BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 9:00 a.m. on August 12, 2010, in the Adams County Economic Development Offices, 12050 N. Pecos St., Suite 200, Westminster, Colorado, for an order allowing a variance from Rule 804., Visual Impact Mitigation, to exempt all operators within the County from painting production facilities, which are observable from any public highway, with uniform, non-contrasting, non-reflective color tones and with colors matched to but slightly darker than the surrounding landscape by September 1, 2010.

FINDINGS

The Commission finds as follows:

1.    The Board of County Commissioners of Cheyenne County (“Cheyenne County”), as applicant herein, is an interested party in the subject matter of the above‑referenced hearing.

2.    Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

3.    The Commission has jurisdiction over the subject matter embraced in said Notice, and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order pursuant to the Oil and Gas Conservation Act.

4.  Rule 804. of the Commission requires production facilities, regardless of production date, which are observable from any public highway to be painted with uniform, non-contrasting, non-reflective color tones, and with colors matched to but slightly darker than the surrounding landscape by September 1, 2010. 

5.  Further, Rule 801. provides that any Colorado county, home rule or statutory city, town, territorial charter or city and county may, by application to the Commission, seek a determination that any rules and regulations of the 800-Series should not apply to oil and gas activities occurring within the boundaries, or any part thereof, of any Colorado county, home rule or statutory city, town, territorial charter or city and county, such determination to be based upon a showing by any Colorado county, home rule or statutory city, town, territorial charter or city and county that, because of conditions existing therein, the enforcement of the rule and regulation is not necessary within the boundaries of any Colorado county, home rule or statutory city, town, territorial charter or city and county for the protection of public health, safety and welfare.

6.  Rule 503.b.(5) provides that any local government within whose jurisdiction the affected operation is located may seek a variance from the Commission.

7.  On June 7, 2010, Cheyenne County, filed a written request, by its representative, for a Commission hearing to seek a variance from Rule 804. to exempt all operators within the county from painting production facilities, which are observable from any public highway, with uniform, non-contrasting, non-reflective color tones, and with colors matched to but slightly darker than the surrounding landscape by September 1, 2010.  Further, it is alleged that the enforcement of Rule 804. is not necessary within the boundaries of the county for the protection of public health, safety and welfare.

8.         Cheyenne County also submitted a copy of its Resolution #2010-09, adopted on May 28, 2010, that formally requested an exemption from Rule 804.

                        9.         Cheyenne County’s resolution states that ad valorem taxes collected from the operators of producing oil and gas wells are an important source of revenue for the county and that Cheyenne County believes the requirements of the rule would force most operators to incur additional operating costs, that could result in the premature plugging and abandonment of economically marginal producing wells.

                        10.       At the August 12, 2010 hearing of the Commission, Jerry Allen, a Cheyenne County Commissioner, further testified that: 1) Cheyenne County is rural in nature; 2) oil and gas represents about 67% of assessed value; 3)  tank and ancillary feature aesthetics are not a big concern; 4)  the cost of conducting the required painting is of concern to operators in the county; 5) there is fear that the cost could cause low producing wells to be shut in; and 6) the county commissioners do not believe that enforcement of the rule as written is necessary for the protection, health and safety of citizens and residents of Cheyenne County.

                        11.       Mr. Allen further testified that Cheyenne County’s request is made pursuant to, and consistent with authority granted in Rule 801.

                        12.  Based on the facts stated in the verified application and the testimony and exhibits presented at the hearing, the Commission should allow Cheyenne County a variance from Rule 804 for what the Commission considers to be a land use matter.  The Commission should order that operators in Cheyenne County do not have to meet the deadline of September 1, 2010 or the paint colors specified in Rule 804.  The variance does not, however, eliminate the need for painting production facilities if the Commission determines on a case by case basis that certain production facilities should be painted to protect public health, safety, and welfare or the environment.

ORDER

NOW, THEREFORE IT IS ORDERED, that the relief requested by the Board of County Commissioners of Cheyenne County is granted as established by the terms of this Order.

IT IS FURTHER ORDERED, that the color of the oil and gas production facilities located in Cheyenne County, regardless of construction date, which are observable from any public highway, need not be painted in accord with the mandates of Rule 804. 

                         IT IS FURTHER ORDERED, that the paint on said production facilities shall be kept in good condition and subject to regular, effective maintenance.

.IT IS FURTHER ORDERED, that the provisions contained in the above order, shall become effective forthwith.

                        IT IS FURTHER ORDERED, that the Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

                        IT IS FURTHER ORDERED, that under the State Administrative Procedure Act the Commission considers this order to be final agency action for purposes of judicial review within thirty (30) days after the date this order is mailed by the Commission.

                        IT IS FURTHER ORDERED, that an application for reconsideration by the Commission of this order is not required prior to the filing for judicial review.

                        ENTERED this__________ day of September, 2010, as of August 12, 2010.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By____________________________________         

                                                                                    Carol Harmon, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

September 8, 2010