Written by Chloe Marie – Research Specialist
On April 16, 2019, Colorado Governor Jared Polis signed Senate Bill No. 19-181 into law, significantly
amending the regulation of the oil and gas industry within the state. This new legislation
aims to increase the focus on environmental and public health concerns in the
oil and gas governance process.
Increases Consideration on Environmental and Public
Health Concerns
Senate Bill No. 19-181 emphasizes that the primary interest of the
Colorado Oil and Gas Conservation Commission [Commission] now is in regulating
– as opposed to fostering – the development of oil and gas
resources in Colorado. Under the new legislation, the Commission must regulate “in
a manner that protects public health, safety, and welfare, including protection
of the environment and wildlife resources.” This new legislative directive runs
counter to the recent Colorado Supreme Court ruling in Colorado Oil & Gas Conservation Commission v. Martinez which
held that the rulemaking authority of the Commission did not encompass a right
to condition all new oil and gas development on a finding of no cumulative
adverse impacts to public health and the environment.
Increases Authority for Local Governments
The new legislation also alters the permanent mission of the Commission by
providing local governments with specified oversight of the siting and surface
impacts of oil and gas development projects. In this respect, the bill provides
local governments with the authority to inspect oil and gas facilities, to
impose fines on operators for pollution, and to impose fees on operators for costs
associated with the permitting and regulating of oil and gas production and the
implementation of the monitoring and inspection program. Local governments also
are responsible for providing technical expertise regarding the location and
siting of oil and gas projects. At their discretion, local governments may
request that the Commission Director assemble a technical review board in order
to evaluate the effects of the local government’s technical input on the
operator’s project application.
With the passage of the new legislation, local governments will no
longer be dependent upon the Commission to act before the municipalities can
exercise their “1041 powers” with respect to land use planning for oil and gas
development. In other words, local governments will have authority to license
and control oil and gas development projects without any limitation from the
Commission regardless of whether these projects may have statewide impacts. In
addition, the legislation repeals prior statutory provisions that prevented
counties from regulating noise generated by oil and gas production activities. Finally,
the legislation addresses preemption by stating that both the state and
municipalities have land use authority over development with the most stringent
requirements, whether they are state or local, prevailing.
Directs Colorado Oil and Gas Conservation Commission
to Develop Regulations
The new legislation mandates that the Commission develop and adopt
regulations aimed at reducing methane and VOC emissions from oil and gas
facilities. More importantly, the Commission is now required to impose stricter
requirements for leak detection and repair inspections, pipeline inspection and
maintenance, and methane emissions monitoring. Furthermore, the legislation
directs the Commission to develop and promulgate a number of rules in a manner
that is consistent with the Commission’s primary interest to protect people,
wildlife, and the environment. In addition, the bill directs the Commission to
adopt rules that require an alternative location analysis for oil and gas
development projects that are to be located near populated areas. The
Commission also is directed to develop rules addressing the potential
cumulative impacts of oil and gas development, and it must amend its rules
pertaining to inactive, temporarily abandoned, and shut-in well rules. It is
only after promulgating these rules that the Commission can approve oil and gas
permit applications.
Adjusts Membership of Colorado Oil and Gas
Conservation Commissions
The bill also adjusts the composition of the nine-member Commission with
the overall objective of giving increased representation to environmental
interests. On or before July 1, 2020, the bill provides that the number of
members required to have expertise in the oil and gas industry has been reduced
from three to one. In addition, the Commission must now include members with
expertise in environmental protection, wildlife protection or reclamation, and
public health. Furthermore, out of the seven Commission appointments by the
Governor, there may be no more than four of the same political party.
Does Not Affect Authority of Other State Agencies
While the legislation increases the regulatory authority of local
governments, it is not intended to reduce the authority or jurisdiction of the
Air Quality Control Commission, the Water Quality Control Commission, the State
Board of Health, and the Solid and Hazardous Waste Commission to regulate their
own matters.
Amends Waste Definition and Forced Pooling Provisions
Regarding other matters, the bill amends the definition of waste as
applied to oil and gas by specifying that leaving some oil and gas deposits
unproduced cannot be considered a waste if the Commission decides that not to
produce oil or gas would contribute to the safeguarding of public health or to
the protection of the environment or wildlife resources.
The bill also addresses forced pooling and stipulates that only owners
of at least 50% of the mineral interests to be pooled or operators who have
secured the consent of the owners can enter into a pooling order.
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