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Energy

Colorado is quickly becoming a patchwork of oil and gas rules after a major law change

Boulder County wants to enact tougher regulations. Weld County wants to make it easier to drill. And the state is scrambling to keep up.

An Extraction Oil & Gas oil drilling rig in operation on the Livingston pad on the west side of the Anthem neighborhood in Broomfield on Aug. 2, 2019. (Doug Conarroe, The Colorado Sun)
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When county commissioners met this summer to ponder local control of oil and gas operations in Boulder County, residents came with signs proclaiming “I am over O&G’s $ influence.” In Weld County there were “Recall Jared Polis” T-shirts — a sartorial critique of the governor who signed the new oil and gas legislation.

The audience histrionics are but a sign of the deep divide over the role of the oil and gas industry in Colorado and what local control means under Senate Bill 181 — titled the Protect Public Welfare Oil and Gas Operations Act.

The law requires a host of new rules at the state level for things such as air emissions and assessing cumulative impacts of oil and gas projects, and at the same time local governments are moving ahead with their own rules.

Dan Haley, president of the Colorado Oil and Gas Association. (Handout)

“The next two years or year-and-a-half there will be an exhaustive amount of rulemaking at the state level and the local level,” said Dan Haley, CEO of the Colorado Oil and Gas Association, a trade group.

The Colorado Oil and Gas Conservation Commission on July 31 adopted the first of these new rules, putting limits on the use of “forced pooling,” the ability of drillers to consolidate mineral rights even if the owners object. It did not come, however, without noisy demands from protesters to halt all permitting until the new rules are made

On the local level, Boulder and Weld counties may be at the extremes. Boulder is looking to tighten already tough regulations while Weld is setting up its own oil and gas department to expedite permitting. But other counties and municipalities in the middle are also wrestling with the issue.

“Home rule is defined in law and case law,” said Kevin Bommer, executive director of the Colorado Municipal League. “Local control is an amorphous thing and wildly inconsistent.”

Until passage of the new law, the state, through the COGCC, held primacy in all key areas of oil and gas regulation, including siting.

The new law emphasizes that local government has the land use authority to regulate and site oil and gas locations to minimize adverse impacts to public safety, health, welfare and the environment.

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Local governments also gain the ability to regulate impacts, including the ability to inspect facilities, issue fines for leaks, spills and emissions and impose fees to fund oversight.

It remains to be seen how these powers will be used, but the fact that two counties and six municipalities have enacted moratoriums on oil and gas permits while they review local controls has spawned worst-case-scenario fears among critics and the industry.

“When SB-181 was in the legislature they said ‘Oh this isn’t going to be a moratorium,’” said Kristie Melendez, mayor of Windsor, which straddles the Larimer-Weld county line. “Now there are moratoriums. I think we are going to see local overreach.”

Adams County adopted a six-month moratorium that will expire in September, when the county commission is scheduled to vote on revisions to its oil and gas rules. “We’ve done moratoriums before without a problem,” said Steve O’Dorisio, the commission chairman. “This shouldn’t be an issue.”

Conflict as big as Texas

The other local governments adopting moratoriums are the towns of Erie, Superior, Lafayette, Timnath, Berthoud, the city of Broomfield and Boulder County. The time-outs ranged from three to nine months, with Boulder County having the longest, stretching to March 2020.

“One of my concerns,” Haley said, “is when you have those moratoria popping up it sends an anti-business message.”

The difference between Boulder and Weld counties is “like California vs. Texas on a county scale,” O’Dorisio said.

In March 2017, Boulder County adopted more than 40 pages of rules in what it called the “the strongest set of regulations on oil and gas development in the state of Colorado.”

Now it is researching “new areas of authority” not previously included in its regulations. “The rules we wrote were in light of the legal standards at the time,” said Kate Burke, senior assistant Boulder County attorney. “We are asking, `Have we done enough, could we do more?’”

MORE: Colorado oil and gas overhaul tips power toward local government. How that power is used will vary widely.

Boulder County’s rules already include regular air monitoring, water-well testing for as long as six years, disruption payments to residents affected by drilling, local inspections and restrictions beyond state requirements in flood plains.

“There were gray areas where we pushed the limits,” said Kim Sanchez, the county’s senior chief planner. “SB-181 gives us new authority.”

New rules will be drafted, put up for review by the public and the industry and then go through official hearings and votes by the county planning commission and the commissioners. It is a process that should run till next March, Sanchez said.

“These operations give off odors, emit chemicals that can cause cancer and they can explode,” said Commissioner Matt Jones. “So we should have the power to protect people and Senate Bill 181 gives us the power to do that.”

Still, when the county commissioners met on July 17 to vote on keeping the moratorium in place until March 28, 2020, many of the public scolded the commissioners for not just banning oil and gas development.

The industry was characterized as rogue and “incapable of reason” and called “suckatrons.”

“If you don‘t think this is a war, think again,” Amanda Harper, who lives near Erie, just over the Weld County line, told the commissioners.

Oil and gas activities have moved closer to neighborhoods in Colorado, including this Crestone Peak site known as the Pratt pad in Erie. (Doug Conarroe, The Colorado Sun)

The threat of global warming was invoked, as was the possibility that a sudden shift of climate 120,000 years ago led to cannibalism among Neanderthals in the Rhone Valley of France.

In attempt to maintain a measure of civility, there are no shouts or applause allowed in Boulder County Commission hearings. When agreeing with a point made by a speaker people raise their hands and shake them – much like one does when doing the hokey-pokey.

“Are you afraid of a lawsuit or extinction?” demanded Lafayette resident Marty Feffer, to a shaking of hands.

On the other hand

A few weeks earlier, when the Weld County Commission met to invoke new land use control powers over oil and gas operations, there was more talk of jobs and the local economy than Neanderthals. Weld is the epicenter of drilling in Colorado with 21,180 wells representing 88% of the state’s oil production and 34% of its gas output.

About 59% of Weld’s total assessed value comes from oil, according to the county. At the back of the hearing room was a banner proclaiming the county’s support for the industry with a heart sitting atop an oil derrick.

MORE: New energy legislation didn’t end Colorado’s “oil and gas wars.” It just relocated them.

“What works or is right for Boulder, is not what works or is right for Weld,” Windsor’s Melendez testified in support of the proposal.

The county invoked so-called 1041 powers, which enable a local government to maintain control over projects even when they have statewide impact. Arapahoe County, for example, has invoked 1041 for highways and interchange planning.

Communities had been blocked from using 1041 on oil and gas projects — a prohibition that Senate Bill 181 removed.

On July 8, Weld followed-up by creating its own oil and gas department to handle siting applications. In county officials’ view, lifting the 1041 prohibition supplanted COGCC oversight on the issue and the land use form, called a 2A, required by the state was no longer necessary.

That position drew a swift rebuke from the state in the form of a letter from the Attorney General’s office.

“While SB19-181 provides local government with siting authority over oil and gas surface locations, it does not diminish the COGCC’s authority to regulate the orderly development of oil and gas throughout the state,” the letter from Kyle Davenport, a senior assistant attorney general, said.

“Local government may impose regulations that are ‘more protective or stricter than state requirements,’ but they are not authorized to bypass the COGCCs regulations,” the letter said.

Before Senate Bill 181, the state rules were the ceiling for regulation, but now they are the floor, said Sara Loflin, executive director of the League of Oil and Gas Impacted Coloradans (LOGIC). “What Weld County is trying to do is build a basement.”

County officials and supporters don’t see it that way and contend that this raises the question of how much local control there really will be.

Weld County Commissioner Barbara Kirkmeyer. (Handout)

“We are setting up our local process assuming our enhanced land use regulation,” Commissioner Barbara Kirkmeyer said. “We are trying to bring stability and certainty to the process.” She said the COGCC’s insistence that operators file a 2A form just “muddies the water.”

“They can’t tell the county the location has to be moved, they can’t tell the operator to move,” Kirkmeyer said.

“As elected officials we are held accountable by our constituents to protect health, safety and the environment, and I think we can do a better job than a state agency out of Denver,” she said.

Rulemaking has begun

The COGCC is, however, at the beginning of developing new rules that could impact local decisionmaking, including a cumulative impact assessment, which could account for environmental impacts, and alternative site analysis, calling for operators to consider sites away from urban areas, for any drilling application.

“The state still has a finger in this so we’ll see how much local control there is,” Windsor Mayor Melendez said.

MORE: Colorado’s oil and gas battlefield (and campaign cash) is shifting to local elections

What if cumulative impact assessment or the state alternative site analysis disagrees with a local decision?

“There ought to be some deference to local decisions,” Bommer, from the Colorado Municipal League, said. “If there is a blurring of the lines over land use decisions then we are going to have something to talk about.”

Adams County in its proposed regulations leaves a large area open to oil and gas development but zones it out of residential, open space and conservation areas. Could that be overridden by the state?

“We aren’t going to ban it, like Boulder wants, or take out the floor the way Weld wants to,” Commissioner O’Dorisio said. “We’re not ‘Drill baby, drill,’ or ‘Keep it in the ground.’”

Jeff Robbins, the COGGC executive director. (Handout)

Jeff Robbins, the COGGC executive director, said that the state working with local governments is the way to resolve these issues as they emerge.

“I want to be partners with local government,” Robbins said.  “There are a lot of jurisdictions; we are all trying to make rulemakings.”

Robbins said he has met with Weld County staff and with Boulder County, as well with Adams County and other local governments.

“Jeff and his staff have done a great job reaching out to counties and local governments,” said Brandy DeLange, the municipal league’s policy advocate overseeing oil and gas issues. “There are just so many unknowns.”


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