Global Fracking Resources
Colorado has a long history of oil and gas development and is home to several major oil and gas basins, including the Denver & Julesburg, Raton, San Juan and Piceance Basins, and the Niobrara, Pierre and Hillard-Baxter-Mancos shale plays.1 Recently, the United States Geological Survey revised its estimate of undiscovered, technically recoverable shale gas in the Mancos shale play within the Piceance Basin upward to 66.3 trillion cubic feet.2 Some industry representatives maintain that even this estimate understates the resource’s potential.3
Statutory and Regulatory Framework
Oil and gas development is governed primarily by the Colorado Oil and Gas Conservation Act4 and rules promulgated by the Colorado Oil and Gas Conservation Commission (“COGCC”).5 The COGCC is a division of the Colorado Department of Natural Resources (“DNR”), and has broad statutory authority with respect to impacts on any air, water, soil, or biological resources resulting from oil and gas operations.6
The COGCC evaluated hydraulic fracturing risks when it comprehensively updated its regulations in 2008,7 adopted a chemical disclosure rule in 2012,8 and adopted statewide water sampling and monitoring rules in 2013.9 Colorado’s rules also include well casing and cementing requirements,10 “buffer zones” near surface waters and tributaries that are sources of public drinking water,11 and other setback requirements.12
The DNR Division of Water Resources (“DWR”) oversees the administration of surface and groundwater, including water produced by and used in oil and gas activities.13 However, a Memorandum of Agreement (“MOA”) between the COGCC and the Water Quality Control Division (“WQCD”) of the Colorado Department of Public Health and Environment (“CDPHE”) transfers reporting and initial oversight responsibilities for spills and releases from oil and gas operations to the COGCC, including responding to spills associated with hydraulic fracturing.14
In February 2014, the CDPHE’s Air Quality Control Commission adopted new air regulations implementing the federal Standards of Performance for Crude Oil and Natural Gas Production (40 C.F.R. pt. 60, subpt. OOOO) and regulating methane emissions from oil and gas operations, including fracking wells.15 These rules require an average hydrocarbon control efficiency of 95% at oil and gas production facilities;16 require green completions at all newly constructed, hydraulically fractured, or recompleted wells;17 require emissions reductions from centrifugal compressors;18 require VOC emissions control requirements at storage tanks utilized during production;19 and address fugitive emissions from components at natural gas compressor stations and well production facilities through various leak detection and repair requirements.20 Four statewide anti-fracking initiatives were originally going to be on Colorado’s November 2014 ballot, but Governor John Hickenlooper reached an agreement with supporters of the initiatives to keep the initiatives off the ballot.21 As part of that negotiation, Governor Hickenlooper agreed to establish a Task Force on State and Local Regulation of Oil and Gas Operations (“Task Force”).22
In its Final Report, dated February 27, 2015, the Task Force presented the following nine recommendations:
- The COGCC should establish a process for increased collaboration between local governments, the COGCC, and operators on the locations of oil and gas operations and urban planning;
- Future oil and gas drilling and production facilities should be included in existing local comprehensive planning processes;
- The COGCC should work to enhance the role of local government designees as liaisons between industry, residents, and local officials;
- The General Assembly should authorize an increase in COGCC staffing, including additional inspectors and field operations, enforcement, and permitting staff;
- The General Assembly should authorize an increase in CDPHE’s staffing and the creation of a health complaint and information line;
- The Office of the Governor should create an oil and gas information clearinghouse to facilitate the distribution of accurate, unbiased information regarding Colorado’s oil and gas industry;
- COGCC and Colorado Department of Transportation should convene a working group to reduce truck traffic on public streets, roads and highways for oil and gas activities;
- The General Assembly should approve the continuation of oil and gas methane rules that the state adopted on a temporary basis in 2014; and
- COGCC should implement a compliance assistance program to help operators comply with operating rules policies and to ensure that inspectors are enforcing those rules and policies in a consistent manner.23
In January 2016, COGCC approved new rules addressing some of the Task Force’s recommendations.24 Among other things, the rules call for increased involvement of local governments in processes for planning and siting oil and gas operations.25
Local Initiatives to Suspend or Ban Hydraulic Fracturing
In recent years, a number of Colorado communities have taken actions aimed at banning or limiting hydraulic fracturing activity within their jurisdictions. For example, in November of 2012, voters in the city of Longmont approved a ballot measure banning fracking within the city.26 In November of 2013, voters in four more Colorado jurisdictions—Boulder, Fort Collins, Lafayette, and Broomfield—approved similar ballot measures to suspend or ban hydraulic fracturing.27
The Colorado Oil & Gas Association (“COGA”) challenged the Broomfield, Longmont, Fort Collins, and Lafayette resolutions in State courts.28 Colorado district courts struck down the Lafayette, Fort Collins, and Longmont measures on the grounds that they are preempted by State law; a case challenging the Broomfield measure was held in abeyance pending the resolution to appeals by Longmont and Fort Collins.29 In May 2016, the Colorado Supreme Court upheld the district court decisions, finding that both the Longmont and Fort Collins measures were preempted by State law.30
Following the Colorado Supreme Court’s decision, Colorado communities have continued to take various measures aimed at restricting hydraulic fracturing activity:
- In July 2017, trustees in Erie, Colorado updated its public health and safety code to make it “unlawful and a public nuisance for any person, tenant, occupant or property owner to permit the emission of odor from any source to result in detectable odors that leave the premises and are detected by a reasonably prudent person with a normal sense of smell.”31 The measure is seen as Erie’s first step toward regulating the oil and gas industry.32
- In August 2017, Thornton, Colorado passed a suite of fifteen rules aimed at comprehensively regulating the oil and gas industry. The rules required, among other things, 750-foot setbacks from existing or proposed buildings, increased operator insurance requirements, and the removal of flow lines following operations.33 In April 2018, many of the rules were overturned by a Colorado District Court in a lawsuit brought by the industry.34 Following the lawsuit, rules requiring companies to consolidate wells and minimize disturbances to the surface remain in effect.35
- In November 2017, Broomfield residents passed Issue 301, an amendment to Broomfield’s Home Rule Charter which requires Broomfield to “condition oil and gas development permits to require oil and gas development to only occur in a manner that does not adversely impact the health, safety and welfare of Broomfield’s residents in their workplaces, their homes, their schools. and public parks in order to protect the public’s health, safety, and welfare and to safeguard the environment and wildlife resources.”36
- In November 2017, the City of Lafayette approved a six-month moratorium on drilling activity.37 The moratorium was extended in May 2018, and again in August 2018 for another six-month period.38
- In May 2018, the Longmont City Council reached a $3 million agreement with TOP Operating and Cub Creek Energy that would allow the companies to develop oil and gas resources underneath Union Reservoir, but would prevent them from doing so via drilling activities on the surfaces of properties within city limits, or on city-owned properties.39
- In May 2018, the Boulder City Council voted in favor of a two-year extension to its June 2013 fracking moratorium, which was set to expire in June 2018.40 Unlike the Longmont and Fort Collins measures described above, the Boulder City measure has yet to prompt any legal challenge, presumably due to lack of operator interest in drilling activity in the area.41 Meanwhile, Boulder County’s fracking moratorium lapsed in 2017.42 The Boulder County moratorium was replaced with what county officials called the “most restrictive” county oil and gas regulations in Colorado.43
Martinez Oil & Gas Lawsuit:
In November 2013, Boulder, Colorado teen Xiuhtezcatl Martinez and a group of teenage Colorado citizens requested the COGA to halt the issuance of any new drilling permits until studies from the best available science could demonstrate that the drilling did not pose a threat to human health or contribute to climate change.44 After COGA denied the request, Martinez and the group appealed the decision in July 2014 to Denver District Court.45 In February 2016, the district court affirmed COGA’s refusal after deferring to COGA’s authority.46 However, after appealing again to the Colorado Court of Appeals, in 2017, the Court of Appeals held that COGA’s refusal was improper under the Oil and Gas Conservation Act, which requires COGA to make and enforce regulations in a manner consistent with the protection of public health and safety.47 COGA appealed the decision and on January 29, 2018, the Colorado Supreme Court granted certiorari to hear the case. As of June, 2018, oral argument is not yet scheduled.48
In January 2018, State Rep. Joe Salazar introduced HB18-1071 in the Colorado legislature.49 HB18-1071 would codify the holding of the Colorado Court of Appeals in the Martinez case by amending the Colorado Oil and Gas Conservation Act to expressly require the regulation of oil and gas operations “so as to prevent and mitigate significant adverse environmental impacts.”50 As of March 7, 2018, HB18-1071 had been postponed indefinitely by vote of the Senate Agriculture, Natural Resources, & Energy Committee.51
November 2018 Ballot Initiatives
On August 29, 2018, the Colorado Secretary of State (the “Secretary”) certified that Initiative 97, which would increase oil and gas development setback distances to 2,500 feet from “occupied structures” and “vulnerable areas,” had gathered a sufficient number of valid signatures to appear on the ballot in November 2018. Also on the ballot for November 2018 is industry-backed Initiative 108, a direct response to Initiative 97 that would provide property owners with just compensation when a state or local government takes action diminishing the “fair market value” of their properties. Initiative 108 appears designed to provide a compensation mechanism for oil and gas interests on private property that would no longer be exploitable because of setback distances such as those made effective and enforced as a result of Initiative 97 or similar future measures, among other things.
The certification of both Initiatives 97 and 108 sets the stage for a showdown on the November 2018 ballot that is sure to be preceded by months of intense campaigning given the significant effects these measures would have on Colorado’s oil and gas industry as well as the state economy more broadly. For example, the Colorado Oil and Gas Conservation Commission has estimated that Initiative 97 would foreclose oil and gas development on 54% of Colorado’s total land surface, including 85% of the non-federal lands in the state. Although both of Colorado’s gubernatorial candidates—Democrat Jared Polis and Republican Walker Stapleton—have announced publicly that they do not support Initiative 97, the fates of both Initiatives 97 and 108 will lie solely with the voters on November 6, 2018.
Last updated September 2018.
- Colorado and Ohio Elections Yield Different Results for Moratoriums on Hydraulic Fracturing, V&E News & Flashes, Nov. 19, 2013
1 See Geography: Maps: Oil and Gas Related Exploration, Resources, and Production: Shale Gas and Oil Play, Lower 48 States, U.S. ENERGY INFO. ADMIN. [“USEIA”] (June 30, 2016), https://www.eia.gov/maps/images/shale_gas_lower48.pdf.
2 Dennis Webb, An Even Bigger Beast? Industry Thinks Huge USGS Mancos Shale Estimate May Be Low, DAILY SENTINEL (June 25, 2016), http://www.gjsentinel.com/news/articles/an-even-bigger-beast/.
4 COLO. REV. STAT. § 34-60-100, et seq.
5 See http://cogcc.state.co.us/reg.html#/rules [hereinafter “COGCC Rules”].
6 COLO. REV. STAT. § 34-60-106(2)(d).
7 Bob Randall, Colorado Department of Natural Resources, Colorado Oil and Gas Conservation Commission Rule and Regulations, Presentation at BLM Colorado Resource Advisory Council Meeting (Mar. 7, 2012), http://www.blm.gov/style/medialib/blm/co/resources/resource_advisory/2012_super_rac.Par.83149.File.dat/COGCC.pdf.
8 COGCC Rule 205A, supra note 5.
9 Id. Rule 609.
10 Id. Rule 317.
11 Id. Rule 317B.
12 See, e.g., id. Rules 318, 318A, 603, 604, 605.
13 See generally COLO. DIV. OF WATER RES., http://water.state.co.us/Home/Pages/default.aspx (last visited Sept. 23, 2016).
14 Memorandum of Agreement for the Implementation of SB181 Amendments to the Colorado Water Quality Control Act (25-8-101, et seq.) (Aug. 28, 1990), https://www.colorado.gov/pacific/sites/default/files/moaogcc.pdf.
15 5 Colo. Code Regs. § 1001-8 (2015), https://www.sos.state.co.us/CCR/GenerateRulePdf.do?ruleVersionId=6435&fileName=5 CCR 1001-8.
16 Id. § 1001-9.XVII.G (2014), https://www.sos.state.co.us/CCR/GenerateRulePdf.do?ruleVersionId=5670&fileName=5 CCR 1001-9.
17 Id. § 1001-8.XIX, see supra note 15.
18 Id. § 1001-8.XVII.
19 Id. § 1001-8.XIX.
20 See generally id.; 40 C.F.R. §§ 60.5360–.5499.
21 Maeve Reston, Deal Will Keep Fracking Battle Off Colorado Ballot, L.A. TIMES (Aug. 4, 2014), http://www.latimes.com/nation/politics/politicsnow/la-pn-colorado-deal-fracking-ballot-20140804-story.html.
22 Colorado Department of Natural Resources: Oil and Gas Task Force, http://dnr.state.co.us/ogtaskforce/pages/home.aspx.
23 COLORADO OIL AND GAS TASK FORCE, FINAL REPORT (Feb. 27, 2015), http://dnr.state.co.us/ogtaskforce/Documents/OilGasTaskForceFinalReport.pdf.
24 Cathy Proctor, Colorado Oil and Gas Sites Near Neighborhoods to Get More Local Scrutiny, DENV. BUS. J. (Jan. 25, 2016), http://www.bizjournals.com/denver/blog/earth_to_power/2016/01/colorado-gives-local-officials-a-say-on-big-new.html.
25 See COGCC Rule 305A, supra note 5.
26 Jack Healy, With Ban on Drilling Practice, Town Lands in Thick of Dispute, N.Y. TIMES (Nov. 25, 2012), http://www.nytimes.com/2012/11/26/us/with-ban-on-fracking-colorado-town-lands-in-thick-of-dispute.html?_r=0.
27 Keith Coffman, Colorado an Energy Battleground as Towns Ban Fracking, REUTERS (Nov. 6, 2013), http://www.reuters.com/article/us-usa-fracking-colorado-idUSBRE9A50QT20131106; Megan Quinn, Broomfield Fracking: Recount Finds 5-Year Ban Wins by 20 Votes, BROOMFIELD NEWS (Dec. 3, 2013), http://www.dailycamera.com/broomfield-news/ci_24649390/broomfield-fracking-recount-finds-5-year-ban-wins.
28 Press Release, Colorado Oil & Gas Association, Colorado Oil & Gas Association Seeks Declaratory Judgment Invalidating Broomfield Fracking Ban (Nov. 24, 2014).
29 Joshua Lindenstein, Colorado Supreme Court Strikes Down Longmont, Fort Collins Fracking Bans, BIZWEST.COM (May 2, 2016), http://bizwest.com/colorado-supreme-court-denies-longmont-fort-collins-fracking-ban-appeals/.
30City of Fort Collins v. Colo. Oil & Gas Ass’n, 369 P.3d 586 (Colo. 2016); City of Longmont v. Colo. Oil & Gas Ass’n, 369 P.3d 573 (Colo. 2016).
31 Anthony Hahn, Erie approves ‘odor’ ordinance, a win for advocates of local oil and gas regulation, BOULDER DAILY CAMERA (July 25, 2017), http://www.dailycamera.com/erie-news/ci_31168995/erie-approves-odor-ordinance-fete-advocates-local-oil.
33 Scott Taylor, Thornton Pipeline Rules Overturned, NORTHGLENN THORNTON SENTINEL (April 30, 2018), http://northglenn-thorntonsentinel.com/stories/thornton-pipeline-rules-overturned,261544?.
36 Jennifer Rios, Broomfield Issue 301 passes as voters seek more oil and gas oversight, BROOMFIELD NEWS (Nov. 7, 2017), http://www.broomfieldenterprise.com/broomfield-news/ci_31437164/broomfield-issue-301-passing-voters-seek-more-oil.
37 Anthony Hahn, Lafayette approves 6-month fracking moratorium on eve of election, BOULDER DAILY CAMERA (Nov. 6, 2017), http://www.dailycamera.com/lafayette-news/ci_31433472/lafayette-oil-gas-moratorium.
38Lafayette extends drilling embargo for another 6 months, BOULDER DAILY CAMERA (Aug. 21, 2018).
39 John Fryar, Longmont approves $3 million deal to end oil and gas surface drilling in city, DENVER POST (May 23, 2018), https://www.denverpost.com/2018/05/23/longmont-oil-and-gas-drilling-vote/.
40 Shay Castle, Boulder City Council extends fracking moratorium by 2 years via emergency vote, BOULDER DAILY CAMERA (May 15, 2918), http://www.dailycamera.com/news/boulder/ci_31880916/boulder-city-council-extends-fracking-ban.
42 Jackie Fortier, Boulder County’s New Fracking Rules: 3 Things To Know, KUNC (Mar. 27, 2017), http://www.kunc.org/post/boulder-county-s-new-fracking-rules-3-things-know#stream/0.
44 Amelia Arvesen, Colorado Supreme Court agrees to hear appeal in Martinez oil and gas lawsuit, DENVER POST, (Jan. 29, 2018), https://www.denverpost.com/2018/01/29/colorado-supreme-court-agrees-to-hear-appeal-in-martinez-oil-and-gas-lawsuit/.
47Martinez v. Colo. Oil & Gas Conservation Comm’s, No. 16CA0564, 2017 Colo. App. LEXIS 339** (Colo. App., Mar. 23, 2017).
48Supra note 31.
49 Colorado General Assembly, HB18-1071: Regulate Oil Gas Operations Protect Public Safety, https://leg.colorado.gov/bills/hb18-1071.