Oil, gas bill headed to Gov. Polis’ desk

DENVER — The Colorado Senate passed an amended version of Senate Bill 181 Wednesday morning, sending a final version of a measure aimed at overhauling oil and gas regulations to Gov. Jared Polis’ desk to be signed into law.

The bill, put forth by House Speaker KC Becker, D-Boulder, and Senate Majority Leader Stephen Fenberg, D-Boulder, has been heavily criticized by oil and gas industry groups and Republican lawmakers.

It was approved by the Senate on a 19-16 vote. That final vote came after the body unanimously adopted a set of amendments meant to make SB19-181 more palatable to the industry.

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The bill shifts Colorado’s regulatory philosophy in several ways, including changing the mission and makeup of the Colorado Oil and Gas Conservation Commission, the state’s chief oil and gas oversight body.

Currently, the commission’s charge is to foster the development of oil and gas operations. If Polis signs the measure into law, which he is expected to do, the mission will prioritize regulating the industry and promoting health and safety.

This portion of the measure has been seen by environmental advocacy groups as particularly critical.

“Coloradans can breathe easier today knowing that our state is finally on track to put the health and safety of workers and residents, and our environment, ahead of oil and gas industry profits,” Kelly Nordini, executive director of Conservation Colorado, said in a prepared statement.

The measure puts more limits on the industry’s ability to engage in forced pooling, which allows for drilling even without the consent of all mineral rights holders within the drilling area.

SB19-181 also gives local governments more control over drilling within their jurisdictions, allowing local leaders to enforce land use regulations and zoning rules.

“The role of the local government is to have reasonable regulations when it comes to siting of oil and gas facilities,” rather than to implement de facto drilling bans, which have been a major concern from the industry, Fenberg said before Wednesday’s vote.

A host of amendments to the bill have been adopted since it was introduced Feb. 28.

In response to industry criticism, lawmakers changed the language of the bill to ensure local governments implement new drilling restrictions only when those regulations are “necessary and reasonable.”

Fenberg said, “I believe there were (amendments) that provide some safeguards to make people feel more comfortable” that local governments will not treat the new regulations as an opportunity to implement unnecessary de facto drilling bans.

The way the current regulations are written, only a single property owner must consent to allow the industry to start the forced pooling process. The original version of SB19-181 would have increased the threshold and require the industry to obtain leases from 50 percent of property owners. The amended version reduced that requirement to 45 percent. This addresses concerns from the industry that Colorado’s largest operator Anadarko Petroleum could secure a near monopoly on new drilling.

Another significant change relates to who will serve on the COGCC. Currently, commissioners serve on a part-time, volunteer basis. If SB19-181 becomes law, the commission would be made up of professionals appointed by the governor. The oil and gas industry lobbied for this change, arguing that professionals who are experts in the field would make more informed decisions when approving drilling permits.

“That is a major concession, a major compromise that was made with the industry,” Fenberg said.

Even with the amendments, the industry came out Wednesday in opposition to SB19-181.

The bill “is the most comprehensive oil and natural gas legislation Colorado has seen in decades,” Colorado Oil and Gas Association CEO Dan Haley and Colorado Petroleum Council spokesman Ben Marter said in a prepared statement after the Senate’s vote. “While a few critical amendments were added that begin to address some of industry’s concerns and provide a degree of certainty to our member companies, our industry remains firmly opposed to this bill because it threatens one of the pillars of Colorado’s economy.”

Last month, amid the heated debate over SB19-181, COGA commissioned a study that found  Colorado’s oil and gas industry was directly or indirectly responsible for 89,000 jobs, $13.5 billion of the state’s gross domestic product, and $1 billion of state and local tax revenue in 2017.

“While we clearly disagree on this bill, we appreciate that legislative leaders heard us and opened a dialogue in the final two weeks about the unintended, and intended, consequences of the legislation as introduced,” Marter and Haley said. “We hope that dialogue will continue for the remainder of the legislative session and beyond — that’s how Colorado should work. Our state’s energy future is too important to shut out voices from all impacted stakeholder communities.”

Fenberg acknowledged that while “a lot of work went into this bill,” it is “not a perfect bill.” He said he recognized both supporters of the measure and critics will find reason to be dissatisfied with elements of SB19-181.

“There will be tweaks in the future, I’m sure,” he said, but he predicted those tweaks will be relatively minor.