To: Board of County Commissioners
Through: Bryan Weimer, Director, Public Works & Development
Prepared By:
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Ava Pecherzewski, Development Review Planning Manager, Public Works & Development; Jason Reynolds, Planning Division Manager, Public Works & Development
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presenter
Presenter: Ava Pecherzewski, Development Review Planning Manager, Public Works & Development
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Subject:
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3:00 PM *Proposed Phase 2B Oil and Gas Regulations Amendment
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Purpose and Request:
recommended action
The Board directed staff in October 2023 to craft additional amendments to the Oil & Gas Regulations to include requirements for financial assurances, create additional requirements for air and water quality standards and monitoring, disallow commercial injection wells, increase reverse setbacks and create an inspection program. Staff brought draft regulations to the Board in July 2024 for consideration and were directed to complete public outreach and hold an open house prior to advancing the draft regulations for public hearing.
The purpose of this study session is to provide the BOCC with a summary of the comments received from the public to determine if any adjustments need to be made to the draft regulations. These code amendments are scheduled to go for a public hearing before the Planning Commission on October 14, 2024.
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Background and Discussion:
The BOCC directed staff at their October 16, 2023, study session to proceed with draft amendments to Land Development Code Section 5-3.6 - Regulations for oil and gas development applications. The Board directed staff to complete various updates to the regulations, including:
- Create requirements for financial assurances;
- Include additional requirements for air quality standards and monitoring;
- Include additional requirements for water sampling and monitoring;
- Disallow commercial injection wells;
- Create an inspection program;
- Increase reverse setbacks.
Staff brought draft regulations back to the BOCC on July 23, 2024, for consideration. The Board approved of the draft, with some minor edits, and provided guidance to staff on a financial assurance amount and which method to set up an inspections program (the Intergovernmental Agreement with ECMC was chosen versus a standalone program). The Board directed staff to complete public outreach on the draft regulations and hold an open house, and to report the findings of the public outreach in late September prior to advancing the draft regulations to public hearings.
The draft regulations (Attachment 1) were posted on the County’s website between July 29 to September 6, 2024, for public comment. The website provided a portal in which the public could submit comments directly to the website or upload a prepared letter. An email blast was mailed out to all stakeholders on July 29, 2024, and advertisement of the draft regulations was posted on the County’s social media accounts and mentioned in County newsletters. In sum, there were a total of 73 comments in the website portal (Attachment 2) and 21 individual letters submitted from stakeholders (Attachment 3).
An open house was held at the Arapahoe County Fairgrounds on Tuesday, September 3, 2024 from 5:30-7:00 p.m. Email blasts and reminders were sent out to stakeholders and the meeting was advertised on County newsletters and social media accounts. Approximately 100 attendees were present. Staff provided “stations” where the public could comment on different aspects of the draft oil and gas regulations by writing down comments/questions on sticky notes. In sum, there were a total of 252 sticky notes with comments from the public, which are transcribed and summarized in Attachment 4.
This study session will summarize the feedback received from stakeholders and the public, and staff would like the Board’s feedback on whether any adjustments to the draft regulations need to be made prior to public hearings.
Reverse Setbacks
The current regulations require a 250-foot setback between any new occupied structure from an existing oil and gas facility, regardless of status, or 150 feet from a plugged and abandoned well that was plugged after 2014. The existing setbacks allow room for equipment staging should there be an emergency at the oil and gas site or for plugging and abandonment equipment. The proposed regulations deepen that distance to 2,000 from a well pad that is under active application review or permitted but not drilled, 1,000 feet from a well that is producing, active gas storage, shut-in or temporarily abandoned, and 250 feet from any dry or plugged and abandoned well or pad.
Feedback from community was that they felt the proposed reverse setbacks were appropriate but could be even larger - 3,000 feet. However, staff reached out to developers within range of existing and proposed oil and gas facilities for comment. Generally speaking, those from the development community are not in favor of increasing the reverse setbacks as this could have implications for their projects. The developer of the Prosper development near Bennett submitted comments that the proposed changes could impact their project since a Preliminary Development Plan was approved with a specified 350-foot reverse setback from existing oil and gas facilities allowed within their development plan. The Sky Ranch developer also provided feedback on the proposed reverse setbacks, noting potentially severe economic impacts to development projects if the setbacks are adopted as drafted. Comment letters are provided in Attachment 3.
Based on the recent feedback, staff suggests the following adjustments to the draft reverse setbacks:
Permitted but not yet drilled, drilling, or completing
Base setback of 2,000 feet, which aligns with the state’s minimum setback from a new well site to existing occupied structures. With informed consent of property owner(s) and notification to future buyers, setback of 250 feet.
Producing, active gas storage, shut-in, or temporarily abandoned
Base setback of 1,000 feet, which aligns with the pre-SB19-181 state setback for new oil and gas wells. With informed consent of property owners(s) and notification to future buyers, setback of 250 feet.
Dry and abandoned or plugged and abandoned wells
Maintain 250-foot setback.
These adjustments set recommended separation distances while allowing owners of occupied structures to make an informed decision about whether they have concerns living near an oil and gas site.
Commercial Injection Wells
No negative feedback was provided about the plan to disallow commercial injection wells. It was noted that trucking out produced water does lead to increased traffic. However, the increased traffic is not expected to be significant and would outweigh the negative risks associated with injecting produced water underground, which include the potential for induced seismicity. Further, allowing injection wells in Arapahoe County could attract heavy truck traffic from other jurisdictions, increasing wear on our already stressed road network. Concerns were also raised about where the receiving sites were located and what those sites do with the water; because the receiving sites are not located within Arapahoe County, we do not have jurisdiction to regulate such matters.
Finally, there were several comments in general about the amount of water required for fracking and whether there is sufficient water available in Colorado with dwindling aquifers. One of the code amendments requires operators to provide the County with evidence of an adequate water supply, including a requirement for an executed Water Delivery Agreement.
Additional Water Quality Monitoring
The proposed regulations require more robust baseline water sampling requirements for both groundwater and surface water by requiring a sampling and monitoring plan, to include perennial, intermittent and ephemeral water bodies, both upgradient and downgradient, within a half-mile radius of the facility. Operators are also required to conduct water sampling and monitoring within six months of drilling and every 12 months after production. If contamination is noted, a follow-up test and inspection is required within six months.
Feedback from community indicates that they would like monitoring to occur more frequently than once every 12 months after production, with suggestions ranging from once every six months to every three months. It was also requested that monitoring be done by an independent third-party consultant. Currently, the regulations require operators to hire a licensed environmental consultant to complete the testing and staff believes that this meets the standard for a third-party, as they are required to put their stamp on their report. Others commented that they would like water sampling to be extended as far as two miles and that continuous sampling should be required at the Lowry Landfill. Finally, it was recommended that all data should be accessible to the public.
The American Petroleum Institute (API) and Colorado Oil & Gas Association (COGA) submitted a joint comment letter in which they suggested the definitions for ephemeral stream and intermittent stream be defined to be more closely in alignment with EPA definitions, and they recommended this section be more refined on when testing of intermittent and ephemeral waters is necessary, and they note that data from that testing is likely to be flawed because these streams are dependent on inconsistent weather conditions. Staff recommends including the federal definitions of “ephemeral” and “intermittent” waters in our Definitions section in order to remain consistent. However, Public Works Engineering staff have noted that the federal definitions do not exactly align with State definitions which could be difficult to enforce.
Air Quality Requirements
The proposed regulations focus on best management practices for avoiding and minimizing releases of emissions which impact air quality. In current regulations, the operator is required to test for air pollutants prior to drilling to measure for a baseline, and conduct continuous monitoring during the drilling, completion, and production phases.
Feedback from community was similar to water testing in that they would like to see real-time public access to the air quality reporting and data. A suggestion was made to set up a citizen advisory group or committee to ensure transparency and trust. Other suggestions included requiring operators to require electrification in all steps of the process, given ECMC’s recent approval of the Lowry Ranch Comprehensive Area Plan which included a condition requiring electrification for all Lowry Ranch CAP sites. Arapahoe County’s regulations encourage the use of electric equipment for noise reduction and require electric-powered permanent production equipment, where available. Based on this feedback and the ECMC’s mandate for the Lowry Ranch CAP, staff recommends adding a requirement for electric equipment and drill rigs, unless electric power is not available.
The American Petroleum Institute (API) and Colorado Oil & Gas Association (COGA) submitted a joint comment letter in which they suggested the County clarify what a “health guideline” is when setting benchmarks; staff did consult with Arapahoe County Public Health and changed that to “CPDHE Health Limit Thresholds.” They also request that the best management practices outlined in the draft regulations be more flexible and not required but recommended. They also ask for clarification on the requirement for an infrared camera video and ask if there are other alternative methods of evidence delivery that can be used, and they ask for clarification on when quarterly reports would be due so as not to conflict with similar reporting to the State. It seems reasonable that we revise this section to note that that a copy of the State report be sent to Arapahoe County as well in order to avoid redundancy.
Inspection Program
The draft code amendment incorporates an inspection program for the County and sets forth fines and penalties for noncompliance. The draft regulations allow the Public Works Director to shut down activities if there are three or more documented violations in six months, or under emergency situations. The Director is authorized to issue fines up to $15,000 per day for each violation. The draft regulations do not specify how often each oil and gas facility would be inspected.
General feedback we have received from the public is that facilities should be shut down with a single violation regardless of the scale, and it was recommended that inspections occur monthly or quarterly at a minimum. Other recommendations from the public include shutting down a facility after five neighbor complaints in a 24-hour period about a particular issue. Others commented that they felt the $15,000 per day per occurrence was not enough to deter operators and recommended a higher amount, some as high as $100,000 per day.
Financial Assurances
The draft regulations set up a financial assurance requirement of $95,000 per well to cover the cost of Plugging and Abandonment (P&A). This amount is to be adjusted for inflation annually. The draft regulations included a consumer price index adjustment; staff will revise that to be the Colorado Construction Cost Index, which is more applicable to P&A construction activities. Additionally, the draft regulations require operators to provide evidence of general liability insurance with a minimum of $1 million per occurrence, and environmental liability coverage of at least $5 million per pollution incident.
General feedback from the public about financial assurances is that the proposed $95,000 in the draft code is not enough to cover the cost of plugging and abandoning (P&A) a well and suggestions ranged from $120-$130,000 to $500,000 per well. Others commented that the minimum insurance coverage requirements were not enough and should be raised.
The American Petroleum Institute (API) and Colorado Oil & Gas Association (COGA) submitted a joint comment letter in which they wished to remind the County that their authority does not include downhole work, including plugging and abandoning, as this is within the jurisdiction of the ECMC.
Other General Comments Not Related to the Draft Regulations
There were several comments related to setbacks from occupied structures, which are not part of this code amendment. Specifically, members of the community continued to press for longer setback distances between well pads and occupied structures. Requests for five miles and one mile have been received, although the Board evaluated these distances last year during rulemaking on setbacks and chose 3,000 feet as the required minimum setback from occupied structures. Others have requested that no provisions for shorter setbacks be allowed, such as for downgradient pads from reservoirs, and that all oil and gas applications be required to hold public hearings rather than being administratively approved.
There were many other comments related specifically to the Lowry Ranch CAP applications and comments for those applications are being reviewed under those specific applications and not within this venue for general rulemaking.
Schedule
The following is the tentative schedule moving forward for adoption of these regulations:
October 1, 2024 - Planning Commission Study Session
October 15, 2024 - Planning Commission Hearing
November 12, 2024 - BOCC Public Hearing
Fiscal Impact: There is no fiscal impact for this study session. Fiscal impact from the proposed rules is expected if an inspection program is set up. PWD has submitted a budget package for consideration of the 2025 County Budget and a study session on the proposed inspection program is scheduled for October 1, 2024.
Alternatives: The BOCC can 1) concur with the proposed changes made in the referenced regulations, 2) suggest/direct modifications to all or a portion of the draft regulations, 3) decline to give direction on these draft regulations.
Alignment with Strategic Plan:
☐Be fiscally sustainable
☐Provide essential and mandated service
☒Be community focused
Staff Recommendation: Staff recommends that BOCC consider the general themes from the public outreach and comment period and determine if any additional changes need to be made to the draft regulations prior to advancing to public hearing before the Planning Commission on October 15, 2024.
Concurrence: The County Attorney’s Office has reviewed this Board Summary Report.