Updated rules for oil and gas industry fuel outcry by some Republican legislators

Reps. Greg Brophy, Laura Bradford might introduce legislation if final version of rules pose a risk to jobs

By Jody Hope Strogoff
THE COLORADO STATESMAN

The Colorado Oil and Gas Conservation Commission unanimously approved updates to state rules that it says will provide greater protections for Colorado’s water, wildlife and communities while enabling the state’s oil and gas industry to thrive. But the announcement mid-week has already angered legislative Republicans who feel that the Commission is usurping the role of the General Assembly in drafting new rules governing the energy industry in the state. Republicans are also upset about the potential effect the new rules could have on Colorado’s faltering economy.

The Colorado Oil & Gas Association, the industry’s trade organization, is also upset over the rules that they say will create “the most expensive, time consuming and burdensome regulatory environment in the nation.”

The overall impact of the rules, said John Swartout, vice president of the Association, “officially makes Colorado the most challenging state in the nation for the natural gas and oil industry to conduct business. Particularly during these uncertain economic times, Colorado’s natural gas and oil industry needs a stable regulatory environment to thrive…”

Those sentiments were echoed by state Rep.-elect Laura Bradford, a Republican from mineral-laden Mesa County on the Western Slope. “The last thing we need right now is over regulation that kills jobs,” said Bradford. “If the final version of these new oil and gas regulations further restricts an industry’s ability to stay in Colorado, and to keep jobs in Colorado, they are not in the best interest of Colorado families. If these rules would have that impact, I believe the Legislature has a duty to act.”

The rulemaking was directed by the General Assembly following the adoption of House Bills 1341 and 1298 in 2007. The Legislature will review the rules in the 2009 session. But already two GOP critics point out that they and their legislative colleagues will have final approval over any regulations made by the COGCC. The majority of Republicans opposed HB 1341, sponsored by Democratic Rep. Kathleen Curry of Gunnison and Sen. Jim Isgar of Hesperus. Assistant Senate Republican leader Greg Brophy, of Wray, said this week that “ever since the Oil and Gas Commission was overhauled, it’s acted like it has sole governing power over Colorado’s energy sector, but the fact is all the rules it makes must be approved by us, the elected representatives of the people.”

Sen. Josh Penry, of Fruita, the new Senate minority leader, was also critical of the fast tracking of the controversial new oil and gas rules. “I don’t know if the Oil and Gas Commission reads the paper, but we don’t need another job-killer right now,” Penry said.

COGCC approved the revised guidelines by an 8-0 vote after more than 12 hours of public meetings across the state. Twelve days of hearings were held, and the final package, according to the Commission, reflects a substantial number of modifications drawn from the comments and suggestions of industry representatives, local governments, conservation groups and others.

The new and modified rules will establish protection zones around streams that serve public drinking water supplies; require companies to disclose the chemicals they use in drilling operations to state and emergency responders; reduce odors of oil and gas development near homes and schools in northwestern Colorado; manage erosion and reduce water pollution around oil and gas operators during storms and snow run-off seasons; allow the state health department and state wildlife agency to consult on oil and gas development; and provide notice to nearby landowners and public comment periods for development proposals.

Swartout from the Colorado Oil and Gas Association said the rules add numerous and burdensome layers to an already cumbersome process. A host of new parties, such as the Colorado Department of Wildlife and the Department of Public Health and Environment, as well as surface owners, he said, will be able to appeal. “Nowhere else in the nation is this even possible,” Swartout said.

“We are committed to working closely with industry to ensure these rules work as intended,” said Harris Sherman, director of the Colorado Department of Natural Resources and the chair of the Oil & Gas Commission. “We will pay close attention during the implementation phase to make sure the transition phase proceeds as smoothly as possible.”

Commission members stressed that the new rules will provide industry operators with the ability to submit large-scale development plans that will expedite or eliminate certain permit reviews. Almost all of the environmental changes reflect practices already employed by some companies, they pointed out. In addition, they said that key rules were limited to suit geographical conditions.

“These rules result reflect a responsible balance between our commitment to support the oil and gas industry and our need to protect water, wildlife and public health,” said David Neslin, acting director of the Commission. “The final rules reflect substantial input from industry and those rules that make the biggest changes reflect the most input. It’s a substantial approach that will allow industry to grow while we protect the natural assets that support the rest of the economy.”

Brophy said that he and Bradford plan to introduce legislation this session if the final version of the rules contains any provisions that pose a risk to jobs. Bradford said that while there was little the state could do to address the economic and financial pressures, the rules are the one area where the state can keep a bad situation from becoming worse.