COGCC begins pivotal SB 181 rulemaking hearings

DENVER — The Colorado Oil and Gas Conservation Commission kicked off weeks of hearings and deliberations before it sets new rules that could fundamentally alter how the traditional energy industry operates in the state.

The agency and its newly minted five-person group of full-time commissioners began hearing presentations from lawmakers, industry and environmental groups, local governments and other interested parties Monday morning and plans to hold its first deliberative discussions among commission members on Thursday.

After the passage of Senate Bill 181 last year, which among other actions required the COGCC to reconsider large swaths of policy all the way up to its core mission statement. These include hard policy questions, such as how far a new drilling operation can be from schools or homes, to broad legal arguments as to how much authority SB 181 grants to local governments to set their own policies toward energy operators.

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Weld County, the state’s largest producer of oil and gas, has pushed its own interpretation of SB 181’s granting of local control powers to set up its own dedicated permitting department, while the COGCC and the Colorado Attorney General’s office have claimed that the law allows local governments to set higher restrictions on energy operations but not lower.

Weld County is heavily reliant on property taxes levied on oil production sites, with about 32% of its revenue in 2020 estimated to be coming from energy production.

The new rules could also pose another threat to the economic health of local energy producers who already experienced one of the most difficult periods in the industry’s history this year as stay-at-home orders around the world forced the price of oil down to historic lows.

A cost-benefit analysis performed by the COGCC and requested by American Petroleum Institute Colorado estimates the regulations could cost producers between $13 million to $79 million per year, or between $253 to $1,537 per well, if all the new rules are implemented as drafted.

The hearings are now the main battleground between pro and anti-energy production groups in the state after the largest players on each side agreed to withdraw ballot measures proposed for this year’s elections and hold off on introducing new measures until 2022. 

In announcing the cease-fire late last month, Gov. Jared Polis said the two sides agreed to make their cases to the COGCC as it begins to interpret SB 181 and enact rules within its jurisdiction.

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