2 Colo. Code Regs. § 404-1-218

Current through Register Vol. 47, No. 20, October 25, 2024

Section 2 CCR 404-1-218 - FORM 9, TRANSFER OF OPERATORSHIP

a. Definitions

(1) For the purposes of this Rule 218, "Transferable Items" include but are not limited to:

A. Approved, unexpired Form 2, Application for Permit to Drill; Form 2A; Form 15, Earthen Pit Report/Permit; and Form 28, Centralized E&P Waste Management Facility Permit (collectively "Permits");

B. Wells;

C. Oil and Gas Locations;

D. Oil and Gas Facilities;

E. Off-Location Flowlines;

F. Open Remediation projects;

G. Unresolved Spills and Releases;

H. Unresolved Field Inspection Reports with outstanding corrective actions;

I. Unresolved warning letters;

J. Unresolved Notices of Alleged Violation; and

K. Any item listed in Rule 218.a.(1).A-J that is related in the Commission's records to another Transferable Item proposed for transfer.

b.Form 9, Transfer of Operatorship - Intent. A Selling Operator will notify the Commission about the transfer of any Transferable Item associated with its Oil and Gas Operations to a Buying Operator by filing a Form 9, Transfer of Operatorship - Intent, with the Commission at least 30 days, or as soon as practicable, before the anticipated transfer date. The Form 9 - Intent will include the Selling Operator's understanding of the following information at the time the Selling Operator submits the Form 9 - Intent to the Commission, which may change prior to the closing date of the transaction:

(1) The name of the Buying Operator;

(2) The anticipated date for the transfer of all Transferable Items;

(3) The complete anticipated list of Transferable Items that are proposed for transfer.

A. The list will identify Low Producing Wells, Inactive Wells, and Out of Service Wells proposed for transfer.

B. For each Low Producing and Inactive Well proposed for transfer, the Selling Operator will provide the following information about the Oil and Gas Location where the Low Producing or Inactive Well is located:

i. Area of initial total disturbance for the Oil and Gas Location;

ii. Number of Wells at the Oil and Gas Location, including how many are proposed for transfer and how many are Low Producing or Inactive Wells;

iii. Whether the Oil and Gas Location has cut-and-fill slopes, and, if yes, the slope ratios (e.g., 4:1) of both the cut slope and the fill slope;

iv. Whether the Oil and Gas Location has sandy soils;

v. Whether any salt kills have occurred at the Oil and Gas Location;

vi. Whether the Oil and Gas Location is within 2,000 feet of a School Facility, Child Care Center, High Occupancy Building Unit, or Residential Building Unit within a Disproportionately Impacted Community;

vii. Whether the Oil and Gas Location is within High Priority Habitat; and

viii. Whether topsoil has been salvaged at the Oil and Gas Location.

C. For each Out of Service Well proposed for transfer, the Selling Operator will identify the date by which each Well will be plugged. The transfer of an Out of Service Well will place the Well on a Plugging List for the Buying Operator but will not change the deadline for plugging such Well unless the Buying Operator files a Revised Form 6A pursuant to Rule 434.d.(9).A.

(4) The complete list of any Transferable Items that are related in the Commission's records to a Transferable Item listed pursuant to Rule 218.b.(3) but are not proposed for transfer;

(5) The estimated amount of Financial Assurance required by the Commission's Rules that the Buying Operator will submit to the Commission prior to the anticipated date of transfer identified in Rule 218.b.(2), including:

A. Single Well Financial Assurance for each Low Producing Well subject to a transfer listed on a Form 9 - Intent dated after April 30, 2022, unless:

i. The Wells have been designated as Out of Service; or

ii. The Buying Operator has submitted a Financial Assurance Plan that accounts for the transfer of the Low Producing Wells, and based on that Plan, Single Well Financial Assurance for the Low Producing Well would not be required.

iii. If the Buying Operator has submitted a Financial Assurance Plan pursuant to Rules 702.d.(3) or (4), any Single Well Financial Assurance for Low Producing Wells required by this Rule 218.b.(5).A will not change the Operator's timeline to contribute Financial Assurance each year as required pursuant to the Operator's approved Financial Assurance Plan.

aa. If the Selling Operator has an approved Financial Assurance Plan pursuant to Rules 702.d.(3) or (4), the Buying Operator will assume the Selling Operator's timeline for providing Single Well Financial Assurance under the Selling Operator's existing Financial Assurance Plan. Pursuant to Rule 218.e, the Buying Operator will contribute its Financial Assurance in an amount equal to or greater than the Single Well Financial Assurance that the Selling Operator had contributed for the transferred Wells prior to transfer.

bb. If the Selling Operator has an approved Financial Assurance Plan pursuant to Rules 702.d.(1), (2), (5), or (6), the Buying Operator will incorporate the transferred Wells into its approved Single Well Financial Assurance timeline pursuant to the Buying Operator's approved, pre-transfer Financial Assurance Plan.

B. The amount of Financial Assurance required by Rules 702, 703, & 704 for all Transferable Items other than Low Producing Wells; and

C. The type(s) of Financial Assurance the Buying Operator intends to provide pursuant to Rule 701.

D. The Director, Selling Operator, or Buying Operator may request the Commission determine a different amount of Financial Assurance by requesting a Financial Assurance hearing pursuant to Rule 503.g.(11).

(6) The estimated impact of the transfer on the Selling Operator's Financial Assurance Plan.

(7)Attached Attestations. An attestation signed by the Selling Operator and the Buying Operator attesting to all contents of the Form 9 - Intent.

(8) If the proposed transfer is subject to a non-disclosure or confidentiality agreement between the Selling Operator and the Buying Operator, the Selling Operator will indicate on the Form 9 - Intent that the proposed transfer is considered confidential, and the Director will keep the Form 9 - Intent and any other associated information confidential pursuant to § 24-72-204(3)(a)(IV), C.R.S., until the Form 9, Transfer of Operatorship - Subsequent is filed.

c. The Selling Operator will remit with the Form 9 - Intent the filing fee provided in Appendix III.

d.Revised Financial Assurance Plans. Prior to the proposed anticipated date of transfer identified on the Form 9 - Intent, the Buying Operator and Selling Operator will each file a revised Financial Assurance Plan pursuant to Rule 702.b.(2) that takes into account the anticipated transaction.

e.Financial Assurance Submission. Consistent with the Buying Operator's revised Financial Assurance Plan filed pursuant to Rule 218.d, the Buying Operator will submit the estimated amount of Financial Assurance required as a result of the transfer to the Commission prior to the date of transfer.

f.Form 9, Transfer of Operatorship - Subsequent.

(1) When a transaction subject to a Form 9 - Intent becomes final, the Buying Operator will submit a Form 9 - Subsequent within 7 days of closing. The Form 9 - Subsequent will include:

A. The effective date of transfer;

B. The complete list of Transferable Items that:

i. Were transferred to the Buying Operator;

ii. Are related in the Commission's records to a Transferable Item listed pursuant to Rule 218.f.(1).B.i but were not transferred, and:

aa. Whether the Selling Operator retained responsibility for compliance with the Commission's Rules for any Transferable Item listed pursuant to Rule 218.f.(1).B.ii; or

bb. Whether a Prior Operator retained responsibility for compliance with the Commission's Rules for any Transferable Item listed pursuant to Rule 218.f.(1).B.ii; and

iii. Were listed on the Form 9 - Intent pursuant to Rules 218.b.(3) & (4) but were not transferred to the Buying Operator upon closing, and:

aa. Whether the Selling Operator retained responsibility for compliance with the Commission's Rules for any Transferable Item listed pursuant to Rule 218.f.(1).B.iii; or

bb. Whether a Prior Operator retained responsibility for compliance with the Commission's Rules for any Transferable Item listed pursuant to Rule 218.f.(1).B.iii.

C.Attached Attestations.

i. An attestation signed by the Selling Operator and the Buying Operator attesting to all contents of the Form 9 - Subsequent;

ii. If applicable, an attestation signed by the Selling Operator attesting that the Selling Operator retains responsibility for compliance with the Commission's Rules for any Transferable Item listed in Rules 218.f.(1).B.ii.aa or 218.f.(1).B.iii.aa; and

iii. An attestation signed by the Buying Operator that the Buying Operator notified the Relevant Local Government in which any Transferable Item is located of the completed transaction in writing.

D.Subsequent Liability.

i. For Transferable Items listed in Rule 218.f.(1).B.i an acknowledgment that upon the effective date of transfer, the Buying Operator assumes all responsibility for compliance with the Act, the Commission's Rules, and all terms and conditions of existing Permits and Commission orders for the Transferable Items;

ii. For Transferable Items listed in Rules 218.f.(1).B.ii or iii, an acknowledgment that the Buying Operator may be or may become responsible for compliance with the Act, the Commission's Rules, and all terms and conditions of existing Permits and Commission orders if the Buying Operator takes any action, or fails to take any action, that would cause such Transferable Item to be out of compliance with the Act, the Commission's Rules, and all terms and conditions of existing Permits and Commission orders; and

iii. For Transferable Items not listed in Rules 218.f.(1).B.i-iii but related in the Commission's records, an acknowledgment that the Commission will presume that the Transferable Item was transferred, and that the Buying Operator is responsible for compliance with the Act, the Commission's Rules, and all terms and conditions of existing Permits and Commission orders for the Transferable Items.

(2) If an anticipated transaction that is the subject of a Form 9 - Intent does not occur, the Selling Operator will notify the Director in writing. The Director will withdraw the Form 9 - Intent.

g. The Director will review the Form 9 - Intent and Form 9 - Subsequent upon receipt. The Director will approve the Form 9 - Intent and Form 9 - Subsequent within 45 business days of when all of the following have occurred:

(1) The Director has determined that all Permits described in Rule 218.f.(1).B.i subject to the proposed transfer comply with the Commission's current Rules in effect at the time of the proposed transfer;

(2) If a Permit described in Rule 218.f.(1).B.i is not in compliance with the Act, the Commission's Rules, and all terms and conditions of existing Permits and Commission orders on the date of transfer, the Director has determined that the Selling Operator, Buying Operator, or Prior Operator has submitted a satisfactory plan to bring such Permit into compliance;

(3) The Director has determined that the Form 9 - Intent and Form 9 - Subsequent are complete and comply with this Rule 218; and

(4) The Buying Operator has submitted the Financial Assurance required by the Commission's Rules. If a Commission hearing is required because the Buying Operator requests a Financial Assurance hearing pursuant to Rule 218.b.(5).D, then Director will not approve the Form 9 - Intent and Form 9 - Subsequent until the Commission has held the Financial Assurance hearing pursuant to Rule 510.

h. The Director may deny the Form 9 - Intent and Form 9 - Subsequent and the Selling Operator will remain responsible for compliance with the Commission's Rules for the proposed Transferable Items:

(1) If the Form 9 - Intent or Form 9 - Subsequent fail to satisfy Rules 218.b or 218.f;

(2) If the Selling Operator did not remit the filing fee required by Rule 218.c;

(3) If the Buying Operator fails to submit the amount or type of Financial Assurance required by the Commission's Rules or required by a Commission order approved during a Financial Assurance hearing; or

(4) If the Buying Operator does not submit a Form 9 - Subsequent within 120 days following the anticipated date for transfer identified in Rule 218.b.(1).

i.Addressing an Operator's Failure to Comply with Transfer Requirements.

(1) If a Buying Operator operates a Well or Wells for 60 days or more without obtaining the Director's approval of a Form 9 - Intent and Form 9 - Subsequent, the Director may require all such Wells to be shut-in, consistent with the Well shut-in safety requirements of Rule 434. All such Wells will remain shut-in until the Director approves a Form 9 - Intent and Form 9 - Subsequent. An Operator that objects to a shut-in order may request an expedited hearing before the Commission pursuant to the expedited appeal procedures described in Rule 209.b.

(2) If the Buying Operator fails to file a satisfactory replacement Financial Assurance pursuant to Rule 218.g.(4) and the Selling Operator is unable to maintain adequate Financial Assurance to comply with all its obligations under the Act and Commission's Rules, the Director may file an application pursuant to Rule 503.g.(11). The Director may request an expedited hearing in the application and the Secretary will notice the hearing pursuant to Rule 503.a at the time the Director files the application.

j. The Director will not approve a Form 10, Certificate of Clearance submitted by the Buying Operator for a transferred Well unless there is an approved Form 9 - Intent and an approved Form 9 - Subsequent.

k. A Form 9 is not required for the change of Operator of gas gathering systems, gas processing plants, and underground gas storage facilities, which are governed by Rule 220.c.

2 CCR 404-1-218

37 CR 16, August 25, 2014, effective 9/30/2014

38 CR 01, January 10, 2015, effective 2/14/2015

38 CR 03, February 10, 2015, effective 3/2/2015

38 CR 07, April 10, 2015, effective 4/30/2015

38 CR 16, August 25, 2015, effective 9/14/2015

39 CR 04, February 25, 2016, effective 3/16/2016

41 CR 05, March 10, 2018, effective 4/1/2018

41 CR 06, March 25, 2018, effective 5/1/2018

41 CR 23, December 10, 2018, effective 12/30/2018

42 CR 02, January 25, 2019, effective 2/14/2019

42 CR 17, September 10, 2019, effective 9/30/2019

42 CR 24, December 25, 2019, effective 1/14/2020

43 CR 17, September 10, 2020, effective 9/30/2020

43 CR 13, July 10, 2020, effective 11/2/2020

43 CR 24, December 25, 2020, effective 1/15/2021

45 CR 07, April 10, 2022, effective 4/30/2022

45 CR 09, May 10, 2022, effective 5/30/2022

45 CR 13, July 10, 2022, effective 7/30/2022