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Gazette Premium Content Local control of gas, oil could hurt industry, Colorado Petroleum Association official warns

By Megan Schrader Updated: May 22, 2014 at 8:08 pm

DENVER - As a battle over local control of oil and gas operations continues without imminent resolution, the president of the Colorado Petroleum Association has written a strongly worded letter to Gov. John Hickenlooper and lawmakers warning that the direction negotiations are headed could seriously harm the state's oil and gas industry.

At issue is whether cities and counties should have regulatory authority over some aspects of the industrial drilling, fracking and collection of oil and gas. Three groups have proposed ballot initiatives that, to varying degrees, would grant that authority to local governments, but Hickenlooper is trying to find compromise to ward off a vote.

"We are concerned that the ultimate impact of this change to the Oil and Gas Conservation Act would result in a Byzantine set of oil and gas rules and regulations with the potential for up to 271 cities and towns and 64 counties choosing to implement their own unique regulatory schemes for our industry," Stan Dempsey wrote in a letter that was given to The Gazette by a source close to negotiations. "Not only would this make operating in Colorado more difficult, it would substantially drive up the costs of doing business and create further disincentives for oil and gas development in the state."

The letter is significant, because Dempsey represents a number of operators in the state who are stakeholders in the negotiations.

If the three groups collect enough signatures to put their initiatives on the ballot, voters would settle the matter in November.

Opponents to the measures say the Colorado Constitution guarantees access to mineral rights, and regulating the industry is a state function through the Colorado Oil and Gas Conservation Commission.

Hickenlooper has been hosting meetings between stakeholders since the legislative session ended on May 7, trying to find a middle ground that might prevent the issue from going to the ballot while at the same time satisfying landowner concerns about health and quality-of-life impacts from nearby oil and gas operations.

The negotiations were a tall order, but Hickenlooper remained optimistic that he might be calling lawmakers back this summer into a special session to consider making a new local control law that satisfied both sides.

Eric Brown, director of communications for Hickenlooper, said Thursday his office had received Dempsey's letter and was reviewing it.

"We appreciate the feedback we have received from all stakeholders and will continue working toward finding the appropriate compromises," Brown said.

The letter was written in response to a request from the governor's office for feedback on bullet points outlining a potential oil and gas local control bill.

"We believe that the governor and his staff solicited our thoughts and views, and we wanted to be as clear as we could with regards to how we respond to the concepts that were discussed," Dempsey said Thursday. "We have a good working relationship with them and we've always acknowledged their support of how this industry fits within the Colorado economy."

The outline for potential legislation came out of ongoing conversations this week in Denver, and there appears to be at least some buy-in for the suggestions. Among them: allowing local governments to regulate noise, impose setbacks from dwellings and impose "reasonable and non-discriminatory fees" to cover the cost of inspections.

In a nod to oil and gas operators, the bill would also create standards for what happens when local law "materially impedes the recovery of oil and gas." Decisions would be appealed directly to district court, the document says.

The meetings have been occurring behind closed doors and electronically, but The Gazette was given copies of documents by a source involved in the discussions, but who wished to remain anonymous.

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Contact Megan Schrader

719-286-0644

Twitter: @CapitolSchrader

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