Ballot compromise: Victory for business…

(Editor’s note: This content is sponsored by Coloradans for Responsible Energy Development (CRED).

Colorado’s economy has experienced one of the strongest post-recession recoveries in the country, due largely to oil and gas production. Businesses ranging from commercial real estate to information technology have flourished in the process of servicing the energy industry.

An estimated 33,897 people worked in Colorado’s upstream and midstream oil and gas industry in 2013, earning total wages of $3.5 billion, or $104,626 per worker, according to a study by the Business Research Division of the Leeds School of Business at the University of Colorado Boulder. The public revenue stream related to upstream and midstream activities was estimated at more than $1.1 billion last year – the largest coming from taxes on production.

But ballot initiatives related to oil and gas drilling that appeared headed for the November ballot, including two aimed at restricting oil and gas development, cast doubt on continued economic gains.

Initiative #88 sought to increase the setback requirement for drilling activity to 2,000 feet, even though it had already been increased to 500 feet in February 2013 from a previous restriction of 350 feet. The severity of a setback increase from 500 feet to 2,000 feet was underscored by Matthew Lepore, director of the Colorado Oil and Gas Conservation Commission, the state agency that would be charged with oversight. He pointed out that it would not merely quadruple the setback distance, but increase it 16-fold in radius.

“That’s 18 acres if (the setback) is 500 feet, and 288 acres if it’s 2,000 feet,” Lepore pointed out. “That’s a lot of land that gets taken out of play.” 

Initiative #89, dubbed the “Environmental Bill of Rights,” sought to allow municipalities to impose regulations beyond those required by the state and could ultimately ban certain industries, oil and gas included.  

That cloud of uncertainty unexpectedly, however, gave way to a measure of clarity on Aug. 4 when Gov. John    >>
Hickenlooper announced that he had brokered a deal in which those ballot initiatives would be withdrawn, replaced by a 21-member task force that includes six citizen and local government members, six industry representatives and six impartial members, who will make recommendations to the legislature. A key to the compromise was U.S. Rep. Jared Polis (D), agreeing to drop the two anti-oil and gas initiatives that sought restrictions on drilling. The sixth-richest member of Congress, Polis had financially and publicly backed the two initiatives.

“Colorado is fortunate to have an abundance of energy resources, and we have an obligation to develop them in a way that is safe for our residents, supports jobs and the economy, respects private property rights and protects our environment,” said Hickenlooper, who had opposed the two anti-fracking measures. “The work of this task force will provide an alternative to ballot initiatives that, if successful, would have regulated the oil and gas industry through the rigidity of Constitutional amendments and posed a significant threat to Colorado’s economy.”

Underscoring that threat was an earlier a study by the University of Colorado Boulder sponsored by the Metro Denver Economic Development Corp., Denver South Economic Development Partnership and the Commonsense Policy Roundtable, that concluded a statewide ban on fracking would trim 68,000  jobs in the first five years, raise costs by $6,000 per family, and ultimately lead to $12 billion in lost gross domestic product and reduce tax revenue to local and state governments by $985 million over 25 years.

A key to bringing about the compromise was Initiative 121 championed by Republican Reps. Jerry Sonnenberg and Frank McNulty. The measure sought to prevent communities that banned energy development from receiving state tax dollars from energy development taking place in other parts of the state, such as Weld County. Sonnenberg and McNulty agreed to withdraw this initiative on news that Polis was no longer moving forward with his job-killing initiatives, but it seems reasonable to assume the battle will resume in 2016.

For now, the compromise serves as an indication that Colorado is a leader for other states and federal regulators to follow when it comes to disparate stakeholders working to find common ground.

“I wouldn’t use the word ‘victory’ (for pro-business interests),” said Andrew Spielman, an attorney who serves as the global co-head of the energy and natural-resources group at the law firm Hogan Lovells and is vice chairman of the Colorado Oil and Gas Conservation Commission. “I just think it’s a good thing for Colorado. I think energy development, energy services, are extraordinarily important to our economy in Colorado. And I’m a firm believer that we can have a vibrant energy economy and be very protective of our Colorado way of life at the same time. There’s a reason we all treasure living here, and that doesn’t have to change to have a successful energy economy.”