This is up from the 350 feet buffer it had floated earlier this year.
That's raising concerns from not just energy companies but also the real estate and agriculture industries, among others.
Homebuilders and farmers are among those pushing for a smaller distance, or setback, while some environmental groups and residents concerned about potential health effects of being near rigs are seeking larger setbacks.
The Colorado Oil and Gas Conservation Commission said the draft rules also would make the state the only one to require sampling of water wells near drilling sites both before and after drilling to show whether drinking water aquifers have been tainted. They also would require more mitigation measures for drilling within 1,000 feet of homes.
The commission plans to consider the proposals in hearings Jan. 7-9.
"These proposed rules reinforce Colorado's role as a national pacesetter in the comprehensive and progressive regulation of oil and gas exploration and production," said commission director Matt Lepore in a written statement. He acknowledged the rules won't leave any set of interests completely satisfied.
Current rules require setbacks of 150 feet in rural areas or 350 feet in urban areas. Raising that to 500 feet could leave chunks of land unavailable for new buildings, affecting builders' profits, said Colorado Association of Home Builders CEO Amie Mayhew. A developer's costs of leaving land near rigs untouched could be passed on to other buyers in a subdivision, boosting costs for home buyers, she said.
Mayhew contends there is little scientific evidence to support increasing the setbacks, though her association was open to working with the earlier proposal of 350-foot setbacks.
"Clearly what's being done is being done because of political pressure, and that's frankly the wrong reason to do what we're doing," Mayhew said.
Colorado Farm Bureau Executive Vice President Chad Vorthmann said loan values dependent on the potential for development could be hurt by larger setbacks. The larger buffers also could push rigs further into fields and put them in the way of irrigation operations.
"What we're really supportive of is mitigation measures, things the industry is doing to minimize the nuisance, noise and dust that can happen during drilling operations. Those things should mean more to people than how far a wellhead is to a property," Vorthmann said.
The draft rules would require a hearing in front of the oil and gas commission before any drilling within 1,000 feet of schools or other high-occupancy buildings, up from an earlier suggestion of 750 feet.
Mike Chiropolos of the environmental law group Western Resource Advocates said his group supports a 1,500-foot threshold. "For schools and nursing homes and hospitals, it's very simple. You've got very high numbers of vulnerable populations who are in these buildings on a daily basis," he said.
As for the groundwater sampling proposals, he said the exceptions are too wide for operators in the mineral-rich Wattenberg Field in northeast Colorado who only have to sample once per section. Oil and gascommission staffers are contemplating requiring more frequent testing but haven't settled on details yet.
The state's rules are being updated as drilling has moved into more populated areas. The commission has spent nearly a year gathering input from stakeholders including local governments and mineral rights owners.
The Colorado Oil & Gas Association, a trade group, was reviewing the draft rules. The association helped launch a statewide voluntary groundwater testing program. It said any new rules must be "reasonable, cost-effective, fair and responsive to stakeholder interests."