Houston (Platts)--13Jul2010/539 pm EDT/2139 GMT



Colorado regulators will attempt to get the state's Supreme Court to overturn an appeals court ruling that gave two families who live near the site of a 40-year-old underground nuclear blast standing to sue for the right to protest applications for permits to drill in the area, a spokesman with the agency said Tuesday.

The Colorado Oil and Gas Conservation Commission voted at a hearing last Thursday to file a petition of certiorari asking the state high court to overturn a decision that a three-judge panel of the Colorado Court of Appeals reached last month, Colorado Department of Natural Resources spokesman Theo Stein said Monday.

COGCC is an agency under the Department of Natural Resources. Stein serves as spokesman for both.

The state appelate court decision overturned a state District Court of Denver County ruling that the families did not have standing to demand a hearing before the COGCC on APDs filed near the Project Rulison test site just outside Battlement Mesa in northwestern Colorado. The appeals court remanded the case to the lower court for further action.

COGCC Director David Neslin declined to comment on the reasoning behind the decision to challenge the appeals court ruling. "I don't want to go into the commission's thought process," he said.

Martha Tierney, an attorney for the plaintiffs, said in an interview she had expected the COGCC decision to contest the appeals court ruling.

"We're not surprised, but if the Colorado Supreme Court takes the case they will affirm the court of appeals decision that interested persons have standing," she said.

Plaintiffs Cary and Ruth Weldon and Wesley and Marcia Kent -- who own property directly above the Project Rulison site -- sued the COGCC in December 2008 for denying them a hearing to protest Denver-based Encana Oil and Gas' applications for permits to drill less than three miles from the site.

Environmental groups the Grand Valley Citizens' Alliance and the Western Colorado Congress quickly joined the case as plaintiffs.

Acting on motions that Encana and the COGCC filed, the district court ruled that the plaintiffs lacked standing to file the suit.

Tierney said if the Supreme Court rejects the COGCC's petition for a hearing, the case would go back to the district court, which "might send it back to the agency to implement the Court of Appeals' ruling."

That ruling, which cited Colorado's Oil and Gas Conservation Act and Administrative Procedure Act, found that the plaintiffs "have standing to sue because their alleged injuries," from the COGCC's decision to grant drilling permits in the area.

Plaintiffs' attorney Paul Zogg said in an interview that the seven-member Supreme Court can decide to hear the COGCC petition or can decline to hear it, in which case the appeals court ruling would stand. "If they take it, it goes forward," he said.

The Project Rulison site was created when the Atomic Energy Commission exploded a nuclear device deep beneath a Colorado mountainside as part of an experimental program to see if nuclear explosions could fracture the rocks to let trapped pockets of gas flow free.

After the conclusion of the experiment, the Department of Energy, AEC's successor agency, established a three-mile buffer zone around the blast site and required anyone applying for a permit to drill a gas well to notify DOE before proceeding.

In addition, in 2004 the COGCC determined that any applications to drill within a half-mile radius of the site must be heard before the full commission.

In 2008, EnCana applied for permits to drill wells within the DOE-imposed three-mile buffer zone, but because the proposed wells were beyond the half-mile radius, the applications did not automatically trigger a hearing before the COGCC.

The plaintiffs petitioned the commission for intervention and a hearing on EnCana's applications, but Neslin, then COGCC's acting director, denied the plaintiffs' hearing requests and approved EnCana's permit applications. The plaintiffs then filed their suit.

"During the process the Encana permits at issue expired and Encana tried to get the case dismissed," Zogg said. "But they got new permits on same wells."

The appeals court found that the expiration of the original drilling permits did not, of itself, provide a reason to dismiss the case, Zogg said. "APDs have a short shelf life," he said. --Jim Magill, jim_magill@platts.com