Digging deep on oil and gas drilling overhaul legislation

Cross Currents: A column by Bill Christopher
Posted 3/13/19

It should come as no surprise to those of us who follow state politics: You could have given odds on a bet that the Democrats’ “trifecta” would at some point roll out major proposed changes to …

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Digging deep on oil and gas drilling overhaul legislation

Posted

It should come as no surprise to those of us who follow state politics: You could have given odds on a bet that the Democrats’ “trifecta” would at some point roll out major proposed changes to the regulation of the oil and gas industry in our state.

With the failure of the fracking ballot issue last November which called for drilling to be setback 2,500 feet from residential and a few other land uses, it was simply inevitable that the Democrat controlled legislature would address this polarized issue.

Sea change in mission of COGCC

The bill that was unveiled on March 1 is a comprehensive re-write and re-direction of the existing law and the existing mission of the state created Colorado Oil and Gas Conservation Commission (COGCC). Let’s summarize what Senate Bill 19-181 would do if approved by both state legislative houses and signed into law by Governor Polis.

First and perhaps foremost, it would change the mission and focus of the COGCC. Currently, this commission is charged with developing oil and gas resources throughout the state. It has clearly demonstrated this focus over the years since fracking ramped up in Colorado.

The mission in the proposed legislation would regulate the oil and gas industry in such a way to protect public health and safety, wildlife and the environment.

Along with the major shift in mission, the bill’s sponsors are saying it would modernize state regulations which have not kept pace with the technology and the industry’s capability to access oil and gas in more places.

Local control of new wells and operations

Another key provision would authorize cities, towns and counties throughout the state to regulate oil and gas operations - as opposed to the state, which currently has a monopoly on such regulations.

This is a huge shift in policy and reflects the ill-fated attempts by some municipalities to impose their own version of regulations such as minimum setbacks. It also reflects the lawsuits which have been brought against cities such as Longmont and Boulder by the COGCC.

Municipal regulation of oil and gas operations is similar to land use and development standards which cities, towns and counties currently are authorized to administer and enforce. Local governments could regulate the siting of wells, inspect facilities and impose fines for spills, leaks and emissions. They could charge fees to cover the costs of monitoring and other related activities.

Senate Majority Leader Steve Fenberg summed it up by stating “We also must empower communities to take control over what’s happening in their backyards and equip them with the tools they need to stand up for their best interests.” Local determination on this sensitive issue is amazing to me after all these years local governments have been the step-child.

Shifting control on forced pooling

Another key change would address what is known as forced pooling, which allows an exploration company to force mineral rights owners to allow drilling against their will.

Currently, if one owner in the immediate area signs up with the oil and gas exploration company, the company can tap those who don’t agree to have their mineral rights mined as well.

The company does have to pay the unwilling owners, but instead has control over the owners. The new regulation would call for a majority of the mineral rights owners to agree before a company could drill.

Changing the focus of the Oil and Gas Commission

While there are other new provisions, I want to highlight only one other change which is fundamental: Currently, the law calls for three of the nine member COGCC to have extensive experience in the oil and gas industry.

The proposed bill would drop that number to one. Other members of the commission would include one member each representing wildlife protection, environmental protection, soil conservation or reclamation and public health.

As you can readily see, the focus and priority of the commission would change dramatically. I definitely believe this is a far better mix of experience and focus than what has historically been the case. By the way, the governor appoints the members of the COGCC.

The drafting process of this legislation is flawed

Now that the major provisions have been outlined, there are a couple of concerns which I wish to address.

While I fully support the re-direction of public policy as contained in SB 19-181, I cannot help but wonder if the process used by the Democrats’ leadership to get to the March 1st unveiling was flawed.

Supposedly, oil and gas interests were not invited to the table in drafting this bill. Don’t get me wrong, but there should be a “fair shake” in the process including input from the affected industry as a stakeholder. Yes, they will have an opportunity to lobby and to testify as the bill makes its way through the legislative morass.

However, we all know that when a group comes up with an idea without the input of the so-called outsiders, it is difficult to cause change to take place. It is somewhat of a take it or leave it proposition which then could have substantial consequences.

I am simply saying that if more of an open approach had been used, it would have fit the normal process. While it might not end up changing a thing, it would have been more transparent and open of a process to invite all interested stakeholders from the start.

Striking a balance in local control

Secondly, I would submit that it would be wise for the state legislation in question to contain reasonable maximums or limits for local controls as set forth by the state legislature.

For example, one of the most obvious situations involves minimum setbacks for drilling from residential, schools and other sensitive land uses. If this is left wide open to each town, city and county across Colorado, there will be a huge range of setbacks. More than likely, some setbacks adopted could be exclusionary.

In other words, some local governing bodies might simply not want ANY new wells in their jurisdiction and they set a ridiculous distance as the minimum setback.

Is this fair? Is this wise? Given the 30,000 jobs created in the Colorado oil and gas industry and the amount of taxes which they pay, there needs to be balance and reasonableness applied.

Let’s be careful in how zealous we are if local determination becomes the law. Don’t throw the baby out with the bath water.

Bill Christopher is a former Westminster city manager and RTD board member. His opinions are not necessarily those of Colorado Community Media.

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