Colorado Oil & Gas Conservation Commission v. Grand Valley Citizens' Alliance

2012 CO 52, 279 P.3d 646, 176 Oil & Gas Rep. 676, 2012 WL 2393074, 2012 Colo. LEXIS 458

• Court: Supreme Court of Colorado
• Decided: June 25, 2012
• Docket: No. 10SC532
• Status: Published

Opinions

Justice EID

delivered the Opinion of the Court.

T1 Grand Valley Citizens' Alliance, along with Cary Weldon, Ruth Weldon, Wesley Kent, Marcia Kent, and Western Colorado Congress (collectively, "GVC") filed a complaint against the Colorado Oil and Gas Conservation Commission and others (the "Commission") alleging that it was entitled to a hearing on an application for permit to drill ("APD") pursuant to section 34-60-108(7), C.R.S. (2011), of the Oil and Gas Conservation Act (the "Act") and section 24-4-105, C.R.S. (2011), of the Colorado Administrative Procedure Act. The trial court dismissed the complaint on the ground that GVC had no standing to request a hearing.

2 GVC appealed and the court of appeals reversed. See Grand Valley Citizens' Alliance v. Colorado Oil & Gas Conservation Comm'n, - P.3d --, --, 2010 WL 2521747, at *6 (Colo.App.2010). The court of appeals reasoned that GVC was entitled to a hearing under subsection 108(7) -- which states that on the "filing of a petition concerning any matter within the jurisdiction of the [Clommission, it shall promptly fix a date for a hearing thereon" - because it had filed a petition on a "matter within the jurisdiction of the [Clommission." Id. at -----

T3 We granted certiorari and now reverse. Subsection 108(7)'s reference to a hearing must be read in context with the overall statutory scheme. Subsection 108(2) requires that "[nlo rule, regulation, order, or amendment thereof, shall be made by the [Clommission without a hearing...." When read in context, subsection 108(7)'s reference to a hearing refers to the hearing required by subsection 108(2), which applies only to rules, regulations, and orders. Because GVC is challenging a permit, not a "rule," "regulation," or "order," it is not entitled to a hearing under subsection 108(7). Permits are expressly governed by section 34-60-106(1)(£), C.R.S. (2011), which gives the Commission broad authority to govern APDs and determine who can request a hearing. In this case, the Commission's rules do not permit a citizens group like GVC to request a hearing for an APD, and instead consider their objection as a complaint. Accordingly, we hold that the Commission properly denied GVC's request for a hearing.

I.

T4 In 1969 the federal government conducted an experiment called Project Rulison in Garfield County, Colorado. During this project, a large nuclear device was detonated 8,400 feet underground in an attempt to free natural gas. Project Rulison did not produce any marketable gas because the liberated gas contained radioactive matter.

T5 After the blast, there was little to no drilling at or near the blast site. In the 1990s, companies sought permission to drill in the area. In 2004, the Commission stated that a hearing would be required for any permit application involving drilling within one-half mile of the blast site.

T 6 In 2008, a company applied for permits to drill wells approximately three miles from the blast site. This request did not trigger an automatic hearing because the request did not seek to drill within the restricted one-half mile radius.

T7 GVC petitioned the Commission for a hearing on the APD. GVC's request for a hearing was denied on the ground that the Commission's rules allow only operators, surface owners, and relevant local governments to request a hearing on an application for permit to drill The acting director of the Commission stated that the request to intervene was treated as a complaint under the Commission's rules and considered as such. GVC then filed this present suit, alleging that they were entitled to a hearing under section 34-60-108(7) and section 24-4-105 of the Colorado Administrative Procedure Act. The district court concluded that GVC had no standing to seek a hearing and dismissed the complaint.

T8 GVC appealed to the court of appeals and the court of appeals reversed, holding that GVC was entitled to a hearing under section 34-60-108(7). See Grand Valley Citizens, -- P.3d at --. We granted certiorari¹ and now reverse the judgment of the court of appeals. >

IL

19 Section 834-60-108(2) provides that "Inlo rule, regulation, or order, or amendment thereof, shall be made by the [Clom-mission without a hearing...." Section 34-60-108(7) states that "[on the filing of a petition concerning any matter within the jurisdiction of the [Clommission, it shall promptly fix a date for a hearing thereon and shall cause notice of the filing of the petition and of the date for the hearing thereon to be given." The question in this case is whether the Commission was required to hold a hearing as requested by GVC. We hold that it was not.

10 The court of appeals reasoned, and GVC argues before us, that subsection 108(7) requires a hearing in this case because GVC filed "a petition" concerning "[al matter" within the Commission's jurisdiction. This reasoning is flawed, however, because it reads the provision in isolation rather than within the overall statutory context.

' 11 Subsection 108(2) states that no "rule, regulation, or order, or amendment thereof, shall be made by the [Clommission without a hearing ... except as provided in this seetion." (Emphasis added). Subsection 108(2) thus requires a hearing only for a "rule, regulation, or order, or amendment thereof." When read in context, subsection 108(T)'s language requiring the Commission to "promptly fix a date for a hearing" upon the filing of a petition on "any matter" refers to the hearing described in subsection 108(2), that is, a hearing on a "rule, regulation, or order, or amendment thereof" In other words, subsection 108(7)'s instruction that a "hearing" be "promptly fix[ed]" for "any matter" does not expand the list of subjects for which a hearing is required under subsection 108(2).

T 12 If GVC were correct, and subsection 108(7) required a hearing in every instance, subsection 108(2)'s specification of hearings for "rule[sl, regulation{s], [and] order[s]" would be rendered meaningless. In addition, various provisions throughout the Act that mandate hearings in compliance with section 34-60-108(7) would be entirely unnecessary. See, eg., § 34-60-106(17)(d), C.R.S. (2011) (requiring a hearing "pursuant to the procedures set forth in section 34-60-108(T)" before a certificate of closure may be issued); § 84-60-121(1), C.R.S. (2011) (allowing penalties to be imposed after a hearing has been held). From these provisions, we conclude that the legislature was familiar with the concept of a hearing and specified instances in which a hearing was required. GVC's reading of the statute as requiring a hearing in all instances is inconsistent with this understanding.

113 This case involves a "permit" to drill, not a rule, regulation, or order. Accordingly, a hearing was not mandated by subsection 108(7). "Permits" are addressed in another section of the Act, section 34-60-106. Importantly, the term "permit" does not appear in section 34-60-108 at all, but it does appear throughout the Act together with the terms "rules" and "orders." See, eg., § 34-60-121(1) ("Any operator who violates any provision of this article, any rule or order of the [Clommission, or any permit ...."); § 34-60-124(4)(a)(III), C.R.S. (2011) (Commission may expend funds to "investigate alleged violations of any provision of this article, any rule or order of the [CJommission, or any permit"); § 34-60-128@B)(d)(III), CRS. (2011) (imposing "rules" regarding habitat stewardship, including minimizing habitat disturbance in "orders or rules" and as "conditions of approval to a permit to drill"). These distinctions show that the legislature intended for permits to be separate from other forms of ageney action such as orders and rules. See Robinson v. Colo. State Lottery Div., 179 P.3d 998, 1010 (Colo.2008) ("[Thhe use of different terms signals an intent on the part of the General Assembly to afford those terms different meanings.").

{ 14 Under section 34-60-106(1)(f), no well drilling "shall be commeneed ... without first obtaining a permit from the [ClJommission, under such rules and regulations as may be prescribed by the [Clommission." The language of section 34-60-106(1)(f) gives the Commission broad authority to promulgate rules governing permits. It does not require the Commission to hold a hearing on APDs. Instead, it states that oil and gas drilling cannot commence without obtaining a permit, under the rules and regulations set forth by the Commission.

{15 Here, the Commission promulgated a rule stating that any person seeking to drill must file an APD. 2 Colo.Code Regs. § 404-1:308.2a (as amended 2009). However, only the operator, surface owner, or the relevant local government may request a hearing on an APD under the Commission's rule. 2 Colo.Code Regs. § 404-1:5083b.7 (as amended 2009). GVC cannot seek a hearing under the Commission's rule because it is not the operator, surface owner, or relevant local government.

16 This is not to say, however, that GVC cannot participate in the process and voice its concerns. Under Rule 303.m.(1), the director "may withhold approval of any [APD] ... based on information supplied in a written complaint submitted by any party with standing under Rule 522.a.(1)." 2 Colo.Code Regs. $ 404-1 (2009). Rule 522.a.(1) states, in part, that a complaint can be filed by "any other person who may be directly and adversely affected or aggrieved as the result of [an] alleged violation." 2 Colo.Code Regs. § 404-1 (2009). Under these rules, GVC's request to intervene was properly treated as a complaint.

T17 In this case, the legislature granted the Commission broad authority under seetion 34-60-106(1)(f) to regulate the permitting process. Here, the Commission has determined, pursuant to its rules, that only a limited number of parties, not including GVC, may request a hearing on an APD. We see no grounds for disturbing that determination. See Colorado Ground Water Comm'n v. Eagle Peak Farms, 919 P.2d 212, 217 (Colo.1996) (agency rules are "presumed valid". and any challenging party has "a heavy burden" to establish that the agency violated constitutional or statutory law, exceeded its authority, or lacked a basis in the record). |

18 In sum, we hold section 34-60-108(7) requires a hearing only for rules, regulations, and orders. Permits are governed by section 34-60-106(1)(f), which grants the Commission broad authority to promulgate rules governing the permitting process, including the authority to determine who.. may request a hearing. Because the Commission's rules do not entitle a citizens' group to a hearing, the Commission properly denied GVC's hearing request in this case. ‘

UL.

{19 For these reasons, we reverse the judgment of the court of appeals and remand the case for proceedings consistent with this opinion.

Justice HOBBS, dissents.

1 . We granted certiorari on the following issues:

1. Whether the court of appeals erred by substituting its interpretations of the Act, which divests the Commission of discretion to establish, by rule, reasonable limits on who may invoke the Commission's jurisdiction to initiate an adjudicatory hearing on APDs, for the Commission's longstanding and reasonable interpretation of its enabling legislation.

2. Whether the court of appeals erred by basing its decision on its interpretation of a single sentence of a comprehensive legislative scheme rather than construing the Act as a whole and without considering the consequences of its construction or the overall goal of the statutory scheme.