DISTRICT COURT, WELD COUNTY, COLORADO

901 9TH AVE, GREELEY, CO 80631

PHONE: (970) 475-2400

Plaintiff: CRESTONE PEAK RESOURCES

OPERATING LLC, a Colorado limited
liability company

v.

Defendant: TOWN OF ERIE, a municipal

corporation. COURT USE ONLY

David S. Neslin, #13396

Ericka Houck Englert, #34681
DAVIS GRAHAM & STUBBS LLP
1550 17th Street, Suite 500
Denver, CO 80202
Telephone: 303.892.9400 Case No.
Facsimile: 303.893.1379
Ctrm.
E-mail: dave.neslin@dgslaw.com
ericka.englert@dgslaw.com

Attorneys for Plaintiff

COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF

Plaintiff Crestone Peak Resources Operating LLC (Crestone) for its Complaint for
declaratory and injunctive relief against the Town of Erie (Erie), pursuant to Colorado Rules of
Civil Procedure 57, 65 and Colorado Revised Statutes 13-51-105, et. seq., states as follows:

INTRODUCTION

The Town of Erie has enacted an unconstitutionally vague and overbroad ordinance,
punishing the emission of unquantifiable levels of odors that can be characterized as annoying
to normal people. Erie Municipal Code, Ordinance No. 15-2017 5(H) (the Ordinance) is
plainly directed at Crestone, due to the vocal opposition by a portion of Eries residents to
Crestones oil and gas operations.

The Ordinance violates due process because it is so vague that it fails to provide fair
notice of what conduct is prohibited and it does not contain sufficiently definite standards for
non-arbitrary and nondiscriminatory enforcement. It fails to define any terms, and it lacks
specificity, clarity, and quantifiable standards. The Ordinance is also preempted by state law
because it prohibits the emission of odors that state law allows. This materially impedes the
states interest in regulating air quality in a comprehensive and systematic manner through a
clear and specific regulatory plan.

Erie had already entered into an Operator Agreement that governs all aspects of
Crestones operations and facilities in Erie to protect human health, safety and welfare, the
environment and wildlife. Eries Operator Agreement did not address odor emissions, and
instead relies on Colorado state regulations that set forth qualifiable standards for determining
odor violations as sufficient to protect Eries residents. Even though there have been no odor
emissions from Crestone that exceed the state regulatory limit, Crestone has worked diligently to
successfully address and mitigate any odor concerns that might be associated with its operations
and facilities in Erie.

When an Erie police officer responded to odor complaints on September 7, 2017, in the
area of one of Crestones well pad sites, the officer could not substantiate the complaints. The
officer noted two other potential sources of odor, including the Front Range Landfill and nearby
road-paving operations. Erie did not seek to address the complaints with Crestone, despite
cooperative abatement being the publicly-stated goal of the town relative to nuisance complaints.
Instead, the Erie town prosecutor advised the officer to issue a citation to Crestone, thereby
enforcing the Ordinance in a discriminatory and unconstitutional manner. Eries Ordinance is
unconstitutional on its face and as applied and this Court must enjoin its enforcement.

PARTIES

1. Plaintiff Crestone is a Colorado limited liability company with its principal place
of business at 1801 California St., Suite 2500, Denver, Colorado 80202.

2. Crestone is an oil and gas producer with operations in the Town of Erie, Weld
County, Colorado.

3. Defendant Erie is a municipal corporation, partially located in Weld County,

Colorado.

JURISDICTION AND VENUE

4. The Court has subject matter jurisdiction over this action pursuant to Colo. Const.
art. VI, 9(1).

5. The Court has personal jurisdiction over Erie pursuant to Colo. Rev. Stat. 13-1-
124(1).

6. Venue is proper in this district pursuant to Colo. R. Civ. P. 98(c).

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 GENERAL ALLEGATIONS

The State of Colorado Statutory Scheme Contemplates Regulations on Odor Emissions

that are Specific, Clear and Quantifiable

7. Detection and measurement of odor concentration for the purposes of determining

whether a violation of law has occurred is quantifiable by scientific standards. Such quantifiable
methods are necessary because not all odors are detectable or recognizable by all people.
Likewise, not all odors are equally distasteful to all people. The fleeting detection of an odor is
not the proper basis for a finding of a violation of law.

8. Acknowledging these facts about odors, the Colorado Department of Public

Health and Environment (CDPHE) has promulgated regulations that clarify an odor emission
violation occurs when odors exceed quantifiable, allowable limits. Section 27-7-101, C.R.S., et.
seq.

9. Under Regulation Number 2, Odor Emission, 5 CCR 1001-4 (Reg 2), the State
of Colorado has determined that an odor violation occurs only when odors can be detected after
the odorous air has been diluted with seven (7) or more volumes of odor free air in areas that
are primarily residential or commercial. The levels are higher for other land use areas.

10. When investigating an odor complaint, Reg 2 requires two odor measurements to
be taken within an hour, at least fifteen minutes apart, outside the property line of the property
from which the emission originates.

11. In order to assure reliability and consistency in odor evaluation, Reg 2 further
provides that CDPHE will select and train personnel for evaluating odors using a detectability
rating test following a manual from the United States Public Health Service.

12. Reg 2 was promulgated as part of a regulatory plan related to air quality,
including odors, in order to protect the health, welfare, convenience, and comfort of the
inhabitants of the state of Colorado. Section 27-7-102, C.R.S.

13. The state statutes specifically define emission control regulation as mean[ing]
and include[ing] any standard promulgated by regulation which is applicable to all air pollution
sources within a specified area and which prohibits or establishes permissible limits for specific
types of emissions in such area . . . . Section 25-7-103, C.R.S. This definition further provides
that emission control regulations shall not include standards which describe varying degrees
of pollution. Id.

14. By statute, the state regulations, including emission control regulations regarding
odor, shall be set forth with as much specificity and clarity as is practical. Section 25-7-109,
C.R.S. Additionally, the state allows municipalities to adopt emission control regulations that
are at least the same as, or may be more restrictive than, the emission control regulations
adopted pursuant to this article. . . . Section 25-7-128, C.R.S.

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 Crestones Activities in Erie

15. Crestone acquired certain oil and gas assets from Encana Oil & Gas (USA) Inc.
(Encana) in or about 2016. The assets included certain well pad sites, facilities, and operations
in the Town of Erie.

16. In or about February 2017, Crestone began operations in Erie at the Waste
Connections and Pratt well pad sites, among others.

17. In Erie, as in all areas of operation, Crestone aims to operate efficiently and safely
while acting as good stewards for the land, air and water. Crestone actively seeks new
approaches to operations that minimize impacts on the environment and the communities near its
project sites.

18. The Pratt and Waste Connections pad sites are in close proximity to and within
sight distance of residential neighborhoods and the Front Range Landfill.

19. Many Erie residents have been vocal in their opposition to the presence of oil and
gas operations in Weld County.

20. Upon information and belief, Erie residents made odor complaints to the Colorado
Oil and Gas Conservation Commission (COGCC), CDPHE, and the Erie Board of Trustees as
well as the press.

21. In response to the complaints, Crestone employed numerous methodologies and

technologies to reduce and mask odors. Crestone also engaged the services of an internationally-
recognized odor consultant to assist in reducing and masking odors.

22. Upon information and belief, the COGCC and CDPHE investigated the Erie odor
complaints by inspecting Crestones pad sites and the surrounding neighborhoods.

23. During the majority of the COGCC and CDPHEs inspections, the inspectors
detected no odor at all. On the few occasions in which the inspectors detected odors that could
be coming from Crestones operations, Crestone promptly took action to mitigate the odors.
Neither the COGCC nor the CDPHE cited Crestone for odor violations.

24. Crestones odor consultant also conducted a site assessment in Erie to evaluate the
odor emissions that were allegedly associated with Crestones facilities. The consultant selected
25 sample sites in and around Crestones well pad sites, including public roads, plant boundary
and adjacent landfills. The consultant measured both intensity and odor concentration over five
days beginning on September 5, 2017. The field assessment showed no exceedance of odor over
the state limit by Crestones operations. On two occasions, the consultant detected odor above
the state limit; however, the odors were distinctively municipal waste odors emanating from
waste collection trucks.

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 25. Previous to Crestones acquisition, in 2015, Erie and Encana had negotiated and
entered into an Operator Agreement that was intended to govern Encanas development and
operation of oil and gas wells in Erie in a cooperative manner to be protective of human health,
safety and welfare, environment and wildlife.

26. By virtue of Crestones acquisition of all of Encanas oil and gas assets in Erie,
Crestone became and remains bound, along with Erie, by the Operator Agreement.

27. The intent of the Operator Agreement is to set forth all of the obligations, duties,
requirements, and conditions that Erie will apply to Crestones well pad sites, facilities, and
operations within Erie relative to human health, safety and welfare, environment and wildlife.

28. The Operator Agreement does not contain any specific obligations regarding odor
emissions or mitigation. The absence of such obligations indicates that Erie did not intend to
impose odor-related obligations on Encanaand now Crestoneabove and beyond already
existing state requirements.

Erie Enacts the Unconstitutional Ordinance

29. Despite the largely unsubstantiated odor complaints, the Erie Board of Trustees
voted on or about July 25, 2017, to approve File No. 17-250, that included an Amendment to
Eries Abatement of Nuisance Code, designating odor emissions as a nuisance.

30. The Ordinance provides:

Odor Emissions. It shall be unlawful and a public nuisance for any person, tenant,
occupant or property owner to permit the emission of odor from any source to result in
detectable odors that leave the premises and are detected by a reasonably prudent person
with a normal sense of smell to the exterior of the premises or at any adjoining property
or public right-of way, and that causes annoyance or otherwise detrimentally affects the
general health, safety, welfare or use and enjoyment of ones property.

No summons and complaint shall be issued and no person shall be convicted at trial for
violating this subsection unless a minimum of two witnesses from separate households
testify about the nature of the nuisance odor.

No civil action shall be filed in the municipal court, and no abatement order shall be
issued by the court under this Chapter unless a minimum of two witnesses from separate
households testify about the nature of the nuisance odor.

Erie Municipal Code, Ordinance No. 15-2017 5(H).

31. The Erie Ordinance sets forth no quantifiable thresholds of time, density or
concentration for odor detection and violation. Instead, the Ordinance vaguely provides that a
violation occurs when odors are detected by a reasonably prudent person with a normal sense of

5
smell. . . . The Ordinance further prohibits someone from allowing detectable odors to leave
the premises that cause[] annoyance or otherwise detrimentally affect[] the general health,
safety, welfare or use and enjoyment of ones property.

32. The Ordinance fails to define any term included within it. Accordingly, average
citizens must guess as to its meaning. For example, the phrases reasonably prudent and
normal sense of smell are unconstitutionally vague such that it is unclear how the Ordinance is
to be applied.

33. By its language, the Ordinance fails to provide fair notice to the public regarding
what actions are prohibited. Average citizens will not be able to determine what is needed for
compliance.

34. Because it lacks specificity, clarity and quantifiable standards, and because it
describes varying degrees of pollution, the Ordinance does not constitute an emission control
regulation that is at least the same as, or more restrictive than, the emission control regulations
adopted pursuant to Section 25-7-101, et. seq., C.R.S. and is therefore not authorized by state
statute.

35. An unlawful conflict exists between the Ordinance and Reg 2 because the
Ordinance prohibits odor emissions that are detected by a reasonably prudent person with a
normal sense of smell even if the emissions do not violate Reg 2, and Reg 2 allows odor
emissions that cannot be detected after the prescribed dilution even if they violate the Ordinance.
This conflict materially impedes and destroys the states interest in Reg 2, and accordingly Reg 2
preempts the Ordinance and renders it unlawful.

36. Further, the Ordinance is so general that its scope includes within its prohibitions
the right to carry on certain businesses and to engage in certain activities which cannot under the
police powers be reasonably classified as unlawful.

37. Pursuant to the Ordinance, an alleged odor violation could be of very low
concentration levels for only a few fleeting moments. Further, the odor could be of any variety
of smells that may not be considered annoying to the general public and that are emitted in the
regular course of lawful activities. However, if two residents complain of annoyance, the
Ordinance provides a violation may be found.

38. The uncertainty created by the Ordinance will result in arbitrary and inconsistent
enforcement and application. Further, the Ordinance fails to provide law enforcement with
sufficiently definite standards for non-arbitrary, non-discriminatory enforcement.

Erie Unconstitutionally Enforces the Ordinance

39. On or about September 7, 2017, residents in Erie made complaints alleging odors
were emitting from Crestones oil and gas operations. Officer Cooper Cramblet from the Erie
Police Department investigated the complaints.

6
 40. Officer Cramblet could not substantiate the odor allegations and stated in his
report that he did not smell any odors.

41. Officer Cramblet noted that the complaints were from residents who lived within
proximity of the Front Range Landfill as well as Crestones Pratt pad site. Upon investigation,
Officer Cramblet learned that oil and gas operators had delivered 57 loads of oil and gas
production waste to the landfill on September 7, 2017. Crestone delivered 18 of the 57 loads
from unrelated operations. The remaining loads were from oil and gas operators other than
Crestone.

42. Officer Cramblet also learned that A-One Chipseal, a road paving company, had
been sealing road cracks on Weld County roads that border the neighborhood where the
complaining residents live.

43. The investigating Erie Police Officers were unable to substantiate the odor
complaints of September 7, 2017, or that the odors may have come from Crestones operations
instead of another likely source such as the landfill or paving operations. Accordingly, the
investigative report does not support a factual or legal conclusion that annoying odors had left
the premises of Crestones operations.

44. Also on September 7, 2017, Crestones consultant was conducting its odor
assessment of Crestones operations and did not detect any odors above the state regulatory
levels emitting from Crestones operations.

45. Disregarding the significant evidence to the contrary, the Erie Town Prosecutor,
Kristin Brown, directed the Erie police to charge Crestone with violating the Ordinance in Case
No. 17-2023. Crestones first appearance is set for December 4, 2017.

46. During the discussion regarding File No. 17-250 at the Erie Board of Trustees
meeting on July 25, 2017, the Town Administrator, A.J. Krieger, acknowledged that Eries goal
is to obtain voluntary compliance with nuisance ordinances, stated that Erie prefers to work with
property owners when there are odor complaints, and predicted that only a third of complaints
might result in a citation if odor leaves a property owners premises. He also stated that Erie
will rely on its police officers to respond to a complaint, make observations, and make
reasonable determinations about whether to write a citation.

47. Erie did not contact Crestone prior to issuing a citation, did not seek voluntary
compliance, and did not try to work with Crestone regarding the odor complaints. Crestone is
the first, and so far only, company to be charged with violating the Ordinance.

48. The Erie Board of Trustees enacted the Ordinance in response to complaints
regarding Crestone, despite the fact that the majority of the complaints were unsubstantiated.
Moreover, the Erie Town Prosecutor decided to charge Crestone with a violation of the
Ordinance, despite the fact that the investigating officer could not substantiate the odor
complaints from September 7, 2017. Erie has not charged any other company or person with

7
violation of the Ordinanceeven though the complaints of September 7, 2017, were as likely to
have been caused by oil and gas waste disposal at the landfill or road paving.

FIRST CLAIM FOR RELIEF

(Declaratory Judgment that the Ordinance is
Unconstitutional and Preempted by State Law)

49. Crestone incorporates each allegation of the preceding paragraphs as if set forth
fully herein.

50. The Ordinance adversely affects Crestones rights, status and legal relations.

51. The Ordinance is unconstitutional and is preempted by state law and, on

information and belief, Erie asserts the Ordinance is valid.

52. A real and substantial controversy therefore exists between the parties for which
declaratory relief is appropriate.

53. The controversy is one upon which the judgment of this Court will effectively
operate and upon which a judicial determination will have the force and effect of a final
judgment regarding the parties rights.

54. Crestone seeks a determination that:

a. The Ordinance is unconstitutional on its face as it is impermissibly vague,

overboard and violates due process as afforded by the Fourteenth
Amendment to the United State Constitution and Article II of the
Colorado Constitution;

b. The Ordinance is unconstitutional as applied because it was applied in a

discriminatory manner with the requisite discriminatory intent; and

c. The Ordinance is preempted by the Colorado Air Pollution Prevention and

Control Act, Section 27-7-101, C.R.S., et. seq., and its implementing
regulations, including Reg 2, because the Ordinance forbids odor
emissions that Reg 2 authorizes and this materially impedes and destroys a
state interest.

SECOND CLAIM FOR RELIEF

(Permanent Injunction Enjoining Ordinance No. 15-2017 5(H))

55. Crestone incorporates each allegation of the preceding paragraphs as if set forth
fully herein.

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 56. The Ordinance is unconstitutionally vague, overbroad, violates due process, is
being applied in an unconstitutional manner, and is preempted by state law. Accordingly, it is
unlawful and invalid.

57. Crestone and will suffer certain, immediate, and irreparable harm if the Ordinance
and enforcement of it is not permanently enjoined.

58. The injury to Crestone outweighs the harm, if any, to Erie if the Ordinance is
permanently enjoined.

59. The injunction, if issued, will not adversely affect the public interest.

PRAYER FOR RELIEF

WHEREFORE, Crestone respectfully requests that the Court:

1. Enter judgment in favor of Crestone and against the City on Crestones

declaratory judgment claims, declaring Ordinance No. 15-2017 5(H) unconstitutional and
preempted by state law;

2. Permanently enjoin the enforcement of Ordinance No. 15-2017 5(H) because it

is an invalid and unlawful;

3. Award Crestone its costs under Colorado Rule of Civil Procedure 54(d); and

4. Award Crestone any other relief it deems just and reasonable.

Dated: November 30, 2017

/s/ Ericka Houck Englert
David S. Neslin, #13396
Ericka Houck Englert, #34681
DAVIS GRAHAM & STUBBS LLP
1550 17th Street, Suite 500
Denver, CO 80202
Telephone: 303.892.9400
Facsimile: 303.893.1379

Attorneys for Plaintiff

Plaintiffs address:
1801 California St., Suite 2500
Denver, CO 80202

9
Colorado Courts E-Filing Page 1 of 1

Your filing has been successfully submitted to the court. Your filing is not considered final until the court accepts it.

Filing Information:
Filing ID: 92302C56F6D85
Court Location: Weld County
Case Number: 2017CV030972
Case Caption: Crestone Peak Resources Operating LLC v. Town of Erie
Authorized Date: 11/30/2017 12:27 PM
Submitted By: Angila Papsdorf
Filing Party(ies):

Party Type Status Attorney

Crestone Peak Resources Operating LLC Plaintiff Active Ericka Houck Englert (Davis Graham & Stubbs LLP)

Documents:

Document ID Document Title Statutory Fee Security

16E7A6E8D57CD Complaint Complaint for Declaratory and Injunctive Relief $224.00 Public

7E07791FA4723 Civil Case Cover Sheet Civil Case Cover Sheet $0.00 Public

3A025C5589B26 Summons Summons $0.00 Public

Courtesy Copy(ies):

Party Type Attorney Organization Method

No results were found.

Submission Options:
Note To Clerk: N/A
Authorizer: Ericka Houck Englert
Submit Options: Submit to the court.

Billing Information:
Statutory Filing Fees: $224.00
E-Filing Fees: $6.00
Courtesy Copy Fees: $0.00
Total Fees: $230.00
Billing Reference: 033014-0008

https://www.jbits.courts.state.co.us/efiling/web/filing/reviewFiling/submitted.htm?filingI... 11/30/2017