City of Fort Collins v. Colorado Oil and Gas Association

Fort Collins is a home-rule city in Colorado. On November 5, 2013, citizens of Fort Collins voted in favor of a citizen-initiated ordinance placing a five-year moratorium on hydraulic fracturing (fracking) and the storage of fracking waste within the city. The moratorium prohibited operators from fracking or storing fracking waste in Fort Collins until 2018, barring further action by Fort Collins voters. Fort Collins subsequently amended its municipal code to implement this prohibition, with limited exemptions for certain pre-existing wells subject to operator agreements. The Colorado Oil and Gas Association, an industry organization, sued Fort Collins seeking a declaratory judgment that the Oil and Gas Conservation Act and regulations promulgated thereunder preempt the moratorium, and requesting a permanent injunction against enforcement. The district court granted summary judgment for the Association, finding the moratorium was impliedly preempted and conflicted with the application of the Oil and Gas Conservation Act. Fort Collins appealed to the Colorado Court of Appeals, and the case was transferred to the Colorado Supreme Court.

• Whether Fort Collins's five-year moratorium on fracking and storage of fracking waste regulates a matter of statewide, local, or mixed state and local concern
• Whether the Oil and Gas Conservation Act expressly preempts Fort Collins's fracking moratorium
• Whether the Oil and Gas Conservation Act impliedly preempts Fort Collins's fracking moratorium
• Whether Fort Collins's fracking moratorium operationally conflicts with state law and is therefore preempted
• Whether a five-year moratorium is materially different from a perpetual ban for purposes of preemption analysis

The district court's order invalidating Fort Collins's five-year moratorium on fracking and storage of fracking waste was affirmed. The case was remanded to the district court for further proceedings consistent with the Supreme Court's opinion.

In matters of mixed state and local concern, a home-rule city ordinance may coexist with state law only if there is no operational conflict. A local ordinance operationally conflicts with state law when the effectuation of the local interest materially impedes or destroys the state interest. Fort Collins's five-year moratorium on fracking and storage of fracking waste operationally conflicts with the Oil and Gas Conservation Act because it materially impedes the state's interest in efficient and responsible development of oil and gas resources by preventing operators who comply with state regulations from fracking for a lengthy period, thereby rendering the comprehensive state regulatory scheme superfluous. A five-year moratorium is sufficiently lengthy that it constitutes a prohibition rather than a temporary regulatory time-out, substantially disrupts rather than maintains the status quo, and materially impedes rather than merely regulates the state's interest in oil and gas development.

The Court expressly stated that it expresses no view as to the propriety of a moratorium of materially shorter duration than five years. The Court also noted in dicta that the General Assembly has recognized the propriety of local land-use ordinances that relate to oil and gas development, citing the 1994 amendment to the Oil and Gas Conservation Act stating that nothing in the Act shall be construed to affect the existing land use authority of local governmental entities. The Court observed that fracking, first used commercially in 1949, is now essential to economic production of oil and gas and commonly used throughout the United States. The Court noted that the district court found that "virtually all oil and gas wells" in Colorado are fracked. The Court also observed that the availability of alternatives to fracking does not lessen the state's interest in fracking or alter the interference with operators who have determined fracking is necessary to ensure productive recovery.

This case is significant in Colorado law for clarifying the scope of home-rule cities' authority to regulate oil and gas operations, particularly fracking, within their boundaries. It establishes that while the Oil and Gas Conservation Act does not impliedly preempt all local land-use authority over oil and gas development, lengthy moratoria on fracking can be invalidated as operationally conflicting with state law. The decision reinforces the state's interest in uniform regulation of fracking and limits municipal authority to impose extended prohibitions on oil and gas activities, even when enacted through citizen initiatives. The case provides important guidance on the operational conflict preemption analysis in matters of mixed state and local concern, and distinguishes between brief, status-quo-maintaining moratoria and lengthy prohibitions that substantially disrupt established practices. Together with the companion case City of Longmont v. Colorado Oil and Gas Association (decided the same day), this decision significantly curtailed local government efforts to ban or impose lengthy moratoria on fracking operations in Colorado.