Ritter’s oil and gas rules one year later

Refinery operations in Fruita, the Colorado National Monument in the background (Williams, TCI)

All was relatively quiet on the Western Slope in terms of oil and gas legislation this past session, perhaps reflecting an overall weariness after more than a year of wrangling over the controversial drilling regulations introduced last spring.

Yet lack of action by the oil and gas industry or the grassroots activists and environmentalists opposing it shouldn’t be interpreted as acceptance of the status quo. In fact, both sides would very much like to see changes to the Colorado Oil and Gas Conservation Commission (COGCC) rules that were so hotly debated for so many months in 2008 and early 2009.

Whether those changes are pursued in another COGCC rulemaking process or in the State Legislature next session depends largely on what happens politically in November. Republicans vying for the governor’s mansion and both houses of the legislature have promised a hard look at the new and amended rules that went into effect in April and May of 2009.

Election year wait and see

Democrats want to let the new rules play out in the next boom cycle, delivering the promised protections on public safety, wildlife habitat and air and water quality before considering any significant changes. Denver Mayor John Hickenlooper, the Democratic Party’s pick for the governor’s race, has said the rules are fine but the process may have been flawed.

“He doesn’t want to open up the rules process again, obviously, and he agrees with where it ended up; he just has a critique of the tenor,” Hickenlooper spokesman George Merritt said, adding the process that began in 2007 was needlessly contentious and didn’t fully provide industry officials with a seat at the table.

Republican businessman Dan Maes, who will vie with former GOP congressman Scott McInnis in an August primary to take on Hickenlooper, has said the rules need to change and environmentalists should be ousted from the COGCC. McInnis, an oil and gas and natural resources attorney, has said the new rules need to be reworked to favor the industry and promote energy sector jobs statewide.

Colorado Oil and Gas Association President Tisha Conoly Schuller told the Colorado Independent her trade group doesn’t want to negotiate specific rule changes in the press, but that “regulatory certainty and permitting efficiency continues to drive our efforts.”

COGA has a pending law suit against the state challenging the new rules for the lack of consideration given to their overall economic impacts to both the industry and the state.

Drilling permit processing time and the looming hurdles of working with the Colorado Division of Wildlife (CDOW) on the habitat impacts of drilling were two of the biggest concerns cited by industry representatives during the rulemaking process. Both of those concerns have largely been addressed, according to COGCC director David Neslin.

Permits are now being issued in 30 to 45 days compared to 80 to 90 days when the rules first went into effect more than a year ago. Much of that backup was due to a filing rush to get applications in before the new rules kicked in.

Neslin also said only about 7 percent of permit applications are being flagged for wildlife concerns and that those issues are generally being worked out between operators and CDOW without the COGCC getting involved.

“I don’t have people coming in and saying it’s taking 80 days to get a permit – that’s just not happening – or the Division of Wildlife is being irresponsible,” Neslin said. “I haven’t heard much of that.”

Setbacks and pit liners matter

In fact, some environmentalists say the state should be doing more to protect Colorado’s wild places from the effects of natural gas drilling.

“We still need more safeguards put in place,” said Frank Smith, community organizer with Western Colorado Congress. “There is not enough attention paid to the public health and there is not enough attention paid to the very real impacts that are sustained by energy development in Colorado.”

For instance, residents of some communities want to see the state address setbacks – the distance an oil rig can be placed near a home – an issue the COGCC passed on in 2008. The current rule allows rigs 150 feet from homes.

“The rules and regs didn’t address the issue of setbacks, and that’s one of the primary issues, we feel, and one of the issues that will give major relief to residential communities,” said Dave Devanney of the grassroots Battlement Concerned Citizens. “So it was real unfortunate that the commission and the industry couldn’t agree on changing that setback rule.”

COGCC’s Neslin said dealing with setbacks would be challenging.

“There was a lot of disagreement on whether setbacks should be addressed [during the rulemaking], whether it should be extended and what the extension and expansion should look like,” Neslin said. “It’s a process that would be a potentially contentious one and would require some real time and energy to try and work through these issues.”

Besides suing over the economic ramifications of the new rules, the industry has also challenged rules dealing with the disposal of synthetic pit liners used to contain water and chemicals used in the drilling process.

The Colorado Petroleum Association wants the COGCC to drop a new requirement that pit liners be removed from a drilling site and properly disposed of in an offsite location such as a landfill.

“They basically want to allow for the onsite disposal of pit liners, and in fact they want for that onsite disposal to lack any recording as well,” WCC’s Smith said. “So they don’t want any documentation of where those locations might be.”

Without indicating how the COGCC will decide on pit liners or other contentious issues, Neslin said there is precedent for changing the new rules to fit changing circumstances. Last fall the state extended the life of drilling permits from one year to two years to align with Bureau of Land Management regulations and allow operators more time to drill multiple wells.

“One of the advantages of doing this through regulation is you can adjust the regulations without necessarily going back to the legislature and going through the legislative process, so we said throughout the rulemaking process that if there are issues that arise as we’re implementing this, we’ll take another look at some of this and we’ll adjust and modify the rules if need be,” Neslin said.

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