Drilling It Down

By Mark Jaffe

It was past midnight on October 25, 2017, when the Broomfield, Colorado, City Council voted on a memorandum of understanding with Extraction Oil & Gas Inc. A court had already struck down the city's oil and gas drilling ban in 2014, and the council was trying to navigate between their legal constraints and the demands of citizens.

The meeting lasted seven and a half hours before a packed council chamber and an overflow crowd watching the proceedings on TVs in the lobby and city courtroom.

Many residents opposing the encroachment of drilling into suburban neighborhoods urged the council to reject the agreement. The council approved the MOU on a 6–4 vote.

Council member Mike Shelton, who voted for the MOU, wasn't afraid of another lawsuit. His main concern was, "If we were to lose [another] lawsuit, then what happens? Do we lose control over [oil and gas drilling within our jurisdiction]?"

Local officials in Colorado aren't the only ones facing this dilemma; city councils and planners in Texas, Pennsylvania, and other areas where resurgent oil and gas drilling is moving into previously untouched suburban and rural areas are struggling with similar issues.

Zoning — the traditional tool for controlling oil and gas operations in local communities — has been constrained by state laws, creating a complicated choreography among local governments, state regulators and legislatures, and the courts — and leaving many local planners wondering what options are left.

"States have very few of the fine-tooth regulations — noise, odor, traffic — people really care about," said James Bradbury, an attorney who helped Fort Worth, Texas, write its oil and gas ordinance. "Local government is better suited to deal with these, but there is always some tension with the state."

Those tensions vary from state to state.

In Texas, the state-local issue played out in the legislature. After a drilling boom in the Barnett Shale hit the state in 2003, 67 communities enacted oil and gas zoning rules, according to the Texas Municipal League.

Some cities imposed big setback requirements. Dallas instituted a 1,500-foot buffer, which effectively limited drilling in the city. Most municipalities offered drillers a path to development, says Bradbury.

"Fort Worth produced a very balanced ordinance for an urban environment with noise controls, setbacks," he says. The ordinance also provided for city inspection of Fort Worth's 1,979 producing wells.

But when Denton, home to the University of North Texas, issued a flat-out drilling ban, state officials and the industry pushed back, leading in 2015 to passage of HB-40, the "ban on bans," which confirmed state control, preempted local ordinances, and permitted local rules only if they are "commercially reasonable."

"There was a lot of bitterness, but virtually nothing has happened," Bradbury says.

For while Texas is an oil and gas state, it is also a strong home-rule state. "The reality was that everything was working and working fine. No city went back and revised their ordinances."

The same can't be said in states like Colorado and Pennsylvania, where local governments have been forced to hone their approach.

The front lines

Perhaps no place has the dance been more fraught than in Colorado, which is facing simultaneous housing and drilling booms. The state and oil industry have repeatedly taken municipalities to court for their attempts to regulate oil and gas drilling.

In 2017, there were 3,660 new housing starts in nine suburban municipalities north of Denver, according to data from housing-market analyst Metrostudy.

At the same time, the Colorado Oil & Gas Conservation Commission approved 1,330 drilling permits in the same area.

The drilling boom in Denver (and elsewhere in the U.S.) was set off by new technology — horizontal drilling and hydrofracturing or "fracking" — that unlocks oil and gas from tight shale formations like the Niobrara in Colorado, the Barnett and Permian in Texas, and the Marcellus in Pennsylvania and Ohio. The lateral wells can run up to three miles in any direction where they have mineral rights.

Under these pressures, local officials are trying to address the concerns of their residents and balance development while not running afoul of the state.

At first, Colorado municipalities and counties tried bans or long-term moratoriums but were taken to court by the COGCC and the Colorado Oil & Gas Association.

In September 2014 Broomfield's moratorium was ruled unconstitutional by a district court, and on May 2, 2016, the Colorado Supreme Court struck down the efforts in Longmont and Fort Collins based on a 1992 Colorado Supreme Court ruling in Voss v. Lundvall Bros., Inc., which said the state has power over the issuing of permits and the regulation of oil and gas, while home-rule municipalities retained some land-use authority.

Subsequent court rulings, however, limited that authority, making it impossible to even ban drilling in residential areas.

However, local officials do have some leverage when dealing with drillers: Most municipalities can require an oil and gas operator to obtain a local special- use permit, and they can also have a say over traffic plans.

When Extraction Oil & Gas announced a plan in the fall of 2016 to drill 139 wells at 10 sites in Broomfield, the city adopted a new approach, says Tami Yellico, the city's director of strategic initiatives.

The city council drafted and adopted an oil and gas chapter to its comprehensive plan. The new oil and gas plan includes a vision statement, goals, and polices that cover a wide range of issues including air and water quality, inspections, noise abatement, and setbacks of drilling from homes — some of which don't line up with the state's.

For example, the state has a 500-foot setback rule. Any requirement by a local government beyond that is seen by the state as an overreach. The Broomfield plan calls for setbacks of 750 feet to 1,320 feet depending upon the number of wells on a pad.

The new plan has proven a valuable tool for the city in its dealings with drilling companies. "We used the [oil and gas] chapter as the basis of negotiations," Yellico said.

After three months of intensive back-and-forth, Extraction Oil & Gas agreed to the setbacks and most of the other guidelines in the form of a MOU, and the number of proposed wells was cut from 139 to 84.

Nevertheless, Broomfield Mayor Randy Ahrens says local government is always at a disadvantage: "If you don't reach an agreement, operators can just get state permits and drill."

Lateral thinking

Still, MOUs have their limitations. Erie Township, where five oil companies operate, pioneered the use of the agreements in Colorado starting in 2012 but still ran into problems.

The town's MOU with Crestone Peak Resources calls for limits on noise and odor, but in 2017 problems linked to Crestone sites prompted more than 1,000 complaints to the COGCC.

Unhappy with the lack of a state response, Erie officials felt they had to act. "We had folks who couldn't sleep at night," says Mark Gruber, a former township trustee and mayor pro tempore. "We had to do something."

Enforcing the MOU meant taking Crestone to court, but that would be a long, cumbersome process. Instead, in July 2017 Erie opted to extend its existing public-health and safety code to cover odors from oil and gas operations. The state hasn't objected. Calling it "novel," Matt Lepore, who recently stepped down as COGCC executive director, said, "I look forward to their efforts on that front."

Crestone, however, filed a lawsuit. Jason Oates, Crestone's director of external affairs, says, "We have to protect our legal rights."

"We have reached the point in Colorado where towns and municipalities can no longer pass their own laws," Gruber says.

Ironically, both sides say that, in general, the MOU has worked well. It provided for enhanced leak detection, quieter electric drill rigs, and 1,000- foot setbacks. But clearly, MOUs are not a be-all, end-all answer for communities looking to mitigate the negative impacts of drilling.

Holding their ground

While Broomfield and Erie Township used MOUs, the city of Thornton and Boulder County, Colorado, have adopted comprehensive oil and gas ordinances that could run afoul of the state preemption.

Thornton's last revision to its oil and gas ordinance was in 1993. Since then, the city's population has grown 129 percent, to 137,000.

That growth plus the industrial nature of largescale drilling operations necessitated the revision, explained Grant Penland, AICP, the city's planning manager, to the city council in July 2017 when presenting the proposed ordinance.

While oil and gas drilling has been in the region for more than 100 years, the more traditional well sites were less than three-quarters of an acre.

The new multiwell operations, where pads can contain 30 wells or more, along with tanks and infrastructure, can take up more than six acres, "creating a significantly large footprint and impact," Penland says.

Thornton's ordinance includes a requirement for $5 million in general liability insurance, while the state only requires $1 million, and inspections of flow and gathering pipelines, as well as their removal when a well is abandoned.

The latter requirement was prompted by an accident in April 2017, when two people were killed and a third seriously injured in a house explosion in Firestone, 20 miles from Thornton, caused by gas seeping into the home from an abandoned flowline.

The ordinance also calls for a 750-foot setback.

Thornton has tried to avoid legal conflicts by adding a wavier process for any requirement if an operator can offer mitigation or show that it makes drilling impossible, as well as an accelerated approval process and the option of an MOU.

"We tried to take bits and pieces from several municipalities that haven't been challenged," says city council member Josh Zygielbaum, the ordinance's sponsor.

The state has taken a wait-and-see approach. "How the ordinance is applied may determine our response," Lepore says.

The industry showed no such restraint and sued the city.

"Thornton's City Council passed illegal energy regulation," COGA President Dan Haley said in a statement when the suit was filed last October. In April 2018, a district court agreed striking the setback and pipeline inspection requirements.

In neighboring Boulder County, there was such strong opposition to any drilling that many residents disapproved of even putting an ordinance in place.

Nevertheless, the county commissioners adopted what they called "the strongest set of regulations" in the state, with air monitoring, water-well testing for as long as six years, disruption payments to residents affected by drilling, local inspections, and restrictions beyond state requirements in floodplains.

"We have been advocating regulation of large-scale oil and gas operations on the state level," says Kim Sanchez, the county's senior planner. "We've been pretty disappointed with the results so far, and that's why we needed to strengthen our regulations."

In 2013, a 500-year flood engulfed Boulder County and much of Colorado's Front Range. A total of 1,900 wells were shut, but tanks were upended, berms and fences washed away, and 62,000 gallons of oil and wastewater spilled.

In the aftermath, the state added new rules for operating in floodplains, but the Boulder ordinance is even tighter. "We think we have the authority to regulate and limit activity in a floodplain and ban it in floodway," Sanchez says.

Neither COGG nor COGA have taken legal action against Boulder County. Crestone is the only operator in the county.

"Nobody has gone through the Boulder process yet," Oates says. "We'll see."

Meanwhile, Broomfield's planning staff submitted draft ordinance proposals based on its oil comprehensive plan this spring, but how much of the expansive plan gets into regulations will be up to the city council, Yellico says.

Limited local say in Pennsylvania

While the trend in Colorado courts has been to limit local controls, the Pennsylvania Supreme Court in a series of rulings has given local government more power.

In 2012, the state legislature passed Act 13, which centralized control over drilling with the state. Seven townships challenged the law in Robinson Township v. Pennsylvania. The aim of Act 13 was "to make Pennsylvania more like Colorado," says John Smith, the attorney who represented Robinson Township.

The court ruled in 2013 that parts of the act were unconstitutional, citing the state's Environmental Bill of Rights and opening the way for a range of local approaches. Rural Lycoming County and the Pittsburgh suburb of South Lafayette Township demonstrate that variety.

Lycoming County is one of the five most active counties for horizontal drilling in Pennsylvania's gas-laden Marcellus Shale.

The concern there was to preserve the rural nature and scenic beauty of the region, which are draws for tourism and recreation.

"In 2008 when gas came to town, we didn't know much about it," says Kurt Hausammann Jr., AICP, county director of planning and community development. "The ordinances provided for oil and gas exploration, but the comprehensive plan didn't mention it."

The zoning ordinance was amended with a goal of protecting the rural land and vistas. "We can't tell [the oil and gas] companies how to do their operations. We could only tell where," Hausammann says.

The ordinance does not allow drilling on steep slopes, and there are setback requirements from ridges and special protections for Pine Creek Gorge, "one of the most scenic areas in Pennsylvania," Hausammann says.

For South Lafayette Township, one of the plaintiffs in the Robinson lawsuit, a clear aim of its oil and gas ordinance is to buffer drilling from homes and schools with setbacks of 1,000 to 1,700 feet for residences and 2,500 feet for schools. It also requires operators to have a site of at least 10 acres, limiting the density of drilling in the municipality.

And unlike limitations set in Colorado, South Lafayette goes into operational issues to limit the impact of drilling on residents, including required noise testing and the ability to call for acoustical blankets, sound walls, or mufflers.

"South Lafayette is a battle-tested standard," says Doug Shields, a former Pittsburgh city council member and head of the Municipal Ordinance Project of the advocacy group Food & Water Watch. The project, funded by the Heinz Endowment, is promoting the development of municipal protective oil and gas zoning ordinances.

"There are still a lot of communities that don't have ordinances in place," Shields says. "They should adopt them. It is the best protection they can get."

Mark Jaffe writes on energy and environmental issues and is a former reporter for the Philadelphia Inquirer and Denver Post.