The end of Colorado’s legislative session this past Friday marked the beginning of a new era of energy regulation posing serious ramifications to the State’s fracking industry.

On April 16, 2019, Colorado Governor Jared Polis signed Senate Bill 19-181, officially revamping the Colorado Oil and Gas Conservation Commission. Prior to the Act, the Commission’s purpose was to foster the development of Colorado’s natural resources. Now, the Commission has a new mission: to regulate the oil and gas industry and to protect the public’s health and safety and the environment.

Over the next year, the Commission is expected to unveil numerous regulations designed to carry out its freshly-minted mission. The Act expressly mandates regulations requiring energy companies to supply 24/7 pollution monitors, disclose more information to the public, and monitor flow lines.

The Legislature’s most substantial change, however, is not what type of new restrictive rules may be implemented, but who can implement them. Now, state law no longer pre-empts all local law governing oil and gas development. Municipalities are free to regulate fracking activity within their jurisdictions through zoning restrictions and ordinances. For example, the Act expressly permits local governments to impose noise restrictions, inspection requirements, and additional fees for leaks, spills, and omissions.

The legal effects of Colorado’s change in preemption law will largely depend on how Colorado communities wield their new power.

In Weld County—the county responsible for 89% percent of the State’s crude oil production— county commissioners have already announced plans to use their new authority to maintain a “working relationship” with the energy industry.

One way Colorado communities have historically managed to strike a balance of welcoming development while protecting citizens’ health and safety is through operating agreements. In a statement to the media, president and CEO of the Colorado Oil and Gas Association Dan Haley noted that operating agreements “are a way to coordinate and construct unique approaches to local energy development that values community interest, property owners and business needs.”

Still other cities are expected to attempt to revive previously-thought-dead fracking bans. In 2016, the Colorado Supreme Court struck down fracking bans imposed by Boulder and Longmont based on state-preemption law. Now, the Supreme Court’s ruling is in jeopardy.

Colorado’s legislative overhaul is not the State’s first recent attempt to increase energy regulations. Last November, environmental activists attempted to pass Proposition 112, which would have increased setback requirements for drilling from 500 feet to 2,500 feet from certain vulnerable areas like neighborhoods and schools. While the proposition ultimately failed, the Commission subsequently adopted a more moderate setback rule.

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