BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

REPORT OF THE COMMISSION

The Commission, having reviewed the administrative record, hearing the arguments of counsel and being fully advised on the premises, issues the following report on Applicants Wendy Chase and Mike Sutak’s Amended Application for Order Creating a Designated Outside Activity Area Pursuant to Commission Rule 603.d (“Application”).

I.          The Parties

Wendy Chase and Mike Sutak (“Landowners”) own the surface rights to and reside on the property at issue in the Application, which is more fully described in the legal description attached as Exhibit A (“Property”).    

The State Land Board (“Board”) owns the mineral estate underlying the Property and manages it for the benefit of the Colorado School Trust pursuant to the Colorado Constitution.

Magpie Operating, Inc. (“Magpie”) is an oil and gas operator.  Magpie and the Board are parties to an oil and gas lease for production of oil and gas over a 640-acre section of land that includes the Property.  The Board assigned the lease many times, most recently to Magpie in 1998.

II.         Procedural History

On November 17, 2009, the Landowners filed the Application seeking an order from the Commission designating the Property as a Designated Outside Activity Area (“DOAA”) pursuant to Commission Rule 603.d.  To qualify as a DOAA, a location must be a:

well-defined outside area (such as a playground, recreation area, outdoor theater, or other place of public assembly) that is occupied by twenty (20) or more persons on at least forty (40) days in any twelve (12) month period or by at least five hundred (500) or more people on at least three days in any twelve (12) month period.

Commission 100 Series Rules (Definition of DOAA). 

If a property qualifies as a DOAA, the Commission Rules prohibit oil and gas operations from occurring on the surface of the property so designated and also on an additional 350’ buffer zone from the boundary of the area so designated.  See Commission Rule 603.d. (“The Commission, upon application and hearing, shall determine the appropriate boundary and setbacks for a designated outside activity area as defined in the 100 Series rules.  The minimum setback from the boundary of the designated outside activity area shall be three hundred fifty (350) feet.”). 

The Board and Magpie opposed the relief sought in the Application and filed timely protests.

On February 22, 2010, the Commission conducted an adjudicatory hearing on the Landowners’ Application and issued an oral ruling denying the Application.  The Commission’s subsequent written order stated as follows:

After deliberations, the Commission voted 6 to 3 to deny the Sutak-Chase application for a DOAA based on questions regarding the definition of “designated outside activity area,” whether the property fell within the definition, whether it was the type of property or activity that was contemplated when the definition was promulgated by the Commission, and whether waste will be committed because wells cannot be located on the property if the application is granted.

Report of Commission dated March 24, 2010, ¶ 16. 

At a subsequent adjudicatory hearing, the Commission granted Magpie’s Application for Permit to Drill the State-Chase 33-36 well at the location suggested by Landowners. The Commission also imposed many of Landowners’ proposed conditions within the permit, including the Landowners’ request to allow drilling only between November 15 and March 1, when equestrian training and events were not occurring (or were minimal).

The Landowners appealed the Commission’s denial of the DOAA designation to the district court, which affirmed.  The Landowners then appealed to the court of appeals, which reversed, in part, and remanded for further proceedings.  The court of appeals held:

We agree with Landowners that the occupants need not be present [on the Property] at the same time, but we also conclude the COGCC failed to make the necessary factual findings concerning the DOAA request.  Accordingly, we remand for detailed findings on whether the property meets the criteria of a DOAA under the COGCC rules. 

…

In summary, we lack an order with sufficiently detailed findings of facts, including assessments of the evidence and testimony, and conclusions of law to allow us to meaningfully review on appeal.

The judgment is reversed as to the COGCC’s denial of Landowners’ DOAA designation and the case is remanded for detailed findings by the COGCC, based on the existing record, consistent with this opinion.

…

Landowners also argue that the COGCC erred in granting Magpie a permit to drill. However, this argument relies on Landowners’ assertion that the property qualified as a DOAA and was subject to the mandatory setback requirements in Rule 603.d.  Given our conclusion that a remand is necessary to determine whether Landowners are entitled to a DOAA, we do not address this issue.

Laura “Wendy” W. Chase and Michael Sutak v. Colo. Oil & Gas Conservation Comm’n, 11CA1249 slip op. at ¶¶ 39, 58-60 (Colo. App. June 7, 2012).

On November 15, 2012, the Commission reheard this matter and heard oral argument from counsel for the Landowners, Magpie and the Board.  The Commission also conducted initial deliberations.

On March 25, 2013, the Commission completed their deliberations and voted to deny the Landowners’ DOAA Application on a 5-1 vote. 

III.        Discussion of DOAA Application  

In order for the Property to qualify as a DOAA, the Landowners were required to prove that the Property is a well-defined outside area (such as a playground, recreation area, outdoor theater, or other place of public assembly), and that the Property was occupied by twenty (20) or more persons on at least forty (40) days in any twelve (12) month period.  See Commission 100 Series Rules (Definition of DOAA).  Although the DOAA occupancy requirement may also be established by proving that 500 or more persons occupy a property at least 3 days in any twelve month period, the Landowners did not rely on this alternative standard.  For the reasons stated below, the Commission finds and concludes that the Landowners failed to prove the elements of the DOAA definition by a preponderance of the evidence.

A.        The Commission’s Interpretation of the DOAA Definition  

1.         “Well-defined” and “occupied”

The Commission interprets the words “well-defined” and “occupied” as used in the DOAA definition in conjunction with one another and not in isolation.  Reading these terms in conjunction with one another requires an applicant to prove that the activities supporting the requested DOAA designation occur substantially throughout an area sought to be designated as a DOAA, rather than in only a portion thereof.  Reading these terms in conjunction is necessary because any alternative construction of the DOAA definition would result in an overly broad application of the rule, particularly where the applicant’s activities, here equestrian training, occur in isolated areas of a very large parcel of property.  The fact that a property owners’ large parcel of land is well-defined by an accurate legal description is not dispositive of the DOAA analysis.     

The Commission finds that the forgoing interpretation of the DOAA definition is necessary to foster the responsible, balanced development, production, and utilization of the natural resources of oil and gas in the state of Colorado.  C.R.S. § 34-60-102(1)(a)(I).  The Commission further finds that such an interpretation is necessary to safeguard against potential “waste” arising out of an overly broad application of the DOAA definition.  See C.R.S § 34-60-102(1)(a)(II) (Commission must prevent waste); C.R.S. § 34-60-103(13)(defining waste).   

                        2.         Places of “public assembly”

The Commission Rules provide that playgrounds, recreation areas, outdoor theaters, or other places of public assembly may qualify as DOAAs.  See Commission 100 Series Rules (Definition of DOAA).  The Commission finds that the phrase public assembly, as used in the DOAA definition, is intended to modify the illustrative DOAAs identified in the rule and that predominantly private places are ineligible for DOAA designation.  Whether a particular property is predominantly public or predominantly private is a fact intensive inquiry that must be resolved on a case by case basis.  In considering whether a property qualifies as a place of public assembly, the Commission believes that “public place” as defined in Black’s Law Dictionary is instructive: 

A place to which the general public has a right to resort; not necessarily a place devoted solely to the uses of the public, but a place which is in point of fact public rather than private, a place visited by many persons and usually accessible to the neighboring public (e.g. a park or public beach).  Also, a place in which the public has an interest as affecting the safety, health, morals, and welfare of the community.  A place exposed to the public, and where the public gather together or pass to and fro. 

Black’s Law Dictionary, 1230-1231 (6^th Ed. 1990).   

            B.        The Property Does Not Qualify as a DOAA.  

1.         Occupation by 20 or more persons on at least 40 days                 

The Property is comprised of 78 acres of land in Larimer County, Colorado and is located at 8445 East County Road 14, Loveland, Colorado 80534.  The Property is comprised of two parcels.  An irrigation ditch divides the Property into a northern non-irrigated portion (42.5 acres) and southern irrigated portion (35.25 acres). R. 249 (letter from Larimer County Planning and Building Services Division). 

The Commission finds that the Landowners’ failed to prove by a preponderance of the evidence that their entire 78 acre surface estate was occupied by the requisite number of persons to qualify as a DOAA under the Commission Rules.  The Commission finds that such proof was particularly lacking with respect to the southern portion of the Property.   

The Commission carefully considered the limited documentary evidence submitted by Landowners in support of the Application, including the Landowners’ calendars.  Although the calendars were admitted into evidence, the Commission finds them to be internally inconsistent, unpersuasive and affords little weight to the visitation numbers asserted therein, particularly because they were prepared primarily for purposes of litigation.  Moreover, the Commission finds the calendars were not probative of the “occupied” requirement of the DOAA definition because the calendars did not indicate whether the visitors noted thereon used all or substantially all of the Property on a given day. 

Ms. Chase testified that the entire Property, or “whole area,” is used for equestrian activities.  R. 24.  However, Ms. Chase also testified that the area south of the ditch is maintained as irrigated cropland and, compared to the northern portion, is “not accessible as much of the time” for equestrian activities.  R.24; R. 112-113 (testimony by COGCC onsite inspection manager stating that area south of the irrigation ditch “appear[ed] to just be an irrigated pastureland or irrigated hay field.”).  Ms. Chase testified that a large area south of the ditch contained an area available for “extra parking” and tacking up and tacking down.  R.26; R.286 (aerial exhibit with demonstrative icons).  However, Ms. Chase also testified that vehicle traffic is “never” allowed on the courses.  R.29-30.  Additionally, temporary parking areas and stables erected during large riding clinics are removed to accommodate crop irrigation.  R.123-124, 127:3-16 (“We irrigate all of this and we try to minimize the impact to our irrigating.”). 

The Commission finds that the Applicants’ evidence concerning the use and occupation of the Property, and in particular the southern section thereof, was unclear and contradictory.  The Commission finds that the Property was not occupied by 20 or more persons on 40 or more days as required by the DOAA definition.  The Commission further finds that the Application was overly broad and unwarranted, particularly with respect to the Applicants’ desire to designate the southern portion of the Property as a DOAA.     

            2.         Public assembly

Ms. Chase testified that she does not advertise the Property as a riding facility, and that she prohibits riders from using the Property unless she, or a trainer approved by her, is present.  R.35-36; 49.  Ms. Chase testified:  “I would not let somebody come out if they – that I didn’t know, or who didn’t come with somebody who was properly credentialed to teach or to supervise them.”  R.36.  This is because Ms. Chase does not “want to be responsible for somebody [she does not] know.”  Id.  Ms. Chase testified that she could deny access to her Property altogether at any time if she so chooses.  R.52.   

At the time of the initial decision in this matter, the only DOAA approved by the Commission was a 40-acre complex of municipal softball fields developed by the City of Longmont.  R.131:22-132:16, 476-477, 482.  The City of Longmont applied to establish 400 acres planned for development as a municipal outdoor recreation area as a DOAA.  The Commission toured the proposed site and, after hearing, limited the DOAA to only 40 acres, on which the City had already constructed softball fields and concession stands. 

After the initial decision in this matter, the Commission approved other DOAAs in 2012 as requested by the City of Longmont pertaining to the Union Reservoir Recreation Area and the Sandstone Soccer Complex (collectively, the “2012 Longmont DOAAs”).  The Landowners, without objection, submitted the Commission orders granting the 2012 Longmont DOAAs as exhibits to their October 30, 2012 Brief on Remand to the Commission for consideration.  The Commission takes judicial notice of these materials pursuant to Commission Rule 519. 

The Commission finds that the public’s access to the Property is substantially less than the public’s access to the properties at issue in the 2012 Longmont DOAAs.  Specifically, as stated in the relevant Commission orders, one of the 2012 Longmont DOAAs is a community park that was visited by over 81,000 individuals, and the other is a public recreation area used for swimming, boating, bicycling, running, family and athletic events, and social gatherings.  The openness of such areas warrants them being characterized as places of public assembly, whereas the character and use of the Property is far more limited, controlled and semi-private.     

The Commission finds that the Landowners failed to prove that the Property is a place of public assembly by a preponderance of the evidence.  

ORDER

NOW, THEREFORE, IT IS ORDERED, that the Application to designate the Property as a DOAA is hereby DENIED. 

IT IS FURTHER ORDERED, that under the State Administrative Procedure Act the Commission considers this order to be final agency action for purposes of judicial review within thirty (30) days after the date this order is mailed by the Commission.

            ENTERED this 11th day of April, 2013.

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

                                                                                                                                                                                                                        By____________________________________         

Robert Frick, Secretary

EXHIBIT A

Township 5 North, Range 68 West, 6^th P.M.

Section 36: W½ SE¼

Parcel I:  That portion of the W½ of the SE¼ of Section 36, Township 5 North, Range 68 West, 6th P.M., described as follows:

Considering the West line of said SE¼ of Section 36, as monumented with a #6 rebar 30 inches long with a 2-½ inch aluminum cap L.S. #17662 at the center of Section and at the South quarter corner of said Section 36, as bearing North 00 degrees, 7 minutes, 33 seconds East and with all bearings contained herein relative thereto.

Beginning at said South quarter corner of Section 36; thence along said West line of the southeast quarter North 00 degrees, 7 minutes, 33 seconds West 1256.52 feet to the true point of beginning; thence continuing along said North line North 00 degrees, 7 minutes, 33 seconds West 1384.69 feet to the center quarter corner of said Section 36; thence along the North line of said West half of the southeast quarter North 89 degrees, 57 minutes, 52 seconds East 1328.94 feet to the East line of said West half of the southeast quarter North 89 degrees, 57 minutes, 52 seconds East 1328.94 feet of the East line of said West half of the southeast quarter of Section 36; thence along said East line South 00 degrees, 03 minutes, 29 seconds West 1396.43 feet; thence North 89 degrees, 31 minutes, 40 seconds West 1324.53 feet to the true point of beginning.  Containing 42.352 acres more or less.

Parcel II:  That portion of the W½ of the SE¼ of Section 36, Township 5 North, Range 68 West, 6th P.M., described as follows:

Considering the West line of said southeast quarter of Section 36, as monumented with a #6 rebar 30 inches long with a 2-½ inch aluminum cap L.S. #17662 at the center of Section and at the South quarter corner of said Section 36, as bearing North 00 degrees, 7 minutes, 33 seconds East and with all bearings contained herein relative thereto.

Beginning at said South quarter corner of Section 36; thence along said West line of the southeast quarter corner North 00 degrees, 44 minutes, 33 seconds East 1256.52 feet; thence South 89 degrees, 31 minutes, 40 seconds East 1324.53 feet to the East line of said West half of the southeast quarter of Section 36; thence along said East line South 00 degrees, 3 minutes, 29 seconds West 573.99 feet to the North line of that certain parcel of land as described at Reception No. 96035630, records of said county; thence along said North line and the West line of said parcel of land South 89 degrees, 49 minutes, 18 seconds West 175.00 feet and again South 00 degrees, 3 minutes, 30 seconds West 668.00 feet to the South line of said southeast quarter of Section 36; thence along said South line South 89 degrees, 49 minutes, 18 seconds West 457.25 feet to the North quarter corner of Section 1, Township 4 North, Range 68 West of the 6th P.M.; thence continuing along said South line South 89 degrees, 51 minutes, 49 seconds West 688.22 feet to the true point of beginning.  Containing 35.247 acres more or less.