By Kenneth Artz
Colorado is on the front lines of a battle between states and local communities who want to ban or impose moratoria on fracking, overriding state control of the oil and gas industry.
On December 9, the Colorado Supreme Court heard challenges brought by the cities of Longmont and Fort Collins. The cities claim they should have the power to ban fracking, regardless of decisions made by state agencies.
In 2012, voters in Longmont approved an amendment to its city charter banning fracking. In 2013, voters in Fort Collins approved a five-year moratorium on fracking. Lower courts overturned both limits, citing prior Colorado Supreme Court decisions determining the state, not localities, have control over oil and gas development. The courts found state regulators were solely authorized to regulate fracking.
‘Fracking is Beneficial’
Jonathan Lockwood, executive director for Advancing Colorado, a pro-environment, free-market advocacy group, says Colorado is the epicenter of attacks on the energy industry from out-of-state anti-fracking groups seeking to evict the energy industry from the state, despite the fact the industry is one of the bright spots in the state’s economy.
“Out-of-state special-interest groups with extreme views have flooded our state with anti-energy campaigns, preyed on vulnerable communities, and tried to confuse voters,” Lockwood said. “Protesters in the past have been organized by the same people who organize minimum wage hike protests. The chants are even the same. At one demonstration, a protester held a sign that said, ‘Burn cop cars, not tar sands,’ showing how out-of-control these anti-energy activists really are.
“[Fracking] helps our communities and local mom-and-pop businesses,” said Lockwood. “It helps our schools, [and] it helps keep our homes warm and our lights on. The anti-energy activists seem to have a problem with 21st century cutting-edge technology that helps the environment and helps society, and that’s why people don’t trust these out-of-state-backed radical environmentalists.”
No Play, No Pay
Lockwood, says if the Colorado Supreme Court allows local regulation of fracking, Colorado should deny proceeds from state oil and gas severance taxes to communities imposing bans or moratoria on fracking operations.
“People cannot be allowed to harvest the fruits of other communities’ responsible energy production that they shun,” Lockwood said. “This is not The Hunger Games and this is not a dictatorship. Communities trying to ban fracking are like hungry hippos voraciously clamoring for severance tax revenues.”
‘Local Bans Sow Confusion’
Michael Sandoval, an energy policy analyst with Colorado’s Independence Institute, says the benefits of state regulation for the oil and gas industry are consistency across communities, the protection of property rights, and less regulatory red tape.
“Consumers see lower prices, and mineral owners can rely on their rights being protected across the state, all while producing affordable, reliable, and safe energy,” Sandoval said. “Local bans or moratoria on oil and gas development or hydraulic fracturing create confusion for operators and citizens alike, resulting in a hodge-podge of regulatory schemes designed to drive out natural resource development. [This suppresses] local government property and severance taxes, harming school districts and law enforcement, killing the local economy and driving out jobs, all while increasing prices for consumers.
“This dislocation does nothing to help the environment or nurture communities,” said Sandoval.
“The oil and gas industry wants consistency, even as it participates fully in the conversation about what level of regulation and other protections allow the state to develop oil and gas responsibly,” Sandoval said. “Allowing a patchwork of disparate and sudden regulatory changes with respect to local bans, pushbacks, or other measures would further harm the state’s ability to remain competitive as we endure the current commodity downturn.”
State Regulation Provides Uniformity
Gary Stone, vice president of engineering for Five States Energy Capital, says states have traditionally taken the lead in regulating oil and gas activities to produce uniform safety standards and efficient production.
In Texas, this authority is granted primarily to the Texas Railroad Commission (TRC), Stone says.
“All phases of the industry are regulated, from permitting to drilling to production and reservoir maintenance to transportation,” Stone said. “Instead of a hodge-podge of local regulation, producers are held to uniform safety standards throughout the state, and reservoirs are produced in the most efficient manner possible. It should be noted many activities like changing field production rules or forming cooperative units, for example, require technical hearings before the TRC and specific approvals.”
Stone says localities do have some say over oil and gas production.
“Cities and counties are typically allowed [to] regulate above ground nuisances through ordinances imposing reasonable limits on noise and nighttime lighting and set-backs from schools or churches,” said Stone.
The protection of property rights is another important issue that arises as localities attempt to limit fracking, says Stone.
“The majority of oil and gas reserves in the United States are beneath privately owned land and have long been held to be the property of the land [or] mineral owner,” Stone said. “For a locality to deny a property owner the ability to produce and profit from the sale of that oil and gas is in effect the taking of property without compensation, [which is] a violation of the Texas Constitution, and I suspect it violates the [Colorado Constitution] and other states’ [constitutions] also.”
Kenneth Artz (email@example.com) writes from Dallas, Texas.