5 Colo. Code Regs. § 1002-61.55
The provisions of sections 25-8-202(1)(d), (1)(I) and 25-8-501 to -504, C.R.S., provide the specific statutory authority for adoption of the revisions to Regulation 61. The Commission also adopted, in compliance with sections 25-4-103(4) and 25-8-202(8)(a), C.R.S., the following statement of basis and purpose.
BASIS AND PURPOSE
In this proceeding, the Commission considered proposed revisions to delay until June 12, 2006 the current March 10, 2005 deadline for the submission of applications for stormwater discharge permits for small oil and gas construction activities. The Commission decided to extend the deadline until June 30, 2005.
On March 10, 2003, the United States Environmental Protection Agency (EPA) finalized a rule postponing until March 10, 2005 the deadline for obtaining NPDES stormwater permits for oil and gas construction activity that disturbs at least one acre, but less than five acres of land. The Commission revised the Colorado Discharge Permit System Regulations, Regulation #61 (5 CCR 1002-61), to add section 61.4 , establishing a new Colorado deadline that reflected the then new federal deadline.
EPA postponed the federal rule permitting deadline in order to further evaluate (1) the significantly-higher-than-expected numbers of small oil and gas construction sites that will be affected by the rule, (2) the appropriate Best Management Practices (BMPs) for small oil and gas construction sites, and (3) the potential costs of implementing the BMPs for small oil and gas construction sites. On January 18, 2005, EPA issued a proposal to further delay until June 12, 2006 construction permit requirements for oil and gas activities that disturb between one and five acres of land. EPA proposed the delay because it has not completed its evaluation. On March 9, 2005, EPA finalized its proposed rule and delayed until June 12, 2006 its deadline for obtaining stormwater discharge permits for oil and gas activities that disturb between one and five acres of land. 70 Fed. Reg. 11560 (March 9, 2005).
Section 25-8-202(8)(a) of the Colorado Water Quality Control Act allows the Commission to adopt rules more stringent than corresponding enforceable federal requirements only if it is demonstrated at a public hearing, and the Commission finds, based on sound scientific or technical evidence in the record, that the more stringent state rule is necessary to protect the public health, beneficial use of water or the environment of the state.
The federal rule and the proposed state rule address precisely the same requirements for small oil and gas construction activities. The proposed state rule thus is directly related to a corresponding federal requirement for the purposes of section 25-8-202(8)(a). The Commission postponed the deadline for applications for these permits from March 10, 2005 to June 30, 2005. The permit applications will be due under state law approximately one year earlier than under federal law. Because the applications will be due when permit coverage otherwise would not be required under federal law, the rule adopted is more stringent than the corresponding federal requirement for the purposes of section 25-8-202(8)(a).
The Commission makes the following findings and conclusions regarding the requirements of section 25-8-202(8)(a). In making its determination, the Commission relied upon the entire record before it, but took specific note of the following evidence.
* Evidence produced by Gunnison County demonstrated that, if not properly managed, discharges from construction activity can impact the biological, chemical and physical integrity of receiving waters. This evidence includes EPA's analysis of water quality impacts from small construction sites in general (FR Vol. 64, No. 235, 68724-68731) and evidence of potential water quality impacts from specific oil and gas construction sites in Colorado. Sediment yields from smaller construction sites are as high or higher than the 20 to 150 tons/acre/year measured from larger sites. Siltation is clearly a significant cause of impairment in water quality in rivers and lakes. EPA, Report to Congress on the Phase II Storm Water Regulations, EPA 833-R-99-001, October, 1999, pp. 1-4. The Commission regards sediment deposition as a significant problem affecting water quality in the state.
* At the 2004 rate of permit issuance by the Colorado Oil and Gas Conservation Commission, a fifteen-month delay in stormwater permit requirements could result in substantial additional acreage disturbed by oil and gas construction activities that would not be covered by CDPS permits for stormwater discharges. That delay could have a significant impact on water quality that implementation of the stormwater permit program, along with appropriate planning and BMPs, could mitigate.
* Finally, Division staff stated that there are no significant differences in oil and gas construction sites versus other types of construction sites that would affect the potential sediment yield from such disturbed areas. Although the oil and gas industry has asked EPA to consider the short time frame for actual construction at most oil and gas sites, this does not take into account the time it can take (up to several years) for revegetation of disturbed areas in Colorado. In addition, no evidence was presented that the potential impacts on public health, beneficial use of water or the environment from oil and gas construction activities are significantly different from other small construction sites so as to warrant special consideration. Other small construction sites are already subject to the application deadline in the Commission's Regulation 61 to avoid adverse water quality impacts. EPA's postponement of the permitting deadline for oil and gas construction activity disturbing one to five acres, from March 10, 2005, to June 12, 2006 (70 Fed. Reg. 45, March 9, 2005) was not based on any concern that these sites pose any less threat to health, beneficial uses, or the environment than other small construction sites. The postponement was, instead, implemented in order to allow EPA to further evaluate (1) the economic impacts of the rule; (2) the legal and procedural implications associated with several options that the Agency is considering with regard to regulation of stormwater discharges from oil and gas-related construction sites; and (3) best management practices available to control stormwater discharges from these activities.
The Commission concluded that the record for this rulemaking provides sound scientific or technical evidence that establishing a deadline for stormwater discharge permit applications for oil and gas construction activities disturbing between one and five acres earlier than that established by EPA is necessary to protect the public health, beneficial use of water or the environment of the state.
Section 25-8-102(5) and 25-8-202(2), C.R.S., direct the Commission to consider the economic reasonableness of a regulatory action. In addition to its findings related to section 25-8-202(8)(a), the Commission concluded, based on the record of this proceeding, that implementing the permit program for small oil and gas construction sites without further delay is economically reasonable.
A representative of the oil and gas industry testified that oil and gas construction activities are already subject to requirements that result in implementation of controls that should avoid adverse stormwater impacts. To the extent that this is correct, there should be no substantial additional cost of control measures for meeting stormwater discharge permit requirements.
The testimony at the hearing also indicated that adequate information is now available about appropriate best management practices for small oil and gas construction activities. Division staff testified that the BMPs applicable to these sites do not differ substantially from BMPs for other construction activities.
The industry representative testified that the principal concern for oil and gas operators was the permitting burden associated with the stormwater program. Staff members of the Water Quality Control Division testified that dischargers are required to complete a two-page application, and that the Division's normal turnaround time for reviewing applications is ten days. There is no annual reporting requirement. Frequent inspections of the construction activity for compliance with the stormwater management plan are required only during active construction. Inspection frequency is reduced to once monthly after construction is completed. In order to make any costs for permitting more reasonable, the Division commonly allows stormwater discharge permit applicants to request permits for all facilities in a gas field rather than for each site independently.
No evidence was submitted quantifying unreasonable transaction costs of stormwater permitting in Colorado for this industry. Evidence was submitted by the Colorado Oil and Gas Association providing an estimate of national costs of compliance with stormwater regulations. However, no analysis of these costs was provided regarding the permitting costs specific to Colorado oil and gas operators. For example, the oil and gas industry representative stated that additional costs would be incurred due to requirements for consultation under the federal Endangered Species Act (ESA). However, those additional costs would not in fact be incurred because ESA consultation requirements do not apply to the issuance of a state stormwater discharge permit.
Evidence submitted by Gunnison County reflected a low stormwater permitting cost for industry compared to the other costs of oil and gas development and compared to the water quality benefits of prompt implementation of the permitting program.
Finally, the industry representative testified that rules promulgated by the Colorado Oil and Gas Conservation Commission (COGCC) intended to prevent erosion from these construction activities provide sufficient protection for water quality. The Commission concluded that those rules do not provide an equivalent level of protection to the stormwater permit program. Specifically, the Commission believes that the applicable COGCC rules do not necessarily address all water quality effects of these construction activities. In addition, the Commission strongly believes that the discharge permit program established under the Colorado Water Quality Control Act provides more effective protection of water quality in the state.
Although the Commission concluded that prompt implementation of the stormwater program for oil and gas construction activities is appropriate, the Commission also believes that it is appropriate to provide a reasonable time for affected parties to prepare and submit applications for stormwater discharge permits. Therefore, the Commission extended the application deadline until June 30, 2005. Because this new deadline will not become effective under state law until May 30, 2005, the Commission intends that the Division will exercise its enforcement discretion with respect to the period between the March 10, 2005 application deadline and the effective date of the June 30, 2005 deadline.
PARTIES TO THE RULEMAKING HEARING
5 CCR 1002-61.55