Produced Water Rulemaking Announced by State Water Officials

 On August 31, 2009, the Colorado State Engineer formally announced an administrative rulemaking intended to facilitate the further regulation of produced water from oil and gas wells in the state.¹ The rulemaking is the latest in a series of developments regarding regulation of produced water by Colorado water officials.

Following the decision of the Colorado Supreme Court in Vance, et al. v. Wolfe², and the subsequent passage of House Bill 09-1303 (“HB-1303”), the State Engineer has taken the position that the more than 34,000 existing oil and gas wells in Colorado that produce ground water in the course of operations are subject to Colorado law regarding water well permitting and water rights administration. HB-1303 gives operators until April 1, 2010 to demonstrate compliance.

The proposed rules are intended to establish procedures by which oil and gas operators (and, potentially, certain mining operations) may obtain a determination from the State Engineer that produced water meets the statutory definition of “nontributary” ground water.³ Parties may also propose, as an “alternative rule,” specific areas and formations to be designated as nontributary or tributary. In the absence of a determination to the contrary, all ground water in Colorado is presumed to be tributary, and is subject to administration under the water rights priority system.

The State Engineer has established the following schedule for the rulemaking:

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^1. Notice of Proposed Rulemaking on the adoption of Rules and Regulations for the Determination of the Nontributary Nature of Ground Water Produced Through Wells in Conjunction With the Mining of Minerals (“Produced Nontributary Groundwater Rules”), issued August 31, 2009.

^2. 205 P.3d 1165 (Colo. 2009).

^3. C.R.S. 37-90-103(10.5).