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State audit finds large gaps and errors in oil-and-gas reporting; regulators pledge fixes
Summary
A State Auditor performance audit presented to the committee found inconsistent data across ECMC, CDPHE and Revenue, with thousands of missing or erroneous production and emissions reports; regulators said they will implement audit recommendations and modernize databases to improve enforcement and monitoring.
The Office of the State Auditor reported significant data gaps and quality problems in Colorado's oil-and-gas reporting systems on Friday, saying the three agencies the audit examined collect different datasets that cannot be reliably compared and pointing to tens of thousands of missing or erroneous submissions in 2023.
Derek Johnson, the auditor's performance audit manager, told the Joint Energy & Environment Committee the audit could not make meaningful cross-agency comparisons because reporting rules and record-keeping differ across the Energy and Carbon Management Commission (ECMC), the Colorado Department of Public Health and Environment and the Department of Revenue. He highlighted three concrete findings: missing production reports, errors in reported production data, and failures to take enforcement actions when reports were missing.
Key numbers from the OSA presentation: ECMC had collected about 675,000 production reports but had approximately 11,000 missing reports from 2023 and 32,000 reports with data errors; ECMC's internal report that identifies missing records itself contained errors; auditors estimated ECMC missed collecting certain conservation levies from operators and could have collected up to about $191,000 more. The audit also found many operators did not file emissions data with CDPHE and that the agencies lacked the statutory data alignment to make apples-to-apples comparisons.
Regulator responses and planned fixes: ECMC Director Julie Murphy and CDPHE officials acknowledged the issues. Murphy emphasized that some problems arose from legacy IT systems and that ECMC has secured IT capital modernization funding; she signaled a modernization timeline with key steps in September 2026 and broader data intake rollout by December 2027. Murphy also described ongoing enforcement work (including an investigation into falsified consultant laboratory data that allegedly occurred between 2021 and 2024) and said ECMC is pursuing enforcement against operators responsible for contractors' submissions.
Committee concerns: Lawmakers asked why reports were accepted with erroneous data and whether enforcement policies hampered corrective action. Murphy said some operators were already the subject of open enforcement matters and that ECMC had chosen to sequence enforcement rather than piling on multiple notices; she committed to implementing the auditor's recommendations and to updating the committee on progress.
Why it matters: Accurate production, emissions and disposition reporting underpins tax collection, environmental oversight and the state's ability to track greenhouse gas goals. The auditor warned statutory changes would be needed for full comparability (for example, aligning reporting bases for production versus severance taxes), but also urged better IT, monitoring and enforcement within existing authority.
Quotes: "We found that while ECMC collected about 675,000 reports... there were still 11,000 reports from 2023 that were missing" (Derek Johnson, OSA).
"We have committed to implementing all of the recommendations from the audit" (Julie Murphy, ECMC director).
Ending: ECMC and CDPHE agreed with the OSA recommendations; ECMC has IT modernization funding in process and told the committee it will implement the audit recommendations with scheduled milestones in 2026-27.
