Energy and Environment Monitor
COLORADO COURT’S SELECTIVE USE OF STATUTORY CONSTRUCTION PRINCIPLES TILTS OIL AND GAS DEVELOPMENT CASE IN YOUTH ENVIRONMENTALISTS’ FAVOR
April 4, 2017
By: Laura E. Beverage and Chris M. Hunter
On March 23, 2017, the Colorado Court of Appeals issued a decision that has the potential to make future oil and gas development in the State very difficult, if not impossible. See Martinez v. Colorado Oil & Gas Conservation Comm., No. 16-CA-0564, Opinion. In what is becoming something of a trend of activist groups bringing legal actions purportedly on behalf of minors (see also https://www.ourchildrenstrust.org/us/federal-lawsuit/), a group of minors (“Petitioners”) unofficially affiliated with a youth-focused environmental group filed a petition for rulemaking with the Colorado Oil and Gas Conservation Commission (“the Commission”). Petitioners proposed a rule prohibiting the issuance of oil and gas well drilling permits unless an independent third-party first confirms that the drilling would not occur in a manner that cumulatively, with other actions, impairs Colorado’s atmosphere, water, wildlife, and land resources. Additionally, the proposed rule would require the third-party reviewer to conclude that the proposed permit would not contribute to climate change.
The negative ramifications of such a rule on oil and gas development in the State could be huge, as it would be virtually impossible to disprove that any given drilling project would not make at least some minimum cumulative contribution to global climate change. The proposed rule would, among other things, place oil and gas developers in the position of relying on an independent third party organization to prove the negative in order to obtain a permit. The vague language describing the duties of the independent third party reviewer does not set standards, but rather appears to create an assumption that all drilling contributes negatively to the pristine goals of the rule.
On advice from Colorado Attorney General, the Commission concluded that it lacked jurisdiction to adopt the proposed rule because delegation of permit issuance authority to a third party contradicts the Commission’s non-delegable duty under the Oil and Gas Conservation Act (“the Act”). The Commission also concluded that the Act requires a balance between oil and gas production and public health, safety, and welfare.
On appeal from the Commission’s decision, the District Court likewise concluded that the Act unambiguously requires the Commission to balance the public’s interest in development of oil and gas with the protection of public health, safety, and welfare. The District Court also concluded that the Commission had not acted arbitrarily or capriciously in relying on advice from the Attorney General and denying the petition after considering input from both sides of the issue (the Colorado Petroleum Association and the American Petroleum Institute intervened and submitted briefs in support of the Commission).
Petitioners appealed the District Court’s decision to the Colorado Court of Appeals. The Court of appeals analyzed the language of the Act, specifically the provisions delegating authority to the Commission to regulate oil and gas development in Colorado. Strangely, the Court’s primary focus was language from Colorado Revised Statute (“C.R.S.”) § 34-60-102, which is titled “Legislative declaration.” It is a general principle of statutory interpretation that statements of legislative purpose can be useful in interpreting an ambiguous statute, and the overriding objective of statutory construction is to effectuate statutory purpose. On the other hand, another canon of statutory construction counsels that statements of legislative intent should not override the plain text of otherwise unambiguous provisions.
In gleaning the General Assembly’s intent regarding scope of the Commission’s authority to regulate oil and gas production in the State, a logical starting point would have been C.R.S. § 34-60-105, “Powers of commission,” or § 34-60-106, “Additional powers of commission – rules.” Those sections support the Commission and District Court’s refusal to adopt Petitioners’ proposed rule. For instance, § 34-60-105(1) prohibits the Commission from delegating its duties under the Act to anyone else. Furthermore, C.R.S. § 34-60-106(2)(d) grants the Commission authority to regulate oil and gas operations “so as to prevent and mitigate significant adverse environmental impacts…taking into consideration cost-effectiveness and technical feasibility.” Emphasis added. These provisions unambiguously preclude the Commission’s adoption of Petitioners’ proposed rule for two reasons. First, § 34-60-105(1) prohibits the Commission from appointing a third party to review permit applications. Second, the mandate to consider cost-effectiveness and technical feasibility clearly indicates that the Commission’s regulations must balance protection of the environment with the public interest in development of natural resources. There simply does not appear to be need for resort to legislative intent to interpret these provisions.
The Court of Appeals nonetheless began its inquiry—and seemingly ended it as well—with the Assembly’s legislative declaration, which provides in relevant part as follows:
It is declared to be in the public interest to: Foster the responsible, balanced development, production, and utilization of the natural resources of oil and gas in the state of Colorado in a manner of consistent with protection of the public health, safety, and welfare, including protection of the environment and wildlife resources.
C.R.S. § 34-60-102. Emphasis added. Whereas the District Court concluded that the Act requires a balancing of industry interests with environmental concerns, the Court of Appeals concluded that industry interests are entirely subservient to environmental concerns. Why? Because the Court focused on the clause, “in a manner consist with,” to conclude that the responsible and balanced development of oil and gas is subject to the absolute protection of the environment. In the Court’s view, protection of the environment is a condition precedent to the responsible development of oil and gas resources, rather than part of a balancing test.
The Court simply brushed aside § 34-60-106(2)(d)’s requirement that cost-effectiveness and technical feasibility be considered in conjunction with environmental concerns, focusing instead on § 34-60-106(2)(d)’s delegation to the Commission of authority to “prevent and mitigate significant adverse environmental impacts…to the extent necessary to protect public health.” Emphasis added. The Court reasoned that the statutory language, “to the extent necessary,” is further evidence of the General Assembly’s intent to make protection of the environment a mandatory condition of permit issuance rather than a factor in a general balancing inquiry.
In the dissent, Judge Booras urged Chevron deference to the Commission’s interpretation of the Act. Judge Booras also took issue with the majority’s interpretation of the phrase, “in a manner consistent with.” Contrary to the majority’s view, Judge Booras pointed out that “consistent with” is more commonly understood to denote compatibility, harmony, and congruity. In other words, the term signifies a balancing process. Additionally, Judge Booras noted that a legislative declaration should only be used to interpret a statute that is ambiguous and cannot be used to override the language of the statute. After all, the best evidence of the legislature’s intent is embodied in the unambiguous wording of the statute itself.
The majority opinion in Martinez is an example of how general principles of statutory construction can be tortured by a court in order to dictate a specific outcome. Although attorneys may wish to think of the traditional canons of statutory interpretation as hard and fast rules, they are sometimes viewed more like guidelines that can cut either way, depending on which interpretive principle the court employs and how much weight the various principles are given.
For instance, ordinarily use of the conjunctive “and” in a list means that all of the listed requirements must be satisfied, while use of the disjunctive “or” means that only one of the listed requirements need be satisfied. See, e.g., State v. Saunders, 638 S.E.2d 173, 177 (W.Va. 2006)(“It is axiomatic that where the disjunctive ‘or’ is used, it ordinarily connotes an alternative between the two [or more] clauses it connects.”). However, if a court decides that strict grammatical construction will frustrate the court’s view of the statute’s legislative intent, it can also find support for reading “and” as “or,” or “or” as “and.” See, e.g., United States v. Moore, 613 F.2d 1029 (D.C. Cir. 1979); De Sylva v. Ballentine, 351 U.S. 570, 573 (1956) (“the word ‘or’ is often used as a careless substitute for the word ‘and’”); see also LAWRENCE E. FILSON, THE LEGISLATIVE DRAFTER’S DESK REFERENCE, § 21.10 (1992) (“Both ‘and’ and ‘or’ are context-dependent, and each word is itself semantically ambiguous, and can be used in two quite different senses.”). Thus, even relatively straight-forward grammatical rules can be viewed as mere suggestions to be ignored in favor of a preferred result.
Viewed in this light, the outcome in Martinez is not so surprising. Although the plain language of Colorado’s Oil and Gas Conservation Act prohibits the Commission from enacting Petitioners’ proposed rule, the Colorado Court of Appeals decided to read the statute’s statement of legislative purpose regarding environmental protection seemingly as an absolute bar on even de minimis environmental impacts, which in turn allowed the Court to ignore the clear statutory directive to balance environmental protection with the need for oil and gas development. Thus, under the Court’s interpretation of the Act, a rule prohibiting issuance of oil and gas permits based on a speculative cumulative contribution to “climate change” would not necessarily be prohibited. Accordingly, the case has been remanded to the District Court with instructions to remand to the Commission for reconsideration of the proposed rule in light of the March 23rd opinion.
This article was authored by Chris M. Hunter and Laura E. Beverage, Jackson Kelly PLLC.