Gas producer sues county
SG Interests contests regulatory authority
Times Staff Writer
Originally published 2011-06-09



A natural gas extraction company has sued Gunnison County leaders amidst what it alleges is an attempt to unreasonably delay oil and gas development.

SG Interests I, a Texas limited partnership, filed the lawsuit last Thursday in Gunnison District Court. The 35-page complaint levied by the company claims broadly that the county's oil and gas regulations are preempted by state and federal law.

The document also claims that the county has failed to uphold its own regulatory obligations relating to the approval of "flow back" pits used for hydraulic fracturing, or "fracking," and gas wells extending back to the middle of last year.

The suit names as defendants the County Commissioners, Planning Commission chair Ramon Reed and Assistant Director of Community Development Neal Starkebaum.

The complaint calls for 10 separate requests for relief from the court -- which span from a declaration that the county's oil and gas regulations are invalid to SG being freed from required application review fees.

The county originally adopted temporary regulations pertaining to oil and gas development in 2003, seeking to minimize impacts from the extraction process. The rules deal with, among other aspects, impacts to water, wildlife and noise.

Legal wrangling over local government's ability to regulate oil- and gas-related proposals is nothing new. A 2004 court decision stripped some aspects of Gunnison County's control, saying that the state preempted county authority.

However, in 2006, a Colorado Court of Appeals decision sided with the county, reaffirming much of its ability to minimize impacts from oil and gas extraction -- as long as the county's regulations don't directly conflict with the state's.

SG's lawsuit comes on the heels of efforts over the last year to update and amend Gunnison County's oil and gas regulations by the Planning Commission. Proposed amendments have been forwarded to the County Commissioners. This coming Tuesday, a public hearing is planned over the proposed regulatory changes.

That's why Matt Reed, public lands director for local environmental group High Country Citizens' Alliance, called the suit a "political scare tactic." He believes it is an attempt to minimize the lengths to which county leaders may go in approving changes to the current regulations.

"This is nothing new," he said. "SG has been harping preemption for the better part of a year. When I look at (the complaint), it looks like they've thrown the kitchen sink at the county."

In the lawsuit, SG claims that the county's actions -- and inactions -- concerning a permit proposal for three natural gas wells interfere with the company's ability "to efficiently produce mineral resources without waste, and are causing SG irreparable harm for which it does not have an adequate remedy at law." It further argues against the "excessive scope of the county regulations."

SG's Operations and Land Manager Eric Sanford said that the company is currently operating about a dozen wells in Gunnison County.

"We have a limited drilling season," he said. "It's based on weather, geography and other permitting agencies' restrictions when we can drill."

The complaint cites numerous grievances over time lines laid forth in the county's regulations which, the company claims, county leaders have failed to uphold. For example, SG alleges that the county failed to complete a review of applications for flow back pits within the 21-day period specified in county regulations.

Further, "The county has delayed acting on SG's County Pit Applications by raising technical issues regarding matters that are extensively regulated by the (Colorado Oil and Gas Conservation Commission) and over which the county lacks regulatory jurisdiction," the complaint states.

"These flow back pits are an efficient way to store water between operations that has less impact on the environment and the local community than large amounts of truck traffic and frack tanks," Sanford explained.

County leaders declined this week to address specific grievances cited within the complaint.

However, County Commission chair Hap Channell said that he was not surprised by the suit.

"I kind of view this as being part of an ongoing, inevitable tension between state government and local government as to who has the preemptive authority," he said. "It's a tried and true process in American, state and county history.

"Even though in the complaint there is some specific calling out of provisions, overall I see this as a court test on preemption, on state regulations versus local regulations."

Ironically, it was a request by SG to reduce a required setback from bodies of water that partly spurred the county's effort to update its regulations. The current draft of amendments reduces that required setback from 500 to 300 feet.

"The industry had asked us to review some water setback issues, and that prompted a review," said Channell.

 

(Will Shoemaker can be contacted at 970.641.1414 or editor@gunnisontimes.com)