The Colorado Constitution reserves the right of the people of the state to enact legislation or amend the constitution directly through the ballot initiative process. Environmental groups are currently working on qualifying four measures for the 2016 general election that would negatively impact oil and gas development in Colorado – Initiative No. 40 (“Right of Local Community Self-Government”); Initiative No. 63 (“Right to a Healthy Environment”); Initiative No. 75 (“Local Control of Oil and Gas Development); and Initiative No. 78 (“Mandatory Setback from Oil and Gas Development”). Initiatives 40 and 63 generally aim to provide local governments with expanded authority to regulate business in a way that is more protective of the environment, while Initiatives 75 and 78 are expressly directed at the oil and gas industry. We do not anticipate that all of these measures will be approved for the 2016 general election. However, passage of any one of these measures could dramatically impact the ability of oil and gas companies to operate in Colorado.
Initiative 40 creates “an inherent and inalienable right" in Colorado’s Constitution to "local community self-government,” which expands the authority of local governments to enact local laws that “establish, define, alter, or eliminate competing rights, powers, privileges, immunities, or duties of corporations or other business entities.” Initiative 63 creates an “inherent, indefeasible, and inalienable right to a healthy environment” and protection of such right is “deemed to be a fundamental right.” This measure also expands the authority of local governments to enact laws in furtherance of this fundamental right. Further, both measures make clear that local laws enacted pursuant of these rights cannot be preempted by state law.
Initiatives 75 and 78 both include declarations that “oil and gas development, including the use of hydraulic fracturing, has detrimental impacts on public health, safety, general welfare, and the environment.” As such, Initiative 75 authorizes local governments to regulate oil and gas development in a manner that is more protective of public health and the environment than state law. Similar to Initiatives 40 and 63, such local laws would not be subject to state preemption. Local governments would also be authorized to entirely prohibit oil and gas development within their boundaries. Initiative 78 creates a statewide setback of 2500 feet for oil and gas wells from occupied structures and so-called “areas of special concern,” which include “public and community drinking water sources, lakes, rivers, perennial or intermittent streams, creeks, irrigation canals, riparian areas, playgrounds, permanent sports fields, amphitheaters, public parks, public open space”. The measure also allows for other state or local governments to establish larger setbacks from occupied structures. Accordingly, Initiative 78 would have the most dramatic impact on Colorado’s oil and gas industry. Preliminary analysis by industry indicates that over 85 percent of surface locations for oil and development would be eliminated if Initiative 78 is approved.