Colorado ‘Setback’ Ballot Initiative Threatens Oil and Gas Development

Published October 3, 2018

Colorado’s days as a rapidly growing producer of oil and natural gas will be numbered if voters in November approve a ballot initiative severely restricting extraction on nonfederal land in the state.

Initiative 97, promoted by the environmental group Colorado Rising, would establish a minimum setback for new oil and gas wells of 2,500 feet, up from the current 500 feet from homes or other occupied dwellings and 1,000 feet from schools.

The proposed rule would effectively place four out of every five acres of nonfederal land in Colorado off-limits to new oil and gas drilling. The setback limit would not apply to existing wells or to leases on federal land.

The Colorado Secretary of State’s office on August 29 confirmed Initiative 97 had gathered enough valid signatures, 123,195, to be placed on the November ballot.

Booming Oil and Gas Fields

The Colorado Oil and Gas Conservation Commission (COGCC), the state agency charged with regulating the industry, reports oil production in Colorado rose from an average of 10.4 million barrels per month in 2016 to 13.2 million barrels per month in the first quarter of 2018. Colorado is now the seventh-largest oil-producing state in the country.

In July, COGCC reported Initiative 97 would eliminate drilling on 94 percent of all nonfederal land in Colorado’s top five oil-producing counties. In Weld County, the state’s leading oil- and gas-producing county, Initiative 97 would bar new oil and gas development on 85 percent of nonfederal land, COGCC’s analysis found.

Urban Appeal

Colorado’s most productive oil and gas fields are north and northeast of Denver’s rapidly expanding suburbs. This has brought the wells and the various extraction activities surrounding them in closer proximity to new neighborhoods springing up along the Front Range of the Rocky Mountains.

Rising Colorado successfully targeted these neighborhoods, as well as urban areas far removed from the oil and gas fields, to gather signatures and support for Initiative 97.

Big Fiscal Impact

Voter approval of Initiative 97 would reduce state and local tax revenues by $201 million and result in a loss of 33,500 to 43,000 jobs in the first year alone, an analysis by the consulting company REMI Partnership reports.

According to the Colorado Oil and Gas Association (COGA), Initiative 97 would result in 147,800 lost jobs in Colorado by 2030. In addition, if the 2,500 foot setback becomes law, Colorado will forego $218 billion in state GDP and lose $147.6 billion in personal income and $9 billion in state and local tax revenue between 2019 and 2030, COGA estimates.

Initiative 97 will violate property rights, cost jobs, and hurt the state’s economy, says Dan Haley, COGA’s president & CEO, in a statement the organization released when the initiative was certified for the ballot.

“Coloradans need to know exactly what is at stake: private property rights, more than 100,000 good-paying jobs, more than $1 billion in taxes for schools, parks and libraries, and our nation’s energy security,” Haley’s statement said. “A half-mile setback is a blatant attempt by activists to ban oil and natural gas in Colorado and put working families on the unemployment line.”

United in Opposition

With those implications for jobs and government revenues, Initiative 97 has garnered rare bipartisan opposition in the 2018 election campaign, with both candidates for governor—Republican Walker Stapleton and Democrat Jared Polis—opposing the initiative.

If the measure passes, it faces an almost certain challenge in court, including lawsuits by property owners forbidden from developing oil and gas projects. Those with existing wells receive substantial revenue from oil and gas production on their lands.

Property rights activists were successful in getting another initiative on the November ballot, Amendment 74, which would allow property owners to make claims for just compensation for any reduction in property values resulting from new regulations. The proposal would protect water and mineral rights in addition to physical property. It could be applied to losses stemming from Initiative 97 if both propositions succeed.

The Colorado Farm Bureau and numerous grassroots organizations are backing Amendment 74, which garnered just over 208,000 signatures, approximately 85,000 more than were gathered for Initiative 97.

Brownouts, Funding Cuts

Jay Lehr, Ph.D., science director at The Heartland Institute, which publishes Environment & Climate News, says passing Initiative 97 would make the state more dependent on renewable energy, with potentially devastating consequences for Colorado’s energy security.

“Brownouts and blackouts would be the order of the day if Initiative 97 becomes law,” said Lehr. “Wind and solar energy exist only because of taxpayer subsidies, and they are completely unreliable sources of power requiring 100 percent backup from fossil fuels when the sun doesn’t shine and the wind doesn’t blow.”

Many communities will suffer if the voters approve Initiative 97, says Tracee Bentley, executive director of the Colorado Petroleum Institute.

“If passed, Initiative 97 would devastate the livelihood of hundreds of thousands of Coloradoans and their families,” said Bentley. “Entire communities would involuntarily find themselves closed for business.

“Tax revenues would plummet, crippling essential funding for education and health care across the state,” Bentley said. “I believe Colorado voters will recognize this for the reckless and dangerous effort it is and vote it down.” 

Bonner R. Cohen, Ph.D. ([email protected]) is a senior fellow at the National Center for Public Policy Research.