Colorado Rising letter of April 3, 2020

April 3, 2020

Larimer County Board of County Commissioners

Attn: Commissioners Johnson, Kefalas, and Donnelly

PO Box 1190

Fort Collins, CO 80522-1190

johnsosw@co.larimer.co.us

jkefalas@larimer.org

donnelt@co.larimer.co.us

Re: Public Comment on Draft of Oil and Gas Regulations

Dear Commissioners:

Colorado Rising for Communities is a 501(c)(3) nonprofit organization dedicated to protecting our communities and our environment from fossil fuel extraction. Please allow this letter to serve as our public comment on the final draft of proposed oil and gas regulations that would amend the Land Use Code Regulations.

As we have previously advised this Commission, a review of your proposed regulations demonstrates that the Commission misapprehends the mandates of SB 19-181, and appears to favor the oil and gas industry’s interests over that of its residents. This argument is not without support.

As we have previously noted, the input for these regulations comes from the Larimer County Oil & Gas Task Force. This task force is heavily influenced by members with interests in the fossil fuel industry. You, as commissioners, have received complaints from community members about the heavily industry-influenced task force. It is astounding that despite these complaints, the Commission has allowed this task force to continue in its present form.

Also, we have previously noted that the task force’s charter, adopted on March 20, 2019, is out of compliance with state law. In the Purpose and Authority section of the charter, it states: “The County recognizes that oil and gas has been determined to be a matter of statewide concern and that the Colorado Oil and Gas Conservation Commission (‘COGCC’), along with other state agencies, is responsible for the regulation of oil and gas development and operations at the state level.”

We again reiterate that with the passage of SB 19-181, the task force charter is not in compliance with state law, the charter has not been changed, and it appears as though the task force abdicated its responsibility to meaningfully consider the effects of SB 19-181 after it became law on April 16, 2019. Any recommendations coming from this industry-laden task force should be viewed as suspect, at best.

With respect to the final draft regulations, we are concerned that the final draft still mentions public health, safety, “general” welfare,[1] private property rights, protects environment and welfare, and minimizes adverse impacts, there is no mention of cumulative impacts. It is unfortunate that such respected elected bodies, such as this Commission, fail/refuse to understand that oil and gas operations have a cumulative, disastrous impact on our environment and communities. The final rules simply must abide by the new protective changes in state law, but also reflect the scientific understanding that fossil fuel extraction is harming our planet to the point that we are at an existential crisis.

With that said, and coming from a position of truly protecting our environment and the public, we offer the following comments related to the final draft of proposed rules.

Proposed Rule 17.1(C)(2)

SB 19-181 specifically prioritizes public health, safety, welfare, environment, and wildlife resources over oil and gas operations. § 34-60-102(1)(a)(I), C.R.S. (2019). As you are specifically aware, SB 19-181 establishes a floor of protection. That being said, there is no language in SB 19-181 that gives local government an “out” to skirt the mandates of SB 19-181. Your language in Rule 17.1(C)(2) that mentions regulating oil and gas operators without “unreasonably discriminating against” them is an overt attempt to water down the protective nature of SB 19-181. Exactly what is meant by “unreasonably discriminating against”? It seems that this language is so vague and ambiguous that it can be arbitrarily and capriciously applied.

Proposed Rule 17.2(F)

We again protest Proposed Rule 17.2(E), which allows for a biased third-party to be retained by the Commission for technical expert review. There is no guardrails for objective and neutral review. Instead, it can be used as a rubberstamp under the guise of “expert review,” which does not serve the interest of public health, safety, welfare, environment, or wildlife resources. We invite the Commission to change the language to “object third-party” or “neutral third-party” who has the technical knowledge about oil and gas operations, but will honor the mandates of SB 19-181, which protects public health, safety, welfare, environment, and wildlife resources above the interests of the industry.

Proposed Rule 17.3(B)

Proposed Rule 17.3 wholly fails to protect community and the environment. One of our functions as an environmental protection nonprofit is to litigate cases to protect communities from the hazards of fossil fuel extraction. One such case involves a community organization we represented in Broomfield, Colorado. At the beginning of 2019, and in the course of litigating this case against an oil and gas operator in front of the COGCC, we sought and received discovery from the operator related to public health and safety. To our surprise, the operator had numerous documents that discussed health impacts and an academic study on Colorado’s setback rules. A copy of those documents can be accessed via the following Dropbox link: https://www.dropbox.com/sh/zbuuw8ktunv5wf0/AADP7Omnex-nZOk4zoX572wca?dl=0.

Setback Study:

The setback study focused on three states: Colorado, Texas, and Pennsylvania. The purpose of the study was to catalogue the numerous oil and gas accidents occurring in each state, the radius of the accident, and whether the state’s setback rules were sufficiently protective of human populations. The study examined: 1) Blowouts and Evacuations; 2) Thermal Modeling; 3) Vapor Dispersion; and 4) Air Pollution. It should be noted that the study was published in 2016. Since that time there literally have been dozens of oil and gas accidents in Colorado, some leading to fatalities and evacuations of communities. The conclusion of the study was that Colorado’s setback regulations are not nearly protective of communities. A copy of the study is provided for your convenience.

The proposed setbacks in the final draft are still woeful. Exactly, what scientific studies led the Commission to believe that a 1,000 foot setback sufficiently protects public health, safety, welfare, and wildlife resources? In fact, the Colorado Department of Public Health and Environment issued a study that indicated that individuals within 2,000 feet of oil and gas operation can be adversely affected by oil and gas operations. Also, why are the setbacks from actual structures and not from property boundary lines. Many properties not only have buildings situated on their properties, but also playgrounds, sports fields, or other similar areas where children play and community congregate. Your rules literally allow oil and gas operations to exist feet away from these areas simply because you are measuring from the building and not the property line. Such setbacks are entirely anathema to public health, safety, welfare, environment, and wildlife resources.

Risk Assessment:

Also received from the oil and gas operator was a risk assessment of oil and gas drilling within the City and County of Broomfield published in August 2017. As you may be aware, Broomfield has had significant problems with one oil and gas operator. The risk assessment commissioned by Broomfield looked at accidents throughout the nation and in Colorado involving oil and gas activities. Some of the accidents resulted in a loss of hundreds of millions of dollars and a loss in life. The conclusion of the risk assessment was as follows:

"Onshore oil and gas drilling operations present significant risk exposure,

whether it is potential harm to the environment, citizens, contractors, or

property. This requires higher limits of insurance and robust mitigations.

Broomfield is a special case, as it faces the abovementioned risks, while

having drilling operations in close proximity to residential areas with

growing density. This adds a new layer of risk to citizens, their property,

and quality of life and makes comparisons to existing loss data

challenging.

At first glance, the insurance and bonding recommendations herein may

seem high, but after analyzing loss data and the special circumstances

faced, we are convinced that they are necessary. These requirements not

only serve Broomfield and its citizens, but also the operators and their

contractors and subcontractors by requiring higher coverage to finance

losses in an increasingly risky environment for which they may not

otherwise have given consideration."

It should not escape your attention that oil and gas operators have been penalized numerous times over the past couple of years for safety violations. Such information should weigh heavily on your decision making process.

Environment and Health Studies:

Additionally, the Dropbox file provides a number of climate and health studies for your review. These studies are as recent as 2018. Of course, many other studies have come out since the initial litigation, and demonstrate the adverse climate and health consequences related to fracking operations. For example, the University of Colorado School of Public Health published a study in July 2019 linking oil and gas operations and child heart defects.[2] Larimer County has a lot of young ones and a lot of families looking to have children. You can draw your own conclusions about how Larimer County families might feel with fracking operations 1,000 feet from their neighborhoods, and knowing that Larimer County was aware of this concerning study. The bottom line is that the overwhelming evidence demonstrates that fracking is having a dire effect on our environment and on the health of our communities.

Colorado Rising cannot underscore how every fracking operation is a catastrophic accident waiting to happen. For example, in February 2020, one oil and gas operator suffered a massive explosion at an oil and gas site in Weld County. In December 2019, seven individuals were injured in a fire at another oil and gas site near the Boulder-Weld county line. In July 2019, one person was dead at an oil site in Weld County that resulted in a fire. Of course, there is the Firestone explosion that killed two people. This explosion also was caused by oil and gas activities. Just within the past decades, there have been dozens of accidents at oil and gas sites that have resulted in explosions , release of toxic chemicals, and the loss of life.

As I have previously stated, having served as an elected official, I understand the importance of balancing interests. However, I know that the environment and the health of our communities outweighs all other interests. The proposed setbacks are not sufficient to protect Larimer County’s communities and, sadly, the first big accident will prove my point if the Commission does not listen to reason and the evidence. Frankly, you will be held responsible for any oil and gas catastrophe, and people will be reminded that it was your sad setback rules that failed to protect people.

Proposed Rule 17.3(C)(3)(b), (4) and (6)

It appears by the proposed language of these rules, the Commission wishes to continue under the old regime of the Colorado Oil and Gas Conservation Act (the “Act”), instead of adhering to the changes made by SB 19-181. Flaring is not acceptable. It is wasteful. It has adverse impacts on the environment. Your proposed rule allows for flaring in emergencies or “upset conditions.” There is no definition provided or guardrails related to such language. At any given point, the oil and gas industry will use the terms “emergency” or “upset conditions” to justify flaring. The Commission need to be unambiguous as to what these terms mean.

Also, the Commission uses the term “technically infeasible.” This language was specifically taken out of the Act. Your attempts to place the language in your proposed rules is a violation of SB 19-181. As local governments have been advised, SB 19-181 establishes a floor of protection. Larimer County does not have the authority to go below the floor or to create a basement. The “technically feasible” language must be removed from the proposed regulations.

Along the same vein of ambiguous language, Proposed Rule 17.3(C)(5)(a)-(g) is rife with terminology that is vague and ambiguous. Exactly what is meant by “minimizing,” “reducing,” and “delaying”? It is noted that the proposed final rule includes baseline data. However, what exactly are the enforcement mechanisms if an oil and gas operator fails to meet standards of emissions reductions? Without enforcement mechanisms, this proposed rule is all bark and no bite.

Proposed Rule 17.3(F)

As with the Second Draft Proposed Rules, this final draft fails to take into account the cumulative impacts on water supply and those effects on public health, safety, welfare, environment, and wildlife resources. At least one court has taken notice that one well requires approximately 10 million gallons of water for fracking operations. That does not take into account the multiple wells on one pad and the number of times one well might be fracked. Obviously, such an enormous amount of water takes from the public water supply, from the environment, and from wildlife resources. Hence, this becomes a public welfare issue.

In many, if not all cases, the water used in fracking operations cannot be safely returned to our natural cycle. Larimer County does not have the right to ignore these impacts. Water is a precious property right in the state of Colorado. But, no property right can be used in a manner that harms community. Keystone Bituminous Coal Assoc. v. DeBenedictis, 480 U.S. 470, 491-92 (1987) (“Long ago it was recognized that ‘all property in this country is held under the implied obligation that the owner’s use of it shall not be injurious to the community.’”).

Thus, the County must include a provision that addresses not only water quality, but also water supply.

Additionally, this proposed rule fails to take into account radioactive brine and toxic waste produced by oil and gas activities. In a stunning Rolling Stones report, it was found that the oil and gas industry, specifically involving fracking, produced a trillion gallons of toxic waste per year.[3]

Public health, safety, welfare, environment, and wildlife resource protections must

include some regulation surrounding the safe storage and removal of radioactive and toxic

materials produced as a result of oil and gas activities. A failure to proposed such regulations is a

detriment to Larimer County and its residents.

Proposed Rule 17.3(V) and Rule 17.6

As we have previously indicated, this proposed language simply is unacceptable. Larimer County, if only to protect public welfare, must require that oil and gas operators provide detailed financial information about the health of their respective companies. Such information should include, but is not limited to: 1) assets; debts; revenues; stock market information; and loans. The information provided should be more than the general information found in SEC filings.

This information does not only cover reclamation and remediation, but it also covers the start, middle, and end of any oil and gas operation. § 34-60-106(13)(a)-(f). There are oil and gas companies that have lost over 80 percent of their value these past few years. They are drowning in debt.[4] Investors are not funding oil and gas operations. Without securing financial information from the birth-to-death of an operation, what will happen if the operator files for bankruptcy in the middle of an operation? Who’s left on the hook?

Colorado has suffered the bust of this industry several times over, and at least once within the past decade. Without adequate financial assurances, Larimer County runs the risk of granting permit applications to an oil and gas producer who begins operations, files for bankruptcy and leaves local and state taxpayers to foot the bill for its messes. It is your fiduciary duty owed to your constituents to gather as much data on each and every single operator to ensure that it is financial capable of starting, completing, and reclaiming a project.

With respect to bonding, in Colorado, an oil and gas operator is required to place a $10,000-$20,000 bond on individuals wells, depending on depth; a $60,000 state-wide blanket bond for less than 100 wells, or $100,000 state-wide blanket bond for more than 100 wells.[5]

There are several purposes for the bond, but one being to plug abandon wells and to remediate damages caused by oil and gas operations. In addition, operators are required to maintain general liability insurance of $1 million per occurrence to cover property damage and bodily injury to third parties.[6] The problem with these bonding and insurance rates is that they are utterly inadequate for what is required.

As we previously advised you, in a Denver Post report, COGCC estimated that each abandoned vertical well in Colorado would cost $82,500 to plug and reclaim.[7] In 2018, then- Governor Hickenlooper signed an executive order directing COGCC to categorize each orphaned well site and aim to clean up high and medium priority sites by July 2023.8 In the Executive Order, it was estimated that the total cost to plug, remediate, and reclaim these orphaned wells and sites is over $25 million.[9] A striking fact is that the Commission’s data showed “the average cost to plug an orphaned well is six times greater than the amount of financial assurance held by the State.”[10]

In 2018, the Colorado Legislature changed the law to allow the COGCC to spend more money on plugging and remediating orphaned wells and sites. The previous annual limit was just $445,000, and it was increased to $5 million.[11] The legislature’s appropriation was for 263 orphaned wells and 365 associated orphaned identified sites.[12] This $5 million figure represents taxpayer dollars being spent to clean up the mess left by the oil and gas industry. I know, I was there along with then-Senator John Kefalas.

Yet, what is missing from the equation is that Colorado is home to approximately 60,000 active oil and gas wells and over 20,000 abandoned wells.[13] The abysmally low bonding amount means that taxpayers will be shouldering additional hundreds of millions of dollars to clean up after this industry for decades to come.

On a national level, a study commissioned by the Center for Western Priorities finds that reclaiming oil and gas wells on U.S. public lands could cost a potential $6.1 billion, which is far more than the $162 million in reclamation bonds paid by oil and gas operators.[14]

With this said, and along the lines of your honoring your fiduciary duties, Larimer County must require each operator to provide a minimum bond of $270,000 per well, which is the average cost the federal government is spending to plug and remediate each abandoned horizontal well.15 Your failure to require adequate bonding, financial assurances, and insurance will violate the mandate that public health, safety, and welfare supersedes industry interests.

If this Commission is merely looking at oil and gas operations in terms of reclamation,

then a legal challenge will be forthcoming.

In sum, Commissioners, I understand the great amount of work required to draft these regulations. Just like the second draft, this final draft falls short of the mandates of SB 19-181. In fact, to truly protect the public health, safety, welfare, environment, and wildlife resources from the cumulative adverse effects of fossil fuel extraction, a ban or moratoria should be debated rather than regulations allowing further fossil fuel extraction. SB 19-181 gives local governments the power to enact bans and moratoria.

Should you have any question or comments, please do not hesitate to contact me at your earliest convenience at (303) 895-7044. I thank you for your time and attention in this matter.

Sincerely,

Joseph A. Salazar

Executive Director

[1] It is unknown what is meant by “general” welfare in the second draft of the proposed regulations. SB 19-181 does not remotely add the word “general” before “welfare.” It seems, then, that the inclusion of the word “general” is meant to water down the protective language of SB 19-181.

[2] https://www.cpr.org/2019/07/19/cu-anschutz-study-suggests-link-between-oil-and-gas-developments-and-child- heart-defects/

[3] https://www.rollingstone.com/politics/politics-features/oil-gas-fracking-radioactive-investigation-937389/

[4] https://www.wsj.com/articles/oil-and-gas-bankruptcies-grow-as-investors-lose-appetite-for-shale-11567157401

[5] https://cogcc.state.co.us/documents/about/TF_Summaries/GovTaskForceSummary_Permitting_Bonding.pdf

[6] Id.

[7] https://www.denverpost.com/2018/07/14/orhpan-oil-gas-wells-growing-problem/

[8] https://www.colorado.gov/governor/sites/default/files/executive_orders/d_2018-012_directing_the_colorado_oil_and_gas_conservatism_commission_to_act_to_plug_remediate_and_reclaim_orph aned_oil_and_gas_wells_and_sites.pdf

[9] Id.

[10] Id.

[11] https://apnews.com/b10ea1ccbca9425abac258aff389b0f4

[12] https://cogcc.state.co.us/documents/library/Technical/Orphan/Orphaned_Well_Program_FY2018_Annual_Report_ 20180831.pdf

[13] https://www.denverpost.com/2017/05/01/oil-gas-wells-colorado-map/ 14 http://westernpriorities.org/bondingreport/ 15 https://www.gao.gov/assets/700/691810.pdf