SB12-088, Premption of Local Regs for Oil and Gas

SB12-088

Concerning the Preemption of Local Regulation of Oil and Gas Operations

Sen. Harvey

Prepared by: Amanda Grosgebauer

What the Bill Does:
SB 12-088 ensures state primacy for all decisions about oil and gas operations. All
responsibility for regulation lies with the Oil and Gas Conservation Commission. Local
government authority will always be outweighed by the Commission.

Colorado Context:
Oil and gas development in Colorado is governed primarily by statutory provisions of
the Oil and Gas Conservation Act and rules [promulgated] by the Colorado Oil and Gas
Conservation Commission (COGCC) [1]. As the state agency, COGCC is charged with
promoting the exploration, development, and conservation of Colorado’s oil and gas
resources, while also handling the drilling permit process and ensuring industry compliance with state-wide oil and gas statutes and regulations. In 2009, Colorado passed rules to address environment and safety concerns associated with drilling, that also allowed forlocal communities to participate in permitting process with COGCC, including the right to appeal decisions. [2] Over 90% of the lands managed by Colorado’s Bureau of Land Management are open to potential oil and gas leasing, and drilling permits are being issued at a record pace. More than 6,000 wells were drilled in the region in 2006, and over 50,000 are projected over the next decade [3]. The oil and gas industry in Colorado directly employs 50,000 people and supports over 190,000 jobs in the state, roughly 6% of the state’s total employment. The industry also provides $12.4 billion in total labor income and $24 billion in value added economic output annually; 9.3% of the state total [4]. Due to new technology, drilling has increased along the Front Range drawing concerns from residents and local governments even despite the recent adoption of the most stringent rules regarding drilling [5]. Local governments concerned with what they see as encroachment in the form of horizontal drilling and fracking, have responded by imposing new regulations on drilling rigs, including moratoriums on development [6]. Industry officials, as well as COGCC and some elected representatives, see additional regulations as an impediment to [industry?] development and economic growth [7]. The Colorado Oil and Gas Conservation Commission sought to remedy these concerns by adding two local government liaisons to their staff who would be required to be invited to participate in all development projects to ensure uniform regulation. This bill would further reiterate authority over all oil and gas regulations and development [8].

National Context:
States similar to Colorado have the following structure and regulations:

• Utah grants local governments the authority to supplement the state and federal laws with its own regulations for oil and gas development. Utah authorizes counties to enactany ordinance necessary to carry forth its duties so long as they are not repugnant to state law [9].

• Many New Mexico counties and municipalities have not enacted any additional laws and rely on the state and federal framework to regulate development. Municipalities and counties can pass ordinances “not inconsistent with the laws of New Mexico” to discharge powers and duties and to provide for safety, health, and prosperity of residents or order of the municipality [10].

• Montana law does not allow local governments to make resolutions or rules that prevent the complete use, development, or recovery of any mineral, forest or agricultural resource. While this does not preclude all local regulation of mineral processing or extraction—local governments can impose reasonable conditions on application approvals—land use and zoning ordinances must allow effective utilization of mineral resources. No local standards or requirements can be lower or less stringent than the equivalent state standards [11].

• In Wyoming, cities and towns have the power to regulate oil and gas through the zoning power granted by state statute. They may divide the city or town into districts and within those districts may regulate and restrict the erection, construction, reconstruction, alteration, repair or use of buildings, structures or land. This power is limited for counties, as county zoning resolutions or plans are prohibited from preventing use or occupancy of lands necessary for mineral extraction. Without a similar prohibition, cities have started to regulate oil and gas development [12].

Bill Provisions:
Amends Colorado Revised Statutes, 34-60-105, to clarify that

• the regulation of oil and gas operations is a matter of statewide concern. And

• the COGCC  has exclusive jurisdiction to regulate oil and gas operations, hence local regulation of oil and gas operations is preempted by state law.

No new language or responsibilities are added.

Fiscal Impact: None

[1] Colo. Rev. Stat. § 34-60-100, et seq. and CCR 404-1, et seq.
[2] CCR 303, 305, 306
[3] Colorado Environmental Coalition [http://www.ourcolorado.org/what-we-do/energy/oil-gas/]
[4] “The Economic Impacts of the Oil and Natural Gas Industry on the U.S. Economy: Employment, Labor Income and Value Added,” Prepared for American Petroleum Institute by Price Waterhouse Coopers – September 8, 2009
[5] Denver Post Editorial, [http://www.denverpost.com/opinion/ci_19501338] and new regulations see: [http://cogcc.state.co.us/RR_HF2011/DraftStatementOfBasisPurpose.pdf]
[6] See county press releases for El Paso, Douglas, Arapahoe Counties, and Commerce City, Colorado Springs and Longmont.
[7] Denver Post articles: [http://www.denverpost.com/dontmiss/ci_19789875][http://www.denverpost.com/commented/ci_19701548]
[8] COGCC press release
[9] UCA § 17-53-223(1)(a) (2010).
[10] N.M. STAT. § 3-17-1, N.M. STAT. § 4-37-1
[11] Mont. Code Ann. § 7-1-113, Mont. Code Ann. § 76-2-209.
[12] WSA § 15-1-601 (2010), WSA § 15-1-601(a)(i)(E) (2010), WSA §18-5-201 (2010)