There was a ballot initiative in Colorado the last general election which would have restricted oil and gas development within a certain distance of development in the state. That's significant in that oil and gas in Colorado is hot right now in the DJ and Denver Basin, which is pretty heavily developed, and developing.
Voters rejected it.
The industry spent a lot of effort contesting it. Part of what they were pointing out was the impact of oil and gas development in the state, which is huge.
Well, no matter, the Colorado legislature came in and just passed a bill that in some ways returns the voters kick and maybe scores the goal that those backing the ballot initiative sought to gain.
The new Colorado law does not read identically to the initiative. Rather, what it does is now vest part of oil and gas developmental regulation down at the county level. As the opposition to oil and gas development his heaviest in the aforementioned counties, that may mean that producers will see a lot more regulation on development in those areas than they did before. In other counties, it'll mean nothing at all.
Now, one thing it'll mean for all counties is that they're now subjected to a lot bigger administrative burden than they ever have been, in an area they've never regulated in. Oil and gas regulation is normally a state matter everywhere, and this is something that no county is really prepared to take on. Some have cynically claimed that was part of the intent of the bill's backers. Whether it is, or isn't, I have no idea, but it will be a big task for Colorado's local governments.
If it gets very far, for very long. Industry backers are threatening to sponsor a new ballot initiative to un-ring the bell.
There's so many interesting aspects and lessons in this that's it's hard to know where to start. But to just name a few:
- Some feel that this will be a boon to Wyoming production (and I'd guess maybe to Texas production as well) as producers driven out of Colorado can simply go north. . . or south. .. or north and south. We're already having a boomlet, this may mean that oil and gas development that's on hold in Wyoming now accelerates.
- There's a real lesson in here for those in conservative quarters who always view an increase in the local population as good for everything. Colorado's massively had one, and as it has, it's turned left. That's the urbanization norm. Even Thomas Jefferson worried about that as far back as the 1790s.
- We continue to see really interesting actions by political parties in regards to local controls. In Wyoming, the GOP claims to be for local control, but it took local control away from counties on zoning matters pertaining to private schools in the last legislature. Democrats everywhere like control at the top, but in Colorado, in order to reverse a statewide ballot initiative result it acted basically anti-democratically and threw things down to the county level, where local control will not dictate on some pretty complicated questions.
- Early oil and gas law developed the thesis that oil resembled wild animals, in that it runs everywhere and ignores property lines. It also ignores county lines . . . and state lines for that matter. The DJ Basin production comes all the way up into southern Wyoming. As long as Colorado's counties are uniform, I suppose, in regards to local production, that doesn't create a problem. If they aren't, that does.
