Board of County Com'Rs v. Bds Intern., LLC.

• Decision Date: 14 December 2006
• Docket Number: No. 04CA1679.,04CA1679.
• Citation: 159 P.3d 773
• Parties: BOARD OF COUNTY COMMISSIONERS OF GUNNISON COUNTY, Colorado, Plaintiff-Appellant and Cross-Appellee, v. BDS INTERNATIONAL, LLC., Defendant, and Colorado Oil and Gas Conservation Commission, Intervenor-Appellee, and Gunnison Energy Corporation, Intervenor-Appellee and Cross-Appellant.
• Court: Colorado Court of Appeals

159 P.3d 773

BOARD OF COUNTY COMMISSIONERS OF GUNNISON COUNTY, Colorado, Plaintiff-Appellant and Cross-Appellee, v. BDS INTERNATIONAL, LLC., Defendant, and Colorado Oil and Gas Conservation Commission, Intervenor-Appellee, and Gunnison Energy Corporation, Intervenor-Appellee and Cross-Appellant.

No. 04CA1679.

Colorado Court of Appeals, Division II.

December 14, 2006.

David Baumgarten, County Attorney, Gunnison, Colorado; Sullivan Green Seavy, LLC, Barbara J.B. Green, John T. Sullivan, Boulder, Colorado, for Plaintiff-Appellant and Cross-Appellee.

No Appearance for Defendant-Appellee.

John W. Suthers, Attorney General, Carol Harmon, Assistant Attorney General, Denver, Colorado, for Intervenor-Appellee.

Brownstein Hyatt & Farber, P.C., Timothy R. Beyer, Wayne F. Forman, Mark J. Mathews, Denver, Colorado, for Intervenor-Appellee and Cross-Appellant.

Colorado Municipal League, Geoffrey T. Wilson, Denver, Colorado, for Amicus Curiae Colorado Municipal League.

Hall & Evans, L.L.C., Beth A. Dickhaus, Denver, Colorado, for Amicus Curiae Colorado Counties, Inc.

Kenneth A. Wonstolen, Denver, Colorado, for Amicus Curiae Colorado Oil & Gas Association.

Opinion by Judge TAUBMAN.

Plaintiff, Board of County Commissioners of Gunnison County (the County), appeals from a partial summary judgment in favor of defendant, BDS International, LLC. (BDS), and intervenor, the Colorado Oil and Gas Conservation Commission (COGCC), in which the trial court invalidated numerous county oil and gas regulations based on state preemption. Intervenor Gunnison Energy Corporation (GEC) cross-appeals the partial denial of summary judgment, in which the trial court concluded the county regulations are not preempted by federal law. We affirm in part, reverse in part, and remand.

BDS and GEC are oil and gas companies involved in the development of and exploration for natural gas resources located in the Grand Mesa, Uncompahgre, and Gunnison National Forest in Gunnison County. They operate natural gas wells under both federal and state drilling permits, subject to federal and state regulation.

BDS was the principal defendant in the trial court. After the County filed its notice of appeal, the case was remanded to the trial court, which granted GEC's motion to intervene. By agreement, GEC is pursuing the appeal on behalf of BDS and itself.

In 2003, the County filed suit in federal court seeking injunctive and declaratory relief against BDS. The court dismissed the complaint for lack of subject matter jurisdiction.

The County refiled the complaint in state court, seeking to enjoin BDS from maintaining or drilling wells on federal property within Gunnison County and seeking an order requiring BDS to comply with the County's Temporary Regulations for Oil and Gas Operations (County Regulations). The trial court subsequently granted COGCC's motion to intervene.

BDS and COGCC then filed motions for summary judgment. COGCC challenged the County Regulations on their face, and the trial court issued a thorough, comprehensive order granting summary judgment in part and denying it in part. The trial court held numerous County Regulations are preempted by state law, including the following portions of § 1-104, Application Submittal Requirements for Oil and Gas Permits:

(1) Wildlife and Wildlife Habitat Analysis, § 1-104 (B16);

(2) Vegetation, § 1-104 (B17);

(3) Water Quality, § 1-104 (B19);

(4) Drainage and Erosion Control Plan, § 1-104 (B21).

The trial court also held the following portions of § 1-107, Oil and Gas Operation Standards, are preempted:

(5) Drainage and Erosion Control, § 1-107A;

(6) Wildlife and Wildlife Habitat, § 1-107D;

(7) Livestock and Livestock Grazing, § 1-107E;

(8) Recreation Impacts, § 1-107F;

(9) Water Quality, § 1-107G;

(10) Waterbody Setbacks, § 1-107H;

(11) Cultural and Historic Resources, § 1-107I;

(12) Wildfire Hazard, § 1-107J;

(13) Geologic Hazards, § 1-107K;

(14) Impact Mitigation Costs, § 1-107L;

(15) Access to Records, § 1-107M;

(16) Financial Guarantees, § 1-107O.

The trial court also held that part of another regulation is preempted by state law:

(17) Permit Duration, § 1-111.

The trial court held the remaining County Regulations are not preempted by state or federal law.

The trial court certified the summary judgment as a final order pursuant to C.R.C.P. 54(b) "with respect to those items that the Court found to be facially invalid," and the County appeals that summary judgment. GEC cross-appeals the trial court's denial of summary judgment, arguing the County Regulations are completely preempted by federal law.

I. Standard of Review

We review the trial court's summary judgment de novo. Cotter Corp. v. Am. Empire Surplus Lines Ins. Co., 90 P.3d 814 (Colo. 2004).

Summary judgment is a drastic remedy and is never warranted except on a clear showing that there exists no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. C.R.C.P. 56(c); Churchey v. Adolph Coors Co., 759 P.2d 1336 (Colo.1988). The moving party has the initial burden of showing no genuine issue of material fact exists.

The burden then shifts to the nonmoving party to establish the existence of a triable issue of fact. AviComm, Inc. v. Colo. Pub. Utils. Comm'n, 955 P.2d 1023 (Colo.1998).

We view all evidence properly before the trial court in the light most favorable to the nonmoving party, give the nonmoving party the benefit of all favorable inferences that may reasonably be drawn from the evidence, and resolve all doubts as to the existence of a genuine issue of material fact against the moving party. Luttgen v. Fischer, 107 P.3d 1152 (Colo.App.2005).

II. Types of State Preemption

A county regulation and a state statute may both remain in effect as long as their express or implied conditions do not irreconcilably conflict with each other. Bd. of County Comm'rs v. Bowen/Edwards Assocs., Inc., 830 P.2d 1045 (Colo.1992). A state statute may preempt a county regulation where (1) the statute expressly preempts all local authority over the subject matter, (2) the implied legislative intent is to occupy completely a given field, or (3) the county regulation's operational effect would conflict with application of the state statute. Bowen/Edwards, supra.

Here, the trial court did not find express or implied state preemption. However, it invalidated certain County Regulations based on operational conflicts with the state regulatory scheme.

Under Bowen/Edwards, state preemption by reason of operational conflict can arise where the effectuation of a local interest would "materially impede or destroy the state interest." Bowen/Edwards, supra, 830 P.2d at 1059.

Elaborating on the operational conflicts test, the Bowen/Edwards court stated:

[T]here may be instances where the county's regulatory scheme conflicts in operation with the state statutory or regulatory scheme. For example, the operational effect of the county regulations might be to impose technical conditions on the drilling or pumping of wells under circumstances where no such conditions are imposed under the state statutory or regulatory scheme, or to impose safety regulations or land restoration requirements contrary to those required by state law or regulation. To the extent that such operational conflicts might exist, the county regulations must yield to the state interest.

Bowen/Edwards, supra, 830 P.2d at 1060.

In Bowen/ Edwards, the supreme court held a trial court must determine the extent of an operational conflict "on an adhoc basis under a fully developed evidentiary record." Bowen/Edwards, supra, 830 P.2d at 1060. The supreme court did not define the necessary components of a full evidentiary record.

III. Operational Conflicts

The County argues that the trial court erred in entering summary judgment because it did not have a sufficient evidentiary record of any operational conflicts between the County Regulations and state law. We agree in part.

Initially, we note that because BDS did not apply for a permit, we narrow the focus of our inquiry. In California Coastal Commission v. Granite Rock Co., 480 U.S. 572, 107 S.Ct. 1419, 94 L.Ed.2d 577 (1987), the United States Supreme Court held that because Granite Rock did not apply for a permit, "[the regulatory authority's] identification of a possible set of permit conditions not preempted by federal law is sufficient to rebuff Granite Rock's facial challenge to the permit requirement." Granite Rock, supra, 480 U.S. at 589, 107 S.Ct. at 1429. The Colorado Supreme Court later explained this rule:

We interpret Granite Rock to hold that for purposes of the federal standing requirement a party's failure to seek a permit may well serve to narrow the focus of the party's facial challenge to a permit requirement, but that the seeking of a permit is not a threshold standing requirement for challenging a permit regulation.

Bowen/ Edwards, supra, 830 P.2d at 1054 n. 5

Therefore, in determining whether the County Regulations are in operational conflict with state statute or regulation, we will construe the County Regulations, if possible, so as to harmonize them with the applicable state statutes or regulations. Where no possible construction of the County Regulations may be harmonized with the state regulatory scheme, we must conclude that a particular regulation is invalid.

Based on this standard, we conclude that certain County Regulations, on their face, conflict with state law. However, we also conclude that a majority of the County Regulations invalidated by the trial court may possibly be harmonized with the state regulatory scheme and, therefore, an evidentiary hearing is necessary to determine the extent of any operational conflicts in this case.

In reaching this conclusion, we necessarily reject GEC's contention that a same-subject analysis applies to determine whether there is an operational conflict. GEC maintains that if a state statute or...