Proposition 112 Was Defeated, But That is Not the End
Colorado’s Proposition 112, which gained national notoriety this fall, the full text of which can be found here, was a ballot initiative that proposed the nation’s strictest setback – a blanket 2,500 feet setback for new wells. Luckily, the highly publicized Proposition 112 was defeated at the polls this November, as it could have had significant negative impacts on not only the industry as a whole, but on the lives of many Coloradans. The extreme and controversial measure was even discussed in The New York Times article entitled, In Colorado, a Bitter Battle Over Oil, Gas and the Environment Comes to a Head, shortly before voters hit the polls.
Residents of Denver saw people taking to the sidewalks and streets to oppose Proposition 112 and to spread the word of how detrimental the measure would be if passed – industry workers, landmen, executives, engineers, lawyers and the like all sported “Vote ‘No’ on 112” signs. As a resident of Weld County, I personally did not see any “Vote ‘Yes’ on 112” signs until driving north to Fort Collins or west to Boulder.
By way of a summary, Proposition 112 would have had substantial impacts on the oil and gas industry in Colorado, including the following:
It would have greatly reduced the available locations for new oil and gas development
Colorado’s tax revenue, unemployment rate and overall health of the state economy would have taken a major hit
Most notably, the measure would have had major negative impacts that would have rippled throughout Colorado communities – our families would have felt its negative impacts the most.
What many forget is that it is not just those families who work in the oil and gas sector who would have suffered – local restaurants, hotels, gas stations, and many others who serve the industry would have lost a significant flow of income. This also does not include the mineral owners whose asset could have remained undeveloped – they stand to lose the benefit of owning such a resource if it can not be developed. An excellent summary of the potential impacts of Proposition 112 was put together by the Colorado Oil and Gas Association (“COGA”) and can be found here.
Proposition 112 was reportedly rejected by a margin of 57% to 42%. Those in favor of restricting oil and gas operations in Colorado will likely attempt future ballot measures aimed at the same…the takeaway is that the defeat of Proposition 112 will likely not be the end.
The roots of this measure started to grow as early as 2010, with local Colorado communities starting to get interested in pushing fracking moratoria. It is unlikely that this movement toward heavily restricting oil and gas development in Colorado will end any time soon. Many think that the oil and gas industry is currently poised to educate the public now that it has defeated Proposition 112 and use the opportunity to prevent future misinformation and obstruction of the industry. Coloradans for Responsible Energy Development is one such effort.
Stay tuned – we will keep you informed of any new developments and regulations affecting the industry in Colorado.