Court Opinion

ID: 4257345
Source: CourtListenerOpinion
Date Created: 2018-03-22 19:10:28.576857+00
Date Added: 2024-06-11T13:28:15.076992
License: Public Domain

The summaries of the Colorado Court of Appeals published opinions
  constitute no part of the opinion of the division but have been prepared by
  the division for the convenience of the reader. The summaries may not be
    cited or relied upon as they are not the official language of the division.
  Any discrepancy between the language in the summary and in the opinion
           should be resolved in favor of the language in the opinion.

                                                                  SUMMARY
                                                              March 22, 2018

                                2018COA40

No. 17CA0051, Maralex Res., Inc. v. Colo. Oil & Gas
Conservation Comm’n — Administrative Law — Oil and Gas
Conservation Act — Colorado Oil and Gas Conservation
Commission; Constitutional Law — Fourth Amendment —
Searches and Seizures — Administrative Searches

     In this appeal of an administrative agency order, a division of

the court of appeals considers whether the Colorado Oil and Gas

Conservation Commission (COGCC) can constitutionally subject oil

and gas locations to unannounced, warrantless inspections. The

division concludes that a COGCC rule permitting warrantless

inspections of oil and gas locations does not violate the United

States or Colorado Constitution. Because it authorizes searches

falling within the administrative search exception to the warrant

requirement, the COGCC rule is constitutional. Further, the
division concludes that the inspection of the oil and gas locations at

issue here did not violate the surface owners’ constitutional rights.

     The division also considers COGCC’s findings that Maralex

Resources, Inc., violated various agency rules at two oil and gas

locations. The division concludes that one of COGCC’s findings was

arbitrary and capricious in one respect, but otherwise affirms the

district court’s order enforcing COGCC’s order.

     Accordingly, the division affirms in part, reverses in part, and

remands with directions.
COLORADO COURT OF APPEALS                                        2018COA40

Court of Appeals No. 17CA0051
City and County of Denver District Court No. 14CV34759
Honorable John W. Madden, IV, Judge

Maralex Resources, Inc., a Colorado corporation; A.M. O’Hare; and Mary C.
O’Hare,

Plaintiffs-Appellants,

v.

Colorado Oil and Gas Conservation Commission,

Defendant-Appellee.

               ORDER AFFIRMED IN PART, REVERSED IN PART,
                 AND CASE REMANDED WITH DIRECTIONS

                                    Division I
                          Opinion by JUDGE TAUBMAN
                         Booras and Casebolt*, JJ., concur

                            Announced March 22, 2018

Abadie Schill, P.C., William E. Zimsky, Durango, Colorado, for Plaintiffs-
Appellants

Cynthia H. Coffman, Attorney General, Jake Matter, Senior Assistant Attorney
General, David A. Beckstrom, Assistant Attorney General, Denver, Colorado,
for Defendant-Appellee

*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art.
VI, § 5(3), and § 24-51-1105, C.R.S. 2017.
¶1    In this appeal of an administrative agency decision, plaintiffs,

 Maralex Resources, Inc. (Maralex), A.M. O’Hare (O’Hare), and Mary

 C. O’Hare, appeal the district court’s order affirming an order

 finding violation (OFV) issued by defendant, the Colorado Oil and

 Gas Conservation Commission (COGCC). On appeal, Maralex and

 the O’Hares contend that a COGCC rule permitting random,

 warrantless searches of oil and gas properties violates the United

 States and Colorado Constitutions. As a matter of first impression,

 we conclude that the COGCC rule is constitutional because it

 permits searches falling within the administrative search exception

 to the warrant requirement. To the extent the O’Hares separately

 challenge the constitutionality of the rule, we similarly reject their

 challenge.

¶2    Maralex also appeals the district court’s order enforcing

 COGCC’s findings that it violated several rules at two of its oil and

 gas locations. Because we agree with Maralex that one of COGCC’s

 findings was arbitrary and capricious in one respect, we reverse the

 district court’s order in part and affirm in part.

                                    1
                             I. Background

                                A. Facts

¶3    In a prehearing statement submitted to the COGCC, the

 parties stipulated to the following facts.

¶4    O’Hare was the president of Maralex, a Colorado corporation

 licensed to conduct oil and gas operations in the state. Maralex

 operated over 200 oil wells in Colorado. As relevant here, Maralex

 was the operator of three producing wells in southwest Colorado —

 Katie Eileen 34-7-35 2A (Katie Eileen 2A), Katie Eileen 34-7-35 2

 (Katie Eileen 2), and Katie Eileen 34-7-35 3 (Katie Eileen 3).1 The

 wells were located on the O’Hares’ ranch, and the O’Hares owned

 both the surface and mineral rights, though they leased a mineral

 interest to Maralex beginning in 1995.

¶5    The wells were located on two separate oil and gas locations.2

 Katie Eileen 2A was located on a western location, while Katie

 Eileen 2 and 3 were located on an eastern location. The Katie

 1 A COGCC rule defines operator as “any person who exercises the
 right to control the conduct of oil and gas operations.” Dep’t of Nat.
 Res. Rule 100, 2 Code Colo. Regs. 404-1.
 2 A COGCC rule defines oil and gas location as “a definable area

 where an operator has disturbed or intends to disturb the land
 surface in order to locate an oil and gas facility.” Id.

                                    2
 Eileen 2 well was completed in 1996, and the Katie Eileen 3 well

 was completed in 2007.

¶6    Additionally, there were two pits on the eastern location

 adjacent to the Katie Eileen 2 and 3 wells.3 One pit was unlined,

 and the other had a partially torn liner. The O’Hares used those

 pits as stock ponds for their cattle.

¶7    In the afternoon of March 20, 2014, a COGCC field inspection

 supervisor contacted a local Maralex office and requested access to

 the Katie Eileen wells to conduct a routine inspection. Maralex

 employees informed the inspection supervisor that the properties

 were protected by locked gates and, because O’Hare was out of

 town, they could not permit access that day. The inspection

 supervisor agreed to delay the inspection for a day, provided that

 Maralex contact him “oil-field early” — meaning, according to

 industry custom, at 6:00 a.m. — the next day.

¶8    At 9:30 a.m. the following morning, not having heard from

 Maralex, the inspection supervisor issued a notice of alleged

 3A COGCC rule defines pit generally as “any natural or man-made
 depression in the ground used for oil or gas exploration or
 production purposes.” Id. The rule also lists various types of pits.
 See id.

                                    3
 violation based on Maralex’s failure to provide access to the wells.

 There was no communication between Maralex and the inspection

 supervisor until mid-morning, when O’Hare called the inspection

 supervisor.

¶9    The exact content of the March 21 phone call was disputed,

 but the conversation was apparently heated and arguably

 culminated in O’Hare threatening the inspection supervisor. O’Hare

 emailed the inspection supervisor later that day offering to allow the

 inspection supervisor access to the wells the following Monday

 morning. However, he also wrote that, had the inspection

 supervisor attempted to enter the property in spite of the locked

 gates, he would have been at risk of being shot because the

 O’Hares’ children had been instructed to shoot trespassers. O’Hare

 added:

           If your purpose is truly to inspect the locations
           for adherence to the COGCC rules and
           regulations then bring your notepad on
           Monday and you can write up all the
           deficiencies you find and we will address them
           to the best of our ability as soon as we can. If
           your intention is to run roughshod over our
           Constitutional rights then you should be
           prepared for a fight because I will defend my
           rights and my family to the death! Any
           questions?

                                   4
¶ 10   COGCC then sought an administrative search warrant

  authorizing entry to and inspection of the western and eastern

  locations, which was granted by the La Plata County District Court.

  On March 27, 2014, the COGCC executed that warrant.

                   B. COGCC’s Inspections and Order

¶ 11   During the initial March 27 inspection, COGCC staff noted

  several rules violations, including, as relevant here, improperly

  stored equipment at the Katie Eileen 2A well and unclosed pits at

  the Katie Eileen 2 and 3 wells, one of which contained improperly

  stored drill cuttings.4

¶ 12   About two weeks later, COGCC staff conducted a follow-up

  inspection of the wells. That inspection revealed that the previously

  observed violations were ongoing. Additionally, a COGCC

  environmental protection specialist collected soil samples from the

  pits adjacent to the Katie Eileen 2 and 3 wells. Those soil samples

  showed levels of various contaminants that exceeded COGCC rules.

  4 Drill cuttings “are bits of rock and soil cut from subsurface
  formations by the drill bit during the process of drilling a well and
  then lifted to the surface by circulation of oil-based drilling fluids.”
  Osage Envtl., Inc. v. R.R. Comm’n, No. 03-08-00005-CV, 2008 WL
2852295, at *1 n.2 (Tex. App. July 24, 2008) (unpublished opinion).

                                     5
¶ 13   Based on the inspections of the Katie Eileen wells, COGCC

  issued Maralex multiple notices of alleged violations during June

  and August of 2014. Challenging these notices, Maralex requested

  an administrative hearing. COGCC held a hearing at which various

  COGCC and Maralex employees testified. Following the hearing,

  COGCC issued an OFV, concluding that Maralex had violated

  several rules, including, as relevant here, Rules 204, 603.f, 905(a),

  and 907(a)(1). See Dep’t of Nat. Res. Rule 204, 2 Code Colo. Regs.

  404-1; Dep’t of Nat. Res. Rule 603.f, 2 Code Colo. Regs. 404-1;

  Dep’t of Nat. Res. Rule 905(a), 2 Code Colo. Regs. 404-1; Dep’t of

  Nat. Res. Rule 907(a)(1), 2 Code Colo. Regs. 404-1. In total,

  Maralex was assessed a penalty of $94,000 for the violations.

                      C. The District Court’s Order

¶ 14   Maralex and the O’Hares sought judicial review of COGCC’s

  order. They raised constitutional challenges to COGCC’s rule

  permitting warrantless inspections of oil and gas locations and

  sought injunctive and declaratory relief. The O’Hares (but not

  Maralex) raised a separate constitutional challenge to the inspection

  rule based on their status as surface owners. Maralex (but not the

                                    6
  O’Hares) also challenged COGCC’s determination of rules violations

  in the OFV.

¶ 15   In a thorough and well-reasoned order, the district court

  denied Maralex and the O’Hares declaratory and injunctive relief,

  concluding that COGCC’s inspection rule did not violate either the

  United States or Colorado Constitution. Similarly, the district court

  concluded that the O’Hares’ constitutional rights were not violated.

  The district court also affirmed the OFV in full, finding that all the

  violations were supported by competent evidence in the agency’s

  record.

                     II. Constitutionality of Rule 204

¶ 16   Maralex and the O’Hares argue that COGCC “lacks statutory

  authority” to conduct unannounced, warrantless searches of oil and

  gas locations. Although they do not characterize it as such, we

  construe this claim as a facial challenge to the constitutionality of

  Rule 204, which permits authorized COGCC staff “the right at all

  reasonable times to go upon and inspect any oil or gas properties.”

  Dep’t of Nat. Res. Rule 204, 2 Code Colo. Regs. 404-1; see City of

  Los Angeles v. Patel, 576 U.S. ___, ___, 135 S. Ct. 2443, 2449 (2015)

  (“[F]acial challenges under the Fourth Amendment are not

                                     7
  categorically barred or especially disfavored.”). We conclude that

  Rule 204 passes constitutional muster.

                         A. Standard of Review

¶ 17   Because it is a question of law, we review the constitutionality

  of an agency rule de novo. See Indep. Inst. v. Coffman, 209 P.3d
1130, 1135 (Colo. App. 2008).

                      B. Administrative Searches

¶ 18   The Fourth Amendment protects “[t]he right of the people to be

  secure in their persons, houses, papers, and effects, against

  unreasonable searches and seizures.” U.S. Const. amend. IV.

  Likewise, the Colorado Constitution prohibits “unreasonable

  searches and seizures.” Colo. Const. art II, § 7. As a general rule, a

  warrantless search is presumptively unreasonable. Patel, 576 U.S.

  at ___, 135 S. Ct. at 2452. The Fourth Amendment’s prohibition on

  unreasonable searches and seizures is applicable to commercial

  premises. New York v. Burger, 482 U.S. 691, 699 (1987).

¶ 19   However, the Supreme Court has carved out certain

  exceptions to the requirement that searches be conducted pursuant

  to a warrant issued upon probable cause. One such exception is in

  the context of administrative searches. See Eddie’s Leaf Spring

                                    8
  Shop & Towing LLC v. Colo. Pub. Utils. Comm’n, 218 P.3d 326, 332

  (Colo. 2009). Developed in two Supreme Court cases, Colonnade

  Catering Corp. v. United States, 397 U.S. 72 (1970), and United

  States v. Biswell, 406 U.S. 311 (1972), this exception has been

  referred to as the Colonnade-Biswell exception. See, e.g., Exotic

  Coins, Inc. v. Beacom, 699 P.2d 930, 942 (Colo. 1985).

¶ 20   Under this exception, “a warrantless inspection made

  pursuant to a regulatory scheme of a closely regulated industry is

  reasonable if three requirements are met.” Eddie’s Leaf Spring

  Shop, 218 P.3d at 332. First, the regulatory scheme must “be

  informed by a substantial government interest.” Id. Second,

  warrantless searches must be necessary to further that government

  interest. Id. Third, the regulatory scheme must “provide a

  ‘constitutionally adequate substitute’ for a warrant in terms of the

  certainty and regularity of the program’s application.” Id. (quoting

  Burger, 482 U.S. at 700).

¶ 21   The Colonnade-Biswell exception is rooted in the principle

  that, because there is a reduced expectation of privacy on the part

  of an owner of commercial premises in a pervasively regulated

  industry, the traditional warrant and probable cause requirements

                                    9
  have lessened application. See Marshall v. Barlow’s, Inc., 436 U.S.
307, 313 (1978) (“[W]hen an entrepreneur embarks upon such a

  business, he has voluntarily chosen to subject himself to a full

  arsenal of governmental regulation.”).

¶ 22   The Supreme Court has stated that this exception to the

  warrant requirement is a narrow one. In a recent decision, the

  Court noted that it had applied the administrative search exception

  to only four closely regulated industries: “liquor sales, firearms

  dealing, mining, or running an automobile junkyard.” Patel, 576

  U.S. at ___, 135 S. Ct. at 2454 (citations omitted). In Patel, the

  Court held that the hotel industry was not “pervasively regulated”

  because it was subject only to “general regulations” like licensure,

  tax, rate postage, and sanitary requirements. Id. at ___, 135 S. Ct.

  at 2455 (noting that such regulations “hardly . . . put[] hotel owners

  on notice that their ‘property will be subject to periodic inspections

  undertaken for specific purposes’” (quoting Burger, 482 U.S. at 705

  n.16)).

¶ 23   Despite the Court’s admonition that the closely regulated

  industry “is the exception,” Marshall, 436 U.S. at 313, other courts

  have found that many and varied industries fall within that

                                    10
  exception. See Eddie’s Leaf Spring Shop, 218 P.3d at 333

  (nonconsensual towing); Gora v. City of Ferndale, 576 N.W.2d 141,

  147 (Mich. 1998) (massage parlors); State v. Klager, 797 N.W.2d 47,

  53 (S.D. 2011) (taxidermy); Hill v. Commonwealth, 624 S.E.2d 666,

  671-72 (Va. Ct. App. 2006) (food production).

                               C. Analysis

¶ 24   Maralex and the O’Hares contend that COGCC lacks authority

  to conduct unannounced, warrantless searches of oil and gas

  locations. While they opaquely reference the analysis set forth in

  Supreme Court and Colorado cases discussing administrative

  searches, neither their opening brief nor their reply brief addresses

  COGCC’s contention that the Colonnade-Biswell exception applies

  here. We conclude that COGCC’s inspection scheme, as codified in

  Rule 204, does not violate the United States or Colorado

  Constitution.

¶ 25   We first address whether the oil and gas industry is “closely

  regulated.” Eddie’s Leaf Spring Shop, 218 P.3d at 332. “The key

  factors in determining whether an industry is closely regulated are

  the pervasiveness and regularity of the regulation and the effect of

  such regulation upon an owner’s expectation of privacy.” Id.

                                    11
¶ 26   We conclude that the oil and gas industry is closely regulated.

  The Oil and Gas Conservation Act (Act), §§ 34-60-101 to -130,

  C.R.S. 2017, provides COGCC with substantial authority to regulate

  oil and gas facilities. See generally Chase v. Colo. Oil & Gas

  Conservation Comm’n, 2012 COA 94M, ¶¶ 24-29, 284 P.3d 161,

  165-67 (detailing COGCC’s history and authorizing legislation).

  Indeed, COGCC is empowered to “do whatever may reasonably be

  necessary to carry out the provisions of th[e Act].” § 34-60-105(1),

  C.R.S. 2017. To that end, COGCC has promulgated comprehensive

  rules regulating multitudinous aspects of the oil and gas industry.

  See City of Fort Collins v. Colo. Oil & Gas Ass’n, 2016 CO 28, ¶ 29,

  369 P.3d 568, 593 (characterizing COGCC’s rules as “exhaustive”

  and “comprehensive[]”); City of Longmont v. Colo. Oil & Gas Ass’n,

  2016 CO 29, ¶ 52, 369 P.3d 573, 584 (same). The inevitable effect

  of this exhaustive regulatory scheme is a lessened expectation of

  privacy in commercial premises for operators in Colorado’s oil and

  gas industry. See Eddie’s Leaf Spring Shop, 218 P.3d at 332-33.

¶ 27   Moreover, courts in other jurisdictions have concluded that

  the oil and gas industry is closely regulated. See United States v.

  Stinson, No. 1:12CR-00012-JHM, 2013 WL 1221937, at *3 (W.D.

                                    12
  Ky. Mar. 25, 2013) (unpublished opinion) (oil and gas industry is

  “highly regulated”); Matter of Mullins & Pritchard, Inc., 549 So. 2d
872, 876-77 (La. Ct. App. 1989) (“[I]t is obvious that the oil and gas

  production facilities subject to the warrantless searches fall under

  the ‘pervasively regulated industry’ exception to the warrant

  requirement.”). We similarly conclude that the comprehensive

  scheme governing oil and gas operations in Colorado renders the

  industry closely regulated.

¶ 28      Next, we consider whether the three additional criteria

  necessary to make warrantless inspections reasonable are satisfied.

  First, we must determine whether the state has a substantial

  interest in regulating oil and gas operations. We conclude that it

  does.

¶ 29      According to the Act’s legislative declaration, it is “in the

  public interest” to “[f]oster the responsible, balanced development,

  production, and utilization of the natural resources of oil and gas in

  the state of Colorado in a manner consistent with protection of

  public health, safety, and welfare, including protection of the

  environment and wildlife resources.” § 34-60-102(1)(a)(I), C.R.S.

  2017. The Act “and the Commission’s pervasive rules and

                                        13
  regulations . . . convince us that the state’s interest in the efficient

  and responsible development of oil and gas resources includes a

  strong interest in the uniform regulation” of oil and gas operations.

  City of Fort Collins, ¶ 29, 369 P.3d at 593.

¶ 30   Second, we consider whether warrantless searches are

  necessary to further the state’s substantial interest in the safe and

  efficient operation of oil and gas facilities. We conclude that they

  are. Imposing a warrant (and, as a result, probable cause)

  requirement would frustrate COGCC’s ability to effectively enforce

  the Act by inspecting between 19,000 and 23,500 oil and gas

  facilities each year. See Oil & Gas Conservation Commission, Field

  Inspection Unit 1, https://perma.cc/9VR8-G59G. Requiring that

  inspectors apply to a court for a warrant before each inspection

  would dramatically reduce COGCC’s enforcement power, and might

  allow operators to conceal violations. Cf. Donovan v. Dewey, 452
U.S. 594, 603 (1981) (noting, in the context of the mining industry,

  the “notorious ease with which many safety or health hazards may

  be concealed if advance warning of inspection is obtained” (quoting

  S. Rep. No. 95-181, at 27 (1977))).

                                     14
¶ 31   To the extent Maralex and the O’Hares argue that the

  legislature must affirmatively declare that warrantless inspections

  are necessary to further a given agency’s regulatory interest, we find

  no authority for such a conclusion. In contrast, as COGCC points

  out, this position has been expressly rejected by other courts. See,

  e.g., Balelo v. Baldrige, 724 F.2d 753, 765 (9th Cir. 1984) (referring

  to a similar argument as a “novel constitutional proposition” and

  determining that “[t]he law is to the contrary”). Moreover, a 2013

  amendment to the Act instructed COGCC to begin conducting

  inspections pursuant to a “risk-based strategy” targeting “the

  operational phases that are most likely to experience spills, excess

  emissions, and other types of violations and that prioritizes more

  in-depth inspections.” § 34-60-106(15.5), (15.5)(b), C.R.S. 2017.

  That amendment was enacted prior to the inspections of the Katie

  Eileen wells here. In enacting that amendment, the legislature

  could have, but did not, impose any warrant requirement for

  COGCC inspections. In fact, the legislature specifically stated that

  the purpose of the legislative amendment was “to increase the

  frequency of inspections of oil and gas wells.” S. 13-202, 69th Gen.

  Assemb. § 1(c) (Colo. 2013).

                                    15
¶ 32   Last, we consider whether the occurrence of warrantless

  COGCC inspections was “so random, infrequent, or unpredictable

  that the owner, for all practical purposes, has no real expectation

  that his property will from time to time be inspected by government

  officials.” Donovan, 452 U.S. at 599. In this case, neither party

  describes the frequency with which COGCC typically inspects any

  given location. However, a COGCC document states that “[o]n

  average, active wells are inspected once every 2.4 years.” See Field

  Inspection Unit at 1. Maralex and the O’Hares concede that the

  Katie Eileen 2 and 3 wells had been inspected four times between

  July 2000 and June 2006.

¶ 33   Further, as Maralex and the O’Hares acknowledge, Rule 204

  imposes a reasonableness requirement that circumscribes COGCC’s

  authority to conduct random inspections. We therefore conclude

  that COGCC’s inspection regime “provid[es] a constitutionally

  adequate substitute for a warrant.” Burger, 482 U.S. at 703

  (quoting Donovan, 452 U.S. at 603).

                                   16
¶ 34   Because Rule 204 meets the Colonnade-Biswell criteria, we

  conclude that warrantless inspections made pursuant to the rule do

  not violate the Fourth Amendment.5

¶ 35   We reach the same outcome under the Colorado Constitution.

  Although article 2, section 7 of the Colorado Constitution has in

  some contexts been interpreted as providing broader privacy

  protections than its federal counterpart, Maralex and the O’Hares

  have not argued that any distinction between the two provisions is

  significant here. Cf. Eddie’s Leaf Spring Shop, 218 P.3d at 334.

  “Additionally, our precedent provides no basis to distinguish

  between the rights under the [United States] and the Colorado

  Constitutions with regard to administrative searches.” Id.

  5Maralex and the O’Hares pointed us to separate litigation also
  concerning the Katie Eileen wells. Considering a challenge to the
  Bureau of Land Management’s (BLM’s) inspection scheme, a federal
  district court concluded that the BLM had statutory authority to
  conduct unannounced, warrantless searches under the Federal Oil
  and Gas Royalty Management Act of 1982, 30 U.S.C. § 1701 (2012).
  Maralex Res., Inc. v. Jewell, No. 15-cv-01893-CMA, 2017 WL
6033694 (D. Colo. Oct. 19, 2017) (unpublished opinion) (order
  affirming agency determination).

                                   17
¶ 36   In sum, we conclude that Rule 204 does not run afoul of the

  United States or Colorado Constitution. The facial challenge to the

  inspection rule therefore fails.

                     III. Other Constitutional Claims

¶ 37   The O’Hares also raise constitutional challenges to Rule 204 in

  their capacity as surface owners of land including oil and gas

  locations subject to COGCC oversight.

¶ 38   First, the O’Hares contend that Rule 204 is unconstitutional

  as applied to surface owners because, unlike the operators of oil

  and gas locations, they maintain an expectation of privacy in the

  property searched. However, in this case, the O’Hares granted

  Maralex an extraordinarily broad set of rights under the surface

  agreement. Specifically, the O’Hares gave Maralex “the right to do

  whatever they want on [their] property.” Under these

  circumstances, the O’Hares substantially lessened any objective

  expectation of privacy by granting the corporation an unlimited

  easement on the surface estate. Because we have already

  concluded that Rule 204 permitted COGCC’s inspection of

  Maralex’s operations, the O’Hares’ derivative claim must fail. We

  agree with the district court that, “[b]ecause Maralex has an

                                     18
  obligation to comply with [COGCC] orders, rules, and policies, the

  O’Hares do not have an expectation of privacy in property over

  which they willingly transferred access and control rights to

  Maralex.”

¶ 39    To the extent that the O’Hares challenge the application of

  Rule 204 to all surface owners, we must reject that facial challenge.

  We conclude that, in other cases where a surface owner has granted

  a mineral lessee a broad surface easement, warrantless entry of the

  surface estate would not necessarily violate the surface owner’s

  rights. See City & Cty. of Denver v. Casados, 862 P.2d 908, 913

  (Colo. 1993) (stating that a facial challenge is “the most difficult

  challenge to mount successfully, since the challenge must establish

  that no set of circumstances exists under which the [rule] would be

  valid”).

¶ 40    The O’Hares also purport to raise a takings claim under the

  Fifth Amendment. U.S. Const. amend. V (“[N]or shall private

  property be taken for public use, without just compensation.”). As

  they did in the district court, the O’Hares argue with extremely

  broad strokes that Rule 204 interferes with their property rights to

  such a degree as to constitute an uncompensated government

                                     19
  taking. Because this claim is set forth in a perfunctory manner, we

  decline to address it. See People v. Mershon, 874 P.2d 1025, 1034

  n.13 (Colo. 1994) (declining to address constitutional arguments

  that were only raised in a cursory fashion before the trial court); see

  also Wagner v. Georgetown Univ. Med. Ctr., 768 A.2d 546, 554 n.9

  (D.C. 2001) (“[I]ssues adverted to in a perfunctory manner,

  unaccompanied by some effort at developed argumentation, are

  deemed waived.” (quoting United States v. Zannino, 895 F.2d 1, 16

  (1st Cir. 1990))).

                           IV. COGCC’s Order

¶ 41   Maralex also challenges the COGCC’s order concluding that it

  violated multiple rules in relation to the Katie Eileen wells. We

  reject its contentions, with one minor exception.

¶ 42   COGCC final orders are subject to judicial review in

  accordance with the State Administrative Procedure Act. § 34-60-

  111, C.R.S. 2017 (citing § 24-4-106, C.R.S. 2017). A “reviewing

  court may overturn an administrative agency’s determination only if

  the court finds the agency acted in an arbitrary and capricious

  manner, made a determination that is unsupported by the record,

  erroneously interpreted the law, or exceeded its constitutional or

                                    20
  statutory authority.” Sapp v. El Paso Cty. Dep’t of Human Servs.,

  181 P.3d 1179, 1182 (Colo. App. 2008) (citing § 24-4-106(7)). We

  defer to an agency’s findings of fact unless they are “unsupported

  by substantial evidence when the record is considered as a whole.”

  § 24-4-106(7).

¶ 43   We address each violation in turn.

                              A. Rule 204

¶ 44   In its OFV, COGCC concluded that Maralex had violated Rule

  204 by denying the inspectors access for a period of seven days

  starting on March 20, 2014, the day the inspection supervisor first

  contacted Maralex. Maralex contends that COGCC erred for two

  reasons. First, it asserts no Rule 204 violation occurred on March

  20 because the inspection supervisor agreed to postpone the

  inspection until the next day after he was informed that O’Hare was

  unavailable. Second, Maralex contends there was no Rule 204

  violation from March 21 through March 27 because nothing

  effectively prevented COGCC staff from entering the property during

  that period.

¶ 45   We agree with the first of Maralex’s contentions. We conclude

  that COGCC’s finding that Maralex violated Rule 204 on March 20

                                   21
  was arbitrary and capricious. The undisputed facts in the record

  reflect that the inspection supervisor first contacted Maralex in the

  afternoon of March 20, and did not actually speak to an employee

  until nearly 4:00 p.m. that day. The inspection supervisor agreed

  to delay the inspection until the next day. Accordingly, we conclude

  there was not substantial evidence to support COGCC’s

  determination that Maralex failed to provide access to its wells at

  “all reasonable times.” See Dep’t of Nat. Res. Rule 204, 2 Code

  Colo. Regs. 404-1. Thus, we reverse the district court’s order

  affirming that part of the OFV concluding Maralex violated Rule 204

  on March 20, 2014. Accordingly, we also reverse the penalty

  assessed for the March 20 Rule 204 violations, which amounted to

  $2000.

¶ 46   However, we perceive no basis for disturbing COGCC’s

  conclusion that Maralex “effectively denied staff access through

  threats to staff’s safety” between March 21 — when O’Hare emailed

  the inspection supervisor stating that he had instructed his family

  to shoot trespassers — and March 27, when COGCC staff executed

  the search warrant. As COGCC noted in the OFV, the inspection

  supervisor testified that he was “quite terrified for his safety” and

                                     22
  felt threatened by O’Hare’s email and phone call. This evidence

  supports COGCC’s determination that Maralex violated Rule 204 for

  the duration of that six-day period.

¶ 47   Maralex attempts to minimize the impact of O’Hare’s email by

  characterizing it as stating “what any reasonable person should

  know — do not jump a locked gate and traverse across a private

  ranch in a rural area because you might be mistaken as a

  trespasser and if you are deemed a threat, you might get shot.”

  While O’Hare apparently believed he could legally shoot a person

  merely for entering his property without permission, his position is

  not supported by Colorado law.6

¶ 48   Thus, we affirm the district court’s enforcement of that part of

  the OFV concluding Maralex violated Rule 204 from March 21

  through March 27, 2014, including its imposition of $12,000 in

  fines for that period.

  6 Colorado statutes provide that a person may lawfully use physical
  force against another person in certain limited circumstances. See
  §§ 18-1-703 to -706, C.R.S. 2017. Further, a person may lawfully
  use deadly physical force against another person in limited
  circumstances. See § 18-1-704(2), C.R.S. 2017; § 18-1-704.5(2),
  C.R.S. 2017. However, nothing in those provisions authorizing use
  of physical force would have permitted O’Hare to legally shoot
  trespassers merely for entering his property without his permission.

                                    23
                              B. Rule 603.f

¶ 49   Rule 603.f requires that oil and gas locations “be kept free of

  . . . [unnecessary] equipment, vehicles, and supplies” and “rubbish,

  and other waste material.” Dep’t of Nat. Res. Rule 603.f, 2 Code

  Colo. Regs. 404-1. The rule applies to “[a]ll locations, including

  wells.” Id. COGCC concluded that Maralex had violated Rule 603.f

  at both Katie Eileen locations based on its finding that there was

  unnecessary equipment and debris at the locations. Maralex

  appeals only the violation arising from equipment and debris at the

  Katie Eileen 2A location.

¶ 50   Maralex argues, as it did before COGCC and in the district

  court, that the surface owners — the O’Hares — had reclaimed use

  of the relevant land and thus the area no longer constituted an “oil

  and gas location” within COGCC’s jurisdiction. Because the

  O’Hares had “exclusive possession and control” of the property,

  Maralex argues that it did not violate Rule 603.f.

¶ 51   We reject this argument. Referring to its definition of “oil and

  gas location” in Rule 100, COGCC determined that the location fell

  within its jurisdiction. Our review of the record leads us to the

  same result. See Colo. Citizens for Ethics in Gov’t v. Comm. for Am.

                                    24
  Dream, 187 P.3d 1207, 1219 (Colo. App. 2008) (“An agency’s

  determination of its own jurisdiction is reviewed de novo.”). The

  area on which the equipment and debris were observed is a

  “definable area where an operator has disturbed . . . the land

  surface in order to locate an oil and gas facility” — namely, the

  Katie Eileen 2A well. See Dep’t of Nat. Res. Rule 100, 2 Code Colo.

  Regs. 404-1. Especially in this context, where the O’Hares as

  surface owners granted Maralex an unchecked right of access to the

  surface estate, we conclude that Maralex violated Rule 603.f by

  failing to remove unnecessary equipment and debris from the area

  near the well.

¶ 52   Alternatively, Maralex asserts that the equipment belonged to

  O’Hare alone, and thus Maralex could not have violated the rule.

  However, as COGCC found, O’Hare’s testimony significantly

  undermined that argument. O’Hare contradictorily testified that he

  had purchased the equipment and that Maralex owned the

  equipment. As a result, COGCC found O’Hare not to be credible on

  this matter, and we defer to that finding. Similarly, we defer to

  COGCC’s finding that the equipment was Maralex’s.

                                    25
¶ 53   Accordingly, we affirm COGCC’s determination that Maralex

  violated Rule 603.f at the Katie Eileen 2A location.

                              C. Rule 905(a)

¶ 54   Rule 905(a) states that “[d]rilling pits shall be closed in

  accordance with the 1000-Series Rules.” Dep’t of Nat. Res. Rule

  905(a), 2 Code Colo. Regs. 404-1. The “1000-Series Rules”

  “establish the proper reclamation of the land and soil affected by oil

  and gas operations.” Dep’t of Nat. Res. Rule 1001(a), 2 Code Colo.

  Regs. 404-1. Accordingly, Rule 1003(d)(2) requires that, on

  non-crop land (such as the O’Hares’ ranch), drilling pits be closed

  no later than six months after “drilling and completion activities

  conclude.” Dep’t of Nat. Res. Rule 1003(d)(2), 2 Code Colo. Regs.

  404-1.

¶ 55   Rule 1001(c) states that COGCC will not require compliance

  with Rule 1003

            if the operator can demonstrate to the
            Director’s or [COGCC’s] satisfaction both that
            compliance with such rule[] is not necessary to
            protect the public health, safety and
            welfare . . . and that the operator has entered
            into an agreement with the surface owner
            regarding topsoil protection and reclamation of
            the land.

                                    26
  Dep’t of Nat. Res. Rule 1001(c), 2 Code Colo. Regs. 404-1. Rule

  1001(c) then states that, “[a]bsent bad faith conduct by the

  operator, penalties may only be imposed for non-compliance with a

  [COGCC] order issued after a determination that, notwithstanding

  such agreement, compliance is necessary to protect public health,

  safety and welfare.” Id.

¶ 56   COGCC concluded that Maralex had violated Rule 905(a) on

  the basis of the two open drilling pits on the Katie Eileen 2 and 3

  location. Maralex contends that it had waived the requirement that

  the pits be closed within six months of the completion of the drilling

  operations by converting the pits into stock ponds. Further,

  Maralex contends that the second sentence of Rule 1001(c)

  “precludes any fine being levied against [it] for failing to reclaim the

  stock ponds” because COGCC never determined that compliance

  with Rule 1003 was necessary to protect public health, safety, and

  welfare.

¶ 57   COGCC rejected Maralex’s interpretation of Rule 1001(c),

  stating that, in order to waive the closure requirements, the surface

  owner must get COGCC approval for delaying closure or

  reclamation. It was undisputed that COGCC had not granted

                                     27
  Maralex a waiver or variance approving the use of the open pits as

  stock ponds.

¶ 58   An agency’s interpretation of its own rule is entitled to great

  deference. Abromeit v. Denver Career Serv. Bd., 140 P.3d 44, 49

  (Colo. App. 2005). Thus, we will accept COGCC’s interpretation if it

  has a reasonable basis in law and is warranted by the record. See

  Bd. of Cty. Comm’rs v. Colo. Oil & Gas Conservation Comm’n, 81
P.3d 1119, 1125 (Colo. App. 2003). Here, we accept COGCC’s

  interpretation of Rule 1001(c) as imposing a requirement that an

  operator affirmatively seek a waiver before being able to invoke the

  protection of the rule’s second sentence.

¶ 59   Accordingly, we conclude there is no basis for reversing

  COGCC’s determination that Maralex violated Rule 905(a).

                            D. Rule 907(a)(1)

¶ 60   COGCC has defined exploration and production waste as

  “wastes associated with operations to locate or remove oil or gas

  from the ground.” Dep’t of Nat. Res. Rule 100, 2 Code Colo. Regs.

  404-1. Rule 907(a) generally requires that operators properly store,

  handle, or dispose of exploration and production waste. Dep’t of

  Nat. Res. Rule 907(a), 2 Code Colo. Regs. 404-1. The rule also

                                    28
  refers to a table, Table 910-1, setting forth acceptable concentration

  levels of various contaminants. Id. Operators must manage

  exploration and production waste “to the extent necessary to ensure

  compliance” with Table 910-1. Id.

¶ 61   COGCC concluded that Maralex violated Rule 907(a)(1) at the

  Katie Eileen 2 and 3 location based on exploration and production

  waste observed in the pit with the partially torn liner. According to

  the OFV, the violation was based only on the presence of

  “weathered drill cuttings” in the pit, which were visible due to the

  contrast in color between the cuttings and the native soil.

¶ 62   At the agency’s hearing, COGCC’s environmental protection

  specialist also testified that, based on soil samples he had taken

  from the edge of the pit, the soil exceeded the permissible levels of

  electrical conductivity, sodium absorption, and arsenic. However,

  the environmental protection specialist did not take background

  samples that would show that the elevated levels were unique to the

  area around the pit and not merely common to the nearby soil.

¶ 63   Maralex contends that COGCC staff erred in failing to take

  background soil samples. We conclude that Maralex’s reliance on

  the footnote in Table 910-01 is misplaced. While that footnote

                                    29
  states that “[c]onsideration shall be given to background

  [contaminant] levels in native soils,” Dep’t of Nat. Res. Table 910-1

  n.1, 2 Code Colo. Regs. 404-1, nothing in COGCC’s rules mandates

  that an inspector take background soils samples.

¶ 64   Regardless, COGCC’s conclusion with regard to Rule 907(a)(1)

  was based only on the inspectors’ testimony and photographs

  demonstrating that there were drill cuttings in the pit with the torn

  liner. Specifically, the OFV read, “[COGCC] finds Maralex in

  violation of Rule 907.a(1) at the Katie Eileen 2 [and] 3 Location,

  because drill cuttings were not properly treated or stored in the pit

  with the torn liner.” Because that finding is supported by

  substantial evidence, we perceive no basis for reversing the agency’s

  decision that Maralex violated Rule 907(a)(1).

                              V. Conclusion

¶ 65   Accordingly, the district court’s order enforcing COGCC’s OFV

  is reversed insofar as it upheld the agency’s determination that

  Maralex violated Rule 204 on March 20, 2014, and assessed a

  $2000 penalty for that violation. In all other respects, the district

  court’s order is affirmed. We remand to the district court to return

                                    30
the case to COGCC for further proceedings consistent with this

opinion.

     JUDGE BOORAS and JUDGE CASEBOLT concur.

                                31