The Colorado General Assembly passed its contentious overhaul of state oil and gas regulations today, sending it to Governor Jared Polis’ desk for final signature.

SB-181 invokes several changes to existing law, including increased input from local communities, changes to forced pooling thresholds and an update to the mission and make-up of the Colorado Oil and Gas Conservation Commission.

The House passed the bill late last week with several additional amendments:

• 164: This amendment outlines the changes regarding professionalization of COGCC.  It also describes who is going to comprise the commission and the expertise required for each role.
• 169: This changes the threshold of forced pooling from 50 percent to 45 percent. It also changes the royalty rate for oil wells to 16 percent and keeps the gas royalty rate at 13 percent.
• 148: This amendment states that local governments can address the surface impacts of oil and gas operations “in a reasonable manner” under this change. It also specifies that local governments don’t have ability to regulate downhole considerations.
• 150: This amendment addresses the authority of the COGCC. The bill initially stated that the COGCC can refuse to issue a permit while certain rulemakings are being completed – L.150 changes the language from “refuse to issue” to “delay the final determination regarding a permit application.”  In addition, language added in the Senate said COGCC “would not act in an arbitrary or capricious manner.”  This clarifies the “commission must regulate oil and gas operations in a reasonable manner.”
• 174: This provides a way to codify details surrounding the nature of local control.

Today, the Senate voted to adopt the amendments and then voted to pass the bill on a 19-16 vote, along party lines.

The Colorado Petroleum Council and Colorado Oil and Gas Association highlighted the legislation’s dangers in a joint statement shortly after the final vote:

“SB 181 is the most comprehensive oil and natural gas legislation Colorado has seen in decades. While a few critical amendments were added that begin to address some of industry’s concerns and provide a degree of certainty to our member companies, our industry remains firmly opposed to this bill because it threatens one of the pillars of Colorado’s economy.”

Polis is expected to sign the bill into law sometime this week.  Then all eyes will be on the COGCC, as the bill assigns the agency several rulemakings to undertake.  These could take months or possibly years to adopt.

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