Colorado’s Mandatory Setback Amendment May Have Severe Repercussions for the Oil & Gas Industry

On November 8, there’s a likelihood that Colorado voters will encounter — among other tough decisions at the polls — Colorado ballot initiative #78, colloquially known as the Mandatory Setback from Oil and Gas Development Amendment. While the term “setback” in the bill’s title refers to physical location and not actual hindrances to the oil and gas industry, the dual meaning may very well be apt if the initiative is actually voted in by Colorado’s voters.

The Colorado Mandatory Setback Amendment is a legislative attempt to restrict the placement of new oil and gas development facilities to any location, “at least 2,500 feet from the nearest occupied structure or other specified or locally designated area.” In other words, no new oil and gas installations could go up within a half mile of a house. While, on paper, that sounds like an initiative that’s in the best interest of the voting public, the implications seem far more dire.

According to a new study from the Colorado Oil & Gas Conservation Commission, implementation of the Mandatory Setback Amendment would do serious damage to the future of the oil and gas industry in a state that’s responsible for more than 5 percent of the country’s oil and gas production.

Should the new initiative get passed in November, fully 90 percent of the land in Colorado would be off limits for future oil and gas development. Weld County, the state’s largest oil and gas producing county, would get hit particularly hard, seeing 85 percent of its land unavailable for cultivation. What’s more, the state’s top 5 producing oil and gas counties — Weld, Garfield, La Plata, Rio Blanco, and Las Animas — would see their available surface development area shrink to just 5 percent of its former area.

In short, one of the state’s fastest growing industries would be seriously injured in the aftermath of the legislation’s passage. In the short term, that means a very real impact on the jobs available in the industry. Colorado’s oil and gas industry is already enduring a wave of layoffs. The loss of further employment could also have repercussions for Colorado’s economy.

There’s still a possibility that the new Colorado Mandatory Setback Amendment won’t actually make it to the polls. The architects of the legislation still need to secure nearly 100,000 signatures in order to get the ballot initiative on the bill. Should they hit that goal by early August, though, initiative 78 could be on November’s ballot.

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