraction operations on real property in Commerce City. Staff is not permitted from accepting, processing, or reviewing new or pending applications during that time.
During the moratorium, staff is directed to review, promptly and with due diligence, current regulations relating to oil and gas exploration and extraction operations with respect to recent and anticipated court decisions, current best management practices, updated COGCC Rules, Commerce City’s growth, current technologies of the oil and gas exploration and extraction industry, and public health studies. Council will later direct whether new or amended regulations should be presented to the Council.
Exceptions & Special Exemption for Undue, Substantial Hardship:
The ordinance provides for exceptions to protect the rights of landowner’s and the interests of the public. These exceptions include non-City applications, informal or pre-application discussions with oil and gas companies, existing lawful uses, and cases of undue, substantial hardship.
For hardship applications, the ordinance establishes a procedure for the application, public notice (including notice to all property owners within 2,500’), approval criteria, and an application fee of $700.
Action Options:
1) Consider the ordinance first reading.
2) Amend the ordinance.
3) Postpone the ordinance to a future Council meeting.
4) Refer the ordinance to a Council study session for discussion.
Staff Responsible (Department Head): Robert Sheesley, City Attorney
Staff Member Presenting: Robert Sheesley, City Attorney
Financial Impact: A legal challenge to the ordinance would impact the City Attorney’s budget. Evaluation and drafting of code changes and policy formation will impact budgets and staff time of affected departments.
Funding Source: n/a
Staff Recommendation: n/a