The state of Colorado participated in additional reporting about state and local natural resource governance, revenues, and disbursements.
The state of Colorado regulates an array of activities related to natural resource extraction and interacts with the extractive industries, especially when the activity is occurring on state or private land.
The Colorado Department of Revenue collects, manages, and distributes revenue from companies engaged in extraction in Colorado. It publishes annual summary , expenditure (PDF), and severance tax reports. Additionally, county governments collect oil and gas related property taxes, with the Colorado Department of Local Affairs’ Division of Property Taxation coordinating this process.
The Colorado Department of Natural Resources manages the state’s natural resources and administers state trust lands.
- The Colorado Oil and Gas Conservation Commission ensures that oil and gas wells and operations comply with state law. It is involved in all stages of extraction—issuing exploration permits, auctioning leases, addressing incidents/complaints, enforcing rules and regulations, collecting levies, etc. The commission is governed by rules and regulations, runs a data portal, and publishes reports.
- The Division of Reclamation, Mining, and Safety works to protect the public, miners, and the environment during current mining operations. It holds responsibility for restoring abandoned mines and ensuring that all mined land is reclaimed to beneficial use. It works to achieve these goals through four major programs: coal regulatory program, minerals regulatory program, inactive mine reclamation program, and mine safety and training program. The commission is governed by rules and regulations and publishes data and reports
The Colorado Department of Public Health and Environment (CDPHE) plays a role in regulating oil and gas operations. CDPHE deals primarily with:
State laws and regulations
The Colorado Constitution includes Article XVI on Mining and Irrigation, which outlines laws regulating the safety and environmental implications of extraction as well as the organizational structure charged with overseeing extractive activities.
The Code of Colorado Regulations also has several sections that govern natural resource extraction, including:
- Practice and Procedure (PDF) (2 CCR 404-1) outlines rules and regulations to prevent waste and conserve oil and gas in the state of Colorado, while protecting public health, safety, welfare, including the environment and wildlife resources
- Hard Rock Metal Mining (PDF) (2 CCR 407-1) includes general provisions and requirements regarding the permit process
- Regulations for Coal Mining (PDF) (2CCR 407-2) establishes the provision known as the Colorado Surface Coal Mining Reclamation Act
- Control of Hazardous Air Pollutants (PDF) (5 CCR 1001-10) regulates all new sources of air pollution and all modified or reconstructed sources of air pollution, including those generated by the extraction industry
- Storage Tank Regulations (PDF) (7 CCR 1101-14) outlines rules for the design, installation, registration, construction and operation of storage tanks used to store regulated substances (including petroleum)
- Rules Regarding Electric Utilities (PDF) (4 CCR 723-3) describes the specific provisions applicable to public utilities, includes specific regulations related to renewable energy, and recognizes that is it in the best interest of the public to utilize and develop renewable energy resources
Fiscal costs of extractive activity
In addition to generating revenue and economic activity, extractive industries can also bring certain costs to state and local communities. In Colorado, these are concentrated in a few areas due to the fact that nearly all production occurs in just six counties: Weld, Garfield, La Plata, Adams, Rio Blanco, and Jackson. Attention to and analysis of costs is, therefore, focused on these areas.
Extractive activities have resulted in not only more traffic on Colorado roads and highways, but also greater loads on the state’s transportation infrastructure. In certain areas, such as Highway 85C between Fort Lupton and Platteville, traffic has increased by 58.72% over a five year period due to oil and gas development. Additionally, according to a Colorado Department of Transportation (CDOT) study, the load impact of trucks used in extraction can be as much as 15,000 to 46,000 times that of a passenger car. Oil and gas loads are estimated to be 3-10% of total loads on the Colorado highway system.
According to CDOT, the estimated cost to offset the impact of the oil and gas extraction on state roads and highways ranges from $10 to $30 million, which is up to 13% of the CDOT’s annual surface treatment budget. To read more, see the CDOT study Oil and Gas Impacts on Transportation (PDF).
Increased extraction can put added demand on both water supplies and water infrastructure in communities. This can lead to increased rates and the need for infrastructure investments. Oil and gas extraction in Colorado reported using approximately 6.7 billion gallons of water from 2011-2013. Additionally, COGCC found that extractive activities produced 304,451,972 BBL of water in 2016, 0.006% of which was spilled.
In addition to water use and production, the environmental and engineering staff of the COGCC also monitor and assess water quality in Colorado. Currently, they are investigating 22 instances of Thermogenic stray gas impacts in domestic water wells in the Denver-Julesberg basin. Additionally, the state, through the Department of Public Health and Environment, also has multiple large remediation obligations related to the extractive industry, including a total of: $57 million at Summerville Mine operating a water treatment plant, $64.8 million at Clear Creek Basin cleaning up metal mine contaminated surface water, and $5.5 million at Captain Jack Mill addressing mine waste piles and drainage. See Colorado’s Comprehensive Annual Report to read more about the state’s remediation obligations.
The increased population that often corresponds with increased extraction can place greater demands on the emergency medical, fire, and police services of the state, counties, and towns.
Notably, a study conducted on the extractive industry in Weld County found a 163% increase in large truck crashes and a 64% increase in fatal crashes between 2000 and 2014 (a time of major growth in active wells in the area).
Additionally, increased extractive activity has also led to increased oil and gas fires and explosions. Though the exact number of such incidents is not published by the government, general incidents and complaints can be searched through the Colorado Oil and Gas Information System. Additionally, a study conducted in 2005 found 32 incidents of active coal mine fires.
Multiple organizations in the Colorado state government work on the reclamation and remediation of sites related to extraction.
The Colorado Oil and Gas Conservation Commission oversees spill incidents associated with oil and gas exploration and production related activities. The Colorado Department of Labor and Employment’s Division of Oil and Public Safety oversees cleanup of petroleum released from regulated underground storage tanks. Finally, the Colorado Department of Transportation oversees spill incidents within Colorado highways and beyond.
Colorado has not been “certified” by the federal Abandoned Mine Land (AML) Reclamation program, meaning that it has remaining high-priority abandoned coal mine areas. Reclamation efforts in Colorado are led by the Colorado Division of Reclamation, Mining, and Safety (DRMS) which works to reclaim abandoned and inactive mines. DRMS has reclaimed 6,127 of the estimated 23,000 abandoned mines in Colorado. In 2017, Colorado received $2,793,000 from the federal AML Program, sourced from fees paid by coal mine operators, in line with the historic annual average. The average cost for closing a hazardous abandoned mine feature is $5,000. An overview of DRMS’ history and work can be found here.
Colorado currently has $75.3 million in unfunded abandoned mine land areas in need of reclamation. Priority 1 abandoned mine land (AML) areas, the highest priority, account for $41.5 million (or 55.2%) of those unfunded costs. Priority 1 AML areas are those that are necessary to reclaim in order to protect public health, safety, and property from extreme danger of adverse effects of coal mining practices pre-1977. This can include restoration of land, water, and/or the environment.
As of June 2017, $4.2 million in reclamation work was underway and $63.2 million had been completed across the three priority types.