VOSS v. LUNDVALL BROS., INC. No. 91SC169.
830 P.2d 1061 (1992)
Gayle VOSS, City Clerk of the City of Greeley, a municipal corporation, Vitus Einsphar, Fire Chief, City of Greeley Fire Department, the Election Board of the City of Greeley, a municipal corporation, the City Council of the City of Greeley, a body politic, and the City of Greeley, a municipal corporation, Petitioners, v. LUNDVALL BROTHERS, INC., a Colorado corporation, d/b/a Lundvall Oil and Gas, Inc., Bellwether Exploration Company, Hertzke Brothers, a partnership, Conquest Oil Company, Colorado Oil and Gas Conservation Commission, and Langford Resources, a Colorado general partnership, Respondents.
Supreme Court of Colorado, En Banc.
June 8, 1992.
Richard P. Brady, George N. Monsson, Greeley, for petitioners.
James J. Peyton, Lind, Lawrence & Ottenhoff, George H. Ottenhoff, Kenneth F. Lind, Greeley, for respondents Lundvall Bros., Inc., a Colorado corp., d/b/a Lundvall Oil and Gas, Inc.; Bellwether Exploration Co., Hertzke Bros., and Conquest Oil Co.
Gale A. Norton, Atty. Gen., Raymond T. Slaughter, Chief Deputy Atty. Gen., Timothy M. Tymkovich, Sol. Gen., Patricia S. Bangert, Deputy Atty. Gen., Jerry W. Goad, First Asst. Atty. Gen., Timothy J. Monahan, Asst. Atty. Gen., Denver, for respondent Colorado Oil and Gas Conservation Com'n.
Randolph W. Starr, P.C., Randolph W. Starr, Loveland, for respondent Langford Resources.
Charles H. Richardson, Robert M. Rogers, Aurora, for amicus curiae City of Aurora, Colo.
Gorsuch, Kirgis, Campbell, Walker and Grover, William A. Keefe, Hugh V. Schaefer, Kenneth A. Wonstolen, Denver, for amicus curiae Colorado Petroleum Ass'n.
Geoffrey T. Wilson, Denver, for amicus curiae Colorado Mun. League.
Lohf, Shalman & Ross, P.C., J. Michael Morgan, David G. Ebner, Denver, for amici curiae Colorado Oil and Gas Ass'n and Independent Petroleum Ass'n of the Mountain States.
Justice QUINN delivered the Opinion of the Court.
The questions in this case are whether the Oil and Gas Conservation Act, §§ 34-60-101 to -126, 14 C.R.S. (1984 & 1991 Supp.), preempts a home-rule city from enacting a land-use ordinance that imposes a total ban on the drilling of any oil, gas, or hydrocarbon wells within the city and whether any such preemption would violate article V, section 35 of the Colorado Constitution, which prohibits the delegation of a municipal function to a special commission. In Lundvall Bros., Inc. v. Voss, 812 P.2d 693 (Colo.App.1990), the court of appeals addressed only the preemption issue and held that, because the development of oil and gas resources is a matter of statewide concern, the Oil and Gas Conservation Act preempts a home-rule city from regulating any aspect of oil and gas development or operations within the city. We affirm the judgment of the court of appeals, but we do so for reasons different from those relied on by the court in its opinion. We hold that while the Oil and Gas Conservation Act does not totally preempt a home-rule city's exercise of land-use authority over oil and gas development and operations within the territorial limits of the city, the statewide interest in the efficient development and production of oil and gas resources in a manner calculated to prevent waste, as well as in protecting the correlative rights of owners and producers in a common pool or source to a just and equitable share of the profits of production, prevents a home-rule city from exercising its land-use authority so as to totally ban the drilling of oil, gas, or hydrocarbon wells within the city. We also conclude that the state preemption of a home-rule city's total ban on drilling does not violate article V, section 35 of the Colorado Constitution.
The City of Greeley is a home-rule city. On August 6, 1985, Lundvall Brothers, Inc., a Colorado corporation engaged in oil and gas development, obtained a permit from the city to drill four gas wells on property located in a multi-family residential zone.
The Greeley City Council enacted a separate ordinance, Greeley Ordinance No. 90, which also prohibited "the drilling of any well for the purpose of exploration or production of any oil or gas or other hydrocarbons within the corporate limits of the [c]ity" and repealed any conflicting ordinance. Greeley Ordinance No. 90, §§ 1 & 2 (1985).
Lundvall Brothers filed an action for declaratory relief which was subsequently consolidated with similar actions filed by oil and gas developers and various owners of oil and gas leases. As pertinent here, Lundvall Brothers and the other plaintiffs sought a declaration that Greeley Ordinance Nos. 89 & 90 were null and void and did not divest them of their respective rights under the Oil and Gas Conservation Act and the permits issued by the Oil and Gas Conservation Commission. The trial court granted summary judgment in favor of Lundvall Brothers and the other plaintiffs, ruling that Greeley Ordinance Nos. 89 & 90 were facially void because "the entire area of oil and gas exploration regulation, including the location of sites within municipalities [has] been preempted by the State of Colorado and [has been] delegated to the Oil and Gas Conservation Commission" and that, consequently, "there is no area of regulation of oil and gas exploration left to the City of Greeley."
In Bowen/Edwards Assocs. Inc. v. Board of County Commissioners of La Plata County, 830 P.2d 1045 (Colo.1992), issued today, we held that the Oil and Gas Conservation Act, §§ 34-60-101 to -126, 14 C.R.S. (1984 & 1991 Supp.), does not totally preempt a county from exercising its land-use authority over any and all aspects of oil and gas development and operations in unincorporated areas of the county. In the instant case we must determine whether the scope of Greeley's authority as a home-rule city to regulate land use within its municipal borders extends to a total ban on the drilling of an oil, gas, or hydrocarbon well within the city limits. The answer to that question depends on whether Greeley's authority to impose a total ban has been preempted by the Oil and Gas Conservation Act. As a backdrop to our preemption analysis, we briefly review the land-use authority of a home-rule city and those provisions of the Oil and Gas Conservation Act which delineate the nature and scope of the state's interest in oil and gas development and operations.
The Home-Rule Amendment, Colo. Const. art. XX, § 6, grants home-rule cities "the full right of self-government in both local and municipal matters." This constitutional provision further provides that a home-rule city's ordinances pertaining to local and municipal matters "shall supersede within the territorial limits ... any law of the state in conflict therewith." In addition, the Home-Rule Amendment expressly states that "the enumeration herein of certain powers shall not be construed to deny cities and towns, and to the people thereof, any right or power essential or proper to the full exercise of such right." The effect of the Home-Rule Amendment is to grant to a home-rule city "every power possessed by the General Assembly as to local and municipal matters, unless restricted by the terms of the city's charter." VFW Post 4264 v. City of Steamboat Springs, 195 Colo. 44, 50, 575 P.2d 835, 840 (1978).
Our case law has recognized that the exercise of zoning authority for the purpose of controlling land use within a home-rule city's municipal borders is a matter of local concern. E.g., National Advertising Co. v. Department of Highways, 751 P.2d 632, 635 (Colo.1988); VFW Post 4264, 195 Colo. at 50, 575 P.2d at 840; City of Greeley v. Ells, Jr., 186 Colo. 352, 357-58, 527 P.2d 538, 541 (1974); Roosevelt v. City of Englewood, 176 Colo. 576, 586, 492 P.2d 65, 70 (1971). Colorado statutory law evidences further confirmation of a home-rule city's authority to control land use within
The state has an interest in oil and gas development and operations. That interest finds expression in the Oil and Gas Conservation Act. §§ 34-60-101 to -126, 14 C.R.S. (1984 & 1991 Supp.). The declared purposes of the act are
§ 34-60-102(1), 14 C.R.S. (1984). The Oil and Gas Conservation Act establishes the Oil and Gas Conservation Commission and vests the commission with authority to enforce the provisions of the act, to make and enforce rules and orders pursuant to the act, and to do whatever may reasonably be necessary to carry out the provisions of the act. § 34-60-105(1), 14 C.R.S. (1984).
In Bowen/Edwards, 830 P.2d at 1049, we summarized the authority of the Oil and Gas Commission as follows:
There is no question that the Oil and Gas Conservation Act evidences a significant interest on the part of the state in the efficient and fair development, production,
In light of the interest of a home-rule city in land-use control within its territorial limits and the interest of the state in promoting the efficient and fair development, production, and utilization of oil and gas resources in the state, the threshold consideration in this case is whether Greeley's total ban on the drilling of oil, gas, or hydrocarbon wells within the city derives from a purely local concern. It is a well-established principle of Colorado preemption doctrine that in a matter of a purely local concern an ordinance of a home-rule city supersedes a conflicting state statute, while in a matter of purely statewide concern a state statute or regulation supersedes a conflicting ordinance of a home-rule city. E.g., National Advertising, 751 P.2d at 635; DeLong v. City and County of Denver, 195 Colo. 27, 31, 576 P.2d 537, 539-40 (1978); Davis v. City and County of Denver, 140 Colo. 30, 35, 342 P.2d 674, 676 (1959). Our case law, however, has recognized that municipal legislation is not always a matter of exclusive local or statewide concern but, rather, is often a matter of concern to both levels of government:
City and County of Denver v. State of Colorado, 788 P.2d 764, 767 (Colo.1990). In matters of mixed local and state concern, a home-rule municipal ordinance may coexist with a state statute as long as there is no conflict between the ordinance and the statute, but in the event of a conflict, the state statute supersedes the conflicting provision of the ordinance. Denver v. State, 788 P.2d at 767; National Advertising, 751 P.2d at 635; City and County of Denver v. Colorado River Water Conservation Dist., 696 P.2d 730, 740-41 (Colo.1985); DeLong, 195 Colo. at 32, 576 P.2d at 540.
There is no question that the city of Greeley has an interest in land-use control within its municipal borders. It is also settled, as evidenced by our decision in Bowen/Edwards, that nothing in the Oil and Gas Conservation Act manifests a legislative intent to expressly or impliedly preempt all aspects of a local government's land-use authority over land that might be subject to oil and gas development and operations within the boundaries of a local government. See Bowen/Edwards, 830 P.2d at 1059. To say as much, however, is not to imply that Greeley may totally ban the drilling of any oil, gas, or hydrocarbon well within the city. In view of the state's interest in oil and gas development and operations, and in light of the authority vested in the Oil and Gas Conservation Commission to regulate oil and gas development and operations throughout the state, we must analyze Greeley's total ban on drilling against the state regulatory scheme to determine if the Greeley ordinances conflict with the state's interest in the efficient production and development of oil and gas resources in a manner preventative of waste and protective of the rights of common-source owners and producers to a fair and equitable share of production profits.
In determining whether the state regulatory scheme preempts the Greeley
The first factor—the need for statewide uniformity of regulation of oil and gas development and production—weighs heavily in favor of state preemption of Greeley's total ban on drilling within city limits. The intended effect of the Greeley ordinances is to prohibit all oil and gas development and operations at any location within the city. Oil and gas are found in subterranean pools, the boundaries of which do not conform to any jurisdictional pattern. As a result, certain drilling methods are necessary for the productive recovery of these resources. The Oil and Gas Conservation Commission emphasizes in its brief, as does Lundvall Brothers, that it is often necessary to drill wells in a pattern dictated by the pressure characteristics of the pool, and because each well will only drain a portion of the pool, an irregular drilling pattern will result in less than optimal recovery and a corresponding waste of oil and gas.
The extraterritorial effect of the Greeley ordinances also weighs in favor of the state's interest in effective and fair development and production, again based primarily on the pooling nature of oil and gas. Limiting production to only one portion of a pool outside the city limits can result in an increased production cost, with the result that the total drilling operation may be
Furthermore, the regulation of oil and gas development and production has traditionally been a matter of state rather than local control. State control of oil and gas development and production commenced in 1915 when the General Assembly created the office of the State Oil Inspector and imposed several requirements on the operation of oil and gas wells, including the prevention of waste, plugging upon abandonment, and well location. Ch. 126, sections 29, 30 & 32, 1915 Colo.Sess.Laws 367, 374-75. In 1927 the General Assembly created the Gas Conservation Commission with authority to adopt rules and regulations for the conservation of oil and gas resources and the prevention of waste and to impose penalties for violation of its rules and regulations. Ch. 138, sections 3 & 4, 1927 Colo.Sess.Laws 525, 526-27. This legislative history demonstrates that the state has exercised significant control over these activities, but not in a manner preemptive of all local government land-use authority.
Finally, we note that the Colorado Constitution neither commits the development and production of oil and gas resources to state regulation nor relegates land-use control exclusively to local governments. We, however, have previously held that a home-rule city can exercise control over outdoor advertising within its borders under its zoning authority only to the extent that the local ordinance does not materially impede the significant state goals expressed in the Outdoor Advertising Act, §§ 43-1-401 to -420, 17 C.R.S. (1984 & 1991 Supp.). National Advertising, 751 P.2d at 635. The same principle applies to a home-rule city's exercise of land-use authority over oil and gas development and production within the territorial limits of the city.
We conclude that the state's interest in efficient oil and gas development and production throughout the state, as manifested in the Oil and Gas Conservation Act, is sufficiently dominant to override a home-rule city's imposition of a total ban on the drilling of any oil, gas, or hydrocarbon wells within the city limits. Because oil and gas pools do not conform to the boundaries of local government, Greeley's total ban on drilling within the city limits substantially impedes the interest of the state in fostering the efficient development and production of oil and gas resources in a manner that prevents waste and that furthers the correlative rights of owners and producers in a common pool or source of supply to a just and equitable share of profits. In so holding, we do not mean to imply that Greeley is prohibited from exercising any land-use authority over those areas of the city in which oil and gas activities are occurring or are contemplated. What we said in Bowen/Edwards concerning the land-use authority of a county applies to a home-rule city:
Bowen/Edwards, 830 P.2d at 1058.
If a home-rule city, instead of imposing a total ban on all drilling within the city,
We need not labor long over whether the state preemption of the Greeley ordinance violates article V, section 35 of the Colorado Constitution, which provides as follows:
We are satisfied that the state preemption of the Greeley ordinances does not violate this constitutional provision.
The purpose of article V, section 35 of the Colorado Constitution is to prevent a legislative commission from intruding upon a city's right of self-government in matters of local concern. E.g., Denver & Rio Grande Western R.R. Co. v. City and County of Denver, 673 P.2d 354, 362 (Colo.1983); City and County of Denver v. Eggert, 647 P.2d 216, 226-27 (Colo.1982); Denver Urban Renewal Authority v. Byrne, 618 P.2d 1374, 1385-86 (Colo.1980). The Oil and Gas Conservation Commission is a statutory commission created to administer and enforce the provisions of the Oil and Gas Conservation Act. As such, the commission is a body separate and distinct from city government. Because the regulation of land use within a city is a municipal function, article V, section 35 of the Colorado Constitution prohibits the commission from performing that municipal function. The commission's exercise of authority, however, is not directed to municipal land use but rather to the effectuation of the state's legitimate concern for the efficient and fair development and production of oil and gas resources within the state.
The authority vested in the commission to promulgate and enforce regulations applicable to oil and gas development and production, including well location and spacing requirements, is not intended to involve the commission in land-use planning and control within a municipality, but rather is specifically designed to permit the commission to carry out its statutory charge. Because of the important state interest in oil and gas development and operations, the Oil and Gas Conservation Commission's exercise of authority over oil and gas activities within a home-rule city does not intrude upon a municipal function of purely local concern in violation of article V, section 35 of the Colorado Constitution.
For the above reasons, we affirm the judgment of the court of appeals.
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