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In the Know: Update on Colorado’s Senate Bill 181



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As discussed in
our March 13 post, which can be found here,
Senate Bill 181, introduced on March 1, proposed significant changes to Colorado’s
long-standing oil and gas regulatory system.  After a number of amendments from Senate and
House membership, Governor Polis signed S.B. 181 into law on April
16, 2019. 

Here’s an
overview of key amendments that brought the bill to its final form:

(1)        More direction and
support in implementing local regulation

S.B. 181’s
original revamp of local authority under C.R.S. § 26-20-104, which gave
localities the power of “regulating oil and gas development” in order to
generally “minimize adverse impacts… on public health and the environment” remains
mostly intact.  However, S.B. 181 amendments
have limited that power to “regulating the surface impacts of oil and
gas development,” and have also tailored local impact minimization measures “to
the extent necessary and reasonable to protect public health, safety, and
welfare and the environment…” 

S.B. 181 now creates
C.R.S. § 29-20-104(3), which establishes atechnical review board procedure to provide qualified input on local
well siting determinations. This new system will allow a locality or operator
to request that COGCC-appointed experts report on the technical and operational
suitability of the locality’s preliminary or final well siting decision. 

  • C.R.S. § 29-20-104(3)(b) makes clear that local
    governments will not be required to reconsider or amend siting decisions based
    on technical review board reports.
  • More specifics regarding technical review board
    procedures and membership can be found in the revised C.R.S. § 34-60-104.5(3).

(2)        More direction in enacting new emissions

S.B. 181 now includes
important additions and refinements to the COGCC’s new mandate to adopt emissions
regulations under C.R.S. § 25-7-109. 

COGCC rules to
minimize emissions of methane, VOCs and NOx must be adopted under C.R.S. § 25-7-109(10)(a).

C.R.S. § 25-7-109(10)(b)
now directs the COGCC to revisit its existing rules and consider stricter
requirements with respect to: leak detection and repair; pipeline inspection;
emissions from pneumatic tools (e.g. gas-driven pumps and compressors); and continuous
methane monitoring “at facilities with large emissions potential, at multi-well
facilities, and at facilities in close proximity to occupied dwellings.” 

  • Notably, S.B. 181 no longer requires
    emissions monitoring installation at every “oil and gas facility”in the state.

(3)        Future restructuring of

S.B. 181’s original changes to the nine-member COGCC, which de-emphasized
oil and gas industry experience among the qualifications of its seven appointed,
volunteer commissioners, will be effective until no later than July 1, 2020. By
then, the COGCC will be restructured to seven total members, including
five appointed commissioners of balanced credentials who will become full-time
state employees.

  • At least one member of the restructured COGCC
    must have substantial experience or formal training in: the oil and gas
    industry; planning and land use; environmental and wildlife protection or
    reclamation; and public health.  More specifics
    regarding the future makeup of the COGCC are set out in the new C.R.S. §

(4)        Minor Adjustments to Pooling Application

S.B. 181
originally introduced amendments to C.R.S. § 34-60-116 that would have required
a 50% minimum consent threshold on forced pooling applications and a 15%
statutory royalty on oil and gas for non-consenting, unleased owners. The final
bill instead requires consent to be pooled from parties comprising 45% of
the interest of reasonably locatable owners and a statutory pooled royalty
of 13% on oil and 16% on gas.