Chase v. Colorado Oil & Gas Conservation Commission

2012 COA 94, 284 P.3d 161, 2012 WL 2045852, 2012 Colo. App. LEXIS 919
CourtColorado Court of Appeals
DecidedJune 7, 2012
DocketNo. 11CA1249
StatusPublished
Cited by7 cases

This text of 2012 COA 94 (Chase v. Colorado Oil & Gas Conservation Commission) is published on Counsel Stack Legal Research, covering Colorado Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Chase v. Colorado Oil & Gas Conservation Commission, 2012 COA 94, 284 P.3d 161, 2012 WL 2045852, 2012 Colo. App. LEXIS 919 (Colo. Ct. App. 2012).

Opinion

Opinion by

Judge FOX.

{1 Plaintiffs, Laura W. "Wendy" Chase and Michael Sutak (collectively Landowners), appeal the district court judgment affirming orders of defendant the Colorado Oil and Gas Conservation Commission (COGCC): (1) declining to interpret the lease between defendants Magpie Operating, Inc. (Magpie) and the Colorado State Board of Land Commissioners (the Board); (2) denying Landowners' request to have their property deemed a Designated Outdoor Activity Area (DOAA); and (8) granting a permit to drill for natural gas to Magpie. We affirm in part, reverse in part, and remand for further findings by the COGCC.

I. Background

A. Nature and History of the Surface Estate

T2 In 1997, Landowners purchased a seventy-seven-acre surface estate in Larimer County (the property or the surface estate) knowing it was subject to a mineral rights reservation. The 1916 patent transferring the surface estate (as part of a larger parcel) reserved to the state all mineral rights and "the right of ingress and egress for the purpose of mining together with enough of the surface of [the property] as may be necessary for the proper and convenient working of such minerals and substances." The Board owns the mineral estate and manages it for the benefit of the School Trust pursuant to Colorado Constitution, article IX, see-tions 9(6) and 10.

3 An irrigation ditch divides the property into two parcels. Landowners use part of the south parcel for agricultural purposes. The south parcel also contains a residence, agricultural outbuildings, and an indoor riding arena. Although the property is zoned for agricultural use, Landowners improved the property to facilitate its use as a training and competition area for equestrian events.

B. The Mineral Estate and Gas Drilling Proposal

4 Since 1977, the Board has been a party to Oil and Gas Lease No. OGTT/21808 (the lease) for production of oil and gas over a 640-acre section of land that includes the property. The lease was assigned many times, most recently to Magpie in 1998. The first attempt to access the mineral estate occurred in June 2008, when Magpie submitted two applications for permits to drill (APD) wells1 on the property.

15 On November 21, 2007, before submitting its APDs, Magpie had contacted Landowners to solicit their input regarding the locations of the wells and other operations needed to facilitate gas drilling. After Magpie's representative and Landowners met in late 2007, Magpie sent a letter notifying Landowners of its intent to drill.

T6 On December 7, 2007, the COGCC received Landowners' request for onsite inspection of the property to assist in identifying a gas drilling site.2 After receiving the [163]*163request, COGCC staff participated in consultations between Landowners and Magpie concerning gas extraction activities The COGCC inspected the property on August 27, 2008. The inspection was intended to determine whether an alternative drilling site could accommodate Landowners' concerns about the potential impact of drilling on their equestrian activities.3

T7 After Magpie submitted the APDs, but before completion of COGCC's proposed survey, Landowners applied to have their surface estate declared a DOAA. A DOAA is defined as

T8 a well-defined outside area (such as a playground, recreation area, outdoor theater, or other place of public assembly) that is occupied by twenty (20) or more persons on at least forty (40) days in any twelve (12) month period or by at least five hundred (500) or more people on at least three (8) days in any twelve (12) month period.

T9 COGCC Rule 100 (Definitions). Magpie and the Board filed timely protests to the DOAA request.

110 The COGCC survey, completed on November 80, 2009, revealed that the alternative location for State-Chase 38-86 was outside the drilling window established by COGCC Rule 318A. Even so, a COGCC staff analysis recommended that the COGCC address Landowners' request for a DOAA, and, if the DOAA was denied, allow drilling on the alternative site.

111 The staff analysis noted that the authorization to drill on the alternative site, even though outside the drilling window, was consistent with Rule 318A.h., which "permits exception locations" as allowed under Rule 318.c. "for environmental or topographic reasons or other 'good cause.'" Only the mineral estate owner, not the surface estate owner, needed to agree to the exception. The Board, as the mineral estate owner, approved the alternative well location on December 12, 2009.

T12 The staff analysis also recommended the following conditions to approve the APDs for the State-Chase 38-86 and State-Chase 34-86 wells:

® "Drilling and completion activities shall occur between October 31 and March 1, outside of the irrigation season."
* "Interim reclamation shall commence immediately following well drilling and completion."
® "The operator shall implement all practicable measures to ensure that disruption to the surface owners' irrigation practices [is] minimized."
e"In addition to the required notice for site preparation, drilling and completion, the operator shall provide 30 days'] notice to the surface owner for any non-emergency workover or well treatment. If the surface owners fail to notify the operator of a scheduled event 14 days in advance of the scheduled work[,] then the operation may proceed. Otherwise[,] if [there] is a conflict then the operator shall work with the surface owner(s)] to avoid the work during the surface owner[s'] scheduled equestrian events."

C. Landowners' DOAA Request

[ 13 The COGCC held a hearing on Landowners' DOAA request on February 22, 2010. After the evidentiary hearing, COGCC commissioners expressed concern over several matters, including whether the number of people present on the property met the DOAA definition's requirements, whether the property was of the type anticipated to be protected under the rule, and whether waste would occur if Magpie's APDs were denied.

[164]*164D. COGCC Decision on the DOAA Request

14 The COGCC ultimately denied Landowners' DOAA request The COGCC's March 24, 2010, report concerning the DOAA hearing noted the testimony of the various witnesses, as well as the COGCC staff ree-ommendation. The COGCC order stated:

After deliberations, the Commission voted 6 to 3 to deny the Sutak-Chase application for a DOAA based on questions regarding the definition of "designated outside activity area," whether the property fell within the definition, whether it was the type of property or activity that was contemplated when ... the Commission [promulgated the definition], and whether waste will be committed because the wells cannot be located on the property if the [DOAA] application is granted.

The COGCC therefore ordered that (1) the DOAA request was denied; (2) the order was effective immediately; (8) the COGCC reserved its right to amend or repeal any or all of the order; (4) the order was final agency action for the purposes of judicial review pursuant to the Colorado Administrative Procedure Act (APA); and (5) no application for reconsideration was needed to seek judicial review,

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Bluebook (online)
2012 COA 94, 284 P.3d 161, 2012 WL 2045852, 2012 Colo. App. LEXIS 919, Counsel Stack Legal Research, https://law.counselstack.com/opinion/chase-v-colorado-oil-gas-conservation-commission-coloctapp-2012.