New oil and gas rules given final approval by Colorado regulators

‘Watershed moment’ as commissioners finalize overhaul of COGCC’s mission

A pump jack is seen in Frederick on June 24, 2020. (Andy Bosselman for Colorado Newsline)

Colorado oil and gas regulators gave final approval on Monday to a sweeping set of changes to the state’s drilling rules, in a major step towards the full implementation of a landmark reform bill enacted by Democrats in the legislature in 2019.

In a series of unanimous votes, the five-member Colorado Oil and Gas Conservation Commission finalized a package of new regulations known as the “Mission Change” rules, overhauling everything from siting and permitting procedures to emissions controls and cleanup. The rulemaking was named for a key provision in Senate Bill 19-181, signed into law by Gov. Jared Polis last year, which replaced decades-old statutory language directing the COGCC to “foster” drilling with a new mission to “regulate” it to protect public health and the environment.

“We are happy, and I think a bit relieved, to have finalized this historic rulemaking, to help COGCC meet the spirit and mandates of SB 19-181,” commission chair Jeff Robbins said after the final vote. “These rules provide a path forward for oil and gas production in a manner that protects Colorado and provides all of us a voice and a seat at the table.”

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Among the major changes made by the new rules are a 2,000-foot “setback” requirement between new wells and most buildings; new permitting procedures that will include the assessment of “cumulative impacts” of operations on air quality; new controls on the venting and flaring of methane; and environmental-justice safeguards meant to protect low-income people, people of color and Indigenous people from disproportionate development impacts.

Representatives from more than 90 organizations, including oil and gas operators, environmental groups and local governments, participated in the development of the new rules in a marathon series of hearings that began in August.

In a statement, Lynn Granger, executive director of the American Petroleum Institute’s Colorado chapter, thanked the commission for its hard work but noted the uneasiness with which the industry views the sweeping rules overhaul.

“It is our hope that the coming months will prove constructive and yield positive outcomes for communities and operators across Colorado, because the hard work has only just begun,” Granger said. “The breadth and complexity of this regulatory overhaul has been far-reaching and as a result, there remain concerns with a number of the regulations adopted today, including a still-ambiguous setback standard, which regrettably lacks clarity for operators or the communities in which natural gas and oil are developed.”

Decade-long environmental push

The completion of the mission change rulemaking brings the COGCC closer to the end of a nearly two-year-long legislative and regulatory overhaul of Colorado’s oil and gas laws and marks a turning point in a conflict that has roiled state politics for more than a decade.

“It is a new day for impacted Coloradans, where they have a voice in the impacts and risks that they face,” Sara Loflin, executive director of the League of Oil and Gas Impacted Coloradans, said in a statement.

Beginning around 2010, the U.S. oil and gas industry’s “shale revolution,” a nationwide surge in production made possible by advanced technologies like fracking and horizontal drilling, increasingly brought industry operations into the backyards of fast-growing suburban communities north of Denver.

Residents battled the drilling boom at city halls and in the courts but often found the deck stacked against them. State law prohibited the regulation of fracking at the city or county level, and lawmakers at the Capitol, where the industry had powerful allies among Democrats and Republicans alike, failed repeatedly to enact reforms pushed for by environmentalists, progressives and local governments. A series of high-stakes ballot measures backed by both industry interests and anti-fracking activists resulted in expensive, bitterly contested campaigns but little change to the status quo.

After taking full control of state government in 2018, Polis and his fellow Colorado Democrats sought to end the “oil and gas wars” with SB-181, which granted local governments more authority to regulate drilling and more explicitly charged the COGCC with protecting “public health, safety, and welfare, including protection of the environment and wildlife resources.”

Activists’ push for stricter rules followed years of public health complaints by residents living near oil and gas operations, as well as a home explosion linked to a nearby well that killed two men in Firestone in 2017. A report released last year by the Colorado Department of Public Health and Environment, which found that drilling can pose health risks to nearby residents under certain conditions, also spurred the strengthening of COGCC regulations.

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“Today is a watershed moment in Colorado’s oversight of oil and gas development in our state,” Dan Gibbs, executive director of the Department of Natural Resources, which oversees the COGCC, said in a statement. “The new nation-leading rules passed today, finds the right safeguards for wildlife, our air, water and communities while providing certainty and a streamlined process for oil and gas operators.”

Dispute over setbacks

The most controversial of the new rules is a requirement of a 2,000-foot buffer zone between new oil and gas sites and occupied buildings. In 2018, oil and gas interests spent more than $40 million in a successful campaign against Proposition 112, a measure backed by anti-fracking activists that would have imposed a rigid 2,500-foot statewide setback.

Critics accused the COGCC of reviving an idea that Colorado voters had soundly rejected — a notion that commissioner Bill Gonzalez, a former Occidental Petroleum executive and the commission’s industry representative, dismissed following Monday’s vote. One study estimated that roughly 90% of subsurface resources in Colorado’s top-producing county would still be accessible through horizontal drilling, and multiple processes exist in the new rules for the setback requirement to be waived.

“These rules do not effectively ban oil and gas operations, nor are they a codification of Proposition 112,” Gonzalez said. “They are rules that fulfill the statutory directives of this commission. They are fair. They are reasonable.”

Robbins, too, pushed back against advocates on both sides of the issue, rejecting claims that the commission had gone too far or hadn’t gone far enough.

“Before editorials are published, folks should at least read the rules and familiarize themselves by talking to all stakeholders to truly get an understanding of the pathways for oil and gas,” Robbins said. “I have had discussions with our regulated community and others, and largely I have received positive support for where we have landed.”

The COGCC is expected to conduct a final round of SB-181 rulemakings in early 2021, including new requirements for the financial assurance, or “bonding,” that operators must provide to cover potential cleanup costs. Commissioners pledged to implement the required rules according to the agency’s new mission — and to make changes if needed.

“We know that this is a work in progress,” said commissioner Karin McGowan, a former CDPHE deputy director. “I’m looking forward to implementing the rules, but also understanding that some of them might need to be tweaked. Maybe this wasn’t perfect the first time, but we’re all here to listen to folks and discover what is successful, and what maybe we can improve upon.”

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