The small town of Erie, Colorado narrowly voted down an “emergency” one-year fracking moratorium in a 5-4 vote in January.
Erie trustees say instead of imposing a moratorium, they will work with the oil and gas industry to address community concerns about noise, truck traffic, and setbacks from housing while allowing oil and gas development to continue.
This is the latest defeat for environmental lobbyists who have attempted to end fracking in Colorado through a series of municipal and county bans and moratoriums. Erie joined Loveland, Longmont, Fort Collins, Lafayette, and Broomfield in striking down or overturning fracking bans and moratoriums.
One Erie trustee said his rejection of the moratorium was based on concerns about high litigation costs potentially arising from the act. “We were elected to represent our citizens and do what we honestly believe is best for the town, and I don’t believe that enacting a moratorium is what is best for the town,” trustee Waylon Schutt said in the Longmont Times-Call (January 27). “I think it will hinder our ability to negotiate [memorandums of understanding]. I think it will send a lot of taxpayer money toward litigation,” Schutt said.
Expensive for Taxpayers
John Eick, the Energy, Environment, and Agriculture Task Force Director for the American Legislative Exchange Council (ALEC), says property owners should be allowed to lease their mineral rights, which they are unable to do when a state or locality imposes fracking bans.
“States also rely on revenue generated from severance taxes to provide citizens with important services, including healthcare and education. If localities disallow fracking, states will be challenged with finding other sources of revenue such as increased income taxes. Furthermore, given the regulatory patchwork that can arise if localities start regulating drilling, the oil and gas industry will have a more difficult time operating in the region,” Eick said.
The trustees who rejected the ban may have been influenced by the fact that mineral rights owners are increasingly organizing to protect their interests from challenges by environmentalists in several states, including Colorado, where lawmakers are already considering a set of bills requiring municipalities that impose moratoriums or bans on oil or gas production to compensate land and mineral owners.
Daniel Simmons, vice president for policy at the Institute for Energy Research, says local governments, even ones close to Boulder, Colorado, understand denying people’s property rights will come at a high cost.
“Many of these [anti-fracking] protests come from out-of-towners who have no real interest in the local community. Local communities confront the benefits and cost of new development and make better decisions because it directly affects their lives,” says Simmons.
Landowners Fighting Back
By one estimate, Boulder County taxpayers could be on the hook for as much as $1 billion if mineral-rights owners prevail in lawsuit they filed against the county over the oil and gas drilling moratorium it put in place until 2018. This figure, from an analysis released in the summer of 2014 by Netherland, Sewell & Associates, an international petroleum-engineering firm, includes expected revenue from royalties, sales, and various fees mineral owners could potentially expect if drilling were allowed on their property and the wells proved productive.
Isaac Orr, a research fellow at The Heartland Institute, publisher of Environment & Climate News, says in Colorado the state government has the primary authority to regulate oil and natural gas production, which is why state courts overturned local bans enacted in Longmont and Fort Collins. Orr recommends municipalities contemplating fracking moratoria or bans carefully consider the potential legal liability facing their residents and the possible costs cities may have to bear to compensate mineral owners for lost revenues.
“This reality has not been lost on local elected officials, who are wary of enacting a ban that will prompt a lawsuit from the oil and gas industry they are unlikely to win. Local officials would rather allocate limited municipal resources to other areas and work with energy companies to set reasonable standards for compensation for road degradation and other local matters,” Orr said.
Kenneth Artz ([email protected]) writes from Dallas, Texas.