The future of Colorado's oil and gas sector could be up for grabs this fall. That's because three different groups are currently working to put initiatives on that ballot that would give cities and counties the power to regulate, and outright ban, processes like hydraulic fracturing. Those are powers the state says currently belong to it alone, a claim it's backed up by suing the City of Longmont, Colo., over its drilling regulations and fracking ban.
While these lawsuits and ballot measures are the stuff of current headlines, the uneasy relationship between the state and local governments over energy development goes back decades, evolving through a long series of court cases and rule changes. Today, despite the possible ballot measures, one long-time voice for local government says the two sides are actually working well together.
"All of these things have contributed to, I think, a better environment now than we've seen in the past," Geoff Wilson says. "We're in a much better time now."
Wilson, who worked on oil and gas issues since the early 1990s as general counsel for the Colorado Municipal League, points to a number of watershed moments leading to today's balance of power:
- 1985: In August, Lundvall Bros. Inc., an energy company, acquires state and local permits to drill four wells in a residential neighborhood in Greeley, Colo. In September the Greeley City Council enacts an ordinance banning all drilling for hydrocarbons and in November, the city's voters pass an identical ballot measure.
- 1992: On June 8, the Colorado Supreme Court issues two rulings that set the precedent for all following court cases over municipal regulation of oil and gas:
- Voss vs. Lundvall Bros: In a case challenging Greeley's drilling ban, the high court rules that local governments do not have the power to block access to mineral resources.
- La Plata County vs Bowens/Edwards: In this case, an energy company sued La Plata County over its oil and gas regulations. The court rules local governments can exercise some control over the industry, as long as their rules don't get in the way of the state's interest in promoting oil and gas extraction.
CML's Wilson says the Voss decision will loom large over the current lawsuits against local bans and moratoria on hydraulic fracturing.
"The question will be whether the fracking bans amount to a ban on oil and gas extraction," says Wilson. "If they do, I would expect them to be overturned."
- 1992 - 2006: Wilson calls this era "the Oil and Gas wars," a period of numerous lawsuits between industry and local governments, with the state generally entering on the industry's side, in order to preserve its own regulatory monopoly.
"We in local government weren't particularly knowledgeable about this industry," Wilson says. "The industry for its part didn't seem to be particularly engaged with local government. We didn't know much about each other, nor did we care. We tended to stand at 40 paces and shout."
- 2007: The Colorado General Assembly, backed by Governor Bill Ritter, passes HB1341, reworking the composition of the Colorado Oil and Gas Conservation Commission to reduce the influence of industry and add voices for natural resources, public health and local government. The law qualifies the COGCC's mission of developing the state's oil and gas resources by requiring production be "consistent with the protection of public health, safety, and welfare, including protection of the environment and wildlife resources."
- 2008: The COGCC undertakes a massive rulemaking process in order to incorporate its new goals into its regulations. Those rules, strongly opposed by industry at the time, are now cited by it as a reason why more stringent local controls are unnecessary.
"For many, many years the Commission was viewed as a tool of the industry it regulates," Wilson says. "I think the Commission has a lot more credibility with the public, and I think the rules that the Commission completely rewrote... also have far more credibility than the rules did in the old days."
- 2012: The City of Longmont, Colo., passes restrictions on oil and gas development and is sued by the state. In November, Longmont voters approve a ban on fracking in city limits. An industry group sues the city, with the state joining some months later. Both cases are still in progress. Also in 2012, Governor John Hickenlooper convenes a task force to address the concerns of Front Range governments experiencing new oil drilling. One outcome is that municipalities are empowered to hire their own inspectors for oil and gas wells.
Wilson says some local governments have embraced the opportunity to hire inspectors, but not many.
"Frankly, most of the controversy around oil and gas extraction focuses on the drilling phrase, the first 90 days," Wilson notes. "Once the well is drilled and it's in the production phase, not a lot happens out at the wellhead from week to week [in terms of possible regulatory violations]."
- 2013: On election night, voters in three Front Range communities – Fort Collins, Boulder and Lafayette – approve moratoriums on hydraulic fracturing. A fourth measure in Broomfield is too close to call that night, although it is eventually determined to have passed. Three of the four cities face lawsuits from industry. None of those cases have been resolved.
- 2014: Three separate groups are working to put statewide measures on the November ballot to give local governments the power to greatly control oil and gas development and ban fracking. Two are on the verge of being able to gather signatures, while the third is challenging the state-approved title for its initiative in court.
