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substitute water supply plan. In addition,pursuant to C.R.S. § 37-90-137(7), a party who <br /> withdraws nontributary ground water in order to facilitate the mining of minerals is not <br /> required to obtain a water well permit, unless the ground water being removed will be <br /> beneficially used. <br /> Historically, the State Engineer has not administered ground water withdrawn in the <br /> course of oil and gas operations ("produced water")within the prior appropriation <br /> system. The State Engineer had concluded that administration of produced water was <br /> under the exclusive jurisdiction of the Colorado Oil and Gas Conservation Commission <br /> ("COGCC"). Based on that conclusion, the State Engineer did not require oil and gas <br /> wells to obtain Ground Water Act well permits, or require oil and gas wells that withdraw <br /> tributary ground water to obtain substitute water supply plans or augmentation plans. <br /> Although these rules are not limited to oil and gas operations, they have been the primary <br /> focus of these rules. <br /> The State Engineer's position was challenged by a group of water rights users in Vance v. <br /> Wolfe, 205 P.3d 1165, 1173 (Colo. 2009). In Vance, the Supreme Court specifically <br /> found that the extraction of ground water in the course of coalbed methane ("CBM") <br /> operations was a beneficial use of water, and that operators of CBM wells must obtain <br /> well permits under the Ground Water Act. Id. In addition, the Court in Vance more <br /> generally held that"while the production of oil and gas is subject to extensive regulation <br /> by COGCC, it is also subject to the [Water Rights Act] and the Ground Water Act." Id. <br /> As a result,pursuant to Vance, the State Engineer must consider the need to permit, as <br /> well as determine whether augmentation or substitute water supply plans are required, for <br /> the more than 35,000 existing oil and gas wells. <br /> In reaction to the Vance decision, the General Assembly passed House Bill 09-1303, as <br /> codified at C.R.S. §§ 37-90-137, 37-90-138(2), and 37-92-308(11). House Bill 1.303 had <br /> three primary purposes. First, House Bill 1303 established a reasonable period of delay, <br /> until April 1, 2010,before oil and gas wells would be required to obtain Ground Water <br /> Act well permits, if needed. C.R.S. § 37-90-138(2). Second, House Bill 1303 provided <br /> an additional transition period,until December 31, 2012, within which time period <br /> operators of CBM wells that withdraw tributary ground water could obtain approval of <br /> substitute water supply plans without having to file applications for plans for <br /> augmentation in water court. C.R.S. § 37-92-308(11). Third, House Bill 1303 authorizes <br /> the State Engineer to adopt rules to assist in the administration of C.R.S. § 37-90-137(7). <br /> The record shows that the legislature intended that the rulemaking be used specifically to <br /> assist the State Engineer in efficiently and expeditiously identifying those oil and gas <br /> wells that withdraw nontributary ground water. <br /> Description of Proposed Rules <br /> The State Engineer is adopting Produced Nontributary Ground Water Rules pursuant to <br /> the rulemaking authority granted to the State Engineer. The rules establish an <br /> adjudicatory procedure pursuant to which the State Engineer may make individual <br /> nontributary determinations for purposes of the State Engineer's administration of <br /> Produced Nontributary Ground Water Rules 2 CCR 402-17, Statement of Basis and Purpose <br /> -2- <br />