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SB 181 Signed Into Law in Colorado

Colorado Gov. Jared Polis signed into law on Tuesday a major overhaul of the state’s oil and gas rules, encouraging state regulators to focus on public safety and environmental concerns.

Colorado ranks fifth nationally in crude oil production and sixth in natural gas, contributing $32 billion annually to the state economy, including taxes and 89,000 direct and indirect jobs.

Supporters of the law believe it will protect the fast-growing Denver suburbs from possible environmental effects of drilling. The law also gives cities and counties more control over the siting of wells, which could create a divide, as rural counties – who are typically friendlier to oil and gas activity – are pressured to increase industry regulation. The legislation amends current preemption law that provides protection from local ordinances that conflict with existing state law.

The law also requires the installation of continuous emission monitoring equipment for methane, nitrogen oxides, etc., and it repeals an exemption for oil and gas production from a county’s authority to regulate noise. The new law also changes the makeup of the Colorado Oil and Gas Conservation Commission (COGCC) by reducing the number of oil and gas industry members from three to one, and requires that with a permit to drill, operators must prove they have filed an application with the local government in order to start production.

The commission has 30 days after the law takes effect to issue new guidelines for the review of wells with health and safety concerns or for those causing unease for a local community. The commission will take public comment on the criteria and Dan Gibbs, executive director of the Department of Natural Resources, which houses the COGCC, has promised a “transparent process.”

Many supporters of the law believe it won’t negatively impact current drilling because 90% of Colorado’s oil and more than 50% of its gas are produced in Weld County, which extends from Denver’s northern suburbs to the Wyoming state line. All five county commissioners are supportive of the industry and are unlikely to impose tougher restrictions.

A pair of county commissioners – former Arapahoe County Commissioner John Brackney and Weld County Commission Chairwoman Barbara Kirkmeyer – are leading the efforts to ask voters to overturn the law in November.