How Is Colorado’s Oil And Gas Industry Regulated?

Apr 20, 2017

Looking out the windows of Matt Lepore’s eighth floor corner office in downtown Denver, you see high-rise office buildings and the Rocky Mountains. What you don’t see are any signs of the state’s multibillion-dollar oil and gas industry.

But Lepore said he’s reminded of how contentious oil and gas is to Coloradans every day.

“There are people who think that we are indifferent to them, their concerns, their health, and nothing could be further from the truth,” he said. “And if they would spend a day with my field inspectors and with my environmental people, they would understand that we care.”

During the nearly five years Lepore has been the director of Colorado’s oil and gas regulatory arm -- the Colorado Oil and Gas Conservation Commission (COGCC) -- community fracking bans and changing regulations have left many Coloradans confused over how the industry is regulated.

“We make regulations by rule makings, which are a public process. We call it a quasi-legislative process -- it’s similar to making laws,” Lepore said. “The rules that we make do have the force and effect of law. That authority to make those rules within the oil and gas space is granted to us by the legislature.”

The state attorney general’s office and the congressional legislative legal services look over the rules adopted by the COGCC -- such as rules for location and construction of drill sites and what kind of machinery can be used -- to make sure they fall within the scope of that authority.

Where state authority ends and local begins

Local governments have additional, substantial regulatory authority through their land use code, such as building permits for structures, traffic impact fees and inspections for compliance with local codes and standards related to water quality and wildlife impacts.

The limit on that authority has been tested during Lepore’s tenure. Some communities tried to issue outright bans on oil and gas extraction, including the use of hydraulic fracturing, but they were ultimately overturned by the state Supreme Court.

Credit Jackie Fortier / KUNC

Land use and drilling ‘setbacks’

In Colorado, oil and gas wells have to be 500 feet away from residences, and 1,000 feet from multiple occupancy buildings, like schools, hospitals or jails - unless the operator, in most cases an oil and gas company, gets special permission.

“Literally in our rules, it’s not that a location must be 1,000 feet away from a school. It’s that if an operator seeks a location less than 1,000 feet away, they must have a public hearing in front of the commission. We adopted that rule in 2013. We have had zero applications for a location within 1,000 feet,” he said.

"Those [mineral rights] are property rights, just like the home and the land that they bought to build their house on."

Lepore said he does not live by oil and gas drilling himself, but he can understand why people don’t want to.

“I think we’re all concerned about the potential for accidents and certainly for health impacts. We know that there are going to be spills, we know there is a potential for accidents,” Lepore said. “Lots and lots of our rules are intended -- and I think successfully have minimized those. They are not going to get them to zero. I don’t think any set of rules gets any industrial activity to zero emission, or zero accident or zero adverse effects.”

According to Lepore, an operator has a legal right to access the minerals that they have purchased or leased. The COGCC has denied drilling permits in the past, but if a company files an application that meets the state’s rules, the COGCC can’t deny the application.

“My perception is that people didn’t or don’t anticipate that oil and gas might be part of their neighborhood,” he said. “Those are property rights, just like the home and the land that they bought to build their house on.”