Oil and gas drillers in Colorado will have to pay more to the state panel that oversees them.
That’s because the Colorado Oil and Gas Conservation Commission voted Tuesday to increase the mill levy it assesses to help cover a decrease in operating dollars caused by a decline in revenue and state budget cuts due to the COVID-19 pandemic.
The increase in its mill levy is from 1.1 to 1.5, which is expected to raise an additional $3.4 million to help cover the commission’s day-to-day operations.
The levy is based on the amount of oil and gas each driller produces and the price at which it is sold.
At the same time, the commission also decreased its expenses, primarily by leaving vacant positions unfilled, to make up for the shortfall in revenue, which also is due to dwindling severance taxes that the industry also pays.
“The COGCC must be good stewards of its finances, both revenues and spending, as local governments and neighbors count on us for environmental and public health protections,” said commission chairman Jeff Robbins.
“The mill levy change and reduced COGCC spending will allow us to continue to provide services that are protective of public health, safety, welfare, wildlife resources and the environment as we continue to implement SB19-181,” he said.
That’s the bill approved by the Colorado Legislature last year that dramatically altered the commission’s mission from one that focused on fostering production to one that must first consider the health, safety and environmental impact of drilling wells.
Industry advocates have said they understand the budgetary issues, but warned that because of the poor economy and market issues surrounding oil and gas development, now was a bad time to increase fees.
The increase comes on the heels of a recent increase in air emission permit fees from the Colorado Department of Public Health and Environment that was approved by the Legislature during this year’s session.
The increase also marks the second time in as many years the commission has raised its mill levy, which was at 0.7 in 2018.
Gov. Jared Polis, however, said that same industry wants a quick turn-around time when it comes to getting permits approved, and that can’t be done without the revenue needed to hire staff to handle those permits and conduct inspections.
“I don’t think that this is viewed by the industry or by anybody else as adversarial, it’s viewed as a way to have the staff they need to process permitting quicker, and that’s an important part of their mission,” Polis said. “Absent general funding, absent funding from other sources to be able to make sure that they can have quicker turnaround on permitting is really in everybody’s best interests.”