Opponents of hydraulic fracturing, horizontal drilling, and other unconventional oil and gas development technologies have changed their focus to local governments. Initiatives that would ban such activities will be on ballots in several US communities in November. Others could surface in 2015 and 2016, oil and gas association officials told OGJ.
"Our members tell us that local communities are where the biggest fights are taking place," said Daniel T. Naatz, vice-president of federal resources and political affairs at the Independent Petroleum Association of America in Washington, DC.
"When opponents can't gain traction at the federal or state level, they approach city and county councils," Naatz said. "If they can't sell their message there, they start gathering signatures to place propositions on election ballots."
Two such initiatives in Colorado were withdrawn in early August when Gov. John W. Hickenlooper (D) formed a taskforce to address issues raised by unconventional oil and gas development in the state. But OGJ has learned that others remain in Texas, Ohio, and California localities.
The Santa Barbara County Water Guardians successfully placed Measure P on the November ballot there to stop what they called "extreme oil extraction" by banning acidizing and steam injection as well as fracing. "Ultimately, it would shut down every well in the county, some faster than others," said John M. Deacon, environmental safety and compliance manager at ERG Operating Co., Santa Maria.
One supervisor pressed the county attorney at a meeting this summer and got him to admit that it would the biggest financial liability in the county's history because of the lawsuits that would result if Measure P passes, he told OGJ.
Tax base impacts
"The industry has operated here for about 100 years," Deacon said. "Most of the population lives in the southern part of the county. All of the oil production is in the north. Our challenge is to get the voters to understand what passing this proposition would do to the tax base."
The Santa Barbara County Coalition Against the Oil and Gas Shutdown Initiative, with more than 2,000 members, estimates that Measure P's adoption would result in the loss of more than 1,000 jobs and $16 million/year in tax revenue for the county's schools, fire protection, and other services.
Voters in Denton, Tex., also are being asked to consider banning fracing within the city limits this November, noted Alex Mills, president of the Texas Alliance of Energy Producers in Wichita Falls. But the problem's roots go back 10 years when the city council decided to issue drilling permits through its fire department, eventually reaching about 270. Meanwhile, the city planning division granted developers the right to build houses, some of them very close to where the wells were permitted by the fire department.
Not all the permitted wells were drilled immediately, Mills said. "As it often happens," he told OGJ, "the company that originally held the permits leased them to another company to develop the wells. The original setback provision was 300 ft. The city ordinances have changed twice since then, and it currently is 1,200 ft, but the wells have been permitted under the old ordinance."
When one producer started to drill some wells, the noise, lighting, truck traffic, and other aspects of the 24-hr, 7-day-a-week operations created a nuisance for people living nearby and they began to complain, Mills said. The city council issued a moratorium, and has extended it twice since, taking it now into January 2015.
A national environmental organization, Earthworks, saw an opportunity to work with Frack Free Denton, a local group. The two presented about 1,800 signatures to the city council, which was enough under city ordinances to either adopt a petition to ban fracing, or not adopt it and allow the question to go before the citizens on Nov. 4. The council took the latter route by a 5-2 vote, Mills said.
Funding consequences
"We, along with a lot of others, testified before the city council about the reasons why banning fracing is a bad idea," Mills said. "Financial considerations are a major part of that: The city, county, and University of North Texas all receive funding from oil and gas production in that area. Banning fracing would severely reduce that."
There also are legal reasons why adopting this initiative would be a bad idea, Mills continued. "Texas clearly has given subsurface rights primacy over surface rights," he said. "A former Texas Supreme Court chief justice gave the city council a brief about the legal history. I just learned that a lawsuit also has been filed against the city.
"The conditions lined up in Denton for this to happen. The city itself, by permitting these wells and then allowing development so close to them, is responsible," Mills said. "Associations and the companies involved in exploration and production in the Barnett shale are very concerned. We're gearing up to counter the antidrilling crowd."
Earthworks also is active in Colorado, where it has appealed a state judge's decision overturning the City of Longmont's fracing ban. After Hickenlooper's oil and gas taskforce met for the first time on Sept. 25, Bruce Baizel, who directs the organization's Oil & Gas Accountability Project, said the commission will be a success "if it recommends that local communities can decide for themselves if, and how, they want to live with oil and gas development. If doesn't, it will be a failure."
Five Colorado communities-Longmont, Lafayette, Fort Collins, Broomfield, and Boulder-voted in 2012 and 2013 to ban fracing via the municipal ballot, according to the Colorado Oil & Gas Association. COGA sued in the first three, and won strongly worded rulings from two state district judges that local municipalities do not have the power to ban fracing, and that oil and gas regulation and development is of statewide interest.
US Rep. Jared Polis (D-Colo.) helped push the two statewide initiatives withdrawn in August which would have amended Section 11 of the state's constitution. One would have required drilling rigs to be set back 2,000 ft from homes, schools, and businesses. The other, Proposition 89, would have given local governments "the power to enact laws, regulations, ordinances, and charter provisions that are more restrictive and protective of the environment than laws or regulations enacted or adopted by the state government."
'Flexible local authority'
COGA Pres. Tisha Schuller said the association has worked with more than 30 communities across the state to help adapt the framework of state oil and gas regulations in order to meet each community's specific needs. "In Colorado, communities have the tools and ability to regulate oil and gas activity to meet their local needs both through tough state regulations and flexible local authority," she said.
"Trying to regulate an industry as diverse and important as the oil and gas industry through the ballot box is simply a bad idea," Schuller said, adding, "Over 30 communities have successfully navigated finding local solutions that address their unique concerns."
In Ohio, antifracing initiatives will be on ballots in four communities-the Village of Kent Mills, and the cities of Athens, Kent, and Youngstown (where the question has been defeated three times already)-in another few weeks. "We keep beating them back, but they keep popping up. They're being drafted when the city councils won't pass them," said Mike Chadsey, who directs public relations for the Ohio Oil & Gas Association in Columbus.
He said OOGA has been successful because HB 278 in 2004 basically solidified the state's having sole and exclusive authority over the oil and gas industry in Ohio, and because the initiatives are so broad that no corporation can have any impact on soil, water, and air. "They're so poorly written that labor unions, chambers of commerce and other groups have said the initiatives are bad for businesses and municipalities no matter where you stand on the issue," Chadsey told OGJ.
OOGA also has built broad coalitions that fight the proposals by bringing the consequences to local governments' attention, Chadsey added. It sometimes has gone up against the Community Environmental Legal Defense Fund, based in Mercersburg, Pa., which has tried to help community groups stop unwanted corporate development with free legal assistance since 1995.
'Policy by emotion'
"This is not good public policy, but public policy by emotion. This is someone trying to grab a headline and raise funds," Chadsey said. "People from the biggest cities to the smallest towns are beginning to recognize this."
Kevin J. Moody, vice-president and general counsel at the Pennsylvania Independent Oil & Gas Association in Harrisburg, said he first became aware of CELDF when PIOGA was working with the Pennsylvania Association of Township Supervisors on the commonwealth's oil and gas impact fee before much of it was overturned by a state court.
"Home rule does not give a Pennsylvania municipality authority to be its own country," Moody told OGJ. "We try to work with municipal organizations. Litigation costs can be only part of the expenses. They should be concerned with surcharges and possible civil rights violations. They're being sold a bill of goods, basically."
Before this year, the most recent antifracing ballot initiatives in Pennsylvania were in Warren, State College, and Peters Township. "We were involved with all those trying to educate the municipalities on what they were trying to do," Moody said. "The substance of these ordinances-whether adopted by voters or governments-is the same. For the vast majority of municipalities where our members operate, the relationships are good. There are only problems in a few of them."
That's also the case in Colorado, Schuller said. "Our priority at COGA is to continue to work with our communities to find the best, unique solutions for our numerous local stakeholders-including residents, mineral owners, operators, and local businesses," she indicated.