STATE AND LOCAL REGULATION OF COALBED GAS DEVELOPMENT County and Municipal Zoning and Land Use Regulation Affecting Coalbed Methane Development

• Jurisdiction: United States

Coalbed Gas Development
(Apr 1992)
CHAPTER 6B
STATE AND LOCAL REGULATION OF COALBED GAS DEVELOPMENT County and Municipal Zoning and Land Use Regulation Affecting Coalbed Methane Development
David E. Brody
Amoco Production Company
Denver, Colorado

CONTENTS

SYNOPSIS

Page

I. INTRODUCTION

II. LOCAL ZONING AND LAND USE REGULATION GENERALLY

A. Validity and Authority of Local Zoning Regulations

B. Sources of Power

C. Limitations on Authority

D. Constitutional Limitations

III. COLORADO AND NEW MEXICO COUNTIES AND MUNICIPALITIES—ZONING AND LAND USE CODES AFFECTING OIL AND GAS ACTIVITIES

A. Downhole Regulation of Oil and Gas Development

B. County and Municipal Regulation of Surface Land Use Activities

IV. MUNICIPAL BUSINESS OCCUPATION TAXES AFFECTING OIL AND GAS DEVELOPMENT

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V. SUMMARY OF STATE AND LOCAL AUTHORITY

A. State May Regulate Mining Activities on Federal Lands But Not Oil and Gas Activities on Federal Lands

B. County and Municipal Governments in Colorado are Preempted from Regulating "Downhole" Oil and Gas Activities

C. County and Municipal Regulation of Surface Land Use Activities Remains Open Issue in Colorado

D. Land Use Related to Oil and Gas Development in New Mexico Is Within Scope of County and Municipal Regulation

VI. STUDIES OF METHANE IN DRINKING WATER AND LEGAL IMPLICATIONS

A. Nature of Problem

B. Technical Evaluations and Potential Sources

C. State Oil and Gas Commission Statute and Regulations

D. Safe Drinking Water Act and Regulations

VII. CONCLUSIONS AND PRACTICAL SUGGESTIONS

APPENDICES

A. Colorado Oil and Gas Conservation Commission—Aesthetic and Noise Control Regulations

B. Regulation of Oil and Gas Facilities in La Plata County, Colorado

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I. INTRODUCTION

The pace of coalbed methane development in the San Juan Basin of Colorado and New Mexico since the mid-1980s and through the present has been dramatic and substantial. Private citizens and public officials concerned about the environmental and socioeconomic impact of such activities, as well as people opposed to any level of oil and gas operations, have attempted to regulate or prohibit such development through county and municipal permitting requirements.

This paper will first review the law of zoning and land use generally and then will examine state, county and municipal statutes, regulations and ordinances, primarily in Colorado and New Mexico, as they relate to oil and gas development generally and coalbed methane development in particular.

Secondly, this paper will discuss the enactment of two local ordinances which purport to impose an occupation tax on the oil and gas industry and which might indicate a trend that could affect coalbed methane development.

Finally, there has been an increased incidence of methane in drinking water aquifers in certain areas of the San Juan Basin, which has been the subject of several studies and investigations to determine if there is a correlation between coalbed methane development and such methane in drinking water. This paper will review those studies and examine existing regulations intended to monitor and prevent coalbed methane drilling and operations from having any such a negative impact.

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II. LOCAL ZONING AND LAND USE REGULATION GENERALLY

Zoning is defined as the legislative division of a municipality or other local community into areas or districts in which only certain designated uses are permitted and where the regulation of buildings and other structures is limited according to their construction and the nature and extent of their use. The meaning of land use is broader and more general than zoning, as it includes the aesthetic and environmental aspects of use of the land on a wide geographical basis, oftentimes county-wide or regional, and does not usually refer to the imposition of specific use requirements.¹

A. Validity and Authority of Local Zoning Regulations—The first comprehensive zoning ordinance was adopted by New York City in 1916. However, it wasn't until 1926 that the U.S. Supreme Court decided the case of Euclid v. Ambler Realty Co.,² which definitively upheld the general validity of zoning laws as being within the police powers of municipalities. In 1922, the Village Council of Euclid, Ohio, a suburb of Cleveland, adopted an ordinance establishing a comprehensive zoning plan for regulating and restricting the location of trades, industries, apartment houses, two family houses, single family houses, etc., the lot area to be built on, the size and height of buildings, etc. A Board of Zoning Appeals was given power to interpret the ordinance to protect "the public health, safety and general welfare...." Ambler Realty Company was the owner of a 68-acre tract of land, which it intended to develop for industrial uses but which had been zoned for residential use by the Euclid zoning ordinance. It presented evidence that the market value as residential land was approximately $2,500.00 per acre, and the market value as industrial land was about $10,000.00 per acre. On that basis, Ambler claimed the ordinance violated Section 1 of the Fourteenth Amendment of the U.S. Constitution in that "it deprives appellee of liberty and property without due process of law and denies it the equal protection of the law...."³

The court stated that "the ordinance ... must find ... justification in some aspect of the police power, asserted for the public welfare." In finding such justification, the court recognized the validity of the municipality's general concerns with security, preventing injury to

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children, the need to "separate dwelling houses from territory devoted to trade and industry, suppression and prevention of disorder" and various other general purposes and goals. Thus, deferring to the wisdom of the governing body of the local entity, the court found that "the ordinance in its general scope and dominant features ... is a valid exercise of authority ...."⁴

Prior to the enactment of comprehensive zoning laws, land uses were controlled by common law principles such as nuisance and restrictive covenants. However, the shortcomings of those principles are evident when one considers that they do not allow for a comprehensive, organized or consistent use of property. Although covenants achieve those objectives to a limited extent, they are contractual in nature and require agreement among private parties, as opposed to the objectives being imposed uniformly and timely when the government officials determine that such comprehensiveness and uniformity is necessary.

Zoning is now so prevalent throughout the United States that only the most sparsely settled areas lack zoning laws. Even in areas where Euclidean zoning is not present, there is often sophisticated regulatory control through comprehensive performance standards, such as building codes, cluster zoning, minimum lot size, floor-space requirements, etc.

B. Sources of Power—Since municipalities and counties (as well as other local governmental entities) have no inherent power to enact zoning laws, they must do so solely by virtue of authority delegated to them by the state. The following references provide examples of such delegation in Colorado and New Mexico:

1. Colorado Counties—(a) Local Government Land Use Control Enabling Act, C.R.S. 29-20-101 et seq. ; Section 104(1) "... Each local government ... has the authority to plan for and regulate the use of land by ... (e) Regulating the location of activities and development which may result in significant changes in population density ... (h) Otherwise planning for and regulating the use of land so as to provide planned and orderly use of land and protection of the environment ...."

(b) County Planning and Building Codes, C.R.S. 30-28-101 et seq. ; Section 102 "The boards of county commissioners of the

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respective counties within the state are authorized to provide for the physical development of the unincorporated territory within the county and for the zoning...."

Under these statutes and similar statutes in other jurisdictions, the courts have consistently held that they will not interfere with the decisions of zoning authorities unless the record shows a clear abuse of discretion and that if the questions regarding the character and needs of neighborhoods is "fairly debatable" and the decision of the governmental entity in charge of interpreting and enforcing the zoning ordinances is supported by competent evidence, the court will find no "clear abuse of discretion."⁵

2. Colorado Municipalities — Planning and Zoning, C.R.S. 31-23-301(1) Municipalities may "regulate and restrict the height ... of buildings and other structures ... and the location and use of land for trade, industry, residence or other purposes." The discretion afforded municipalities is commensurate with that of counties, as referenced above. Municipalities' power to zone is extensive, is superior to many private rights if the ordinance protects a public objective, and brings with it a presumption of validity that is difficult to overcome.⁶

3. New Mexico Counties — County Ordinances, N.M.S.A. 4-37-1 "All counties are granted the same powers that are granted municipalities except for those powers that are inconsistent with statutory or constitutional limitations placed on counties. Included in this grant of powers to the counties are those...