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Colorado Legislature Pushes Forward With Oil & Gas Restrictions

Even though Colorado voters defeated Prop 112 – a bill that would severely restrict oil and gas product in the state – in November’s election with 57% of the vote, state lawmakers have pushed forward with sweeping changes to industry regulations.

On Friday, March 1, Senate Bill 181, Protect Welfare Oil and Gas Operations, was introduced. PESA’s Colorado Steering Committee was notified about the bill on March 4 with an outline of the proposed changes that include not only alterations to permitting practices, but the makeup of the Colorado Oil and Gas Conservation Commission (COGCC). The legislation also amends current preemption law that provides protection from local ordinances that conflict with existing state law.

The bill also requires the installation of continuous emission monitoring equipment for methane, nitrogen oxides, etc. and gives local governments land use authority to regulate the siting of oil and gas locations. It repeals an exemption for oil and gas production from a county’s authority to regulate noise and changes the makeup of the commission by reducing the number of oil and gas industry members to one. It also requires that with a permit to drill, operators must prove they have filed an application with the local government to drill.

Even with a major snowstorm barreling across Colorado forcing the closure of schools, businesses and government offices on March 13, the state Senate passed SB 181. Many have criticized the speed by which Democrats have pushed this bill through. The Senate had three hearings on the matter and three separate floor readings, all within just over a week.

Several amendments were also adopted. They included:

  • A requirement that additional regulations adopted by local governments need to be “necessary and reasonable” when it comes to health and safety.
  • The creation of a technical review panel at the COGCC that could be requested by an operator or local government to mediate disagreements between parties.
  • The addition of “necessary and reasonable” language to the COGCC’s new mission.
  • A mandate that the COGCC Director will have 30 days to come up with new criteria to be used to decide if additional review of permitting is needed.
  • An amendment that states local governments can have stricter regulations than the state.

The REMI Partnership, a group including of the Colorado Bankers Association and the Colorado Association of Realtors among others, released a report in mid-March that outlines some of the potential economic consequences associated with SB 181. The report states if the bill reduces production by 50 percent, there will be 120,000 fewer jobs and $8 billion in state and local tax revenue lost from 2020 to 2030. If 100 percent of production is shut down, those numbers increase to 185,000 jobs and $13.5 billion in state and local taxes.

On March 15, industry supporters held rallies opposing the bill in Greeley and Grand Junction. The bill, which passed the House Energy and Environment committee on March 18, now heads to two other committees before the House floor votes.

PESA will continue to monitor this situation in order to provide Members with the latest information. For questions regarding this issue, please contact PESA Vice President Government Affairs, Tim Tarpley.