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Colorado Lawmakers Block New Oil, Gas Restraints

With only one day to go before the Colorado General Assembly is scheduled to adjourn, the energy industry and Gov. John Hickenlooper, a Democrat, have quashed nearly all proposed legislation to revise state oil and gas regulations.

Democratic lawmakers had filed eight bills in this session that were focused on tightening up oil and gas drilling oversight, but ahead of Wednesday's adjournment, only one bill remains, and it was in committee on Tuesday.

The state Senate late Monday defeated HB 1269 by a vote of 25-20. The legislation would have changed the mission of the Colorado Oil and Gas Conservation Commission (COGCC), prioritizing health, safety and environmental issues over regulating oil and gas resource extraction. It also would have barred oil and gas industry representation on the commission.

Hickenlooper, a former geologist who has been at odds with members of his party, some towns and with state conservation groups, opposed the measure, as had the director of the Colorado Department of Natural Resources, of which the COGCC is a part.

The Colorado Oil and Gas Association (COGA) had lobbied hard against the bill, arguing it was redundant and unworkable (see Shale Daily, May 2).

COGA said Colorado couldn't stay competitive if it kept changing the rules and regulations every five years. Current regulations call for three oil and gas representatives to serve on the nine-member commission. In 2008 as part of a complete overhaul of the COGCC, industry representation was reduced at the same time the panel was enlarged, going from five members out of seven to the three out of nine.

The bill included a redefinition of "waste" or the unnecessary loss of the resource through inefficient operating practices, which would subordinate the COGCC's historic charge to prevent waste and protect correlative rights to the protection of public health, safety and welfare, the environment and wildlife.

This change, COGA maintains, would invite challenge to every COGCC decision based on a contention by a neighbor, member of the public, or organization that it negatively impacts public health, safety, and welfare. "This would have a dramatic impact on mineral rights owners everywhere," COGA spokesman Doug Flanders said, noting that a six-state interstate compact commission agreed to the current definition in 1935. Dozens of cases and thousands of regulatory decisions have been based on the current law.

Also going down in defeat Monday was HB 1361, legislation that would have required more stringent groundwater testing in the Greater Wattenberg Field in Weld County and neighboring counties.

Three Democrats who had been for the groundwater bill changed their votes Monday night and sided with Republicans, sending the bill to defeat by one vote.

The state now requires drillers to conduct groundwater testing, but in Weld County and the surrounding area, more flexibility is allowed under current regulations because of the amount of drilling ongoing. Hickenlooper, COGCC staff and industry groups had argued that the bill's passage would undermine regulators.

As of Tuesday morning, only one piece of legislation that would impact the industry remained up for consideration, HB 1267, to increase maximum fines for spills and other environmental accidents to $15,000. It also would remove the overall cap on the amount of penalties that may be imposed. Hickenlooper staff and House Majority Leader Dickey Lee Hullinghorst, a Democrat, were in negotiations, according to the governor's office.

Hickenlooper has indicated that he's in favor of increasing the penalties for spills.

Already suffering defeat in this session was HB 1273 to create more funding for local government oil and gas oversight activities, as well as HB 1275, to study Front Range oil and gas health.

SB 202, which would have added about 30 more oil and gas inspectors and required all oil and gas facilities to be inspected annually, was amended. The annual inspection requirements were removed, and as part of the budget appropriation, 14 new inspectors are to be added to COGCC staff.

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