University of Colorado at Boulder
BMP of Oil and Gas Development

MOU Anatomy

MOUs and the processes used to develop them are as different as the communities, operators and issues that they address.  Yet they have commonalities as well.

MOU Evolution

Over a decade ago, La Plata County Commissioners and operators started developing MOUs - agreeing to disagree on the authority of local governments to regulate oil and gas beyond the requirements of the Colorado Oil and Gas Conservation Commission (COGCC). Beginning in 2005, La Plata County and several operators negotiated and signed MOUs that recognized this disagreement and agreed to terms of development that would guarantee the county certain operating standards and pay certain road fees. In exchange, the operator could avoid protracted formal hearings of the County's standard land use permitting process. Over the next decade, 10 additional communities negotiated over 40 MOUs with operators.

Governor's Task Force: Read more on the Task Force and its recommendations.

Just prior to the 2014 elections, Governor Hickenlooper created the Colorado Oil and Gas Task Force, as an alternative to contentious ballot initiatives on local control and in order to address conflicts between local and state regulation, multiple-well production areas, and drilling operations near and within communities. The Task Force meetings included discussions of MOUs and several Task Force proposals for action included MOUs.

MOU Negotiations

The process of negotiating MOUs varies substantially from jurisdiction to jurisdiction.  Local governments have developed site-specific MOUs after intense negotiation with particular operators and more general MOUs that are subsequently signed by several operators (with minor tweaks).  Individual operators, industry groups (e.g., Colorado Oil and Gas Association), and the COGCC have been involved in various negotiations.  For some MOUs, the parties have used public information meetings, Council/Commission hearings, and informal discussions to inform community members and other stakeholders. Other MOUs have been negotiated with little if any public participation.

MOU Components: Administrative Clauses and Substantive Elements

MOUs generally begin by naming and describing the parties and setting out the understanding between the parties that have led to signing an MOU (Recitals, Background or “Whereas” sections).  Common, but not universal, administrative provisions of the MOUs include an applicable timeframe or term, whether the agreement would apply to successors or assigns (following sale of properties), definition of terms, and clauses on severability, force majeure, waiver of rights, governing law, and default.

Comparison Table of Common Elements of MOUs

More substantive provisions that are common elements of MOUs include:

  • Applicability of the MOU within the jurisdiction – varying between a few specific wells to all future development;
  • Specific incentives for operators and the expected advantages to the community for agreeing to the specific agreements of the MOU;
  • Enforcement provisions, including incorporation of all or part of the MOU in COGCC permits  or orders for specific wells;
  • Provisions regarding imposition of impact fees; and
  • Best management practices.

MOU Components: BMPs

BMPs are a standard component of MOUs, but have been incorporated into the documents in various ways.  Some BMPs are included in the main body of the MOU; some occupy an appendix, exhibit or operator agreement; and some are duplicated, more or less, in the body of an MOU and an appendix/exhibit.  Where an appendix/exhibit lists specific practices, the parties general identify this subset of practices for incorporation into the applicable COGCC permit, order or form as a condition of approval for the development.  Most BMPs define the expected actions of the operator, but, occasionally, specify expected actions of the local government.  A few BMPs even identify expected actions of the COGCC despite the fact that the commission is not party to the agreement.

Things to remember when using the databases:
- The number of BMPs in a particular MOU is meaningless. Quantity is not quality.
- MOUs may include BMPs that are unique or novel, but may also include practices that are already required by federal, state, or local law/regulations.
- Disclaimer: We continue to refine the database and review it for data entry errors, but we cannot guarantee its accuracy – it is intended only as a resource and a guide.

The best management practices (BMPs) of an MOU are “best” as determined by the parties to the agreement for the particular place and time to which the MOU applies.  Some of the MOUs explicitly call the practices BMPs; others list “agreed to” practices.  In all cases, this project’s data entry crew (Law and Engineering students from CU Boulder) have parsed the text of the MOUs into “one issue” bite-sized pieces that we call “BMPs.”

Substantively, BMPs vary both among MOUs and within a single MOU from general to specific. They also vary from memorializing an operators’ agreement to comply with existing requirements of federal, state or local laws/regulations to promising actions that are more stringent/restrictive than current legal requirements. BMPs have evolved over the years to deal with new issues (e.g., air quality) and incorporate use of new technologies or practices (e.g., green completions) as well as continuing to address well density, confining new disturbance to existing well pads, and road maintenance. This evolution has occurred over time both within and between jurisdictions and operators: as a single jurisdiction creates agreements with new operators (e.g., in La Plata County); as an individual operator signs agreements for new properties (e.g., in The Town of Erie); and as additional jurisdictions begin using MOUs for the first time.

Anatomy of an MOU
Anatomy of an MOU
Database of MOUs Database of MOUs
Database of MOU BMPs Database of MOU BMPs
Stakeholder Assessment Stakeholder Assessment
Additional Resources Additional Resources