Document Control: Created Date: December 17, 2015 Last Updated Date: December 17, 2015

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1 COGCC OPERATOR GUIDANCE RULE 1001.c: RECLAMATION VARIANCES AND WAIVERS Document Control: Created Date: December 17, 2015 Last Updated Date: December 17, 2015 Last Updated By: Dave Kulmann Review Cycle: Yearly Review Systems Used: eform Document Owner: Denise Arthur SUMMARY This guidance addresses Rule 1001.c. Surface Owner Waiver of 1000-Series Rules. Pursuant to Rule 1001.c, compliance with Rule 1003 Interim Reclamation, and specific provisions of Rules 1002 and 1004, will not be required if the operator demonstrates to the Director s or Commission s satisfaction both: 1) that compliance with those Rules is not necessary to protect public health, safety and welfare and prevent significant adverse impacts to the environment; and 2) the operator and the surface owner have entered into an agreement regarding topsoil protection and reclamation of the oil and gas location. This guidance describes the type of information an agreement between an operator and a surface owner regarding topsoil protection and reclamation of the oil and gas location should contain to allow COGCC to evaluate whether compliance with the specified 1000-series Rules should be waived. In addition, this guidance describes the baseline information COGCC needs in most cases to effectively evaluate whether public health, safety and welfare will be protected and significant adverse impacts to the environment prevented if the specified Series 1000-series Rules are waived. COGCC will evaluate all requests under Rule 1001.c on a case by case basis, considering the totality of circumstances. However, COGCC considers the information described in this Guidance to be the minimal baseline necessary to make the required determination, taking into consideration the agreement to protect topsoil and reclamation of the land. Finally, this guidance describes the procedural steps COGCC will follow when evaluating waiver and variance requests pursuant to Rule 1001.c. Rule 1001.c: Reclamation Variances and Waivers

2 I. Agreement between an Operator and a Surface Owner Regarding Topsoil Protection and Reclamation of the Location. An agreement between a surface owner and an operator regarding topsoil protection and reclamation of the land is required under Rule 1001.c. and is essential to COGCC s evaluation of whether compliance with the specified 1000-series Rules should be waived. In the absence of a written agreement containing all or most of the information listed below, it will be difficult for the Director or Commission to determine whether public health, safety and welfare will be protected, or that significant adverse environmental impacts will be prevented if the relevant reclamation rules are waived. The written agreement may be contained within a surface use agreement or it may be a stand-alone document. An agreement regarding topsoil protection and reclamation of the land entered into or executed after COGCC has issued a reclamation inspection that requires corrective actions or a violation will be subject to heightened scrutiny. A written agreement between an operator and surface owner regarding topsoil protection and reclamation of the land should contain: 1. A clear description of the specific portions of an access road or oil and gas location for which the surface owner is waiving the operator s obligation to perform interim or final reclamation. 2. A brief explanation of the surface owner s reasons for waiving the operator s obligation to perform interim or final reclamation for the specified portions of an access road or oil and gas location. 3. The surface owner s acknowledgement that the current condition of the portions of the access road or oil and gas location subject to the waiver is satisfactory to the surface owner or will be satisfactory once the operator performs the agreed upon plan. 4. For interim reclamation waiver requests, the surface owner s acknowledgement that: a. All active portions of the oil and gas location and all oil and gas operations remain under the jurisdiction of the Colorado Oil and Gas Conservation Commission; and b. The surface owner may not impede ingress to or egress from the active oil and gas location or interfere with the safe conduct of oil and gas operations on the location. c. NOTE: Sections 4a and 4b will not apply to final reclamation variances as active operations will no longer exist on the location. Last Revised 12/17/2015 Page 2 of 13

3 5. In addition to items 1 through 4, above, if an operator intends to seek a variance under Rule 502.b. to be relieved from its obligation to comply with specified provisions of Rule 1004 Final Reclamation Well Sites and Associated Production Facilities the following information should be included in a written agreement: a. The surface owner s acknowledgement that once the variance is approved and all agreed upon actions have been conducted the surface owner knowingly, and forever, waives all reclamation protections otherwise afforded by the specified provisions of Rule 1004; and b. A brief description of the operator s plans for compliance with the specified provisions of Rule 1004 on areas of the oil and gas locations or access roads that are not subject to the variance. 6. NOTE: If an operator anticipates or intends that lands covered by an agreement with a surface owner will not be subject to interim OR final reclamation, operators are strongly encouraged to apply for a final reclamation variance in the first instance, rather than first seeking relief from the requirement to comply with Rule 1003 and later seeking relief from the specified provisions of Rule Including the additional information pertinent to seeking a variance into the written agreement with the surface owner is encouraged. II. COGCC s Evaluation of Whether Public Health, Safety and Welfare Will Be Protected and Significant Adverse Environmental Impacts Prevented if Specified Reclamation Rules are waived. A. Request to Waive Compliance with Rule 1003 An operator who has entered into an agreement with the surface owner regarding topsoil protection and reclamation of the land will not be required to comply with Rule 1003 if the Director or Commission determines compliance with the Rule is not necessary to protect public health, safety, and welfare and prevent significant adverse impacts to the environment. The Director and Commission have identified the information listed below to be essential in nearly all cases to determining whether compliance with Rule 1003 is necessary in light of a surface owner agreement. The Director s or Commission s decision is likely to be delayed or the request denied if the following or substantially similar information is not provided at the time a request to waive compliance with Rule 1003 is made. 1. Evidence that all oil and gas equipment has been removed from all portions of access roads or the oil and gas location for which a waiver from the requirements of Rule 1003 is sought ( Waiver Area ). Last Revised 12/17/2015 Page 3 of 13

4 2. Evidence that all trash and debris belonging to the operator or its agents have been removed from the Waiver Area. 3. An express acknowledgement that the operator is still required to comply with Rule 1002.f related to stormwater management controls. 4. The operator s analysis of how the surface owner agreement is sufficient to protect public health, safety, and welfare, and prevent significant adverse impacts to the environment even if compliance with Rule 1003 is waived. This analysis should contain a weed management plan detailing how noxious weeds will be managed on the Waiver Area. This analysis should specify whether the surface owner agreed in writing to manage the noxious weeds and, if not, the operator s plan for managing noxious weeds. The depth of the operator s analysis may vary depending on the scope of the waiver request. A request to waive compliance with Rule 1003 for a small portion of an oil and gas location on which the surface owner wants to store personal equipment or vehicles would not require elaborate analysis, particularly if an existing written agreement regarding topsoil protection and reclamation of the land specifically contemplated such use. The operator s analysis of a waiver request should increase in proportion to the increase in the scale of the oil and gas location for which a waiver from Rule 1003 requirement is sought. Thus, a request to be relieved from the requirements of Rule 1003 for five acres of an existing oil and gas location not being used for active operations should be accompanied by a detailed analysis of how public health, safety, and welfare will be protected and significant adverse impacts to the environment prevented in the absence of reducing the pad size as contemplated by Rule B. Request to Waive Compliance with Specified Provisions of Rule 1004, via a Variance. The information described below is considered to be a minimal baseline to allow COGCC to evaluate whether public health, safety and welfare will be protected and significant adverse environmental impacts prevented if compliance with specified provisions of Rule 1004 is not required: 1. Evidence that all wells on the location are plugged and abandoned, and that a Form 6 subsequent was submitted for each well. 2. Evidence that all oil and gas equipment has been removed from the location, including flowline risers and gathering line risers. Last Revised 12/17/2015 Page 4 of 13

5 3. Evidence that trash and debris belonging to the operator or its agents has been removed from the location. 4. Evidence that noxious weeds have been controlled as required by Rule Documentation showing the operator consulted in good faith with the surface owner regarding final reclamation pursuant to Rule 306.f. Information describing the consultation (who, what, where, when) should be provided. 6. Documentation of the existing state of reclamation for the entire location. 7. Documentation detailing how the oil and gas location will be stabilized and details about what required stormwater management controls will be in place prior to COGCC s final signoff reclamation inspection. 8. The operator s analysis of how public health, safety, and welfare will be protected and significant adverse environmental impacts prevented even if compliance with the specified provisions of Rule 1004 receive a variance. As with requests for waivers from compliance with Rule 1003, the depth of the operator s analysis may vary depending on the scope of the variance request. For example, a request to be relieved from compliance with the specified provisions of Rule 1004 on the entire oil and gas location likely requires a more detailed analysis of the potential impacts to public health, safety, and welfare. COGCC would expect an analysis of the following types of issues to be included: 1) the specific nature of the location, including urban vs. rural, proximity to surface water, wildlife areas, 317B area, or sensitive area classification; and 2) comparative benefits of re-contouring and reseeding vs. just reseeding. III. COGCC Procedures for Processing Requests to Waive Compliance with Rule 1003 or Specified Provisions of Rule 1004 A. Interim Reclamation Waivers COGCC will process requests under Rule 1001.c. to waive compliance with Rule 1003 as follows (See flowchart format also): 1. Operator performs and completes the following two items to initiate the process: a. Enters into a written agreement with the surface owner that includes the first 4 points (and sub points) in section I above. Last Revised 12/17/2015 Page 5 of 13

6 b. Gathers all information and evidence included in the 4 points in section IIA above. The operator may ask Reclamation staff for advice during this process, including request an onsite. These will be assessed on a case-by-case basis but if time permits, Reclamation staff will provide advice. 2. Operator creates an electronic Form 4, Sundry Notice, attaches all information identified in steps 1a-1b above, and submits the Form 4 which the system will route to the COGCC Reclamation Staff. a. Operator must select the Rule 502.b variance requested box under the Engineering/Environmental tab of the Form 4. b. Operator must provide further details in the Comments box under the Engineering/Environmental tab of the Form Operator sends an to the Reclamation Supervisor with the Form 4 document number. 4. COGCC Reclamation Staff will perform a high level completeness check within 15 business days of receipt. NOTE to Step 4: The operator should follow-up with the Reclamation Supervisor if a response is not received within 15 business days of submittal. Further escalation to Inspection Manager or Deputy Director should occur after follow-up with Reclamation Supervisor has occurred. 5. Are issues identified during the completeness check? a. If yes, COGCC Reclamation Staff returns the Form 4 to Draft status, enabling the operator to fix and resubmit per step 2 above. b. If no, move on to step 6 below. c. COGCC Reclamation Staff will the operator when either step 5a or 5b is completed. 6. COGCC Reclamation Staff performs a detailed technical review of the information submitted prior to performing an inspection. Small issues can be resolved through communication with the operator and documented in comments on the Form COGCC Reclamation Staff performs an interim reclamation inspection on the location to identify current conditions, if required. 8. Are issues identified during the inspection? a. If yes, COGCC Reclamation Staff will communicate these issues to the operator via the inspection report. COGCC Reclamation Staff will reference the waiver request Form 4 document number and state the Last Revised 12/17/2015 Page 6 of 13

7 inspection was related to a reclamation waiver request in the general comments section of the report. The operator will resolve the identified issues and respond via a new Form 4 responding to the inspection report. COGCC Reclamation Staff will then reinspect the location. b. If no, move on to step 9 below. 9. COGCC Reclamation Staff, working with the operator, develops required conditions of approval (COAs) for the waiver request Form COGCC Reclamation Staff makes a recommendation to either Approve or Deny the waiver request. a. If the recommendation is to deny the waiver request, the COGCC Inspection Manager and Deputy Director will deny the Form 4 and discuss the reasons with the operator. This concludes the request process but the operator may apply for a Commission hearing. b. If the recommendation is to approve the waiver request, move on to step 11 below. NOTE to Step 10: The operator should follow-up with the Reclamation Supervisor if a response is not received within 60 days from passing the completeness check. Further escalation to Inspection Manager or Deputy Director should occur after follow-up with Reclamation Supervisor has occurred. 11. COGCC Reclamation Staff writes a summary of the approval decision, attaches it to the waiver request Form 4, approves the Form 4, and s the operator, concluding the process. 12. Operator communicates to COGCC Reclamation Staff via when all COAs on the approved Form 4 waiver have been finalized. NOTE to Step 12: This communication should occur when all agreed upon COAs have been completed. 13. COGCC Reclamation Staff performs a reclamation inspection on the location to verify completion of all required COAs. General Comments about the Entire Interim Reclamation Waiver Process Reclamation staff has discretion to vary from this interim reclamation waiver process as required, especially related to the time frames. Last Revised 12/17/2015 Page 7 of 13

8 B. Final Reclamation Variances COGCC will process requests under Rule 1001.c. to waive compliance with specified provisions of Rule 1004 as follows (See flowchart format also): 1. Operator performs and completes the following three items to initiate the process: a. Enters into a written agreement with the surface owner that includes points 1, 2, 3, and 5 (and sub points) in section I above after a surface owner consultation occurred. b. Gathers all information and evidence included in the 8 points in section IIB above. The operator may ask Reclamation staff for advice during this process, including request an onsite. These will be assessed on a case-by-case basis but if time permits, Reclamation staff will provide advice. c. Drafts a formal Rule 502.b variance letter addressed to the Director. NOTE: Do not send this directly to the Director but rather attach it to the Form 4 (see below). 2. Operator creates an electronic Form 4, Sundry Notice, attaches all information identified in steps 1a-1c above, and submits the Form 4 which the system will route to the COGCC Reclamation Staff. a. Operator must select the Rule 502.b variance requested box under the Engineering/Environmental tab of the Form 4. b. Operator must provide further details in the Comments box under the Engineering/Environmental tab of the Form Operator sends an to the Reclamation Supervisor with the Form 4 document number. 4. COGCC Reclamation Staff will perform a high level completeness check within 15 business days of receipt. NOTE to Step 4: The operator should follow-up with the Reclamation Supervisor if a response is not received within 15 business days of submittal. Further escalation to Inspection Manager or Deputy Director should occur after follow-up with Reclamation Supervisor has occurred. 5. Are issues identified during the completeness check? a. If yes, COGCC Reclamation Staff returns the Form 4 to Draft status, enabling the operator to fix and resubmit per step 2 above. b. If no, move on to step 5 below. c. COGCC Reclamation Staff will the operator when either step 5a or 5b is completed. Last Revised 12/17/2015 Page 8 of 13

9 6. COGCC Reclamation Staff performs a detailed technical review of the information submitted prior to performing an inspection. Small issues can be resolved through communication with the operator and documented in comments on the Form 4. NOTE to the Process: At this point in the final reclamation variance process, there are two different paths the variance request can take depending on the specific circumstances of the request. Path 1 is outlined in steps 7 through 16 below. This is the path a request will take when not all agreed upon reclamation work is complete but there is a desire to obtain approval of the variance request prior to work being completed. For example, the surface owner and operator may desire a variance from the recontouring of the pad requirements in Rule However, the surface owner and operator have agreed to reseed the pad and perform some additional stabilization. The reseeding and stabilization will not be completed at the time of the variance request but the operator desires to obtain formal COGCC approval prior to beginning that work. Path 2 is outlined in steps 17 through 21 below. This is the path a request will take when all agreed upon reclamation work has been completed prior to the variance request and final reclamation signoff is ready. Last Revised 12/17/2015 Page 9 of 13

10 Path 1 (Steps 7 through 16) 7. COGCC Reclamation Staff performs a reclamation inspection on the location to identify current conditions. NOTE to Step 7: Since additional reclamation activities are required to be performed or verified per the request, this is not the final reclamation inspection where final signoff occurs. 8. Are issues identified during the inspection? a. If yes, COGCC Reclamation Staff will communicate these issues to the operator via the inspection report. COGCC Reclamation Staff will reference the variance request Form 4 document number and state the inspection was related to a reclamation variance request in the general comments section of the report. The operator will resolve the identified issues and respond via a new Form 4 responding to the inspection report. COGCC Reclamation Staff will then reinspect the location. b. If no, move on to step 9 below. 9. COGCC Reclamation Staff, working with the operator, develops required conditions of approval (COAs) for the variance request Form 4 to ensure all in progress activities will be completed. 10. COGCC Reclamation Staff makes a recommendation to either Approve or Deny the variance request. a. If the recommendation is to deny the variance request, the COGCC Inspection Manager and Deputy Director will deny the Form 4 and discuss the reasons with the operator. This concludes the request process but the operator may apply for a Commission hearing. b. If the recommendation is to approve the variance request, move on to step 11 below. NOTE to Step 10: The operator should follow-up with the Reclamation Supervisor if a response is not received within 75 days from passing the completeness check. Further escalation to Inspection Manager or Deputy Director should occur after follow-up with Reclamation Supervisor has occurred. 11. COGCC Reclamation Staff writes a summary of the approval decision, attaches it to the variance request Form 4, approves the Form 4, and s the operator. 12. COGCC Director reports the variance, via the Staff Report, to the full COGCC Commission at the next Commission hearing. Last Revised 12/17/2015 Page 10 of 13

11 13. Operator communicates to COGCC Reclamation Staff via when all COAs on the approved Form 4 variance have been finalized. NOTE to Step 13: This communication should occur when all agreed upon reclamation activities that were not completed at the time of the variance request have been completed. 14. COGCC Reclamation Staff performs a reclamation inspection on the location to verify completion of all required activities. NOTE to Step 14: This is the final reclamation inspection where final signoff will occur if it passes. 15. Are issues identified during the inspection? a. If yes, COGCC Reclamation Staff will communicate these issues to the operator via the inspection report. COGCC Reclamation Staff will reference the variance request Form 4 document number and state the inspection was related to a reclamation variance request in the general comments section of the report. The operator will resolve the identified issues and respond via a new Form 4 responding to the inspection report. COGCC Reclamation Staff will then reinspect the location. b. If no, move on to step 16 below. 16. COGCC Reclamation Staff provides final sign off on the location to the operator, concluding the process. Path 2 (Steps 17 through 21) 17. COGCC Reclamation Staff performs a reclamation inspection on the location to verify completion of all required activities. NOTE to Step 17: This is the final reclamation inspection where final signoff will occur if it passes 18. Are issues identified during the inspection? a. If yes, COGCC Reclamation Staff will communicate these issues to the operator via the inspection report. COGCC Reclamation Staff will reference the variance request Form 4 document number and state the inspection was related to a reclamation variance request in the general comments section of the report. The operator will resolve the identified issues and respond via a new Form 4 responding to the inspection report. COGCC Reclamation Staff will then reinspect the location. b. If no, move on to step 19 below. Last Revised 12/17/2015 Page 11 of 13

12 19. COGCC Reclamation Staff makes a recommendation to either Approve or Deny the variance request. a. If the recommendation is to deny the variance request, the COGCC Inspection Manager and Deputy Director will deny the Form 4 and discuss the reasons with the operator. This concludes the request process but the operator may apply for a Commission hearing. b. If the recommendation is to approve the variance request, move on to step 19 below. NOTE to Step 19: The operator should follow-up with the Reclamation Supervisor if a response is not received within 75 days from passing the completeness check. Further escalation to Inspection Manager or Deputy Director should occur after follow-up with Reclamation Supervisor has occurred. 20. COGCC Reclamation Staff writes a summary of the approval decision, attaches it to the variance request Form 4, approves the Form 4, s the operator, and provides final sign off on the location to the operator. 21. COGCC Director reports, via the Staff Report, the variance to the full COGCC Commission at the next Commission hearing. This ends the process. General Comments about the Entire Final Reclamation Variance Process Reclamation staff has discretion to vary from this final reclamation variance process as required, especially related to the time frames. Once a final reclamation variance is approved and COGCC Reclamation Staff provides final sign off to the operator, the operator will no longer have access to the areas of land approved in the variance for any oil and gas operations without filing for a new Form 2A. DISCLAIMER This is a guidance document, not a formal rule. The purpose of this guidance document is to inform all interested stakeholders of the Commission s interpretation of, and expectations concerning, the formal Commission Rules discussed herein. Interpretative rules or general statements of policy, such as this guidance document, are not meant to be binding as rules under the Administrative Procedures Act (1), C.R.S. Last Revised 12/17/2015 Page 12 of 13

13 I. Commission Rule 1001.c. Current Rule 1001.c. provides: APPENDIX A Surface owner waiver of 1000-Series Rules. The Commission shall not require compliance with Rules (except Rules 1002.e.(1), 1002.e.(4), and 1002.f, for which compliance will continue to be required), Rule 1003, or Rule 1004 (except Rules 1004.c.(4) and 1004.c.(5), for which compliance will continue to be required), if the operator can demonstrate to the Director's or the Commission's satisfaction both that compliance with such rules is not necessary to protect the public health, safety and welfare, including prevention of significant adverse environmental impacts, and that the operator has entered into an agreement with the surface owner regarding topsoil protection and reclamation of the land. Absent bad faith conduct by the operator, penalties may only be imposed for non-compliance with a Commission order issued after a determination that, notwithstanding such agreement, compliance is necessary to protect public health, safety and welfare. Prior to final reclamation approval as to a specific well, the operator shall either comply with the rules or obtain a variance under Rule 502.b. This rule shall not have the effect of relieving an operator from compliance with the 900 Series Rules. Document Change Log: Change Date November 24, 2015 December 17, 2015 Description of Changes Document Created and Finalized. Small process changes made to section III. Sections I and II remain unchanged. Last Revised 12/17/2015 Page 13 of 13