Permits denied, leases lost: Inside the MOU reshaping oil and gas production in Colorado

By Jen Schumann | Rocky Mountain Voice

Colorado’s 2024 MOU with BLM is being used to block drilling on federal land, reroute energy dollars and shift authority from Washington to regulators aligned with the Polis anti-fossil fuels agenda.

In September 2024, a document quietly signed by BLM Colorado Director Doug Vilsack just eight weeks before the Presidential election may have done more than establish interagency cooperation. Critics say it handed away federal power.

The document—a Memorandum of Understanding (MOU) between the Bureau of Land Management (BLM) and the Colorado Energy and Carbon Management Commission (ECMC)—opened the door for Colorado to impose sweeping restrictions on oil and gas production. 

Those restrictions now apply even to federally controlled mineral leases.

The table that changed everything

The MOU claims that BLM and ECMC share a mutual goal of regulation over oil and gas development. While the document states that it does not override federal law, Colorado regulators have used this federal MOU to impose state-level policies like zero-emission mandates on operators working entirely on federal land.

“Colorado abused their federal agreement with U.S. Fish and Wildlife Services to import wolves and the BLM MOU’s also being abused as a loophole to evade President Trump’s Executive Orders on energy. These agreements are exactly how and why our livestock producers and  energy producers are still getting boxed in, ” said Naomi Dobbs, LPC Farm Bureau board member and Protecting Our Way of Life committee volunteer. “These intergovernmental agreements let the state override the feds without actually saying it outright.”

Dobbs and Mike Clark, CEO of Colorado-based Petrox Resources and chair of the Colorado Conservation Alliance (The Alliance), made that case directly to DOI Senior Advisor Ryan Hofman in a July 11 meeting. 

Their position was clear: the MOU enables state actors to apply their political agenda to federal assets. And without action, the damage won’t stop at Colorado.

Language in the 2024 MOU outlines shared authority between BLM and ECMC over permitting and enforcement—a framework critics say has blurred federal control and allowed state overreach.

From shared roles to shared control

Earlier MOUs drew a clearer line between state and federal authority. The 2009 agreement delegated distinct permitting responsibilities and treated federal law as primary. 

But the 2024 version outlines joint responsibilities across key regulatory areas—from permitting to enforcement and environmental review. It even assigns lead roles interchangeably between BLM and ECMC, depending on the activity.

Critics say this framework gives state agencies co-equal authority on federal lands and weakens the federal government’s ability to maintain control.

“That kind of framework is how you end up with activist boards and state-level commissions guiding national energy policy,” Dobbs said.

Visualizing the shift

The 2009 Memorandum of Understanding between BLM, USFS and Colorado’s oil and gas commission didn’t include a roles and responsibilities table. But if it had, the differences would’ve jumped off the page. The 2009 agreement left little room for confusion—federal agencies ran the show when it came to permitting and enforcement, while the state’s job was to weigh in, pass along notices and help coordinate with local contacts. 

At no point was Colorado granted regulatory parity with the federal government.

Rocky Mountain Voice reconstructed a table based on the 2009 MOU to make that comparison visually clear. The 2024 version doesn’t just update the paperwork—it changes the playbook. By assigning rotating lead roles and spreading out decision-making, critics say it tips the balance of power away from federal agencies and into the hands of the state.

To critics, the difference is obvious: what was once federal turf is now a shared lane. The contrast with the 2009 version shows why: the state’s role evolved from advisor to regulator.

Permits you can’t use

Clark told Rocky Mountain Voice that in his July 11 meeting with DOI Senior Advisor Ryan Hoffman, he described how Colorado’s regulatory web makes it impossible for small producers to operate—even with federal approvals in hand.

“I can get a BLM permit, but I’m held up by the state’s regulations,” Clark said. “Then the state says I need county approval and the counties open the door to activist entities which aren’t actual government agencies. In Colorado we have a blue state, plus blue counties and dark blue radical organizations working together to block production. And that leaves energy operators in the red.” 

He said Petrox has run the numbers, and the risks are no longer manageable under current conditions.

“We won’t lease any new acreage in Colorado as long as this MOU is on the books,” Clark said. “As long as we’ve got this MOU in place and an endangered species like the gray wolf hanging over every lease, we’re not investing in Colorado.”

Clark says the MOU has rendered federal permits effectively worthless in Colorado.

A permit lost to time

For Petrox Resources, the BLM–ECMC MOU is just the latest chapter in a long history of regulatory entanglement in Colorado. The company’s Somerset Unit in Gunnison County—once seen as a promising gas development—was trapped in environmental review, mapping revisions and permit re-drafts for more than two decades.

It started in 2002 when Petrox acquired federal leases COC65524, COC65525 and COC65526. By 2008, the company had submitted a Master Surface Use Plan and began the formal NEPA process. 

What followed was 17 years of delays involving state and federal agencies, new rule changes and repetitive on-site assessments. 

In 2017, Petrox successfully challenged a misclassification of the site as roadless, but even that win didn’t break the bottleneck.

The final blow came in 2023, when the U.S. Forest Service asked Petrox to revise a fully approved road design and submit a complete facility redesign. 

Petrox concluded the region’s U.S. Forest Service was influenced by anti-energy NGO’s like the Wilderness Workshop. And faced with expected ongoing obstruction, Petrox assigned the lease to Gunnison Energy in February 2025.

“Every time we met a condition, another one got added,” said Clark. “The closer we got to the finish line, the more they moved it.”

Petrox’s Somerset Unit faced more than two decades of regulatory delays. In 2025, the company walked away from the lease it had fought to develop since 2002.

To make matters worse, one of the nonprofits involved in earlier delays has now filed a lawsuit against the BLM for failing to act on the Somerset Unit—a case Clark calls “the height of irony.”

A fix on the table

Clark worked with the Energy Council to revise the MOU prior to sharing recommendations with federal agency officials. The proposed draft calls for removing joint regulatory language and restoring clear federal control. It was shaped by people who work in energy, land use and policy—including those with firsthand experience navigating state and federal red tape.

Sources close to the drafting process say it reflects a practical push to rein in state overreach without cutting out local input.  

 “Our recommended wording for the BLM clearly retains federal decision-making control,” Clark said, “and Colorado’s federal agreements with the U.S. Forest Service should also be verified to not interfere with federal energy operations since Vilsack removed USFS in 2024.” 

Clark added that the U.S. Fish and Wildlife Service also has problematic federal agreements with Colorado, especially in regards to the endangered non-native Gray Wolf. “We’ve definitely raised the alarm in D.C.,” Clark said, “and President Trump needs to understand an endangered gray wolf will shut down our energy operations just as hard as ECMC.”

The Alliance’s proposed MOU revision outlines who should lead permitting decisions—removing ambiguity that allows states to overstep.

From Colorado to Congress

The legal and regulatory maneuvering has now drawn federal attention. 

A letter from Rep. Lauren Boebert to the Department of the Interior last year flagged concern over the agencies’ MOU’s with Colorado and included a request for a copy of the MOU or Memorandum of Agreement between the U.S. Fish and Wildlife Services and the State of Colorado regarding Gray Wolves.  

According to the Boebert team the requested document was never provided.  

Congresswoman Boebert, who serves as Vice Chair of the House Natural Resources subcommittee on oversight and investigations, stated her support for the revision of MOUs that improperly allow states to override federal leasing, permitting and environmental law.  

“There is no reason for more gray wolves to be imported into Colorado, which violates the Resource Management Plans on the books and brings into further question what laws the Biden Administration violated to help with this process,” said Boebert. “I’m in full support of a review of what took place under the Biden Administration as well as Secretary Burgum reevaluating all MOU’s and RMP’s to make sure we can make American energy dominant again and get our Colorado oil & gas developers out from under the job-killing rules and regulations of Colorado lawmakers.”

Supporters of reform say the effort to rein in Colorado’s overreach won’t stop with one letter. 

Lawmakers and energy advocates are now exploring broader policy tools—including federal agency directives—that would restore permitting authority, reinforce the limits of state control and address violations tied to wolf reintroduction and environmental law.

Michelina Paulek, Executive Director of the Energy Council based in Southwest Colorado provided review of the proposed BLM/Colorado MOU changes submitted to the Department of Interior. According to Paulek, the MOU structure is at the heart of why Colorado continues to regulate federal land as if it were its own. 

“If the MOU isn’t fixed,” Paulek said, “the precedent has already handed Colorado’s environmental NGOs the keys to federal lands.”  

During the 118th Congress, Rep. Lauren Boebert hands a letter to then-Secretary of the Interior Deb Haaland, demanding disclosure on federal actions in the Dolores River Corridor. The letter required DOI to report any decisions tied to MOU activity or federal land closures—yet according to Boebert’s office, no response was provided. As DOI continued restricting access from Utah into Colorado, agency officials also withheld key documents related to the corridor and failed to respond to multiple requests from House Republicans.

The rise of the regulation state

The original MOU between BLM, USFS and Colorado’s oil and gas commission never set out to hand the state regulatory authority over federal lands. And according to local officials at the time, BLM’s own leadership agreed.

In 2020, Garfield County Commissioner Tom Jankovsky and others said that then–BLM Colorado Director Jamie Connell made it clear in a public meeting that the MOU did not transfer authority to the state. Her comments were later reported by the Grand Junction Daily Sentinel: “The idea that this MOU would somehow have changed anybody’s authority for operations on public land, it perplexes me that that got into people’s mindsets so much.” Connell also reportedly said, “This agreement doesn’t usurp the chain of authority, and it can’t legally do so.”

Still, the MOU was quietly extended without public clarification. Connell stepped down that year and was succeeded by interim leadership. In August 2022, Doug Vilsack—formerly of Colorado’s Department of Natural Resources—was appointed BLM Colorado State Director.

It was under Vilsack’s direction that the MOU was overhauled. The 2024 agreement removed the U.S. Forest Service from the process entirely and replaced the original federal-led permitting structure with a shared decision-making model. A new roles table allowed for ECMC to be designated as lead—sometimes even on federal mineral projects. Where the state once advised, it now directs.

Critics say the framework creates a shadow handoff of regulatory power. Though the document includes boilerplate language saying it does not alter legal authority, its structure tells a different story: federal actors defer, and state rules apply—even on public land.

Operators now face multiple layers of review. Colorado’s 2,000-foot setbacks, emissions mandates and bonding requirements have been used to delay or deny leases that would otherwise have moved forward under federal law.

Local leaders began raising red flags years ago. “I don’t want to see [the state] have control over drilling on federal lands,” Garfield County Commissioner Tom Jankovsky warned in 2020. Today, many say that’s no longer a hypothetical—it’s the reality.

To reverse the trend, The Alliance has proposed a revised MOU that reasserts federal primacy, restores BLM lead status and clearly limits ECMC’s role to consultation. The draft was shaped by oil and gas advocates, land use experts and energy attorneys—and includes a line-by-line rewrite of the current agreement.

The potential of whether other blue states using federal MOU’s to assert regulatory control similar to what was achieved under Vilsack in Colorado is unknown.  According to Clark, speaking as an energy operator with business in multiple states, “States like Wyoming are good partners for federal lands and minerals stewardship and development, but Colorado’s got their own agenda and they’re not listening to President Trump.”

The bottom line

The Trump administration has made clear it sees domestic energy as a matter of national security. But it won’t mean much if politicized state agencies like ECMC are still holding the keys.