BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE RULE 303.j COMPLAINT OF HIGHPOINT OPERATING CORPORATION (FORMERLY KNOWN AS BILL BARRETT CORPORATION) REQUESTING THAT THE DIRECTOR WITHHOLD APPROVAL OF VERDAD RESOURCES, LLC’S EIGHT FORM 2 APPLICATIONS FOR PERMITS TO DRILL CERTAIN NAMED REITER WELLS IN SECTIONS 4 AND 5, TOWNSHIP 1 NORTH, RANGE 64 WEST, 6TH P.M., WATTENBERG FIELD, WELD COUNTY, COLORADO
CAUSE NO. 1
DOCKET NO. 180700625
TYPE: GENERAL ADMINISTRATIVE
ORDER NO.: 1-
REPORT OF THE COMMISSION
The Commission heard this matter on September 18, 2018, at the Garfield County Sheriff's Annex – Rifle, 106 County Road 333-A, Rifle, Colorado 81650 upon exceptions to the Hearing Officer’s Order Dismissing Applications.
The Commission finds as follows:
1. HighPoint Operating Corporation (“HighPoint) (Operator No. 10071), formerly Bill Barrett Corporation (“BBC”), is an interested party in the subject matter of the above-referenced hearing.
2. Verdad Resources, LLC (“Verdad”) (Operator No. 10651) is an interested party in the subject matter of the above-referenced hearing.
3. The Director of the Commission is an interested party in the subject matter of the above-referenced hearing.
4. Due notice of time, place and purpose of the hearing has been given in all respects as required by law.
5. The Commission has jurisdiction over the subject matter embraced in said Notice and the parties interested therein, and has authority to promulgate the hereinafter prescribed order pursuant to the Oil and Gas Conservation Act (“Act”).
PROCEDURAL AND FACTUAL HISTORY
6. On December 4, 2017, Verdad submitted eight Reiter Applications for Permits to Drill with a surface location in the SE¼ of Section 4, Township 1 North, Range 64 West, 6th P.M., and bottom hole locations in the S½ of Section 5, Township 1 North, Range 64 West, 6th P.M., in addition to an associated Form 2A, Oil and Gas Location Assessment, for the Reiter Pad (collectively the “Verdad Reiter Permit Applications”).
7. On December 13, 2017, BBC submitted five Grinde Applications for Permits to Drill with a surface location in the NW¼ of Section 5, Township 1 North, Range 64 West, 6th P.M., and bottomhole locations in the N½ of Section 4, Township 1 North, Range 64 West, 6th P.M., and the Grinde North Pad Form 2A, Oil and Gas Location Assessment, located in the SW¼NW¼ of Section 5, Township 1 North, Range 64 West, 6th P.M.
8. On December 19, 2017, BBC submitted a Form 2A, Oil and Gas Location Assessment, for the “Grinde South I Pad”, for a new location in the NW¼SW¼ of Section 5, Township 1 North, Range 64 West, 6th P.M.
9. On January 16, 2018, BBC submitted a Form 2A, Oil and Gas Location Assessment, for the “Grinde South II Pad” for a new location in the NW¼SW¼ of Section 5, Township 1 North, Range 64 West, 6th P.M.
10. On January 22 and January 25, 2018, BBC submitted the four (4) additional Grinde APDs. Collectively, all BBC permits are known herein as the “HighPoint Grinde Permit Applications.”
11. On February 5, 2018, BBC submitted a complaint to the Director pursuant to Rule 303.j. (“HighPoint 303.j. Complaint”), which alleged that the Verdad Reiter Permit Applications violated the Act and Commission rules.
12. On May 9, 2018, the Director dismissed HighPoint’s 303.j. Complaint on the grounds that the Verdad Reiter Permit Applications were not in material violation of any Commission rules, regulations, orders, or statutes.
13. On May 30, 2018, HighPoint applied to the Commission for a hearing on the Director’s dismissal of HighPoint’s 303.j. Complaint (“HighPoint 303.j. Application”).
14. On July 13, 2018, Verdad filed a Motion to Dismiss the HighPoint 303.j. Application.
15. On July 17, 2018, the Director filed Notice of Opposition to the HighPoint 303.j. Application.
16. On August 7, 2018, HighPoint filed a Motion to Strike Verdad’s Motion to Dismiss the HighPoint 303.j. Application.
17. On August 28, 2018, the Hearing Officer dismissed the HighPoint 303.j. Application on the grounds that Rule 303 contains no mechanism for requesting review of the Director’s dismissal of HighPoint’s 303.j. Complaint.
18. On September 6, 2018, HighPoint filed an Exception to the Hearing Officer’s dismissal requesting that the Commission reverse the Hearing Officer’s dismissal and that the Commission hear HighPoint’s arguments regarding Verdad’s Reiter Permit Applications (“Exception”).
19. This matter was heard by the Commission at its September 17-18, 2018 meeting.
20. HighPoint, Verdad, and the Director presented argument on the issues certified by the Hearing Officer in the September 11, 2018 Final Prehearing Order.
21. The Commission deliberated following argument.
22. The Commission voted unanimously (7-0) to affirm the Hearing Officer’s dismissal.
23. Rule 303.j.(1) provides that the Director may withhold approval of any Application for Permit-to-Drill, Form 2, or Oil and Gas Location Assessment, Form 2A, for any proposed well or Oil and Gas Location when, based on information supplied in a written complaint submitted by any party with standing under Rule 522.a.(1), the Director has reasonable cause to believe the proposed well or Oil and Gas Location is in material violation of the Commission's rules, regulations, orders or statutes. Any such withholding of approval shall be limited to the minimum period of time necessary to investigate and dismiss the complaint, or to resolve the alleged violation or issue.
24. Rule 303.j.(1) further provides that if the complaint is dismissed or the matter resolved to the dissatisfaction of the complainant, the recourse available to the complainant is to consult with the parties identified in Rule 503.b.(7). The parties identified in Rule 503.b.(7) are the operator, the surface owner, and the relevant local government.
25. Rule 303.j.(2) provides that if the Director withholds approval of a permit application due to a 303.j(1) complaint, the applicant may request a Commission hearing. Rule 503.b.(6) also provides that it is the operator who may apply for a Commission hearing pursuant to Rule 303.j.(2). Rule 503.b.(6) does not include a reference to Rule 303.j.(1).
26. Rule 303 does not provide HighPoint with the right to request Commission review of the Director’s dismissal. HighPoint, pursuant to Rule 303.j.(1), brought before the Director its allegations that the Verdad Reiter Permit Applications violated the Act and Commission rules. Should the Director dismiss a complaint filed pursuant to Rule 303.j.(1), that decision is final agency action. Had the Commission intended to allow Commission review of the Director’s decision to dismiss a 303.j.(1) complaint, it would have explicitly provided such relief in the Rule. Rule 303.j.(2) and Rule 503.b.(6) explicitly provide that the permit applicant may request a Commission hearing when the Director withholds approval of a permit as a result of a Rule 303.j.(1) complaint. Nowhere within Rule 303.j.(1) or Rule 503.b.(6) is such a provision made for the complainant. The rules clearly show that when the Commission wished to provide a person with the ability to request a hearing, it did so, and no such ability was afforded to a Rule 303.j.(1) complainant.
27. The Director’s decision to dismiss HighPoint’s 303.j. Complaint was a final agency action. The Director’s decision was the end of the decision-making process and was an action which determined the rights and obligations of HighPoint and Verdad regarding the Verdad Reiter Permit Applications. See Chittenden v. Colo. Bd. of Social Work Examiners, 292 P.3d 1138 (Colo. App. 2012) (setting forth the test for determining whether an administrative agency has taken final action). A formal adjudicatory proceeding is not a prerequisite to final agency action under the APA. West Colo. Motors, LLC v. GM, 411 P.3d 1068, 1077 (Colo. App. 2016).
28. HighPoint’s due process rights were recognized through the 303.j. complaint process. HighPoint had a full and fair opportunity to bring their complaints regarding the Verdad Reiter Permit Applications to the Director and obtain a decision from the Director on its complaints.
29. The State Administrative Procedure Act provides that an initial decision regarding agency action may be appealed to the Commission by filing an exception. C.R.S. §24-4-105(14)(a)(II)(2018). The exception process is not available to HighPoint as the Director’s decision was a final decision.
30. Since the Commission concludes that HighPoint may not appeal the Director’s dismissal to the Commission, the Commission does not reach the merits of the Director’s dismissal, not does it offer any opinion or conclusion regarding the Director’s dismissal.
IT IS HEREBY ORDERED:
2. The Hearing Officer’s Dismissal of HighPoint’s 303.j. Application in Docket No. 180700625 is UPHELD.
IT IS FURTHER ORDERED:
1. The provisions contained in the above order shall become effective immediately.
2. The Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.
3. Under the State Administrative Procedure Act the Commission considers this Order to be final agency action for purposes of judicial review within 35 days after the date this Order is mailed by the Commission.
4. An application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.
ENTERED this 16th day of October, 2018, as of September 18, 2018.
CORRECTED this 31st day of October, 2018, as of September 18, 2018.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
Julie Spence Prine, Secretary
CERTIFICATE OF SERVICE
The undersigned hereby certifies that on the ___ day of November, 2018, a true and correct copy of this Order was served on the following by email and U.S. Mail, first-class postage prepaid, at the addresses shown below:
Attorneys for Complainant:
Jamie L. Jost
Kelsey H. Wasylenky
Jost Energy Law, P.C.
1401 17th Street, Suite 370
Denver, Colorado 80203
Attorneys for Verdad Resources, LLC
Joseph C. Pierzchala
Geoffrey W. Storm
Welborn Sullivan Meck & Tooley, P.C.
Attorneys for Verdad Resources, LLC