## Facts

- Youth environmental activists petitioned the Colorado Oil and Gas Conservation Commission (COGCC) to adopt a rule restricting issuance of oil and gas drilling permits.
- The proposed rule would have barred permit issuance unless “best available science,” confirmed by an independent third party, showed drilling would not cumulatively impair state air, water, wildlife, and land resources, would not adversely affect human health, and would not contribute to climate change.
- COGCC denied the petition, concluding the governing statute requires balancing development with protections, not conditioning development on proof of no cumulative impacts.
- COGCC also cited its ongoing coordination with the state health agency and competing regulatory priorities as reasons to decline rulemaking.

## Issues

1. Whether COGCC correctly interpreted the Colorado Oil and Gas Conservation Act as not authorizing a rule that conditions all new drilling permits on proof of no cumulative adverse environmental, health, or climate impacts.
2. Whether COGCC lawfully exercised discretion in declining to initiate rulemaking based on statutory limits, existing interagency work, and agency priorities.

## Decision

- The Colorado Supreme Court reversed the court of appeals and reinstated the district court’s judgment upholding COGCC’s denial of the rulemaking petition.
- The Court held that the Act calls for “responsible, balanced development” consistent with protection of public health, safety, and the environment, and does not impose environmental and health protections as an absolute condition precedent to development.
- The Court agreed that the proposed rule would eliminate the Act’s required balancing by making the absence of cumulative impacts a prerequisite to permitting, which exceeded COGCC’s statutory authority.
- The Court further held COGCC reasonably declined rulemaking in light of its statutory interpretation, ongoing work with the health agency, and resource and priority constraints.

## Legal Principles

- When a regulatory statute contains ambiguous policy directives, an agency’s reasonable construction consistent with statutory text and intent is entitled to due judicial deference.
- The Colorado Oil and Gas Conservation Act requires COGCC to foster responsible, balanced oil and gas development while protecting public health, safety, and the environment; it does not mandate a regime in which protection concerns always override development.
- An agency may deny a rulemaking petition where the proposed rule would require action beyond statutory authority.
- Agency decisions to allocate limited resources and set regulatory priorities may support denial of rulemaking and will be upheld if supported by a rational explanation and not arbitrary or capricious.

## Conclusion

The Colorado Supreme Court sustained COGCC’s denial of a petition for a rule that would have conditioned drilling permits on proof of no cumulative environmental, health, or climate impacts, holding that the governing statute requires a balancing approach and that the agency acted within its discretion in declining to commence rulemaking.


Colo. Oil & Gas Conservation Comm’n v. Martinez, 2019 CO 3, 433 P.3d 22 (Colo. 2019)