Summary

The continuing sluggish job numbers are a sober reminder that a full economic recovery is still well beyond the horizon. As weary job creators search for solutions and opportunities to kick start their businesses, we have repeatedly heard their pleas to state and federal lawmakers to ease onerous regulations, reduce tax burdens and for them to stop mandating higher costs of doing business.

Increasingly, this same message also needs to be directed to our local officials including county and municipal leaders. In recent month’s a number of counties and municipalities have sought to add yet another layer of local regulations upon Colorado’s already heavily regulated energy industry. In some instances, the local governments have issued a moratorium to halt exploration and development altogether for a set period to give them time to craft a new, local regulatory scheme. In a few others, regulations were drafted that go beyond what are already widely recognized as the strictest state rules in the nation only to find out that those regulations are prohibited by state law.

The good news has been that in many instances, the local governments exploring the option of implementing their own set of regulations have taken a step back after learning more about the protections already in place through existing state and federal laws. It is understandable for communities new to energy exploration and development to initially be overly cautious as they want to ensure the safety of their citizens as well as their land, air and water. While it is understandable to be overly cautious, it does not come without real costs to our economy and job creators. When local governments try to recreate a comprehensive regulatory scheme for a complicated and technical industry like energy development, their cumbersome regulations create massive uncertainty in the energy development market. That uncertainty operates to vaporize capital investment dollars from localities with duplicative and impractical regulations.

To eliminate the uncertainty and encourage capital investments in resource development, local governments have been encouraged by Colorado’s Attorney General to work with Colorado’s Oil and Gas Conservation Commission (COGCC), the state agency that regulates the oil and gas industry in Colorado. The COGCC has worked with Colorado’s western and northeastern energy developing counties to create a workable framework for local governments to review existing practices and initiate agreements with operators that meet the unique needs of their community while avoiding the uncertainty that seems to drive investment capital from Colorado.

Colorado’s oil and gas industry is too important to our state and national overall economic well-being for our elected leaders to not work harder to only enact efficient regulations. It is no longer viable to just slap yet another layer of regulatory burdens on the energy industry in the hope that those burdens will not result in forcing job creators to neighbor states.

According to the Colorado Oil and Gas Association, the oil and gas industry currently supports over 190,000 jobs in Colorado and accounts for roughly $24 billion of the state’s economy.

Ten percent of the nation’s natural gas reserves are in Colorado, and with new and improved technologies that provide access to those reserves, there is enormous potential for these numbers to grow for years to come. Combining Colorado’s reserves with recent plays in North Dakota, Utah, Wyoming, and Pennsylvania, will go a long way towards achieving the goal of an energy independent America. That type of independence will fuel a truly sustainable prosperity for each of us.

In order for Colorado to realize the maximum potential of the energy industry’s ability to shrink unemployment lines and grow our state’s economy, public policies at all levels of government need to be consistent to alleviate uncertainty. Governor Hickenlooper acknowledged this in his State of the State address when he discussed the importance of avoiding a piecemeal approach to energy regulations in Colorado and pointed out that having varying rules from one local jurisdiction to the next would be detrimental to the energy industry. It is now up to the local governments, and their elected leaders, to follow the path already set in place by Colorado’s existing regulations. The current set of rules have sufficiently safeguarded the communities throughout Western Colorado, where energy production has been around for decades, and will adequately protect Front Range communities too if given a chance.

Jack Hays, T. Scott Martin

Common Sense Policy Roundtable