On April 14, 2026, the Energy and Carbon Management Commission (ECMC) published guidance for operators to claim Recycled Produced Water Credits under ECMC Rule 905.c.(6).
- Under the ECMC’s Rules, a Recycled Produced Water Credit is a tradeable compliance instrument representing one barrel of Recycled Produced Water or Recycled Produced Water Alternative.
Approved by the ECMC in 2025, the rule requires operators to use a certain percentage of Recycled Produced Water and Recycled Produced Water Alternative for Well Stimulations. Ultimately, the rule is designed to decrease the amount of fresh water used during oil and gas operations. The rule sets the minimum average use at 4% beginning in 2026. Minimum average use increases to 10% in 2030, with further increases in 2034 and 2038.
If an operator demonstrates that its average percentage use exceeds the minimum required percentages for specific reporting periods, it may claim the total volume used above the minimum during the reporting period as credits. To ensure operators create credits, ECMC guidance requires, among other steps, that operators adhere to the following process:
- Operators of oil and gas locations must submit, and the ECMC must approve, a Form 4 Reuse and Recycling Plan that complies with the requirements of Rule 905.a.(3) (Reuse and Recycling) and Rule 905.a.(4).D. (Waste Management Plans).
- Operators must submit Reuse and Recycling Plans no later than 45 days after the quarterly reporting period for which the operator seeks credits. The ECMC will endeavor to approve or deny the Reuse and Recycling Plan within 30 days.
- If the Reuse and Recycling Plan is submitted by the 45-day deadline and approved, the oil and gas location will be eligible to generate credits for that quarterly reporting period and subsequent reporting periods.
Note: the ECMC will approve Reuse and Recycling Plans retroactively for the first quarter of 2026 if submitted prior to January 1, 2027.
The ECMC calculates compliance based on the water volumes reported in Quarterly Water Reports (Form 47). Produced water produced prior to January 1, 2026 may be considered as a source of Recycled Produced Water or Recycled Produced Water Alternative.
The rule and recent guidance follow Governor Jared Polis’s 2023 signing of HB23-1242, which directed the ECMC to adopt rules requiring statewide reductions in fresh water usage, with a corresponding increase in the use of recycled or reused produced water, at oil and gas locations.
The rule, relevant definitions, and the text of the ECMC’s Guidance on the Generation of Recycled Produced Water Credits, can be found at the ECMC’s website.
Beatty & Wozniak’s environmental and regulatory teams are available to assist clients with the ECMC’s regulations covering water volume reporting, establishing Reuse and Recycling Plans, deadlines to request credits, and any other questions.
For additional guidance, please contact Chris Colclasure or Craig Rowland.