2023 Colorado Revised Statutes › Title 34 - MINERAL RESOURCES (§§ 34-1-100.5 — 34-70-101) › OIL AND NATURAL GAS (§§ 34-60-101 — 34-70-101) › CONSERVATION AND REGULATION (§§ 34-60-101 — 34-64-108) › Article 60 - OIL AND GAS CONSERVATION (§§ 34-60-101 — 34-60-143) › Section 34-60-133 - Orphaned wells mitigation enterprise - creation - powers and duties - enterprise board created - mitigation fees - cash fund created - rules - definitions - legislative declaration

(1)
Enterprise created.
(a)
The orphaned wells mitigation enterprise is created in the department for the purpose of:
(I)
Imposing and collecting mitigation fees;
(II)
Funding the plugging, reclaiming, and remediating of orphaned wells and marginal wells in the state;
(III)
Ensuring that the costs associated with plugging, reclaiming, and remediating orphaned wells and marginal wells are borne by operators in the form of mitigation fees; and
(IV)
Determining the amount of mitigation fees.
(b)
The enterprise board, in consultation with the commission, shall administer the enterprise in accordance with this section.
(c)
(I)
The enterprise constitutes an enterprise for purposes of section 20 of article X of the state constitution so long as it retains the authority to issue revenue bonds and receives less than ten percent of its total revenues in grants, as defined in section
24-77-102 (7)
, from all Colorado state and local governments combined. So long as it constitutes an enterprise, the enterprise is not a district for purposes of section 20 of article X of the state constitution.
(II)
The enterprise is authorized to issue revenue bonds for the expenses of the enterprise, secured by revenue of the enterprise.
(1.5)
Legislative declaration.
The general assembly finds and declares that:
(a)
Orphaned wells and marginal wells present risks to public health, safety, and welfare, including risks to the environment and wildlife resources;
(b)
Environmental justice is a priority for the state, and the enterprise board should administer this section in a manner that reduces burdens on overburdened communities;
(c)
The enterprise helps mitigate risks by plugging, reclaiming, and remediating orphaned wells and those marginal wells that are at the highest risk of becoming orphaned;
(d)
All oil and gas wells will require plugging and reclaiming at the end of their useful life;
(e)
Many oil and gas wells will require remediation at the end of their useful life;
(f)
Pursuant to section 34-60-106, all operators are required to provide financial assurance demonstrating that the operators are financially capable of fulfilling every obligation imposed on the operator pursuant to this article 60, including an operator's plugging, reclamation, and remediation obligations; and
(g)
The services that the enterprise provides benefit all operators in the state by:
(I)
Mitigating the risks of an operator's oil and gas well becoming an orphaned well; and
(II)
Plugging, reclaiming, and remediating qualifying marginal wells and eliminating the risk of such qualifying marginal wells becoming orphaned wells.
(2)
Powers and duties.
In addition to any other powers and duties specified in this section, the enterprise board has the following general powers and duties on behalf of the enterprise:
(a)
To adopt procedures for conducting its affairs;
(b)
To acquire, hold title to, and dispose of real and personal property;
(c)
In consultation with the director of the commission or the director's designee, to employ and supervise individuals, professional consultants, and contractors as are necessary in its judgment to carry out its business purposes;
(d)
To contract with any public or private entity, including state agencies, consultants, and the attorney general's office, for professional and technical assistance, office space and administrative services, advice, and other services related to the conduct of the affairs of the enterprise;
(e)
To seek, accept, and expend gifts, grants, donations, or other payments from private or public sources for the purposes of this section, so long as the total amount of all grants from Colorado state and local governments received in any state fiscal year is less than ten percent of the enterprise's total annual revenue for the state fiscal year. The enterprise shall transmit any money received through gifts, grants, donations, or other payments to the state treasurer, who shall credit the money to the fund.
(e.5)
To issue guidance establishing standards for marginal wells to qualify for funding pursuant to subsection (1)(a)(II) of this section. In establishing these standards, the enterprise board shall consider:
(I)
An oil and gas well's location in or near a disproportionately impacted community or a highly populated area; and
(II)
An oil and gas well's risk of adverse impacts on public health, safety, welfare, the environment, and wildlife resources; and
(f)
To have and exercise all rights and powers necessary or incidental to or implied from the specific powers and duties granted by this section.
(3)
Enterprise board created - membership - repeal.
(a)
The orphaned wells mitigation enterprise board is created to administer the enterprise. The enterprise board includes the following five members:
(I)
The chair of the commission;
(II)
The director of the commission or the director's designee;
(III)
An individual with substantial experience in the oil and gas industry, to be appointed by the governor and confirmed by the senate;
(IV)
A local government official, preferably from a jurisdiction that has oil and gas development and orphaned wells, to be appointed by the governor and confirmed by the senate; and
(V)
An individual with formal training or substantial experience in land reclamation projects, to be appointed by the governor and confirmed by the senate.
(b)
Repealed.
(c)
The members of the enterprise board described in subsections (3)(a)(III), (3)(a)(IV), and (3)(a)(V) of this section shall each serve terms of three years; except that the initial term of the member appointed pursuant to subsection (3)(a)(III) of this section is one year, and the initial term of the member appointed pursuant to subsection (3)(a)(IV) of this section is two years. In the event of a vacancy, the governor may appoint an individual to complete the term of the member whose seat has become vacant.
(d)
An individual may be appointed as a member of the enterprise board pursuant to subsection (3)(a)(III), (3)(a)(IV), or (3)(a)(V) of this section an unlimited number of times.
(e)
Enterprise board members serving pursuant to subsections (3)(a)(III), (3)(a)(IV), and (3)(a)(V) of this section may receive compensation from the department on a per diem basis for reasonable expenses actually incurred in the performance of duties required of enterprise board members under this section.
(f)
The governor shall select a member of the enterprise board to serve as chair of the enterprise board.
(4)
Enterprise board - duties.
In addition to administering the enterprise, at least annually, the enterprise board shall:
(a)
Consider whether the amounts of the mitigation fees should be increased or reduced, based on current circumstances and reasonably anticipated future expenditures from the fund;
(b)
If the enterprise board determines that an increase or reduction of the mitigation fee amounts is warranted, adjust the mitigation fee amounts; except that the enterprise board shall not set the fee amounts in an amount that results in a violation of subsection (6)(b) of this section; and
(c)
Advise the commission of the outcome of the enterprise board's deliberations pursuant to this subsection (4).
(5)
Mitigation fees.
(a)
On or before August 1, 2022; on or before April 30, 2023; and on or before April 30 each year thereafter, each operator shall pay a mitigation fee to the enterprise for each well of an operator that has been spud but is not yet plugged and abandoned, in accordance with rules of the commission. Mitigation fees due by August 1, 2022, shall be paid in the following amounts:
(I)
For operators with production that is equal to or less than a threshold to be determined by rules of the commission, one hundred twenty-five dollars for each well; and
(II)
For operators with production that exceeds a threshold to be determined by rules of the commission, two hundred twenty-five dollars for each well.
(b)
Mitigation fees paid after August 1, 2022, shall be paid in the amounts described in subsection (5)(a) of this section, as such amounts may be adjusted by the enterprise board pursuant to subsection (4) of this section.
(c)
The enterprise shall transfer all money collected as mitigation fees pursuant to this subsection (5) to the state treasurer, who shall credit the money to the fund.
(6)
Cash fund.
(a)
The orphaned wells mitigation enterprise cash fund is created in the state treasury. The fund consists of:
(I)
Money received as mitigation fees;
(II)
Any money received from the issuance of revenue bonds, as described in subsection (1)(c)(II) of this section;
(III)
Any gifts, grants, or donations received pursuant to subsection (2)(e) of this section; and
(IV)
Any other money that the general assembly may appropriate or transfer to the fund.
(b)
The total amount of money credited to the fund as mitigation fees may not exceed one hundred million dollars in the first five fiscal years of the enterprise, beginning with the 2022-23 state fiscal year.
(c)
The state treasurer shall credit all interest and income derived from the deposit and investment of money in the fund to the fund. Any unexpended and unencumbered money remaining in the fund at the end of a fiscal year remains in the fund and shall not be credited or transferred to the general fund.
(d)
Money credited to the fund is continuously appropriated to the fund for use by the enterprise and shall be expended to:
(I)
Provide plugging, reclaiming, and remediating services at the request of the director of the commission;
(I.5)
Plug, reclaim, and remediate qualifying marginal wells, as determined based on factors that include:
(A)
The oil and gas well's location in or near a disproportionately impacted community or a highly populated area; and
(B)
The oil and gas well's risk of adverse impacts on public health, safety, welfare, the environment, and wildlife resources;
(II)
Pay the enterprise's reasonable and necessary operating expenses; and
(III)
Otherwise exercise the enterprise's powers and perform its duties as authorized by this section.
(7)
Rules.
The commission shall promulgate rules for the implementation of subsection (5)(a) of this section and as may be otherwise necessary to implement this section.
(8)
Definitions.
As used in this section, unless the context otherwise requires:
(a)
"Department" means the department of natural resources.
(b)
"Enterprise" means the orphaned wells mitigation enterprise created in subsection (1) of this section.
(c)
"Enterprise board" means the orphaned wells mitigation enterprise board created in subsection (3) of this section.
(d)
"Fund" means the orphaned wells mitigation enterprise cash fund created in subsection (6) of this section.
(d.5)
"Marginal well" means an oil and gas well that presents a high risk of becoming orphaned.
(e)
"Mitigation fee" means a mitigation fee authorized and imposed pursuant to subsection (5) of this section.
(f)
"Orphaned well" means an oil and gas well, location, or facility in the state for which no owner or operator can be found or the owner or operator is unwilling or unable to pay the costs of plugging, reclaiming, and remediating.
Amended by 2024 Ch. 183,§ 14, eff. 5/16/2024, app. to enforcement actions commenced by the division of administration in the department of public health and environment and the energy and carbon management commission on or after 5/16/2024.
Added by 2022 Ch. 331, §2, eff. 7/1/2022.