Expanded Setbacks Dominate Oil and Gas Rulemaking

Industry challenges science and process behind new safety rules, while community and environmental groups wary of exceptions

Oil Rigs

The Colorado Oil and Gas Conservation Commission on Sept. 28 voted on a “preliminary final” set of industry safety rules as part of the regulatory revisions required under Senate Bill 19-181, the landmark oil and gas bill passed last year. 

The preliminarily approved 200-600 series rules, which deal with topics including safety, permitting and reporting obligations, will face a final vote Nov. 6, following an additional round of rulemaking, beginning this week, on environmental impacts and wildlife protection. 

The commission’s decision to move forward with a controversial 2,000-foot well setback dominated headlines about the weeks-long rulemaking, which is part of a broader regulatory overhaul to bring the COGCC’s rules in line with its new mission to protect public health and the environment. 

If adopted in the final vote, the setback, which requires drilling operations to be located at least 2,000 feet from residences and schools, would be the strictest in the nation.

Industry groups opposed the rule, which they have claimed is not supported by science. During closing statements during the rulemaking hearings, Brownstein Hyatt Farber Schreck attorney Mark Matthews, speaking on behalf of the Colorado Oil & Gas Association, said the trade group believes there is “not substantial evidence” to support the extended setback.

The group claims the COGCC gave undue weight to a 2019 report by the Colorado Department of Public Health and the Environment that, Matthews said, “considers worst-case scenarios” related to oil and gas emissions and health risks. According to COGA, the commission did not give sufficient weight to the testimony of its witness, Dr. Tami McMullin, a toxicologist who had earlier told the COGCC there is “no credible evidence” for increasing setbacks to protect public health.

Industry representatives also took issue with the COGCC’s rulemaking process during closing remarks and in the wake of last week’s vote. Lynn Granger, executive director of the American Petroleum Institute Colorado, said in a statement that “we believe the rules lack clarity and consistency under the Administrative Procedure Act, and believe specific provisions… fail to comply with the Act.” 

Jason Moore, counsel for the Small Operator Society, said during closing statements SOS believes there are procedural concerns about the rulemaking that “jeopardize the quality and legality of these rules.” Moore chided the commission for “11th hour recommendations” that stakeholders didn’t have time to respond to and for failing to complete an independent evaluation of how the new setback rules would affect oil and gas development in the state. 

“That you are even considering such a proposal in the face of the most perilous economic downturn this state has faced in a generation is nothing short of reckless,” Moore said.

In one of the most heated moments of the rulemaking, COGCC Chair Jeff Robbins hit back against Moore’s characterizations, saying the staff’s draft rules were “not a surprise to you or to anybody else who has been participating in this several-month-long endeavor.” 

For all the furor over the 2,000-foot setback, the draft rules do provide for exceptions for projects that can show they are “special snowflakes,” in the words of commissioner Karin McGowan. 

These so-called “off ramps” would allow operators to drill as close as 500 feet to homes as long as at least one of four conditions is met: 

Homeowners and tenants agree “with informed consent” to the proposed drilling location 

The location is within an approved Comprehensive Area Plan or Comprehensive Development Plan

Any wells, tanks, separation equipment or compressors stay at least 2,000 feed from homes and 

The COGCC finds, following a hearing, that the proposed oil and gas location will provide “substantially equivalent” protections for health, safety and the environment as a 2,000-foot setback would offer.

While the environmental and community groups that testified during the rulemaking were generally more positive about the proposed rules than industry, several expressed concern about the “off ramps.” 

Attorney Michael Freeman of Earthjustice, who represents several citizen and environmental groups, including the League of Oil and Gas Impacted Coloradans, Sierra Club and Earthworks, said in an e-mail that “a setback keeping fracking operations at least 2,000 feet away from homes and schools would represent a major step forward. If the setback rule is finalized, it will make Colorado a national leader in protecting public health and safety.” 

However, he added his clients “do have concerns with some of the exceptions included in the preliminarily approved setback, and we will be watching its implementation carefully.”

Several groups expressed concern over what “informed consent” means, especially when residents might not understand exactly what they are agreeing to or are easily “bought off” by oil and gas developers, and they urged the COGCC to clarify the term before rules are finalized in November.

“Landmen in the oil and gas industry are paid professionals. They’re very good at what they do,” said attorney Matt Sura during closing statements. “They spend every day convincing people to lease their minerals or to sign surface use agreements, pipeline easements or waivers.” He gave an example of mobile home residents who were convinced to allow a multi-well pad within 360 feet of their homes for only $400 while having “only a vague idea of what was being proposed.”

Joe Salazar, executive director of anti-fracking group Colorado Rising, was wary of how much discretion the COGCC has under the rules to approve exceptions to the setback.

“The thing that’s notorious about the commission is the commission always seems to find a way to grant a variance or to grant some type of exception to an oil and gas operator,” he said.

“Giving themselves that opening with a 500-foot setback is going to be problematic, and we will challenge the hell out of that,” Salazar said, adding his group will fight permitting decisions at the administrative level and “if it looks like we have to file a declaratory judgment action to have the courts decide what the rights of homeowners are, then we will do that, too.”

—Jessica Folker

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