COGCC confirms new energy rules under SB 181

DENVER — The Colorado Oil and Gas Conservation Commission unanimously approved an overhaul of the state’s regulations on energy producers after more than four months of sometimes heated battles between industry proponents and opponents.

The rules, which go into effect Jan. 15 next year, will apply to new drilling applications and pending applications before the state regulator. The COGCC began the rulemaking in August under the mandate of last year’s Senate Bill 181, which called for deep reforms in the state’s regulatory stance toward the energy industry.

In a call with reporters Monday morning, COGCC chairman Jeff Robbins said operators with whom he’s spoken are mostly positive on the new rules.

“There is admission that the new rules are more robust and tougher and more comprehensive, but to a tee, people seem to understand that this was to be expected, and we’re moving the landscape from fostering to regulating in a protected manner,” he said.

The agency will continue rulemaking next year, primarily regarding security bonds that companies must post before developing an area, along with discussions on permitting fees and worker certification.

Some of the provisions, such as expanding who has standing to present for or against a drilling proposal, were welcomed by both industry supporters and groups seeking to minimize the industry’s health and environmental impacts.

Others, such as a 2,000-foot setback for new wells from schools and homes, drew intense criticism from producers claiming that they would severely limit their ability to drill across the state.

A joint study at the University of Colorado Boulder and the Colorado School of Mines estimates that the state would have lost $500 million in resource revenues if the setbacks were set at 1,500 feet, but exponentially grow to $4.5 billion if the setbacks were brought to 2,500 feet under the language of a defeated 2018 state ballot measure.

Lynn Granger, the executive director of American Petroleum Institute Colorado, said that the setback rules for seeking a variance are too ambiguous for operators and communities that support drilling to know where exactly they can make new wells.

“The relevant rules will likely give untethered discretion to the director and the commission regarding when a permit will be approved or rejected, which falls short of Gov. Polis’ assurance that Senate Bill 181 would provide certainty to our state,” she said in a statement.

Other adopted rules include a ban on routine gas flaring and venting, implementing periodic inspections for all oil and gas sites and requiring new proposals to consider environmental justice and the effects that a new well would have on severely impacted communities.

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