Ask the Indy: A recap of changes coming to state oil and gas regulations

The state legislature passed a bill giving greater control to local governments

A Crestone Peak oil and gas operation on County Line Road in Weld County. The site contains 16 wells, 40 oil tanks, 26 combustors, 17 separators. (Photo by Ted Wood/The Story Group.)
A Crestone Peak oil and gas operation on County Line Road in Weld County. The site contains 16 wells, 40 oil tanks, 26 combustors, 17 separators. (Photo by Ted Wood/The Story Group.)

A landmark bill that imposes new regulations on oil and gas drillers is on its way to the governor, who is expected to sign it. 

The contentious measure, which passed on a party line 19-16 vote in the Senate on Wednesday, gives communities more control over well locations and drilling operations and requires state regulators to prioritize public health, safety and the environment when issuing drilling permits.

Many questions have been raised about SB-181’s long-range impact. Colorado Independent readers, for example, have asked what the bill’s key provisions are and whether the new rules will hurt Colorado’s economy. Below, we answer these and other concerns you’ve raised.

The legislation comes as population and drilling have both boomed on the Front Range, creating conflict between drilling companies and residents. Ozone levels across the region, partially due to drilling, exceed federal health limits. An explosion from a leaking natural gas flowline in 2017 killed two men.

Democratic lawmakers for years have attempted to impose stricter regulations on the industry, but majority Republicans blocked those bills. That changed when Democrats swept into office in November. About halfway through the session, they unveiled a long-anticipated package of more stringent regulations.

Oil and gas trade groups and businesses fought back, busing in field workers to the Capitol to testify and spending hundreds of thousands on TV and radio ads to drum up opposition to the bill. Republican lawmakers tried to stall the bill, and warned of Democratic overreach. Already, a number of Democratic lawmakers face recalls, including Rachelle Galindo, a first-year representative from Greeley, because of their support for the bill.

Lawmakers passed two dozen amendments to the bill, many of which were favorable to the industry. Industry trade groups still opposed the bill in the end, but issued a statement saying “we appreciate that legislative leaders heard us.” Community leaders from Weld and Arapahoe counties have already filed a petition with the secretary of state in a move to repeal the new regulations.  

Erin Martinez, whose husband and brother were killed in the 2016 Firestone home explosion, spoke at the state Capitol on Feb. 28 to support new oil and gas regulations. (Photo by John Herrick)

Question: Please list the bill’s provisions and requirements to make it easier to understand what this bill would do to oil and gas activities in Colorado.

The following are key provisions and what they mean.

— Each local government … has the authority to plan for and regulate the use of land by… regulating the surface impacts of oil and gas operations in a reasonable manner … to protect and minimize adverse impacts to public health, safety, and welfare and the environment. ‘Minimize adverse impacts’ means … to the extent necessary and reasonable to protect public health, safety, and welfare, the environment, and wildlife resources.

This provision gives local governments authority to regulate oil and gas drilling so long as it is “necessary and reasonable” to protect public health, safety and environment.

Communities such as Longmont have long sought to pass moratoriums and bans on drilling in their communities, only to have such regulations struck down in the courts.

Now that local governments will have more control, expect more hotly contested elections for local councils and county commissions. Environmental groups and industry will be working to elect candidates who share their interests.

The language “necessary and reasonable” was added at the behest of the oil industry and Republican lawmakers. It puts in place guardrails to prevent local governments and the state from passing new regulations without explicit justification.

Environmental groups worry this language is too vague, and will invite costly legal challenges in court, perhaps having a chilling effect in some communities that want to pass new regulations.  

This was one of the key concessions the industry and Republican lawmakers won over the course of the bill’s passage.

— The Commission is directed to: Regulate the responsible, balanced development and production and utilization of the natural resources of oil and gas in the state of Colorado…

This will soon be the mission of the Colorado Oil and Gas Conservation Commission, which oversees the industry. The current mission says the board must “foster” oil and gas development, in addition to regulating it. 

The commission’s statutory mandate, since 1951, has been to promote drilling. That law has resulted in the commission approving virtually every drilling permit, though some have been rejected or withdrawn due to technical issues and concerns.

That will likely change once the bill is signed into law.

— One member of the Colorado Oil and Gas Conservation Commission must be an individual with substantial experience in the oil and gas industry.

The bill cuts the number of oil and gas representatives on the seven-member commission from three to one. This gives the oil and gas industry a much smaller voice when issuing permits.  

— Oil and gas operators may have to install and operate continuous methane emissions monitors…

This provision is designed to help inform the state’s understanding of emissions of methane and volatile organic compounds, which can increase the risk of cancer, developmental disorders, and asthma. Emissions testing at oil and gas wells is generally done only after someone files a complaint with the state or during the air quality permitting process. The state Department of Public Health and Environment has three monitoring stations along the Front Range testing for particulates.

The final version of the law watered down this provision. An earlier draft of the bill would have required oil and gas operators to install continuous emissions monitoring equipment. This was changed to a requirement that the Air Quality Control Commission consider adopting new rules requiring operators to do so. 

— In the absence of voluntary pooling, the commission, upon the application … of a person who owns, or has secured the consent of the owners of more than 45% of the mineral interests to be pooled, may enter an order pooling all interests in the drilling unit for the development and operation thereof. 

Currently, forced pooling gives oil and gas companies the right to drill underneath a property without the owner’s consent so long as the company makes a reasonable offer of compensation and at least one homeowner in the general area agrees to the drilling. This is another provision of the current Colorado law that has been contested in the courts.

The bill would change the law around pooling so that more than 45% of landowners in an area must consent to a pooling order before a company can take their minerals. Environmental groups wanted forced pooling banned, or at least a requirement that a majority of landowners must agree to the pooling order before a company can proceed to drill.

Patrick Murphy, Boulder County Public Health employee, uses a FLIR infrared camera to check for gas leaks at a operating well pad in eastern Boulder County. (Photo by Ted Wood/The Story Group.)
Patrick Murphy, Boulder County Public Health employee, uses a FLIR infrared camera to check for gas leaks at an operating well pad in eastern Boulder County. (Photo by Ted Wood/The Story Group.)

Question: Health problems related to oil and gas are being reported. Where is the data being gathered?

The state Department of Public Health and Environment has a mobile lab and three monitoring locations that collect some data on oil and gas emissions. The department also gathers emissions samples after someone files a complaint. The department is expected to release an updated study on the health impacts of oil and gas drilling later this year.

The department’s most recent study collected air samples 500 feet from oil and gas operations in the Denver-Julesburg and Piceance basins. It concluded that toxic and carcinogenic emissions are just within federal health limits at this distance. 

There have been, however, 867 drilling permits granted since 2009 that fall within 500 feet of a building, according to the state. Research shows that there are also homes built within 500 feet of wells.

Another 2018 study found the closer one lives next to an oil and gas well, the greater the risk of cancer, developmental disorders and asthma. Living within 450 feet of an oil and gas operation led to a cumulative lifetime excess cancer risk above federal health limits, the study found.

Researchers and local governments along the Front Range have been putting in place more continuous monitoring for research purposes.

University of Colorado researchers have been collecting thousands of air samples at the Boulder Reservoir to test for methane, volatile organic compounds, and nitrogen. The data is shared with the Colorado Department of Public Health and Environment and Boulder County.

The city of Broomfield is also using canisters to measure air samples near wells, testing for volatile organic compounds and benzene, a human carcinogen, among other pollutants. Ajax Analytics, Colorado State University and Broomfield staff are analyzing the data. 

More recently, researchers have been studying the effects of noise from oil and gas operations on human health. A 2017 study concluded noise levels near oil and gas rigs are potentially harmful and should be researched more.

Hundreds of oil and gas workers came to the state Capitol on March 5, 2019 to rally and testify against a bill aimed at regulating oil and gas drilling. (Photo by John Herrick)

Question (referring to a March 28 Colorado Independent headline, “Bill to regulate oil and gas advances, pitting pro-environment Dems and pro-business GOP”): You can be both Pro-Environment and Pro-Business. Why does your headline perpetuate this false idea? The 7,000 people with solar jobs in Colorado would agree.

The headline was meant to highlight the two, divergent arguments being made for and against the bill.

This kind of divide is not new; in Colorado’s hard rock mining days, there was a general recognition that companies were polluting waterways but that the economic benefits of the industry outweighed the consequences to the environment.

That debate has been similar this year as the industry chose to make mainly an economic argument over an environmental one.

One environmental argument to be made for the industry is that methane emissions in Colorado have declined in recent years, according to a 2018 report by the Colorado Department of Public Health and Environment. This decline comes after the state passed new regulations requiring companies to repair methane leaks.

Silver Creek Elementary, in Thornton. Oil and gas operations are 350 feet away from the playground. (Photo by Ted Wood/The Story Group.)
Silver Creek Elementary, in Thornton. Oil and gas operations are 350 feet away from the playground. (Photo by Ted Wood/The Story Group)

Question: Why and how can [lawmakers] overturn the voters’ desires? We voted this down on the last election. They are overruling my vote. 😡😡

The questioner is referring to Proposition 112, a November ballot measure that would have increased the distance oil and gas rigs must be placed from homes, buildings and vulnerable areas like streams from 500 feet to 2,500 feet.

The measure, backed by environmental groups, was voted down.

Since then, the oil and gas industry has argued Colorado voters spoke clearly that they don’t want increased setbacks, and that this new bill seeks to subvert that vote. But such arguments are misleading. There is no mention of setbacks in the bill.

Under the bill, the only way the state government could enact statewide setbacks is through a rulemaking process, which takes months and stipulates that testimony must be gathered from all sides before a change is made. The Colorado Oil and Gas Conservation Commission already has such rulemaking authority.

Under the new law, communities could pass new setbacks so long as they are “necessary and reasonable” to protect public health, safety and the environment. Still, local regulations will vary and will likely be more lax in places where most drilling occurs, including Weld and Garfield counties.

A crane in Denver. (Photo by John Herrick)

Question: If SB-181 goes through, what mitigation will be in place to counter the “upheaval and change” that will decimate our current economy?

The oil and gas industry is an estimated $31 billion industry in Colorado, hitting record production levels in 2018. Tax revenue from oil and gas helps pay for schools, water projects and other conservation efforts.

There is nothing in the bill that would mitigate economic impacts if there is less drilling as a result of the new regulations. There is also no clear indication of what effect the bill will have on drilling; local regulations and state rules will likely take effect months, if not years, after the bill is signed into law.

“Since the future actions of state agencies, local governments and business operators are unknowable, a change in state tax revenue cannot be estimated,” said a non-partisan legislative analyst in the bill’s fiscal note.  

Some lawmakers believe Colorado must stop extracting fossil fuels to prevent the worst effects of climate change, such as drought, wildfires and heat waves. Phasing out oil and gas drilling is one part of that effort, though drilling accounts for less than 10 percent of the state’s total greenhouse gas emissions, according to the most recent state data.

Lawmakers are working on a bill that would help electric utilities hasten the closure of coal-burning power plants, which provide a large share of Colorado’s electricity. Any savings from this closure could go to communities to help them transition to new industries, lawmakers say. Lawmakers have yet to introduce legislation that would help workers transition out of fossil fuel industries and into other jobs.

Hundreds of oil and gas workers came to the state Capitol on March 5, 2019 to rally and testify against a bill aimed at regulating oil and gas drilling. (Photo by John Herrick)

Question: Write more about the big money opposing SB-181.

The American Petroleum Institute has spent at least $200,000 on radio and TV ads fighting this omnibus bill, according to an analysis of Federal Communications Commission records. A television ad by API states SB-181 will “shut down energy production in Colorado.”

The industry also has added new lobbyists this year. American Petroleum Institute hired Carrie Anne Hackenberger, among others; Anadarko hired Brandeberry-McKenna Public Affairs; and Noble Energy has about a dozen lobbyists working in the Capitol, many of whom have other clients besides Noble as well.  

The latest figures on how much was spent on lobbying will be reported to the Colorado secretary of state on April 15.  

A previous version of this story stated the law requires oil and gas operators to install continuous emissions monitoring equipment. We updated the story to say that the law requires state regulators to consider such regulations.   

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