For state regulators considering drilling permits, “no” is off the table
The state of Colorado has what’s believed to be an uninterrupted, 66-year-old history of not denying oil and gas companies permits to drill.
It’s a little known policy that has been disclosed twice now in court — and one that regulators at the Colorado Oil and Gas Conservation Commission, or COGCC, say is not untrue.
COGCC’s apparent practice of rubber-stamping oil and gas companies’ drilling permits came up most recently in February, during oral arguments in Martinez v. COGCC, a case brought by a group of teenagers demanding that the agency consider health, safety and the environment before allowing new drilling. Plaintiffs’ attorney Julia Olson said in court that the agency has never denied a permit. The agency didn’t dispute it.
The policy first came to light during legal proceedings in another case, in which the city of Longmont sought to defend its right to ban fracking. In a May 2014 deposition, legal counsel for a citizens group supporting the city questioned Stuart Ellsworth, an engineering manager who has worked for COGCC since 2008, about the agency’s process for considering oil and gas permits.
“Do you ever just flat out deny permits to drill?” asked Gina Tincher, then a student lawyer at Sturm College of Law’s environmental law clinic.
Ellsworth offered a few answers that Tincher found unsatisfying, so she kept asking: In his recollection, has a permit “ever been ultimately denied?”
“…I cannot recall one specifically denied,” he responded.
Asked this week about Ellsworth’s disclosure, COGCC spokesman Todd Hartman didn’t refute it. But he said that asking about “denial” is the wrong way to frame the issue.
“COGCC doesn’t typically deny a permit,” he said. “What occurs is a back and forth between the operator and the agency on permit applications to address issues/problems associated with the permit.”
That process continues “usually until a solution is found or an operator withdraws the application,” Hartman said. He did not explain the reasoning for this system, or why companies withdrawing permit applications is preferable to his agency denying them.
The COGCC, founded in 1951, has a mission to “foster the responsible development of Colorado’s oil and gas natural resources.” It has other incentives to promote drilling: Taxes and revenues from oil and gas extraction help fund the agency, as well as the Department of Natural Resources, which oversees it. More broadly, severance taxes paid by the industry are a major source of state revenues.
Over the past few decades, amendments to the state’s oil and gas act have expanded the agency’s mission to include the protection of health, safety and the environment.
COGCC’s ability to balancing these two goals — promoting drilling and protecting the public interest — has faced heightened scrutiny in recent weeks following a fatal home explosion in Firestone, Colorado, caused by unregulated oil and gas equipment owned and operated by energy giant Anadarko Petroleum. A Colorado Independent investigation into the blast alerted the public to the fact that the COGCC does not map underground oil and gas lines or keep an inventory of tens of thousands of storage facilities and other potentially explosive equipment.
The case of Martinez v. COGCC, brought by 16-year-old activist Xiuhtezcatl Martinez, has highlighted the disagreement between the state regulators and some activists about what role health and environmental protection should play in the agency’s decision-making.
In March, the Colorado Court of Appeals ruled in favor of the teens, ordering the COGCC for the first time in its 66-year history to prioritize concerns about health and safety over the industry’s interests. Colorado Attorney General Cynthia Coffman appealed that ruling following a unanimous vote by COGCC’s board to do so. Gov. John Hickenlooper publicly decried the appeal, but didn’t stop the board he appointed from filing it, leading some environmentalists and gas patch residents to doubt the sincerity of his pronouncements, especially post-Firestone, that Coloradans’ health and safety come first.
Each year, the COGCC receives thousands of applications from oil and gas companies seeking drilling permits. In the past 12 months, the agency has approved more than 3,500 applications. In that time, 131 drilling permits have been “withdrawn,” but none denied, COGCC data shows.
The database the agency makes available to the public only lists information about permits from the past 12 months. Hartman said this week that his colleagues couldn’t run a query to look beyond the past year any time soon, citing the workload associated with increased inspections following the April 17 explosion in Firestone. That blast, caused by an improperly abandoned Anadarko flowline that the state didn’t regulate, killed homeowner Mark Martinez and his brother-in-law, Joey Irwin. Martinez’s wife Erin was gravely injured.
COGCC’s database does not include reasons why permits are withdrawn, denied or “rejected,” a third type of application response the agency added in 2014. The distinction between the terms matters. Hartman said the option to “reject” permits is intended only for clerical issues, to “reduce time COGCC staff spent dealing with errors in applications.” Should a permit application “go beyond a set threshold for errors,” he said, “it is rejected and the operator must resubmit correctly.” In the past year, the COGCC has rejected 191 permits.
If the COGCC were to deny a permit, Hartman clarified, it would mean that the director — that’s COGCC Director Matt Lepore — would turn down an application based on merit, not merely clerical reasons.
Hartman said, “Efforts are made to work through problems. Ultimately, solutions are usually found. If not, an operator withdraws.”
Environmental lawyer Matt Sura said that incomplete or error-ridden applications — the kind typically “rejected” by the agency — are far too common. And that’s a problem, he said, because the public often doesn’t have complete information when weighing in on permit applications.
“How are [the commissioners] even making decisions based on this? This is like the back of a bar napkin,” he said.
Many Coloradans living near oil and gas developments have said the COGCC is not doing its due diligence before approving drilling permits.
In the Greeley neighborhood of Triple Creek, residents filed a lawsuit against the agency for failing to require Extraction Oil and Gas Inc. to install a pipeline in the area, which they said is required under the permitting process as a “best available technology.” Extraction recently confirmed that it would indeed install the pipeline, ending its reliance on large tanks and accompanying truck traffic in the neighborhood. But residents say they’re continuing with the lawsuit because Extraction volunteered to make the change, and the COGCC did not use its authority to demand it.
“It is way too obvious to those of us who have dealt with them across the table that the COGCC does not weigh the needs of the oil and gas industry equally to the public’s right to health, welfare and safety, as well as the environment,” said Triple Creek resident Lowell Lewis. “In my experience, they do take the side of the oil and gas industry very blatantly.”
“Typically they are not in the business of denying permits,” environmental lawyer Kyle Tisdel said of the agency.
“That is consistent with my understanding of how the COGCC operates: They might condition permit approvals, but they will not deny them, and especially they will not deny them based on concerns over health and the environment.”
In the Western Slope community of Battlement Mesa, the Colorado Department of Public Health and Environment (CDPHE) recommended that the COGCC deny oil and gas operator Ursa Resources’ permit to build an injection well in which to dump contaminated fracking water. Health officials cited concerns that the well would have been too close to a water intake that served the community and created an “unnecessary long-term risk for a spill.” The company retracted its request to drill the injection well in question, but the COGCC allowed it to keep the well listed on its application. That means the well could still be permitted and drilled in the future, without Ursa Resources having to redo its entire application process from scratch.
Xiuhtezcatl Martinez, the teenage legal plaintiff, sees the COGCC’s perpetual thumbs-up when it comes to permitting new drilling as a betrayal of the public interest.
“As a government entity, they are the frontline defense of our communities against fracking,” he said. “When the industry has turned against us, when our elected officials have turned against us, we look to the COGCC to protect us.”
But, he added, “The whole relationship between the COGCC and the fossil fuel industry is kind of founded on a mutual agreement of working for the greater good of that industry, rather for the people. We’ve never seen them as being on our side.”
Photo credit: Ted Wood/The Story Group
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