Leading Democrats plan to introduce a major reform bill into the Colorado Legislature soon to clarify that local governments have a clear say in oil and gas drilling operations in their jurisdictions, and the state agency that oversees the industry doesn't exist just to foster development.
That omnibus bill, to be introduced by House Speaker KC Becker and Senate Majority Leader Stephen Fenberg, both Boulder Democrats, not only dramatically alters the mission of the Colorado Oil and Gas Conservation Commission, but also clarifies that local governments can regulate the industry when it comes to surface impacts, land use siting and nuisance.
While the bill doesn't explicitly say those local governments can establish their own setback rules for drilling rigs beyond what the commission already mandates, it doesn't bar it either.
"Setbacks are a pretty normal tool for local governments to use for siting and for zoning, and they can use that as long as it's defensible and necessary to protect health and safety," Fenberg said.
"Our bill doesn't explicitly talk about setbacks, so it doesn't create a state setback," added Becker. "But setbacks are a typical land-use authority that local government have. Anything that they do in this regard under this bill would have to be based on protecting health, safety, welfare and the environment. It does not allow for any arbitrary limit."
The proposed bill, in part, is in reaction to a Colorado Supreme Court ruling in January that said the commission's mission isn't about health, safety and welfare of Colorado residents, but to foster oil and gas development and protect the rights of mineral owners and producers. That ruling said the commission could consider public health and the environment in its decisions, but only after taking into consideration cost effectiveness and technical feasibility.
Becker, Fenberg and Gov. Jared Polis all said they don't believe that should be the case.
"The legislation we outlined (Thursday) puts health and safety first and gives communities a meaningful seat at the table," Polis said. "While we know this doesn't solve all of the problems our communities face, it is a practical approach to finding a solution for many of our issues and providing more stability by updating our laws to reflect today's realities."
While some in the oil and gas industry said they expect to work with lawmakers on crafting a balanced measure, they weren't happy that they had not yet seen the details of any pending legislation.
"In my over 15 years of working with the Colorado state government, not having a thorough stakeholder process is unprecedented, especially for a bill that targets one industry but impacts every Coloradan," said Tracee Bentley, executive director of the Colorado Petroleum Council. "We are deeply disappointed that House and Senate leadership do not appear to value the stakeholder process nor the importance of having all stakeholders at the table on one of the most consequential proposals in Colorado history."
Bentley said everyone should be wary, and not just those in the oil and gas industry.
"This should make any industry, organization or citizen group in Colorado nervous about a transparent, public legislative process from here forward, and all Coloradans should consider the negative consequences of not having a stakeholder process in the creation of new legislation," she said.
Dan Haley, president and chief executive officer of the Colorado Oil & Gas Association, was a little more staid in his reaction to the bill, but no less upset about it.
"Their notion that oil and gas regulations haven't been modernized and strengthened in 60 years is revisionist history," Haley said. "We have the strictest regulations in the country, and they have been updated dozens and dozens of times with bipartisan support and the involvement of countless stakeholders. While we're offended by this intentional mischaracterization of our industry, we're committed to the upcoming legislative process."
While the oil and gas industry was fuming, a group of business leaders were cautioning lawmakers not to circumvent the will of the voters in their resounding rejection of major setback rules at the ballot last fall.
The Colorado Business Roundtable, a group of a variety of business organizations around the state, including the Grand Junction Area Chamber of Commerce, signed on to a letter to Polis and legislators Thursday to express their concerns about any changes in oil and gas regulations.
In it, the group cautioned the Legislature not to do an end run around voters when it comes to setbacks, and not to forget the economic benefits the industry brings to the state.
"As one of the state's largest economic sectors, the oil and natural gas industry is one of the most significant sources of tax revenue for basic public services at the state and local level," the letter reads. "More than $1 billion in taxes and other public revenues are generated by oil and natural gas development every year in Colorado, including more than $600 million for K-12 and higher education."
In addition to altering the commission's mission and ensuring that local governments have the authority to regulate surface concerns, the bill also addresses orphan wells and forced polling, the practice of forcing mineral rights owners into production contracts.
The measure aims to place higher bonding requirements on new wells to ensure that if they are later abandoned, there is money available to remediate them. The forced pooling provision would require that more than 50 percent of mineral rights owners agree to a production contract.