A Few Reasons Why The “Boulder Bill” Deserves A Much Closer Look, More Stakeholder Engagement
The long-expected Colorado Democratic oil and gas bill dropped late Friday night. After taking a first look over the weekend, Energy In Depth and energy experts across the state agree: this bill looks a lot like Proposition 112, if not actually worse.
Of course, that should be hard to believe. Voters overwhelmingly rejected the ballot measure in November by 10 points—a margin of hundreds of thousands of votes. As we know by now, Proposition 112, a mandated 2,500-foot statewide setback, would have all but banned oil and gas development in Colorado.
After the defeat, Boulder Democrats indicated their intention to write a bill addressing oil and gas regulations and vowed this would be a “sensible” approach to updating Colorado’s laws.
No doubt, supporters of the bill will argue that these changes are necessary and will take issue with characterizing the legislation as going far beyond Proposition 112. But that goes directly to the point of why Colorado’s energy industry wants to ensure a robust, collaborative approach to improving Colorado’s oil and gas laws, not a bill constructed in the dark.
A Quick History: Collaboration has already resulted in important, updated rulemakings.
Supporters of the bill have argued that now is the right time to overhaul Colorado’s laws since they “haven’t been updated in 60 years.” But that assertion ignores an ongoing, intensive and collaborative stakeholder process that has produced more than a dozen major rulemakings over the past decade. One of the most high-profile successes to emerge from that process occurred when Colorado, in partnership with industry, adopted the strictest methane regulations in the nation. An Environmental Defense Fund spokesman at the time said, “I think these rules are a model for the country.”
Under then-Gov. Bill Ritter, Colorado lawmakers in 2007 overhauled the Colorado Oil and Gas Conservation Commission with major changes to everything from the make-up of the commission to more public disclosure, setback protections, and expanded water monitoring. That collaborative process continued in 2018, as the commission, working with stakeholders over several months, updated the setbacks in relation to school properties.
But either way, why rush a bill of this consequence, without stakeholder engagement, and without taking the time to get it right? The lawmakers themselves have stated publicly several times that the oil and gas industry was essentially shut out of the process. What about input from lawmakers from Weld County, who represent the areas where a majority of the oil and gas activity occurs? They were also left out. Aside from the lawmakers who actually drafted the bill, the only other group to have seen the text before it was released were “advocates,” presumably of stricter oil and gas regulations.
Even La Plata County Commissioner Gwen Lachelt—a prominent environmental activist and co-chair of the oil and gas task force installed by then-Gov. John Hickenlooper in 2014—says she hadn’t seen the bill until it was released. So it seems that Boulder, where there isn’t much oil and gas activity to begin with, is dictating what the scope of regulations will look like to the rest of the state.
Several provisions in the new legislation should raise alarm bells.
Let’s take a look at some of the key issues that show this bill actually goes further than Proposition 112:
- De Facto Moratorium: The legislation effectively puts a moratorium in place until all the provisions of the bill are implemented. With at least six major rulemakings included—each of which will require significant resources and take possibly years to implement—this will serve as a de facto moratorium and a multi-year ban on oil and gas development in Colorado.
- Unlimited Authority to Local Governments: The bill “grants local governments the authority to regulate oil and gas development to address land use, the avoidance and minimization of adverse impacts from oil and gas operations, the location and siting of oil and gas facilities and oil and gas locations.” (emphasis added) While not explicitly mentioned in the language, this could include things like setbacks and zoning. By not adding in any sort of cap to this authority, local governments could potentially regulate the industry out of their jurisdiction, resulting in a de facto ban.
- No Cap on Fees: The bill also requires the commission to eliminate the current cap on fees and to set a permit application fee in an amount “sufficient to recover the commission’s reasonably foreseeable direct and indirect costs in conducting the analysis necessary to assure that permitted operations will be conducted in compliance with all applicable requirements of the act.”
- State Law Loses Pre-Emption Powers: The bill waters down the state’s authority in issues where state and local law conflict. Currently, state law would pre-empt local regulations should conflict arise. But this bill says that if a conflict exists between different levels of government or multiple agencies, “the regulation or standard that is rationally designed to be more protective” of health and safety controls. The state possesses the regulatory framework and expertise to conduct permitting reviews, while localities may be inadequately or completely unprepared to tackle complicated permitting issues.
- Expansion of “Affected” Parties in Permitting: The bill includes a requirement that operators must provide information relating to “local affected governments”—plural—when applying for a permit. This language could mean that operators will have to account for not only the local governmental jurisdiction in which the development is proposed, but also any other local government that claims to be “affected” by the siting, potentially giving that entity a veto over neighboring communities that would choose to move forward with development. What is not included in the bill is a definition of what it means to be an “affected” government. If any local government can claim it is “affected,” the local jurisdiction that has the toughest regulations would supersede others with less stringent regulations (as noted in the previous bullet).
Again, these are just the initial concerns from our review and conversations with energy leaders in the state. No question there will be more. And certainly, supporters will be ready to clarify and explain.
Last week, 30 business, labor and civic organizations sent a letter to Gov. Polis and lawmakers urging for a serious and thoughtful process that seeks “reasonable compromise and workable outcomes.”
We understand authors of the legislation seem anxious to get this bill passed as quickly as possible, but there are still two full months in which a healthy, collaborative, stakeholder engagement process and dialogue can occur. However it shakes out, we will be there through the legislative process to raise questions, provide industry perspective, and push back against f the more dubious claims made during the debate.