Oil & Gas Production Fees

The act requires the clean transit enterprise (enterprise) to impose a production fee for clean transit (production fee for clean transit) to be paid quarterly by every producer of oil and gas in the state (producer). The production fee for clean transit applies to all oil and gas produced by the producer in the state on and after July 1, 2025.

No later than one week after October 1, 2025, and no later than one week after the first day of each calendar quarter thereafter, the energy and carbon management commission (commission) must calculate the average Henry Hub natural gas spot price reported by the United States energy information administration (average gas spot price) and average west Texas intermediate spot price reported by the United States energy information administration (average oil spot price) for the previous quarter and publish the average gas spot price and average oil spot price on the commission's website.

No later than one month after the commission publishes the average gas spot price and average oil spot price on the commission's website, the enterprise must set the production fee amounts for the previous calendar quarter, which are determined by the enterprise based on the average gas spot price and average oil spot price calculated by the commission; notify the executive director of the department of revenue (executive director) of the production fee amounts set; and publish the production fee amounts on the enterprise's website. Prior to adopting the production fee amounts, the enterprise must consult with the commission on the production fee amounts.

On or before the last day of the second month following the previous calendar quarter, every producer must file a return with and pay the production fee for clean transit for the previous calendar quarter to the executive director in accordance with applicable department of revenue procedures. The state treasurer must first credit the costs to the department of revenue for administering the production fees for clean transit, which money is credited to the oil and gas production fees collection fund created in the act, and then credit the remaining production fees for clean transit in the following manner:

• 70% to the local transit operations cash fund to be used for expanding local transit service and prioritizing transit improvements in certain communities;
• 10% to the local transit grant program cash fund to be used for providing competitive grants to certain eligible entities for expenses associated with providing public transportation; and
• 20% to the rail funding program cash fund to be used for passenger rail projects and service.

No later than March 1, 2030, and every fifth March 1 thereafter, the enterprise must complete an analysis of the production fee amounts and post the analysis on the enterprise's website.

The act also requires the regional transportation district to prioritize completion of the northwest rail line to Longmont and the north lines of the transportation expansion plan adopted by the regional transportation district board (plan). On or before July 1, 2025, the regional transportation district is also required to submit a report to the governor and the general assembly that demonstrates how the regional transportation district will fulfill certain commitments made in the plan.

The act also requires the division of parks and wildlife (division) to impose a production fee for wildlife and land remediation (production fee for wildlife and land remediation) to be paid quarterly by every producer. The production fee for wildlife and land remediation applies to all oil and gas produced by the producer in the state on and after July 1, 2025.

No later than one month after the commission publishes the average gas spot price and average oil spot price on the commission's website, the division must set the production fee amounts for the previous calendar quarter, which are determined by the division based on the average gas spot price and average oil spot price calculated by the commission; notify the executive director of the production fee amounts set; and publish the production fee amounts on the division's website. Prior to adopting the production fee amounts, the division must consult with the commission on the production fee amounts.

On or before the last day of the second month following the previous calendar quarter, every producer must file a return with and pay the production fee for wildlife and land remediation for the previous calendar quarter to the executive director in accordance with applicable department of revenue administrative procedures. The state treasurer must credit the production fees for wildlife and land remediation in the following manner:

• First, the costs to the department of revenue for administering the production fees for wildlife and land remediation are credited to the oil and gas production fees collection fund for use by department of revenue; and
• Second, the remaining amount of production fees for wildlife and land remediation are credited to the climate resilient wildlife and land cash fund to be used for certain wildlife and land remediation purposes.

No later than March 1, 2030, and every fifth March 1 thereafter, the division must complete an analysis of the production fee amounts and post the analysis on the division's website.

Along with publishing the average gas spot price and average oil spot price on the commission's website, the commission is required to routinely provide written guidance to the enterprise and the division on factors relevant to the production fee amounts for the production fee for clean transit and the production fee for wildlife and land remediation.

The act also establishes:

• Certain department of revenue administrative procedures, including certain registration and return filing requirements, for the collection of the production fees for clean transit and the production fees for wildlife and land remediation;
• A petty offense and civil penalty for a producer's failure to register with the department of revenue; and
• The accrual of interest and penalties for a producer's failure to pay or correctly account for any production fees for wildlife and land remediation or production fees for clean transit or to keep complete and accurate records.

If a constitutional amendment is adopted at the 2024 statewide general election that requires voter approval of fees assessed for the purpose of funding mass transportation, the act creates certain definitions that apply to the constitutional amendment.

If a constitutional amendment is adopted at the 2024 statewide general election that defines a "fee" for the purposes of state constitutional law, the act clarifies what fees and fee increases the constitutional amendment applies to and creates certain definitions that apply to the constitutional amendment (fee definition provision).

Provisions of the act are contingent upon Senate Bill 24-184 being enacted and becoming law.

APPROVED by Governor May 16, 2024

EFFECTIVE May 16, 2024
(Note: This summary applies to this bill as enacted.)