Election 2018EnergyEnvironmentFeaturedNews

Another push for oil and gas measures on the Colorado ballot

Author: Mark Jaffe - June 14, 2018 - Updated: June 28, 2018

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An oil pump near a new home In Frederick, Weld County. (milehightraveler via iStock)

The regulation of oil and gas operations, a consistently contentious issue in Colorado, once again may be fought over in dueling ballot initiatives this November.

Four proposed ballot measures falling on opposite sides of the question could be before voters this fall, providing their sponsors collect enough valid voter signatures by the state’s Aug. 6 deadline for petitions.

“This is the most important issue in Colorado environmentally and socially,” said Suzanne Spiegel, a campaign organizer for Colorado Rising, a coalition of environmental and community groups that is backing an initiative to require a 2,500-foot setback from homes for new wells. “The state has failed to act.”

On the other side of the fence, John Brackney, the representative for a ballot measure to reinforce the state’s primacy in regulating oil and gas operations, said, “There have been these ongoing battles for years.”

The state government’s prime role in setting rules and regulations for oil and gas development — superseding city and county authority — is based on court rulings. Brackney’s proposed initiative, which is backed by the oil and gas industry, would embed it in the state’s constitution.

“There are some politicians who constantly want to be battling,” he said. “This is a step to enshrine current law into our constitution.”

Several cities and counties that have been the site of intense drilling, or proposed drilling, tried to adopt local ordinances to add an extra measure of regulation to the state rules that local officials say do not go far enough in protecting residents.

The state and industry have sued some of these efforts with success. A drilling ban in Longmont and a five-year moratorium in Fort Collins were struck down by the Colorado Supreme Court. The city of Thornton’s attempt to add pipeline safety rules and extend the state’s 500-foot setback to 750 feet (with waivers available to drillers) was also rejected by a court.

Nevertheless, Boulder County has adopted what its commissioners have called “the strongest set of regulations in the state.”

“We have been advocating regulation of large-scale oil and gas operations on the state level,” said Kim Sanchez, Boulder County’s senior planner. “We’ve been pretty disappointed with the results so far, and that’s why we needed to strengthen our regulations.”

And so the battle continues at the local level and on the ballot.

“I don’t think it is anyone’s preferred method,” said Karen Crummy, a spokeswoman for Protect Colorado, an industry-financed organization to work on ballot initiatives. “All communities are not the same. The industry has been able to work with some communities and not with others.”

The Colorado Oil & Gas Conservation Commission (COGCC), which is the state’s main regulatory authority for the fossil-fuel industry, in 2013 extended the setback requirement from homes for new wells to 500 feet from 150 feet and for high-occupancy buildings, such as schools and hospitals, to 1,000 feet.

The industry had pushed for a 350-foot setback, while environmental and community groups had called for a 1,000-foot buffer. Efforts at the COGCC, in the legislature and on the ballot to increase the residential setback have foundered.

In 2014, U.S. Rep. Jared Polis, now a Democratic gubernatorial candidate, proposed asking voters to slap new restrictions on oil and gas. He later agreed to a compromise under which he pulled his measures and Gov. John Hickenlooper created a task force to make recommendations on strengthening regulation.

In 2016, backers of two oil and gas measures opposed by the industry — one of which would have expanded Colorado’s buffer zones surrounding oil and gas operations from 500 feet to 2,500 feet — wound up not getting enough valid petition signatures to make the ballot.

Still, Colorado Rising is taking another stab at increasing setbacks fivefold.

“Many communities feel threatened as the oil and gas development gets bigger, more industrial,” Spiegel said. “It has become a real issue on a lot of levels.”

“The state has failed to act for the past decade,” she said. “Communities tried to implement protections, but those were overturned in 2016 leaving no real protection.”

In 2016, Colorado Rising’s setback proposal ran into a multimillion dollar, industry-backed campaign, dubbed “Decline to Sign.”

“We came within a hair of qualifying,” Spiegel said. “We didn’t know to what extent the industry was going to come out against us . . . It was a learning experience.”

“We are totally accustom to them pouring money into the race,” Spiegel said. “The fight is going to be a hard one, and they are going to outspend us tremendously.”

An industry-backed issues committee, “Protecting Colorado’s Environment, Economy, and Energy Independence,” has already raised about $10 million to support and oppose ballot initiatives this season, according to filings with the Colorado secretary of state.

Among the biggest contributors are some of the most active drillers in the state—Anadarko Petroleum Corp., Noble Energy and Extraction Oil & Gas Inc. Each donated around $2 million, according to state records.

Colorado Rising’s issues committee has raised about $133,000, and the issue committee for the Sierra Club, a national environmental organization, so far, has $530.

A fiscal note from the Colorado Legislative Council staff said that while the initiative would not have an immediate impact on state oil and gas severance taxes, “the measure is expected to decrease state revenue in the future from severance taxes, royalty payments from development.”

None of the four Democratic candidates for governor is supporting the initiative, including Polis, an internet entrepreneur who in 2014 donated more than $1 million to support oil and gas ballot measures, including one that would have required a 2,000-foot setback.

While opposing the setback, Protect Colorado is supporting the effort to add to the state constitution the clear statement that the state has primacy over oil and gas development.

“This enshrines rational public policy that there are uniform rules and regulations,” Brackney said. “It is better than having a multitude patchwork of health safety laws.”

Since the initiative is seeking a change in the state constitution, under a ballot measure passed in 2016, it must get a 55-percent vote. That “Raise the Bar” initiative, to make it more difficult to enact constitutional amendments, was also supported by Protect Colorado.

A second requirement that at least 2 percent of the signatures come from each of Colorado’s 35 state Senate districts was ruled unconstitutional by a federal court in March 2018 for violating the principle of “one person, one vote.”

To avoid the 55-percent hurdle, Colorado Rising is offering its measure as a legislative rather than constitutional ballot measure, which needs a simple majority to pass.

A third proposed ballot measure that is also receiving backing from Protect Colorado is spearheaded by the Colorado Farm Bureau and is aimed at ensuring property owners are compensated if new laws or regulations impair their property value.

One focus of the initiative is the risk to mineral owners if new regulations limit access to develop oil and gas reserves, but it isn’t the bureau’s only concern.

“This is much more than an oil and gas issue,” said Shawn Martini, the bureau’s vice president for advocacy, “There are all kinds of proscriptive regulation or government infrastructure projects that can impact property values.”

“Look at the significant expansion of I-70 in Denver,” Martini said. “For someone whose house is not getting bulldozed and condemned, but is left with a major interstate a block away, they should be compensated, as well . . . but the constitution has been silent in this.”

Protect Colorado’s Crummy said, “We are happy to support the Farm Bureau.”

A fourth ballot measure would raise the severance tax paid by operators on the oil and gas they produced. A January study by the Colorado Legislative Council found that Colorado has the lowest effective severance tax rate, 0.6 percent, compared with seven neighboring oil and gas states.

The proposed increase would more than double the oil and gas tax revenues to $307 million in 2019-20, according to a legislative council fiscal note, with money going to all-day kindergartens, elementary and secondary schools, health care and communities impacted by oil and gas production.

The measure is being sponsored by Andrew O’Connor, an attorney who finished 11 in the 14-candidate field for Lafayette City Council last fall. In his campaign statement, he called the oil and gas development “an existential threat.” He also filed to run for a seat on the Boulder Board of County Commissioners.

O’Connor could not be reached for comment as the two telephone numbers he provided to the secretary of state’s office as the initiative’s sponsor are non-working. He did not reply to a Facebook request for comment.

Editor’s note: This story was updated at 12:39 p.m. on June 14 to correct a quote by Martini.

Mark Jaffe

Mark Jaffe

Mark Jaffe has covered energy, environment and government issues for The Philadelphia Inquirer, Bloomberg News and The Denver Post. He was a Knight Fellow at Stanford University and studied environmental economics as a Nieman Fellow at Harvard. He is the author of two books, "And No Birds Sing, The story of an ecological disaster in a tropical paradise" and "The Gilded Dinosaur-The fossil war between E.D. Cope and O.C. Marsh and the rise of American science."