At the Capitol: Legislators attempting to alter oil and gas rules

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The Colorado Oil and Gas Conservation Commission will continue to fend off several legislative attempts to alter a wholesale rewrite of the rules governing oil and gas development across the state before they take effect as planned April 1.

A spokesman for the Department of Natural Resources, which includes the COGCC, said Tuesday that the administration stands behind the new rules, which incorporate environmental and wildlife considerations into the permitting process.

"After an extensive period of rulemaking, we feel the new rules are thoughtful, reasonable, balanced and tailored for specific geographical areas," said Theo Stein, DNR's communication director. "They should be given time to work."

Republican legislators who have been trying to forestall the rules came up with new ammunition this week in the form of a 2-year-old fiscal note.

Sen. Greg Brophy, R-Wray, and Rep. Frank McNulty, R-Highlands Ranch, on Wednesday asked Attorney General John Suthers to look into a published report that the Legislature was given misleading financial information before it authorized an overhaul of the oil and gas rules.

The Associated Press reported the Department of Natural Resources gave a $7,000 estimate to the cost of developing the new regulations but withheld another document that estimated the first-year costs at more than $1 million.

"We have a pretty clear case of deception by the administration in getting the authority to rewrite the rules in the first place," said Brophy, who last week saw the defeat of his bill calling for a 1-year moratorium on the effective date of the new rules.

Deputy DNR Director Mike King said the fiscal note dealt with a proposed bill that eventually was withdrawn but was a precursor to the legislation that led to the 18-month rule-making process. He admitted holding back the higher figure.

"One of the divisions did an analysis and came forward with a fiscal note for $6,000 and Plan B for $3 million," King said. "I felt that the higher number was unsupportable, and we were not going to drive policy through excessive fiscal notes."

Stein called the Brophy/McNulty letter to the attorney general purely political.

"This is nothing but a partisan attempt by a handful of Republicans to obstruct the rules," Stein said. "They are just trying to gin up outrage at the Ritter Administration."

Not all the opposition to the new rules is from Republicans, however.

Western Slope Sen. Jim Isgar, D-Hesperus, is among the critics who think the COGCC went too far in protecting wildlife at the expense of private property rights. He has been working for weeks to come up with a consensus bill that would soften some of the wildlife provisions in the new rules.

"Our goal is to clarify legislative intent regarding landowner consent in the wildlife rules," Isgar said. "We need to find a way to protect wildlife in a way that doesn't unduly take away property rights."

Isgar, the chairman of the Senate Agriculture and Natural Resources Committee, would like to limit wildlife protections to endangered or threatened species, or animals that could be listed if their habitat is not protected, such as a Gunnison sage grouse.

"Not all species rise to that level of concern for protection," Isgar said. He noted a surface owner could use the wildlife restrictions as an excuse to stop development.

"He might say 'no,' not because he really cares about reasonable restrictions, but maybe his intent is to deny the permit," he said. "Now you're getting into the rights of the mineral owner."

Isgar said he has been given two more weeks to come up with a bill. He already has received two week-long extensions of deadlines for bill introduction.

Isgar and Rep. Kathleen Curry, D-Gunnison, who chairs the House Agriculture, Livestock and Natural Resources Committee, predicted the rules will end up in court unless the legislature can better clarify its intent.

"The issue is whether the commission has the right to deny a permit if it can't get landowner consent," Curry said. "It's a three-way struggle between the mineral rights owners, the land owners, and the wildlife interests."

Curry said the legislature gave the commission conflicting directions when it authorized an overhaul of the oil and gas rules.

"We're still working on a bill, but I'm not very optimistic," she said. "We may just have to leave the rules the way they are and see how many lawsuits come up."

Rep. Cory Gardner, R-Yuma, also has introduced a new bill that would return the Division of Wildlife to the role of a consultant when the COGCC is considering new applications for drilling permits.

"For the last two years, we've seen the Division of Wildlife really do a power grab and become a law-making body," Gardner said. The new rules make them a "law-making body - putting restrictions on permits, imposing restrictions on surface occupancy and basically giving them a veto power on permits."

Stein denied the new rules give the DOW that level of authority.

"In no place can the division come in and dictate anything," Stein said.

Yet another bill that would prevent the imposition of any new wildlife protection rules on existing oil and gas operations was scheduled for its first committee hearing this week but was postponed at the request of the sponsor, Rep. Wes McKinley, D-Walsh.

He argues there should be an end at some point to new regulations.

"Once the well is in operation and everyone has signed off on it, then you can not make a new rule that will adversely affect the maintenances, servicing and operation of that permitted well that cost somebody a million bucks because of feeding, breeding, habitation and migration of wildlife," he said.

McKinley said he introduced House Bill 1167 in response to concerns that some wildlife advocates want to shut down gas and oil operations during deer rutting season or when the prairie chickens are brooding.

"Are you going to shut down a well because the deer don't look both ways when they cross the roads at that time of the year?" McKinley asked.

Energy industry representatives continue to argue the new rules are creating more uncertainty in an already shaky economy.

"We want to clarify the right of landowners to consent to wildlife protections," said John Swartout, the government affairs spokesman for the Colorado Oil and Gas Association. "We also are looking for limits in delays and administrative appeals."

Swartout said the industry also is concerned about plans for even more new rules dealing with riparian areas, additional reclamation standards and setbacks for drill pads.

"Let's implement the whole new rewrite of the rules before we go on to more," he said.

Stein confirmed more new rules may be coming.

"During the rule-making, the commissioners received substantial credible information about issues they were not comfortable writing rules for," Stein said. "They deferred discussion into 2009 when we will convene a new stakeholder process on these topics, like setbacks from residential homes."

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