The 2019 Colorado legislative session took the state’s oil and gas-development opponents and proponents on a wild ride. On April 3, 2019, the Colorado Senate passed SB 19-181, which dramatically changes the regulation of oil and gas development in the state. The new Governor signed it into law on April 16, 2019, and it became effective on that date. And although the legislative session recently ended, it looks like the ride will keep going—particularly in three important areas.
First, in response to a recent Colorado Supreme Court opinion,1 SB 19-181 changed the state’s Oil and Gas Conservation Act so that the Colorado Oil & Gas Conservation Commission (“COGCC”) is no longer tasked with “fostering” oil and gas development. Instead, the COGCC must now “regulate” development “in a manner that protects public health, safety, and welfare, including protection of the environment[.]” In other words, the legislature ordered a wholesale reconsideration of how the executive branch regulates oil and gas development in Colorado and which goals it should pursue. In a similar vein, SB 19-181 changed the composition of the COGCC, removing two positions previously reserved for oil and gas industry representatives.
Second, in response to other Colorado Supreme Court precedent,2 SB 19-181 explicitly empowers local governments with increased oversight of (a) land use related to oil and gas activities in their communities and (b) the location and siting of oil and gas facilities. It also empowers local governments with the ability to make regulations, impose fines, and enact other oil and gas regulations. Related—at least recently3—to local control of oil and gas development, the new law also changes the force-pooling laws, requiring 45% of owners to approve a plan (instead of just one owner), and raising non-consenting owners’ royalty rates. As SB 19-181 appears to have been drafted specifically to do away with the Colorado Supreme Court’s holdings that state law may preempt local law regarding oil and gas regulations, it is setting the stage for legal battles. And it is anyone’s guess at this point how those will unfold.
Third—and the focus of this alert—SB 19-181 sets out several areas in which the COGCC and the Colorado Air Quality Control Commission (“AQCC”) must make new rules. And the new law empowers the COGCC director to delay any final oil and gas permit determinations if the director determines, pursuant to objective criteria and following a public comment period, that the permit requires additional analysis for environmental or local-government review.4 Arguably, the new law implicitly imposes a moratorium on oil and gas permitting in Colorado, although the COGCC insists that “there is NOT a moratorium.”5 Nevertheless, oil and gas-development opponents have demanded that regulators “halt” oil and gas permitting until they make the new rules.
Making these rules is going to require a lot of time and work. Under the Colorado...
