In US energy boom, who decides if fracking comes to town?

A failed compromise on local fracking bans in Colorado this week makes the oil-and-gas-rich state the latest flashpoint in a nationwide fight over the controversial drilling process.

Environmental concerns have driven activists to pursue restrictions and bans on hydraulic fracturing (or fracking), a groundbreaking extraction technique that has fueled America’s domestic energy boom. Those battles are increasingly playing out at the local level rather than at the state level, which can make it difficult for energy companies to plan when and where they might be able to work.

Earlier this month, a New York court ruled that cities and towns had the right to ban fracking in their backyards. Even cities and towns in Pennsylvania and Texas are beginning to push back against fracking, and several Colorado towns voted to prohibit fracking last November.

“If your goal is to restrict fracking, you may want to give municipalities more control,” says Barry Rabe, a public policy professor at the University of Michigan, in a telephone interview. States often profit more from taxes on oil and gas development than municipalities do, notes Mr. Rabe, who is also a nonresident fellow working on governance and energy at the Washington-based Brookings Institution.

After failing to gain Republican support, Colorado Gov. John Hickenlooper (D) gave up hope this week of a compromise in the state legislature that would have prevented two state-wide anti-fracking initiatives from being on a November ballot. The deal would have allowed cities and towns more latitude in determining local fracking policy, but would have prevented localities from imposing full-on fracking bans.

Hickenlooper said in a statement Wednesday that he had hoped a compromised “would avoid a series of expensive and divisive ballot initiatives.”

Now, Coloradans will vote on two measures in November. One mandates drilling rigs be set back 2,000 feet from homes, and the other establishes an “environmental bill of rights” in the state constitution.

Time reported on Sunday that oil and gas groups are ready to spend $20 million to defeat the initiatives.

In Colorado and across the US, the oil and gas industry worries that local restrictions could lead to a patchwork quilt of confusing and changing policies that complicate natural gas production.

“Town boards typically change every two to three years … [whereas] companies spend years and millions of dollars of investment before the drilling bit even hits the ground,” Karen Moreau, executive director of the New York State Petroleum Council, said in a press call last week with the industry group American Petroleum Institute. If a pro-drilling community starts the process today – but changes its mind next year – it inserts a great deal of uncertainty and makes investment risky, Ms. Moreau said.

The compromise Hickenlooper attempted was the latest effort to prevent local concerns from manifesting city-specific fracking bans. In terms of fracking regulations, Colorado has been trying to strike a delicate balance between state and local – and between drilling and the environment.

Under Hickenlooper there have been a number of policy adjustments related to drilling, from expanding public disclosure of fracking chemicals to increased environmental protections. And municipalities are benefitting from the severance tax Colorado collects on oil drilled in the state.

“Colorado has shifted a lot of the money the state is getting back to local areas,” Rabe said. More than half of Colorado’s severance tax money flows to localities to fund projects including environmental and forest protections. The hope is that the state can bolster local support by sharing the wealth.

Sen. Mark Udall (D) of Colorado, who is in a tough race for re-election, said in a statement Wednesday that “Colorado has served as a model for the nation on finding the right balance” between protecting the environment and drilling for oil and gas. “In my view, these proposed ballot initiatives do not strike that balance,” Udall said, calling them “one-size-fits-all restrictions.”

Rep. Jared Polis (D) of Boulder, Colo. helped fund the initiatives, but was amenable to the compromise bill Hickenlooper was pushing. “Now, as it has become clear that the path to passing a legislative compromise has been obstructed, we must turn to the people of Colorado to solve this problem,” Polis said in a statement Wednesday.

Nationally, Colorado is something of a middle ground on fracking. On one end of the spectrum is New York, which imposed a moratorium on fracking in 2008 to study its environmental impacts. Opposite New York are North Dakota and Texas, whose oil and gas booms rely on fracking. The technique helped boost North Dakota crude oil production from about 36 million barrels in 2005 to over 313 million barrels in 2013, according to the US Energy Information Administration.

But local-level skepticism of fracking is spreading to those states, too.

“This is even popping up in North Dakota,” Rabe said, despite the boon fracking has been to the state’s economy. “Local communities are facing all kinds of strains and infrastructure problems.”

David J. Unger contributed additional reporting from Boston.