Court Opinion

ID: 4656291
Source: CourtListenerOpinion
Date Created: 2021-02-01 17:00:21.085546+00
Date Added: 2024-06-11T08:00:49.231875
License: Public Domain

FILED
                                                                     United States Court of Appeals
                      UNITED STATES COURT OF APPEALS                         Tenth Circuit

                            FOR THE TENTH CIRCUIT                          February 1, 2021
                        _________________________________
                                                                         Christopher M. Wolpert
                                                                             Clerk of Court
 WILDGRASS OIL AND GAS
 COMMITTEE,

       Plaintiff - Appellant

 v.                                                          No. 20-1151
                                                (D.C. No. 1:19-CV-00190-RBJ-NYW)
 STATE OF COLORADO; JARED S.                                  (D. Colo.)
 POLIS, in his official capacity as Governor
 of the State of Colorado; COLORADO
 OIL AND GAS CONSERVATION
 COMMISSION; JEFFREY ROBBINS, in
 his official capacity as Director of the
 Colorado Oil and Gas Conservation
 Commission,

       Defendants - Appellees,

 and

 AMERICAN PETROLEUM INSTITUTE;
 COLORADO OIL AND GAS
 ASSOCIATION,

       Intervenors - Appellees.
                       _________________________________

                            ORDER AND JUDGMENT *
                        _________________________________

Before LUCERO, McHUGH, and CARSON, Circuit Judges.
                  _________________________________

       *
         This order and judgment is not binding precedent except under the doctrines
of law of the case, res judicata, and collateral estoppel. It may be cited, however, for
its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
      The Wildgrass Oil and Gas Committee (“Wildgrass”) appeals the district

court’s dismissal of its federal procedural due process claim under the Burford

abstention doctrine. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.

                                           I

      This appeal arises from Wildgrass’ challenge to the Colorado Oil and Gas

Conservation Commission’s (the “Commission”) proceeding granting Extraction Oil

& Gas, Inc.’s (“Extraction”) application to pool mineral interests owned by

Wildgrass members for the purpose of extraction. Wildgrass is a committee formed

by residents of the Wildgrass residential subdivision of Broomfield, Colorado. In

July 2018, Wildgrass members received lease offers from Extraction for access to

minerals on their property. When Wildgrass members did not consent to the lease,

Extraction filed an application with the Commission asking for a pooling order,

which requires individuals to lease their mineral interests if the Commission

determines that the leasing offer is “reasonable” based on the following criteria: “(A)

Date of lease and primary term or offer with acreage in lease; (B) Annual rental per

acre; (C) Bonus payment or evidence of its non-availability; (D) Mineral interest

royalty; and (E) Such other lease terms as may be relevant.” Rule 506(c)(3), 2

C.C.R. § 404-1. 1 Wildgrass objected, and the Commission set a hearing on the

pooling application.

      1
         During the events at issue, the Rule was numbered 530(c)(2), but it was
recently amended to Rule 506(c)(3). The criteria provided in the rule were not
changed by the amendment.
                                          2
      Before the hearing, Wildgrass filed a complaint for a temporary restraining

order and injunction in federal district court, arguing that C.R.S. § 34-60-116, which

authorizes forced pooling, violates the Privileges and Immunities Clause, the First

Amendment, the Contract Clause, and the Due Process Clause. It asked the court to

enjoin the Commission from entering the pooling order and for a declaratory

judgment declaring the statute unconstitutional. The district court denied injunctive

relief as unripe but asked the Commission to consider all the issues raised by

Wildgrass in a hearing.

      The Commission complied and set a date for a hearing considering whether

Extraction made a “reasonable offer” for Wildgrass members’ mineral interests.

Before the hearing, Wildgrass was permitted to serve twenty interrogatories, twenty

requests for production, and twenty requests for admission. The Commission granted

many of Wildgrass’ requests but did not allow Wildgrass access to all internal

documents concerning Extraction’s financial condition or information on all lease

offers made by Extraction within a twenty-five-square-mile radius of the drilling unit

and did not allow Wildgrass to introduce certain evidence of Extraction’s history of

accidents.

      At the hearing on the pooling application, Extraction and Wildgrass were each

given an hour and fifteen minutes to present their cases, which included the

introduction of evidence and the presentation and cross-examination of fact and

expert witnesses. After carefully considering the evidence presented, the

Commission approved the pooling application, finding the leasing terms reasonable.

                                           3
      Wildgrass then amended its complaint in district court, adding a procedural

due process claim concerning the events at the hearing. As relevant to this appeal,

Wildgrass argued that the Commission failed to grant it sufficient time to present its

case, erroneously denied several discovery requests, failed to state what information

it would consider in determining whether the leasing terms were reasonable under

Rule 506(c)(3)(E), and did not provide a meaningful opportunity for Wildgrass to be

heard on issues pertaining to health, safety and wellness concerns, and environmental

and financial protections.

      The defendants filed a motion to dismiss based in part on the Burford

abstention doctrine. The court granted the motion and dismissed the procedural due

process claim under Burford and the other claims on the merits. Wildgrass only

appeals the dismissal of the due process claim under Burford.

                                           II

      A district court’s decision to abstain under Burford is reviewed for abuse of

discretion. Marshall v. El Paso Nat. Gas Co., 874 F.2d 1373, 1377 (10th Cir. 1989).

A court abuses its discretion when its decision “is arbitrary, capricious, whimsical, or

manifestly unreasonable.” United States v. Durham, 902 F.3d 1180, 1236 (10th Cir.

2018) (quotation omitted).

      Under the Burford abstention doctrine, federal courts must decline to interfere

with the proceedings of state administrative agencies when the court is sitting in

equity, timely and adequate state-court review is available, and either “there are

difficult questions of state law bearing on policy problems of substantial public

                                           4
import whose importance transcends the result in the case then at bar” or “the

exercise of federal review of the question in a case and in similar cases would be

disruptive of state efforts to establish a coherent policy with respect to a matter of

substantial public concern.” New Orleans Pub. Serv., Inc. v. Council of City of New

Orleans, 491 U.S. 350, 361 (1989) (quotation omitted).

      The district court did not abuse its discretion in holding that each of these

requirements was met. Wildgrass sought declaratory and injunctive relief, thus the

district court was sitting in equity. Timely and adequate state court review of the

Commission’s decision was available to Wildgrass under Colorado’s Administrative

Procedure Act. Though Wildgrass brought a federal claim, state courts are fully

equipped to review the constitutionality of a state agency’s procedures. See Burford

v. Sun Oil Co., 319 U.S. 315, 325-27 (1943) (emphasizing Texas state courts’

specialized knowledge over Texas’ oil and gas regulatory regime in directing the

district court to abstain from resolving a federal due process claim).

      Additionally, the district court did not abuse its discretion in holding that

federal review of the procedural issues presented risked “disrupt[ing] [] state efforts

to establish a coherent policy with respect to a matter of substantial public concern.”

New Orleans Pub. Serv., 491 U.S. at 361 (quotation omitted). The Supreme Court

has noted the risk of disruption in cases involving procedural challenges to whether a

state agency “misapplied its lawful authority.” Id. at 362. For example, in Burford

itself, the Court considered a challenge to whether the Texas Railroad Commission

properly applied Texas’ complex oil and gas regulations in granting a permit to drill

                                            5
four wells. 319 U.S. at 323-24. The Court directed the district court to abstain from

deciding the procedural issue, noting that the plaintiff failed to exhaust state court

review; Texas’ regulations concerning well permits, spacing, and drilling addressed

public policy problems of substantial import; and Texas had created a system of

judicial review that permitted state courts and the railroad system “to acquire a

specialized knowledge.” Id. at 327.

      As in Burford, Wildgrass has not exhausted state court remedies for its

procedural due process claim, and it likewise challenges whether a state agency

charged with regulating oil and gas properly applied its governing statute.

Wildgrass’ procedural challenges also raise important questions of state law,

including whether the Commission must consider information pertaining to the

environment, public health, and the operator’s financial condition in pooling hearings

under C.R.S. § 34-60-116. Resolving this case therefore risks creating “needless

friction with state policies” and disrupting the Commission’s longstanding methods

of applying its own statute. Id. at 332 (quotation omitted). Under these

circumstances, we cannot say the district court abused its discretion.

                                           III

      For the foregoing reasons, the judgment of the district court is AFFIRMED.

                                            6
Appellant’s motion to dismiss intervenor-appellees American Petroleum Institute and

Colorado Oil and Gas Association is DENIED.

                                         Entered for the Court

                                         Carlos F. Lucero
                                         Circuit Judge

                                         7