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Oil, Gas & the 2014 Colorado Legislative Session

Colorado is not alone in experiencing the job creation and economic development that is associated with the more robust development of traditional energy resources. States like Oklahoma, Wyoming and Texas, which are normally associated with energy development, have been joined by states like North Dakota, Ohio and Pennsylvania. These new “plays” are made possible by the modern use of a technology that has been around since the 1940’s – hydraulic fracturing.

Hydraulic fracturing is the process by which fluids are pumped into tight shale or coal formations and, with the pressure of a gallon of milk hitting the floor from table height, fractures the rock formation allowing the natural gas and oil to be collected more easily and economically. Here in Colorado, the historic DJ Basin north and northeast of Denver has seen resurgence in development because of the new implementation of this common technique. Even though communities across northeast Colorado have seen positive economic trends resulting from the new development of an older field, the practice does come with its detractors.

Hydraulic fracturing has been banned in several Colorado cities and counties, by act of the local governing board or by citizen initiative. In one case, a district court judge ordered the vote approving a local ban on “fracking” to be decertified on compelling evidence that voter fraud might have swayed the outcome of the election. To be sure, this policy debate is on-going.

And so it is true for the policy outlook for the 2014 session of the Colorado General Assembly. 2013 saw a very active year relating to oil & gas bills – though the most controversial bills attacking the industry died in the Senate, or, in the case of one, was killed on the House calendar at sine die.

While there is the possibility that Colorado’s fine structure on non-permitted discharges could be revised upward, most insiders surveyed expect fewer bills to be introduced. The areas where bills are likely to be seen include fracking, “local control” and legislation aimed at identifying relative health effects, if any.

Senate Democrats have a slim one-vote advantage and have at least three swing votes in their caucus. With these numbers, joined by the fact that the Governor has been an outspoken proponent of the industry generally, and fracking specifically, it is increasingly likely that energy bills lacking consensus will, again, meet their demise without seeing the Governor’s desk.

Every legislative session has its own unique twists, turns and characters, so stay tuned for how each of these policy issues will play out.