Ask the Indy: Analyzing seven big questions about Colorado’s ballot fight over oil-and-gas setbacks

Is Proposition 112 really going to ruin Colorado’s oil and gas industry, cost hundreds of thousands of jobs, but make communities safer?

By: Lars Gesing, The Colorado Independent
October 16, 2018

It is one of the most contentious ballot measures this fall, with opponents spending millions to defeat it: Proposition 112 would set back new oil and gas development 2,500 from a “vulnerable” structure, such as a home or school building, and it has voters scratching their heads over which of the purported “facts” in support or against the measure they can trust.

We looked into the evidence behind the seven big questions surrounding Proposition 112. Since much of the fight deals with the forecasted economic impact, definitive answers are hard to come by. But what we have found, in a nutshell, is that much of the billboard and 30-second ad campaigns against and in support of the measure lack critical context.

Our answers to these seven questions aim to provide that context. They are based on an extensive review of data and studies as well as nearly a dozen interviews with economists, law professionals, oil and gas development analysts and conservationists. So, buckle in.

1. What is Proposition 112 about and who are the two camps in support and opposition?

The full text of the ballot measure reads as follows:

“Shall there be a change to the Colorado Revised Statutes concerning a statewide minimum distance requirement for new oil and gas development, and, in connection therewith, changing existing distance requirements to require that any new oil and gas development be located at least 2,500 feet from any structure intended for human occupancy and any other area designated by the measure, the state, or a local government and authorizing the state or a local government to increase the minimum distance requirement?”

As the measure’s authors point out, Proposition 112 expands on existing setback requirements for oil and gas developments adopted in August 2013. Those regulations establish a 500-foot setback from any building unit and at least a 1000-foot setback from any “high occupancy” building unit, such as a school, for example.

But since 2013, the conflict between oil and gas developers and residents and communities worried about hydraulic fracturing — fracking — has escalated as more studies show potential adverse health impacts. Boulder and Longmont voters went as far as trying to pass complete bans on fracking. But state law allows such development, and the Colorado Supreme Court in 2016 struck down the attempted bans. If Proposition 112 were to pass, it would supersede existing law and local jurisdictions would gain more authority to restrict oil and gas development.

Proposition 112 was put on the ballot through a grassroots effort organized by the issue group Colorado Rising. Its backers are primarily focused on what they call “lax regulations” and public health. Their initiative is based — in part — on the more than 2,200 resident complaints filed with the Colorado Oil and Gas Conservation Commission [COGCC] since January 2015 over a range of fracking-related issues, from odors to noise and air quality.

Colorado Rising has the support of national environmental organizations including Greenpeace and 350.org, and the latest campaign finance records filed with the state show it so far has received a total of roughly $800,000 in contributions. It currently has $130,500 to spend in the final weeks before Election Day.

Those numbers pale in comparison to Protect Colorado, the oil and gas industry-backed issue committee working to defeat Proposition 112. Protect Colorado has received more than $34 million in contributions — and after already spending $29 million still has upward of $5 million cash on hand to continue its PR blitz.

The industry cites numbers by state regulators and business groups that claim Proposition 112’s passage would devastate its business, endangering 147,000 Colorado jobs, and forfeiting $1.1 billion annually in state and local tax revenue by 2030.

Gov. John Hickenlooper as well as both candidates running to replace him, Republican Walker Stapleton and Democrat Jared Polis, oppose Proposition 112 — despite the latter’s full-throated support for similar measures back in 2014The Denver Post editorial board also came out against the measure, arguing its passage equates to “a ban on oil and gas.”

2. If passed, would Proposition 112 really equate to a ban on new development of oil and gas in the state?

The chief source for this argument is an analysis by the COGCC, the state body charged with both regulating and promoting the oil and gas industry. The study concludes that 85 percent of Colorado’s total non-federal land surface would be off limits for new oil and gas development if Proposition 112 were to pass. That restriction would reach 94 percent of non-federal land in the state’s top five oil and gas producing counties, the COGCC reported.

Critics point out that the analysis conflated existing wells with new development. And while the existing wells would eventually run dry and any new development would be subject to the new law, until then they would be grandfathered in. So, for example, untouched by 112’s passage would be many of the roughy 23,600 active wells documented in Weld County in an April 2018 report by Troy Swain, the Weld County Oil & Gas Liaison. A visual comparison of his map with the map produced in a report by the anti-112 business group Common Sense Policy Roundtable shows a significant amount of those 23,000-plus wells currently fall within the proposed setback area boundaries.

predicted rise in oil prices in the coming years also could help offset some of the losses for price-per-barrel-dependent producers. But, given the volatility of oil prices, it also means the industry would want to ramp up production as prices rise — and the numbers show that Proposition 112 at the very least would put a significant dent in their ability to (quickly) do so.

Proposition 112’s restrictions exclude federal land, and that likely would mean the industry would turn greater focus on public lands, conservationists say. As is currently the case, oil and gas companies must lease federal parcels and then apply for permits to drill from the federal government.

Protect Colorado and other 112 critics suggest that if the industry is cornered into developing primarily on federal land in the state, Coloradans would still lose say in where development happens in this state. But, unless the process changes, permits still remain subject to a sometimes lengthy environmental review and several rounds of public feedback, not to mention lawsuits as is the case with an ongoing legal challenge to oil and gas development lease sales in Colorado and Utah.

Still, the Trump administration and Interior Secretary Ryan Zinke have placed a premium on processing these oil and gas development permits much more willingly and quickly than in the past, said Justin Pidot, who served as the Deputy Solicitor for Land Resources for the Department of the Interior during the Obama administration. Pidot now is an Environmental and Natural Resources Law professor at the University of Denver’s Sturm College of Law.

A vast majority of public lands that are technically available for drilling are not developed yet. (Certain public lands, such as national parks or Congressionally-designated Wilderness areas are totally off limits.) Alison Gallensky from the conservation organization Rocky Mountain Wild said an analysis she performed showed that in Colorado, 17 out of roughly 30 million acres of public lands managed by Bureau of Land Management or the U.S. Forest Service are currently available to be leased, while two million acres have already been leased.

Read more at The Colorado Independent.

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