Colorado Governor Forms Task Force To Address Siting of Oil, Gas Facilities

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By Tripp Baltz  

Aug. 4 — Colorado Gov. John Hickenlooper (D) and Rep. Jared Polis (D-Colo.) announced a task force to draft recommendations on siting of oil and gas facilities.

Specifically, the task force is charged with forging recommendations to reduce land-use conflicts over the location of oil and gas facilities near homes, schools, businesses and recreational areas such as playgrounds, Hickenlooper and Polis said.

With the formation of the task force, Hickenlooper asked supporters of four citizens' initiatives—two of them anti-fracking and two pro-industry—to withdraw their proposed ballot measures.

“The work of this task force will provide an alternative to ballot initiatives that, if successful, would have regulated the oil and gas industry through the rigidity of Constitutional amendments and posed a significant threat to Colorado's economy,” Hickenlooper said.

‘Balanced Group.’

“This approach will put the matter in the hands of a balanced group of thoughtful community leaders, business representatives and citizens who can advise the legislature and the executive branch on the best path forward,” he said.

Polis, who had backed the two anti-fracking proposals, also called on the measures to be withdrawn in light of the formation of the task force. The agreement was “meaningful progress toward sensible fracking regulations,” he said.

“For the first time, citizens will be on equal footing to the oil and gas industry, and able to negotiate directly for regulations that protect property rights, homes values, clean water and air quality,” he said.

Colorado has been engaged recently in battles with local governments over control of oil and gas activities within communities. Five municipalities in the past two years have approved bans, moratoriums or other restrictions on the use hydraulic fracturing in drilling.

State Primacy

The state has maintained it has primacy over drilling regulations through the Colorado Oil and Gas Conservation Commission. Local governments have said they have authority over the siting of wells in addition to other public health and safety policy areas.

A judge in Boulder County struck down July 24 a voter-approved ban on fracking and the disposal of fracking waste in Longmont, ruling that the Colorado Oil and Gas Conservation Act preempts outright bans on drilling (Colorado Oil and Gas Ass'n v. Longmont, Colo. Dist. Ct., No. 2013-cv-63, 7/24/14).

Parties to the case suggested the ruling would provide fuel to citizens seeking to amend the constitution with Initiative 88, which would have quadrupled the current 500-foot setback rule in Colorado, and Initiative 89, which would have given local governments the authority to ban fracking.

The pro-business measures would have denied oil and gas revenues for communities that ban or place a moratorium on fracking (Initiative 121) and would have required the financial cost of a successfully passed ballot measure to be disclosed up front and during the ballot signature gathering process (Initiative 137).

After failing to forge a legislative solution to the ballot conflict, Hickenlooper called on voters to defeat the two proposals in the November election.

‘Obligation to Develop.’

“Colorado is fortunate to have an abundance of energy resources, and we have an obligation to develop them in a way that is safe for our residents, supports jobs and the economy, respects private property rights and protects our environment,” Hickenlooper said.

The 18-member task force, chaired by La Plata County Commissioner Gwen Lachelt and Randy Cleveland, president of XTO Energy Inc., will include representatives of the oil and gas industry, agriculture, home builders, environmental groups and local governments, Hickenlooper and Polis said.

The task force will make recommendations to the Colorado General Assembly with a two-thirds majority, or issue majority and minority opinions.

Hickenlooper also announced that he would ask the commission to dismiss a lawsuit against Longmont over rules enacted by the city council that were more restrictive than state drilling rules.

Environmental Group Disappointed

Earthworks, an environmental group supporting initiatives 88 and 89, was disappointed about the withdrawal of the measures, which were aimed at protecting citizens “from the potential harms of oil and gas drilling,” according to Bruce Baizel, director of the organization's Oil & Gas Accountability Project.

“Colorado's oil and gas oversight favors the oil and gas industry's interests before the public interest,” he said. “That's why hundreds of thousands of Coloradoans backed ballot initiatives to fundamentally change oil and gas regulation for the better this November.”

He said the task force announced by Hickenlooper and Polis “provides a possibility that Colorado's community and environment may yet be protected from the environmental and health threats associated with oil and gas development.”

Another environmental group, Western Resource Advocates in Boulder, said it supports the compromise, saying it “makes it more likely that local governments and communities can negotiate necessary protections while allowing for development of natural gas.”

Colorado Called ‘National Leader.’

Brad Holly, vice president of operations for the Rockies with Anadarko Petroleum Corp. in Denver, told Bloomberg BNA Colorado has been recognized as a national leader for its comprehensive oil and gas regulations.

The Hickenlooper-Polis compromise represents “yet another example of multiple parties working toward constructive solutions that support vibrant industries that are vital to the state's economy and future, while ensuring that public health and the environment are protected.”

The announcement was positive for companies with significant operations in the Rocky Mountains, including Anadarko, Noble Energy Inc., Whiting Petroleum Corp., Bill Barrett Corp., PDC Energy Inc. and Carrizo Oil & Gas Inc., David Tameron, an analyst with Wells Fargo & Co., said in a note to investors after the announcement.

With assistance from Bradley Olson in Houston

To contact the reporter on this story: Tripp Baltz in Denver at abaltz@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com

More information on the four ballot measures is available from the Colorado Secretary of State at http://www.sos.state.co.us/pubs/elections/Initiatives/titleBoard/index.html.