Bureau of Land Management

A 10-year old agreement between Colorado and the federal government was recently extended, bringing at least a temporary end to uncertainty about how oil and gas production on the Western Slope would be regulated. The BLM also told Western Wire today that a new MOU is in the works.

On June 25, Bureau of Land Management (BLM) State Director Jamie Connell put the final signature on a document extending a memorandum of understanding (MOU) between the federal bureau, the U.S. Forest Service (USFS), and the Colorado Oil and Gas Conservation Commission (COGCC). The extension pushes the MOU’s expiration date back to December 31, 2019 and maintains a state role in regulating oil and natural gas development on federal and tribal lands.

Western Wire initially reported this week that the MOU had expired, based on information from a state senator and others in the federal government. BLM said in an email Thursday it “initiated conversations with COGCC and USFS on May 20, 2019 to begin working on the extension.”

The extension, which does not alter the terms of the MOU, gives the state and federal governments some breathing room to consider a new agreement, which BLM said is occurring. If they are unable to reach one, however, the MOU would expire at the end of the year, something that could benefit oil and gas producers on the Western Slope.

The agreement between the BLM, the USFS, and COGCC coordinates permitting and regulatory oversight between the parties. It grants state officials limited input into permitting on federal lands, including reservations and national forests, areas where Colorado would otherwise not have jurisdiction.

If this agreement expires, the BLM and the USFS would have sole regulatory authority over the permitting and regulation of production on federal lands.

The uncertain future of the agreement reflects the fact that certain portions of the document seem to have become overlooked.

Although the terms of the MOU require semi-annual meetings among representatives from the BLM’s Colorado state office, the USFS, and the COGCC, the BLM’s Colorado office tells Western Wire that they have not held formal coordination meetings recently, something industry sources affirm. These meetings offer a chance for the state and federal governments to try to balance two very different sets of energy goals by providing a forum for the COGCC to voice its opinions about permitting on federal and reservation lands.

While the Trump administration has strongly supported domestic oil and gas production, Governor Jared Polis’s (D-Colo.) administration has given the industry a cold reception since taking office.

Polis signed Senate Bill 181, a major overhaul of the state’s oil and gas regulations, in April. The legislation gives local governments far more authority over decisions about oil and gas permitting, which had previously been reserved for the most part at the state level. SB-181 also reduced the presence of industry representatives on the COGCC, the state board which approves drilling permits and regulations. While proponents maintained during the SB-181 debate that it would not result in a permitting moratorium or ban, the number of approved permits has slowed significantly since the new rules went into effect.

That could reduce the odds of a long-term MOU being signed.

“Particularly after [Oil and Gas Reform Bill] 181, I think that the federal government may not be comfortable with an MOU. Certainly permitting [has become an area of tension,]” said Christi Zeller, executive director of the Energy Council told Western Wire. “The permitting purpose of the MOU was to assist with a working relationship by those that regulate the oil and gas exploration on federal lands…We knew it was never a primary agency action, but it was to help with procedural enforcement.”