Colorado adopts sweeping oil and gas rules, banning flaring, creating a 2,000-foot setback

Energize Weekly, December 2, 2020

Colorado has adopted the strongest oil and gas regulations in the country and reoriented its oversight agency from “fostering” oil and gas development to “regulating” the industry to protect public health, safety, the environment and wildlife.

After more than a year of hearings and negotiations, the Colorado Oil and Gas Conservation Commission (COGCC) adopted the voluminous rule change on Nov. 23 in a unanimous vote.

“Rules passed today, find the right safeguards for wildlife, our air, water and communities while providing certainty and a streamlined process for oil and gas operators,” Dan Gibbs, executive director of the state Department of Natural Resources, said the day of the vote.

Among the key elements in the new regulations are:

  • A 2,000-foot setback of new oil and gas sites from homes, schools or occupied buildings, with a waiver process to drill closer with commission approval
  • A ban of routine flaring of methane from oil wells, with a limited ability to flare with commission approval
  • A requirement that an operator perform an “alternative site analysis” for any proposed drill site that engenders local opposition
  • A clear statement that local governments can regulate oil and gas operations under their land-use powers
  • Enhanced protections for wildlife and wildlife migration corridors, including remediation requirements
  • The addition of requirements for cumulative impact of multiple oil and gas projects in an area

“This has been a long, exhaustive and exhausting process for all involved,” Dan Haley, president of the Colorado Oil and Gas Association (COGA), a trade group, said in a statement. “It has been, at times, contentious, tedious, illuminating and frustrating, but ultimately, we were grateful to take part in the process, to engage stakeholders throughout our great state and to work toward reasonable solutions.”

Sara Loflin, executive of the League of Oil and Gas Impacted Coloradans, a grassroots organizing group, called the rules “a new day for impacted Coloradans, where they have a voice in the impacts and risks that they face.”

There has been an ongoing battle for a decade in Colorado between the oil and gas industry and environment groups along with some communities that are the scene of heavy drilling.

In 2019, Gov. Jared Polis signed into law a bill, SB19-181, aimed at resolving many of the contentious issues and changing the mission of the COGCC to one of protection. It also created a five-member, full-time commission to replace a volunteer one.

Among the things the new regulations do is resolve the relation of local government and the state in overseeing oil and gas development. In the past, the industry and state have sued local governments attempting to adopt local ordinances to regulate drilling, maintaining such regulations were the state’s purview.

The rules now state that local governments can regulate oil and gas development and that an operator must seek local approvals before filing for a state drilling permit.

The COGCC will also participate at the local level as a partner in decision-making.

“These rules have been decades in the making and finally give people as much voice as industry in the permitting process,” Emily Hornback, executive director of the Western Colorado Alliance for Community Action, an environmental group, said in a statement.

Perhaps the most contentious rule is the 2,000-foot setback, a standard for which environmental and community groups had pushed. The industry warned that it was unnecessary and would severely limit drilling options.

During hearings on the proposal, industry expert witnesses presented toxicological and emissions data that showed limited-to-no exposure of potentially dangerous chemicals outside the drilling zone.

Environmental groups presented expert epidemiological testimony indicating that populations living around oil and gas sites have higher adverse health outcomes on things such as asthma attacks and low birth-weight babies.

In the end, the commission relied heavily on analysis from the Colorado Department of Public Health and Environment that concluded that in a worst-case scenario, worst meteorological conditions and worst emissions release, there could be short-term adverse health effects at 2,000 feet.

“Commissioners approved unprecedented 2,000-foot siting requirements, largely based on the precautionary principle, as no scientific evidence was presented that showed such an extreme distance was necessary,” Haley said.

The commission did agree to a waiver process to enable drilling within the 2,000-foot buffer if certain conditions, still to be developed by COGCC staff, are met.

“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,” Lynn Granger, CEO of API-Colorado, a trade group, said in a statement.

Still, a number of tough rules won widespread support from both industry and environmental groups.

Colorado, for example, is the first state in the continental U.S. to ban routine flaring, joining only Alaska in limiting the practice of burning methane from producing oil wells.

Similarly, well-integrity rules, adopted in June, aimed at protecting groundwater resources, were supported by all sides. The rules require annual pressure tests of every well in the state, and more steel casing and cement in new wells.

“There has been a lot of collaboration and conversation,” with commission staff and other stakeholders, Carrie Hackenberger, associate director of API-Colorado, said when the rule was tentatively adopted. “It has been a fairly good process.”

One of the industry’s complaints has been the slow processing time at the COGCC for approval of applications for spacing orders and drilling permits.

The new full-time commission was created to help with the flow, and the new rules also created the position of administration law judges to expedite hearings. The rules also streamline the application process.

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