American Oil and Gas Reporter - August 2019 - 38

ty, home to more than nine of every 10
barrels of oil produced in Colorado, took
a different tack and established a new
department to better facilitate permitting
across unincorporated areas of the county.
According to COGCC data, Weld
County produced 158 million barrels of
oil in 2018, an increase from the 121
MMbbl produced in 2017.
In early July, Weld County commissioners approved a plan to create and finance a county oil and gas department to
permit, regulate and enforce surface operations and air emissions. The department's projected $1 million budget will
be paid through permit fees and fines for
violations, according to the county.
The new department "is vital for the
economic health of our county," says Commissioner Pro Tem Mike Freeman. Working
with industry and other stakeholders, he
indicates Weld County "has developed a
process that is responsive, adaptable and
takes into consideration our other vital industry-agriculture. We understand what
works for Weld County."
Weld County notes that 59 percent of
the county's assessed valuation comes
from oil and gas production.
County oil and gas specialist and local
government designee Jason Maxey was
named to oversee the department, which
will grow to 12 staff members including
a director, a planner, permitting and enforcement officers, a hearing officer, and
administrative support staff. Other specialists from the public works and public
health departments will co-locate with
the new department, the county adds.
More Or Less
How Weld County interprets its ability
to approve siting requests has become a
bone of contention, according to news
reports. The county's legal counsel believes it can approve rules that are less
stringent than state laws; other legal experts, including those advising the
COGCC, disagree.
Under so-called 1041 powers, local
governments have the authority to "regulate in designated areas of state interest,
but it also recognizes that a state agency
may deny such a permit," declares Mike
Leonard, a commission spokesman.
Similarly, the governor's office asserts
that decisions about oil and gas operations must take public health, safety
and the environment into account. And,
while local governments "have more
regulatory authority over oil and gas,
the new law does not give local communities the right to jeopardize the
38 THE AMERICAN OIL & GAS REPORTER

health and safety of Coloradans," Polis's
office concludes.
Elsewhere, local governments wasted
little time in passing moratoria on new
development despite predictions from
some legislators during the legislative
session. A key feature of SB 181 allows
local governments to have first say in
siting new well pads and facilities, and
requires operators to include local approval
of location siting before filing state permit
applications.
In late June, Boulder County became
Colorado's eighth local government to
impose or extend moratoria on issuing
permits for oil and gas development. The
others are Adams County and the towns
of Erie, Broomfield, Lafayette, Superior,
Berthoud and Timnath.
The rush to cease permitting along
the Front Range is troubling, Frommer
observes. "The smaller municipalities
don't have the staff and they don't
know what to do, so they put these
moratoria in place," he says. "That is
redundant because the new state director
has issued 15 criteria for development
that should mirror whatever the local
government wants."
Frommer recognizes the difficulty
many local governments face as they
consider their expanded surface development authority. "On one hand, a small
but vocal group of constituents want them
to 'keep it in the ground.' On the other,
the mineral owner still has the right to
develop the resource, a basic tenet of private property rights," Frommer poses.
"With the technology we now have,
we can access the resource from a mile
away and that has changed the lives of
people in our communities," he says.
"For the government to now step in and
say you cannot access those minerals,
that's just wrong."
Tax Increments
An example of local governments
flexing their new muscles surfaced when
the Colorado town of Erie proposed a
tax increment financing (TIF) plan connected to an urban renewal authority
(URA) that would direct new oil and gas
tax revenues away from Weld County
and several special taxing districts and
toward Erie and other tax districts, a
published report indicates.
The town scheduled a public hearing
July 31 to consider formation of the URA,
to be located just west of I-25 and south
of state Highway 52. The TIF would establish a tax ceiling, and any new taxes
collected over that ceiling would be directed
to infrastructure improvements to encour-

age new development.
The issue has raised concerns within
the county government, according to the
report. The plan could produce a windfall
for the town because it directs new oil
and gas tax revenue away from the previous government recipients. The unincorporated tracts would be annexed into
Erie if the plan is approved.
Representatives of Weld County and
Erie were reported to have met three
times to discuss the issue, and media
sources indicate, they had not reached an
agreement as of July 5.
Weld County Commission Chairman
Barbara Kirkmeyer questions the formation
of an urban renewal authority in the area.
State law specifies such plans must meet
criteria for blight such as deteriorating
structures, deficient streets or unsafe or
unsanitary conditions, among other things,
she observes. According to the report,
Kirkmeyer states the plan calls for developing residential and commercial buildings while diverting oil and gas tax
revenue from local fire and school districts.
She concludes that Erie's plan appears to
favor development of the town at the expense of the health, safety and welfare of
the community.
Operator Agreement
Industry watchers were encouraged
in late June when Aurora, Co., approved
an operator agreement with ConocoPhillips
to develop as many as 300 wells on 45
sites in the eastern part of the city.
Considered more stringent than state
rules, the Aurora agreement spells out
steps the company must take to mitigate
impacts on the community, a company
spokesman says. Among the requirements
are no surface storage of liquids, continuous air quality monitoring, electric
drilling rigs and regular neighborhood
meetings during location planning.
ConocoPhillips voluntarily pursued
an operator agreement with the city
months before passage of SB 181 and
held 15 open house meetings with neighbors in order to "ensure they understood
our activities and that their feedback is
considered," the spokesman says.
According to published reports, operator agreements similar to the one approved by Aurora for ConocoPhillips are
modeled on a 2018 agreement between
Extraction Oil and Gas and Broomfield,
Co. Such mitigation strategies likely will
become a template for local governments
as a requirement for location siting approvals in the future, it was reported. At
the same time, the city's reluctance to
impose a moratorium on oil and gas de-

American Oil and Gas Reporter - August 2019

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