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Four Key Questions Now That the Oil and Gas Bill Has Passed

Senate Bill 181, Colorado Democrats’ sweeping package of oil and gas reforms, was more than a decade in the making, the product of long-simmering frustrations over the disruptive, hazardous drilling activity that has increasingly encroached upon fast-growing suburban communities north of Denver. It’s the most substantial overhaul to Colorado oil and gas law in almost seventy years — and that overhaul is only just beginning.

Once Governor Jared Polis signs the bill into law in the coming days, a wide-ranging implementation process will get under way. Municipalities across the state will begin using their new regulatory powers to draft, enact and enforce rules on drilling operations in their jurisdictions. Regulators at the Colorado Oil and Gas Conservation Commission will launch an extensive rule-making process to develop new statewide environmental protections, and ultimately the commission itself will be re-established under a new, professionalized structure.

In other words, the long-running war between environmental activists and Colorado’s oil and gas industry is far from over. But its battles will now shift away from the legislature and back to agency hearings, city council meetings and, inevitably, the courts — and activists hope that after years of outcomes that were heavily tilted in the industry’s favor, the two sides are now on much more even ground.

“While SB-181 does not address all of the concerns and threats associated with industrial fracking activity, it is a desperately needed tipping back of enormously unbalanced scales in favor of people and environment over corporate profits,” said Anne Lee Foster, communications director for anti-fracking group Colorado Rising.

Here are four burning questions about the bill's impact that will be answered in the coming weeks, months and years.

1. How many drilling permits will state regulators put on hold?

When SB 181 was announced in late February, industry groups immediately came out guns blazing against one section of the bill in particular: a provision empowering the director of the COGCC to refuse to issue certain drilling permits while new regulations required by the bill were drafted and enacted.

The oil and gas lobby argued that this could amount to a statewide moratorium on new drilling, and Democrats twice adopted amendments aimed at easing the industry’s concerns. The final version of the bill requires the COGCC to specify the “objective criteria” by which certain permits will be put on hold — and stipulates that the agency can only “delay a final determination” on those permits rather than deny them.

Now, the first major decision of the post-SB 181 era falls to COGCC director Jeff Robbins, a Polis appointee who previously served as legal counsel to several Front Range communities in their efforts to cope with fracking. Within thirty days of the bill becoming law, the agency must hold a public comment period, then release its criteria identifying which permits will be delayed for the next year or more.

The bill sets no clear limits on how broadly these criteria could be defined — and Robbins’s decision could say a lot about the Polis administration’s approach to oil and gas development going forward. Robbins could choose to delay every proposal to drill within a municipality, or within a certain distance of homes or schools; he could, in theory, delay every pending permit in the state, or no permits at all.

In the meantime, the COGCC has already imposed a brief, de facto moratorium on permit approvals; immediately following SB 181’s passage, it postponed its April hearing until next month in order to “allow the Governor and his team time to conduct an evaluation” of the required reforms. Under the new law, the commission will become a smaller, professionalized body by July 1, 2020, but in the interim, several of its current volunteer members must be replaced by newly appointed environmental and public-health experts.

Even under normal circumstances, the COGCC’s current backlog of pending drilling permits would have taken up to three years to process, agency officials have estimated. Applications for nearly 400 new drilling locations are currently pending before the commission, along with another 150 existing sites whose operators have applied to amend their permits. In total, these applications propose to drill more than 6,400 new wells across the state, the commission’s largest backlog in years.

2. How long will rule-makings take?

Like any piece of legislation that addresses complex subject matter, SB 181 enshrines a series of broad directives into statute and leaves the technical details of implementation to the relevant regulatory bodies. At least a half-dozen rule-makings will need to be completed by officials at the COGCC and the Colorado Department of Public Health and Environment to fully implement the new law.

Some of the bill’s instructions to regulators are relatively specific, like sections requiring new flowline regulations and measures to address so-called orphan wells. Other rule-making provisions are much broader, like a subsection that simply directs the COGCC to adopt rules that “evaluate and address the potential cumulative impacts of oil and gas development.”

In Colorado, rule-making proceeds in four stages. The agency or department in question must publish a notice of proposed rule-making; hold a public comment period on the proposed rule; hold a public hearing to hear further testimony; and adopt the new rules no later than 180 days after the hearing.

If that all sounds simple enough, rest assured it’s not. The agency’s last major rule-making, which followed a 2007 oil and gas bill that prefigured some of SB 181’s more ambitious reforms, didn’t even begin until almost a year after the bill’s passage, and the new rules weren’t fully enacted until a full year after that.

The rule-makings required by SB 181 may or may not take that long, but activists who have spent years fighting for tougher environmental protections are eager to make their voices heard. Once again, they’ll be facing off against an industry that employs a small army of lobbyists, lawyers and consultants and will be determined to carve out as many loopholes and exemptions for itself as possible.

“Rule-making will be critical in protecting Coloradoans and making sure 181 fulfills the new mandate of prioritizing health and safety,” said Foster. “Colorado Rising will be there to empower communities and fight for and our environment and public health.”

3. Which municipality will test the limits of local control?

SB 181’s most visible and immediate change to oil and gas regulations will be a shift in who gets to regulating oil and gas in the first place. For the first time ever, local governments will have the authority to restrict where drilling can take place, impose standards for water and air quality, and enforce their rules through inspections and fines.

Even before the bill passed, commissioners in Adams County voted unanimously to impose a six-month moratorium on new drilling projects, preventing a last-minute rush of applications and giving itself time to draft and enact its new local regulations. Several other Front Range governments have taken similar steps in the past, and despite industry opposition, these short-term moratoria have generally been considered legal.

Permanent bans, however, are a different story. Former Governor John Hickenlooper’s administration famously joined an industry lawsuit against Longmont over its drilling ban in 2013, and Hickenlooper threatened to do the same to any town that followed Longmont’s lead. Colorado courts have repeatedly struck down local bans over the last decade. Just before the Senate's final vote on SB 181 this week, Senate Majority Leader and bill cosponsor Steve Fenberg, a Democrat from Boulder, once again assured opponents that this won't change under the new law.

"We clarified that the role of the local government…is to have reasonable regulations when it comes to siting of oil and gas facilities," Fenberg said. "It does not give them blanket authority to do things like a ban, or a long-term moratorium that is effectively a ban. The bill never did that."

So what are the limits of local control under SB 181? No one knows for sure. The bill uses phrases like "necessary and reasonable" and "in a reasonable manner" to describe the kinds of regulations cities and counties may enact, but doesn't attempt to define those terms further. And the reality is that we won't know the full scope of local governments' new powers until one of them goes too far for the industry's liking, the industry sues, and the courts rule on what the new law actually says.

Across the Front Range, towns like Longmont, Erie, Lafayette, Broomfield and others have been on the front lines of the fracking wars for years, challenging the industry's power and pushing the envelope of what existing state law has allowed. Many elected officials in these communities won office thanks in part to their tough stances on fracking, and as they're caught between continued activist pressure and a historically litigious oil and gas industry, one or more showdowns in court seems inevitable.

4. When will oil and gas extraction become a climate issue?

From the beginning of the fight over SB 181, supporters focused squarely on the immediate health and safety impacts of oil and gas drilling along the Front Range. From the direct emission of toxic gases like benzene and other volatile organic compounds to the delayed effect of ozone-forming pollutants like nitrogen oxides, from relatively routine spills and leaks to fatal tragedies like the 2017 home explosion that killed two men in Firestone, oil and gas extraction poses clear health and safety risks to nearby residents. After years of intense pressure from environmental and community groups across Colorado, lawmakers have finally passed legislation that seeks to address many of activists' most pressing concerns.

But the greatest threat posed by oil and gas drilling is a long-term one: climate change. Roughly 90 percent of the world's greenhouse gas emissions come from the burning of fossil fuels, and while phasing out coal will go a long way towards reducing that figure, it won't be nearly enough. One study released in January estimated that the oil and gas extracted in Colorado between now and 2050 could release the equivalent of the lifetime greenhouse-gas emissions of nearly 50 coal plants. If Colorado is still extracting oil and gas at anywhere near its current levels in twenty years — if there's still enough global demand to make large-scale drilling profitable — it will mean some of the worst-case scenarios for the climate are all but assured.

Even Hickenlooper, a longtime industry ally, admitted in a 2017 interview that "at some point," these resources will simply have to be left in the ground. It's certainly true that oil and gas is an economic boon and valuable tax base for many communities in Weld County and elsewhere; it's also true that within the next several decades, oil and gas extraction will have become entirely incompatible with a livable planet. At a certain point, there will be no ignoring this reality — even though lawmakers, Republican and Democrat alike, are doing their best to try.

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