Oil and gas regulation fracturing relationships

The Colorado Statesman

The pressure is building for the state to offer local governments control over regulating oil and gas development, fracturing relations between state leaders and the local governments and activists they represent.

At least 50 elected officials have sent a letter to Gov. John Hickenlooper, a Democrat, encouraging him to take action in order to grant local governments control over oil and gas regulation, including the ability to ban the controversial drilling process known as hydraulic fracturing.

Meanwhile, community leaders and environmental activists are taking matters into their own hands, proposing a ballot initiative that would grant power to local governments to enact rules and regulations separate of the state.

The efforts come despite new rules backed by the Air Quality Control Commission on Sunday that established the first-ever state-based rules around controlling methane emissions from drilling operations.

Hickenlooper organized a news conference on Tuesday to highlight the new rules, which he supported amid growing criticism of his administration’s support for so-called “fracking.”

A groundswell of anger intensified after the state sued Longmont in 2012 for enacting oil and gas rules and regulations that overstepped the state’s authority. Longmont was then sued by the oil and gas industry last year after voters there backed prohibiting fracking altogether. The state has also been supportive of that lawsuit, arguing that a patchwork of local rules and regulations make compliance difficult.

Hickenlooper said he is not deaf to the growing concerns. At the news conference on Tuesday, he pointed out that his administration worked with environmentalists as well as the oil and gas industry in order to reach a compromise on the new standards.

The rules aim to capture 95 percent of emissions by requiring expedited inspections for leak detection and repair, as well as controls on storage tanks and other emissions sources. The target is hydrocarbons, including both volatile organic compounds and methane.

The proposal came about following stakeholder meetings with the Environmental Defense Fund and three producers: Noble Energy, Encana and Anadarko.

“All Coloradans deserve a healthy economy and a healthy environment, and we’ve taken yet another critical move to help make sure that Colorado will continue to have both,” explained Hickenlooper. “The new rules approved… will ensure Colorado has the cleanest and safest oil and gas industry in the country and help preserve jobs.

“We’re fortunate to live in this beautiful, vibrant state,” the governor continued. “We enjoy it every day, and we don’t for one second take it for granted. It’s collaborative efforts like this, the result of everyone working together, that will help ensure Colorado’s tomorrow is even brighter than today.”

At a news conference in November announcing the proposal, health officials said the oil and gas industry is responsible for as much as 30 percent of VOC and methane air pollution emissions in the state. Officials believe the new rules will reduce those emissions by approximately 92,000 tons per year, which is more than are emitted by all cars in Colorado in a year.

Hickenlooper, a former geologist, said at the time that the pollution caused by the industry isn’t “earth-shattering.” Still, he encouraged the collaborative effort.

Following passage of the rules by the commission on Sunday, health officials praised the environmental benefit the rules will have on the state.

“We are pleased the Air Quality Control Commission adopted these important measures. Protecting Colorado’s public and environment is one of our greatest responsibilities, and we must ensure oil and gas development continues to adhere to the most protective standards,” explained Dr. Larry Wolk, executive director of the Colorado Department of Public Health and Environment.

A handful of producers have lauded the new rules, pointing to the industry’s commitment to addressing safety fears, which they believe are mostly unsubstantiated.

“This proposal sends a clear message that we can have a healthy environment, a strong economy and responsible energy development here in Colorado,” opined Ted Brown, senior vice president for the northern region at Noble Energy.

“Expansion of this rule… will result in genuine quantifiable environmental benefit…” added Lem Smith, director of U.S. government and regulatory affairs for Encana Oil and Gas.

The new rules offered a rare chance for the industry and environmentalists to come together in a bit of a “Kumbaya” moment.

“It is not every day you see this alliance of individuals and groups standing together,” acknowledged Pete Maysmith, executive director of Conservation Colorado. “But the fact that we are here is a victory for clean air and the most pressing issue of our time — climate change.

“It is certainly the case that the oil and gas operators who stood up and took responsibility for their air pollution deserve praise,” he continued. “They helped to craft a rule that will result in major air pollution reductions and is cost-effective for the industry to implement — a win, win.”

“Moments like these — when a broad group of stakeholders can come together and agree on difficult, complex questions — are rare,” added former Sen. Dan Grossman, regional director for the Environmental Defense Fund. “Now is the time to honor all the hard work and cooperation that went into developing this proposal…”

Contention remains

Not everyone in the oil and gas industry was completely supportive of the rules. The Colorado Oil and Gas Association and the Colorado Petroleum Association lobbied to weaken the rules.

One of the biggest concerns is cost. Many in the industry have called for a cost-benefit analysis before implementing the rules. The cost is expected to be about $42 million per year on the industry.

The two trade organizations had requested that the rules only be applied in federal ozone “non-attainment” areas along the Front Range, and that operators with a positive track record be exempted from regular inspections.

But despite a bashing from community activists and environmentalists, the industry’s representatives appeared supportive of the new rules after they were implemented on Sunday, promising not to challenge the new regulations in court.

“Oil and gas operators in Colorado strive to protect the health and safety of our communities and environment every day; after all, these are the communities where we are raising our families,” explained Doug Flanders, spokesman for COGA.

“The rulemaking process demonstrated a commitment to bringing all stakeholders together,” he continued. “The new rules accomplish much, which we support. Unfortunately, we were not successful in ensuring that the rule accommodates the differences in basins and operators. Nevertheless, we are committed to working with our operators, our communities and the state to successfully and effectively implement these rules.”

Some may be surprised to learn that the greatest pushback is coming from factions within environmental and local activist communities who were not directly part of the stakeholder meetings. They call the Environmental Defense Fund an “apologist for the oil and gas industry,” pointing to EDF’s role creating the Pennsylvania-based Center for Sustainable Shale Development, which works on shale gas development.

“We think that these rules are an attempt by Gov. Hickenlooper to score political points and deflect public criticism before the 2014 election,” surmised Sam Schabacker, regional director for Food and Water Watch, which played a key role in supporting initiatives to ban or delay fracking in local communities.

This past November, four communities — Boulder, Broomfield, Lafayette and Fort Collins — all passed bans on fracking. Along with Longmont, there have been five communities to take such action.

“Any temporary reduction in emissions from these rules will quickly be undone by the thousands of new wells being permitted by Gov. Hickenlooper each year,” added Schabacker.

In addition to the Longmont court challenge, separate lawsuits are ongoing in Broomfield, Fort Collins and Lafayette. The Broomfield case is based on alleged election administration errors, while the challenges in Fort Collins and Lafayette are on the merits of the anti-fracking initiatives themselves, similar to the case in Longmont.

Schabacker believes the true solution is to allow local communities to decide how they want to regulate oil and gas development. On Feb. 21, a coalition calling itself Local Control Colorado submitted language to the state for a constitutional amendment that would allow communities to ban fracking without having to fear being sued.

If the ballot language were approved then the group would need 86,500 valid signatures by Aug. 4 to send the question to voters.

The proposed language reads, “Not withstanding any other provision of law, local governments in Colorado may place restrictions on the time, place or method of oil-and-gas development, including but not limited to the use of hydraulic fracturing, that are intended to protect their communities and citizens.

“No local government may enact any limitations, rules or regulations on oil-and-gas development that are less stringent than existing state and federal provisions,” it continues.

“Any such restrictions placed by local governments on oil-and-gas development are deemed not to be in conflict with the state’s interests,” the language concludes.

“My first responsibility is to my children — to ensure they have a healthy community in which to grow up,” explained Laura Fronckiewicz, a lead proponent of the new proposed anti-fracking initiative and an organizer of the Broomfield initiative.

“Gov. Hickenlooper has failed to keep us safe from fracking,” she continued. “For this reason, this ballot measure is necessary to ensure that we have the right to determine whether fracking is allowed next to our homes or schools.”

Meanwhile, at least 50 local elected officials are asking Hickenlooper and the legislature to take action on the local control issue without having to seek approval from voters.

In a letter to Hickenlooper this week, county commissioners, mayors and city council members from across Colorado told the governor and lawmakers that they should take action to codify rights of local governments to use zoning and land use powers to protect the health, safety and wellbeing of their communities from the oil and gas industry.

“Local governments have long held the power to balance industrial activities with residents’ quality of life and property values. It is crucial for local governments to have the authority to regulate the pace and scale of oil and gas drilling within their communities. This is the only way that local governments can ensure the health and safety of their children and families, the livability and property values of their neighborhoods and the long-term economic vitality of their communities,” states the letter.

“We ask that you further affirm that local zoning and regulations are not preempted by the state. Without this, cities, towns and counties are not able to make decisions that are in the best interest of their residents without the fear of expensive litigation,” it continues. “A community’s right to self-determination is not a partisan issue. It is of great importance to all Coloradans.

“While the State has an important role to play in setting broad statewide protections, local governments should be able to go beyond this baseline; the fact is, local governments are best equipped to make local decisions about land use in their communities — not the State,” the letter concluded. “Please recognize and support our rights and responsibilities to make these decisions and take action to assure local control over oil and gas development.”

“Local elected officials need assurance that the state will recognize and support our rights and responsibilities to make land use decisions, including controlling oil and gas development,” added Adams County Commissioner Eva Henry. “With multiple pending legal challenges to communities’ right to self-determination, time is of the essence.” 

“It is crucial for local officials to have the authority to regulate the pace and scale of oil and gas drilling within our communities so we can ensure the health and safety of our residents, maintain local property values and foster our long-term economic vitality,” continued Boulder County Commissioner Elise Jones. “Without a common sense solution, cities, towns and counties are thwarted in making decisions that are in the best interest of their residents without the fear of expensive litigation.”

At the news conference on Tuesday praising the new air quality rules, Hickenlooper acknowledged the concerns from local communities. But he remains skeptical about a patchwork of rules. He is also worried about legal conundrums associated with underground mineral rights, suggesting that the issue could land in the U.S. Supreme Court, and that the high court would likely find it to be a “taking.”

“Those elected leaders are all elected by the surface owners,” the governor responded. “There’s no election by the people who own the mineral rights. They have no voice…”

Hickenlooper added, “Natural gas is going to be the transition fuel for a good many years as we move to a cleaner overall energy component.”

Lawmakers this year have also been hesitant to address the local control issue. Many had been waiting to see what happens with the air quality rulemaking. As of Wednesday, lawmakers close to oil and gas policymaking still had not heard of momentum growing for the legislature to tackle the issue.

Sen. Matt Jones, D-Louisville, pointed out that he ran a bill two years ago that would have reaffirmed local control of land use decisions, including oil and gas operations. But he said that idea has not gained popularity in the legislature.

“Local control was an idea circulating early in the session, but I have not heard anything recently,” he said.

Rep. Mike Foote, D-Lafayette, spearheaded several legislative efforts after his district called for a crackdown, including proposing a mandatory-minimum for industry fines. He acknowledged that his constituents would like to see more, but he is pleased with the progress.

“This is a great first step,” he said of the air quality rulemaking. “I hope the oil and gas industry recognizes that more steps will be necessary to get public buy-in around oil and gas operations. My constituents want to know that drilling operations will not compromise their health and safety.”

Peter@coloradostatesman.com