Colorado Fracking Opponents Losing Local Control Fight

Colorado’s compromise with drilling opponents has dealt a blow to environmentalists’ expanding battle to give local communities more control to limit fracking.

Governor John Hickenlooper and Representative Jared Polis agreed to a deal that weakened the prospects for two proposed ballot initiatives aimed at restricting oil and gas activity, the two men said at a news conference in Denver yesterday. Polis, who was expected to help finance the campaign for the measures, agreed to withdraw his support after Hickenlooper promised to create a task force to study the industry’s impact on local communities.

“Responsible oil and gas development in Colorado is critical to our economy, our environment, our health and our future,” said Hickenlooper. The Democrat, who told a Senate committee last year that he drank fracking fluid to prove its safety, has been a strong proponent of drilling. Colorado crude output grew faster than in any other state in 2013.

Ballot initiative proponents said they planned to proceed with their proposals to restrict fracking unless the backers of two competing measures supported by the energy industry agreed to drop their plans.

“Until we receive confirmation that the industry is withdrawing Initiatives 121 and 137, we are continuing to move forward,” said Mara Sheldon, a spokeswoman for the anti-drilling group, Safe. Clean. Colorado.

Expanding Battle

From Texas to North Dakota, companies are clashing with landowners and environmentalists over the local impact of expanded drilling in the U.S. as production has soared because of hydraulic fracturing, which uses sand, water and chemicals to free fossil fuels from shale rock.

The Colorado vote had been seen as a bellwether for “local control” concerns and other potential ballot initiatives to restrict fracking, including one in Denton, Texas, expected to reach voters in November. Communities nationwide have passed 430 measures against fracking, according to a running list kept by Food & Water Watch, a Washington-based public interest organization.

The stakes are greater in Colorado compared with elsewhere due to the amount of oil production at risk and the statewide nature of any regulations approved by voters. The local control initiatives, if passed, would have “severely” impacted hydraulic fracturing in Weld County, the core of new drilling activity, according to a July 29 report from Sanford C. Bernstein & Co.

Producers Benefit

Oil producers led by Noble Energy Inc. (NBL) and Anadarko Petroleum Corp. (APC) rose after the deal was announced. Noble led the Standard & Poor’s 500 Index, gaining 5.2 percent to $70.23 at the close in New York, after earlier having its biggest intraday rise in more than five years. Anadarko increased 4.8 percent to $110.73.

Environmental groups said they’re disappointed the ballot measures may never get to a vote.

“Colorado’s oil and gas oversight favors the oil and gas industry’s interests before the public interest,” Bruce Baizel, director of Earthworks’ Oil & Gas Accountability Project, said yesterday in a statement. “Impacted communities must have a real seat at the table, and must be allowed to determine that in some cases no fracking may be the right choice.”

No other major oil- or gas-producing states have put drilling regulations on the ballot. Other areas where activists are seeking bans or delays on new wells, such as in Santa Barbara County, California, haven’t seen the widespread use of fracking. Other proposed or approved bans have been in places such as New York, Vermont or France, where fracking hasn’t yet been put to significant use.

Sensible Victory

Polis, a Colorado Democrat, called the compromise “a victory for the people of Colorado and the movement to enact sensible fracking regulations.”

The 18-member task force will be made up of representatives from industry, local government and conservation groups and is expected to make recommendations to the state legislature on proposals to mitigate the impact of drilling.

The debate over fracking has escalated in Colorado as drilling moved closer to suburbs, raising concerns about water and air contamination. Five communities in the state have voted to ban or put a moratorium on such activity.

To contact the reporters on this story: Bradley Olson in Houston at bradleyolson@bloomberg.net; Jennifer Oldham in Denver at joldham1@bloomberg.net

To contact the editors responsible for this story: Susan Warren at susanwarren@bloomberg.net Andrew Hobbs

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