Controversial Oil & Gas Bill Passes: 'The Sky Did Not Fall'

DENVER (CBS4) - Sweeping changes are coming to Colorado's oil and gas industry. The state legislature passed the biggest overhaul of oil and gas regulations in decades, and Gov. Jared Polis says he'll sign it into law.

Senate Bill 181 received final passage one month, six hearings and 34 amendments after it was introduced.

"Once it gets signed by the governor, we will all see that the sky did not fall," said Sen. Steve Fenberg, the prime sponsor of the bill.

The most immediate change will be the makeup and mission of the commission that overseas oil and gas development in Colorado. Only one of its seven members will now be from the industry; it will be paid, not volunteer; and, it will be charged with regulating not promoting drilling.

"It doesn't allow a ban. It does not allow an endless moratorium. But what it does do is say you have to prioritize health and safety, and local governments now will have the ability to approve citing and say where they want development to occur and where they don't want it to occur," said Fenberg.

Another big component of the bill deals with so-called forced pooling, which allows operators to extract minerals against the owner's wishes.

"We are increasing it from just one person in an area can force everyone else in the area to sell their property. We're saying actually you need at least 45 percent of the pool to say yes we want to develop these resources."

The industry spend hundreds of thousands of dollars fighting the measure, saying the un-amended bill allowed for unlimited fees and no guardrails to prevent rules from resulting in bans.

"Clearly this legislation was not meant to be stimulative to our industry. It was not meant to encourage oil and natural gas production in Colorado so we remain opposed to the bill. But we do acknowledge House and Senate leaders added some amendments to it that provide a degree of certainty for our member operators going forward in Colorado," said Dan Haley, President and CEO of the Colorado Oil and Gas Association.

Those amendments - brought at the industry's urging - require any new rules and fees be "reasonable and necessary," a standard that will likely be defined by the courts. But it will be years before the rules - on everything from emissions to setbacks to abandoned wells - are in place.

"This is not the end. This is the beginning of seeing how Senate Bill 181 is going to be implemented in Colorado," Haley said.

There are 6,000 pending permits before state regulators right now and some of them will likely be put on hold as the rules are decided.

Sen. Mike Foote, the co-sponsor of the bill, says the rules allow homeowners and local governments to finally have a say, "I'm not sure how it's going to come out but... those residents are going to have a fighting chance at this point to make sure they have their voice heard."

While the bill was meant to bring stability - and end recurring ballot measures - there is already talk of trying to repeal it.