Senate Passes Amended Oil and Gas Bill, Sends It to Governor

It took a few days longer than expected — and a few more amendments than many environmental groups wanted — but Colorado Democrats’ sweeping package of oil and gas reforms is headed to Governor Jared Polis’s desk to be signed into law.

On another party-line vote, the state Senate voted today, April 3, to re-pass Senate Bill 181, which had been amended before its final passage in the House last week. The vote brings to a close one of the most contentious battles of the legislative session, during which Republican opponents of the bill resorted to delay tactics, threats of recall elections and even a lawsuit against Senate President Leroy Garcia.

“A lot of work went into this bill," said co-sponsor and Senate Majority Leader Steve Fenberg, a Democrat from Boulder, before the vote. "It is not a perfect bill. It is not perfect for communities that want additional tools, it is not perfect for environmental advocates, it is not perfect for families that feel threatened, and it's not perfect for the industry."

Today’s vote came after the House, which took up SB 181 following its initial passage by the Senate last month, adopted more than a dozen amendments to the bill, some of which contained significant new provisions or language that had been lobbied for by oil and gas groups. It was the second time the legislation had undergone a round of industry-requested changes, after Fenberg offered nearly a dozen amendments of his own before its first vote in the Senate. Activists have expressed concern about some of the changes, but that didn't stop many of them from celebrating the bill's final passage.

“SB 181 is an important foundational step for impacted Coloradans,” said Sara Loflin, executive director of the League of Oil and Gas Impacted Coloradans, in a statement. "It is time that communities have a voice when it comes to massive industrial projects being forced into their neighborhoods and near their schools.”

The bill’s most substantial, immediate reform is to empower local governments to regulate oil and gas operations within their jurisdictions. Over the past fifteen years, Colorado’s shale-drilling boom has increasingly expanded into densely populated cities and towns along the Front Range, but state law and court rulings have left municipalities almost entirely powerless to restrict this disruptive, potentially hazardous industrial activity. As long as operators buy or lease surface property for an extraction site and obtain a state permit, they've been able to drill almost anywhere they want.

That will change as soon as Polis signs SB 181, which grants city and county governments broad land-use authority to restrict and regulate industry operations. Municipalities will be able to place restrictions on the locations of oil and gas facilities, enact their own health and environmental protections, and collect fines and fees from operators — though a last-minute amendment limits local regulations to those that address the “surface impacts” of industry operations “in a reasonable manner.”

The bill also makes several potentially pivotal changes to the longstanding foundations of Colorado oil and gas law. For years, advocates of stricter regulations have been frustrated by agency rulings and court decisions in the industry's favor, many of which cite decades-old statutes that require regulators to "foster" oil and gas development and don't prioritize health and safety concerns. In January, the Colorado Supreme Court ruled that, as written, state law requires only a "balance" between economic interests and public health and safety.

The bill aims to change that by affirming that the mission of the Colorado Oil and Gas Conservation Commission is to "regulate" drilling and empowering the agency more explicitly to protect health and safety — but here again, some bill supporters worry that these new powers have been somewhat weakened by amendments adopted late in the process. One change adopted by the Senate stipulates that rules enacted by the commission must be "necessary and reasonable," which activists fear could create a loophole through which deep-pocketed industry groups could challenge new regulations in court. Ahead of today's vote, bill co-sponsor Senator Mike Foote, a Democrat from Lafayette and a longtime industry critic, sought to address those concerns.

"'Necessary and reasonable' is not intended to mean regulatory authorities can only enact a regulation once all other options are exhausted," Foote said. "State and local governments…should be entitled to deference, and allowed to use the precautionary principle to determine if a regulation or land-use decision is 'necessary and reasonable.'"

The full extent of the bill's impact won't be felt until COGCC regulators complete the various rule-makings it requires, which is likely to take a year or more — and which will undoubtedly become the next battleground on which industry groups and environmental activists clash over the future of oil and gas development in Colorado. With tensions running high and the threat of recall elections and new ballot measures looming, just before the vote Fenberg urged both sides to take a step back and see how these regulatory processes will play out in the coming months.

"I hope folks will realize that the best thing we can do moving forward is to see this through," he said. "To go through the rule-making process, to be engaged, and allow this to be successful."