Colorado Contemplates Expanding the Mission of Its Oil and Gas Commission

Amid increasing attention on carbon management and energy supply diversification, three Colorado legislators introduced a bill late in the session that would transform Colorado’s Oil and Gas Conservation Commission (COGCC) into the “Energy and Carbon Management Commission.” SB23-285 (Energy and Carbon Management Regulation in Colorado) would expand the COGCC’s purview to include deep geothermal and underground intrastate natural gas storage facilities, specifically granting the COGCC the:

• exclusive authority to permit and regulate exploration and production of deep geothermal operations below 2,500 feet and allocated geothermal resources associated with nontributary groundwater (the state engineer would continue to regulate shallow geothermal operations);
• ability to establish geothermal resource units for allocated geothermal resources;
• exclusive authority to regulate any intrastate facility that stores natural gas in an underground facility (an “UNGS facility”) not subject to regulation by the Public Utilities Commission; and
• power to assess and collect fees from UNGS facility operators.

In addition to changing the COGCC’s name, the bill proposes to change the name of the Oil and Conservation Environmental Response Fund to the “Energy and Carbon Management Cash Fund,” and would permit the COGCC to use the fund for its expanded regulatory purposes. Finally, SB23-285 directs the COGCC to conduct several studies and to draft reports for the legislature regarding the state’s geothermal resources, underground hydrogen storage, and siting and regulation of interstate pipelines.

SB23-285 coincides with the wide-ranging SB23-016 (Greenhouse Gas Emission Reduction Measures) introduced earlier in the session. In relevant part, SB23-016 would authorize the COGCC to:

• regulate underground injection and sequestration of carbon dioxide (CO₂) and other greenhouse gas emissions, i.e., the “sequestration” component of carbon capture, use and sequestration (CCUS).
• apply to the U.S. Environmental Protection Agency (EPA) for the authority to safely and effectively regulate CO₂ injection and sequestration in Colorado under the federal Safe Drinking Water Act, if the governor agrees sufficient resources exist.
• permit and oversee injection wells, including ensuring operators maintain adequate financial assurance until well sites are permanently closed, if the EPA grants regulatory primacy to the COGCC.

Colorado would then need to embark on several executive and legislative efforts to address myriad issues related to CCUS, including pore space ownership, unitization, surface and mineral ownership, long-term liability, pipeline permitting, and environmental justice considerations.

With less than two weeks to go until the end of the legislative session, Coloradans will not have long to wait to see if the 2023 is the year that their legislature rebrands and expands the COGCC.

This document is intended to provide you with general information regarding Colorado SB23-285. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.