Oil & gas regs slip by lawmakers

The Colorado Statesman

Gov. John Hickenlooper avoided painful decisions on strict oil and gas regulations proposed by fellow Democrats in the state legislature after his administration’s lobbying efforts resulted in bills that didn’t have the votes, or were so watered down that they were no longer controversial.

The most recent demise came this week when Rep. Mike Foote, D-Lafayette, decided to spike his House Bill 1267, which would have increased industry fines. The governor’s lobbying team fought to strip from the proposal a minimum fine of $5,000 per violation per day. That revision came two weeks ago in the Senate Appropriations Committee.

When the measure made it back to the House for concurrence, the House voted to form a conference committee. An amendment was proposed to set the mandatory minimum at $2,500 per day. But on Wednesday morning, the Senate rejected the compromise, with four Democrats joining Republicans to oppose the effort.

Foote shortly after decided to kill the measure in the House, suggesting that without the minimum fine, the legislation no longer had teeth.

“There’s nothing that I’ve seen that would make me think that they’re going to change that behavior until it’s passed,” Foote said.

The bill would have increased fines from $1,000 per day to $15,000 per day. But Foote pointed out that the Colorado Oil and Gas Conservation Commission, appointed by the governor, could still impose fines so low that environmental disasters could be considered simply a cost of doing business. Without the minimum daily fine, he said there would be no incentive to take action.

Foote cited an example, a case in the past month where the COGCC reduced an $85,000 fine to $25,000, and another recent ruling to slash a $1.5 million fine to $422,000 for benzene pollution that had lasted for more than a year.

“On the significant adverse impact cases, they don’t come close to fining what they could fine…” said Foote. “They do an initial markdown… and then they typically give a discount.”

Sen. Matt Jones, D-Louisville, sponsored the measure with Foote. The two lawmakers hail from Boulder County, where voters have recently raised increasing concerns over hydraulic fracturing. The controversial drilling process has spread across the Front Range in recent years.

So-called “fracking” employs the pressure of a fluid — often times including chemicals, sand and water — to increase extraction rates. Concerns have grown that water can become contaminated. There are also noise, congestion, air pollution and resource fears.

Longmont voters this past November banned fracking. The city is also facing a lawsuit from the governor’s administration after the municipality enacted its own strict oil and gas rules and regulations, separate of the state’s rules. Hickenlooper, a former geologist, has earned the nickname “Frackenlooper” for his loyalty to the industry.

Jones acknowledged that much of the problem this year advancing tough oil and gas regulations came as a result of lobbying from the governor’s administration, including the Department of Natural Resources. He also noted nearly two-dozen oil and gas lobbyists who roam the Capitol’s halls.

“There’s 20-plus oil and gas lobbyists, and the Department of Natural Resources didn’t support many bills, in fact, they actively opposed…” he said.

But Jones is not bitter that those from within his own caucus, including his Democratic governor, would not support the effort.

“People get to vote however they want…” he said. “I think people have the right to vote how they want to… I respect that. But the other side of the coin is that real people are being adversely affected every day.”

Hickenlooper had supported increasing fines. In fact, the industry as a whole had also supported the increased fines. They were mostly opposed to the mandatory-minimum.

Shortly after Foote killed HB 1267, Hickenlooper issued an executive order directing the COGCC to review its enforcement program, penalty structure and imposition of fines.

“The Colorado Oil and Gas Conservation Commission should re-evaluate its enforcement philosophy and approach and strive to structure fines and penalties to ensure that operators comply with rules and respond promptly and effectively to any impacts from such violation,” states the order.

Still, environmentalists did not appear impressed: “Coloradans rightfully concerned about the increasing impacts of drilling and fracking on our children, communities, public health and environment were pushed aside by an aggressive lobbying effort from the multi-billion dollar oil and gas industry,” stated Pete Maysmith, executive director of Conservation Colorado.

“At times working in concert with the Hickenlooper Administration, the industry was able to defeat, or significantly weaken, measures that would have brought greater transparency and accountability to their operations and given equal weight to protection of environment, public health and communities,” he continued.

Other oil and gas bills lost

Environmentalists also lost House Bill 1269 this week, which would have prohibited a newly appointed COGCC commissioner from being employed by an oil and gas operator.

Foote and Jones also sponsored the legislation.

The aim of the bill was to change the mission of the commission to highlight a more environmental approach.

The legislation would have also redefined “waste” to reduce it and maximize production. Some in the industry feared that redefining “waste” would have allowed the state to prevent mineral-rights owners from taking all of their property out of the ground.

The bill changed at various points throughout the process, at one point removing the conflict-of-interest proposal. Ultimately, though, the goal of the legislation was to repurpose the commission to focus less on the industry and more on the environment.

A handful of Senate Democrats joined Republicans in opposing the bill, and so the votes were not there to send it along to the governor.

The same happened with House Bill 1316 when several Senate Democrats joined with Republicans to kill the bill on amendments.

The legislation would have added the Wattenberg Field in Weld County to the state’s newly adopted groundwater-testing program. It requires water quality testing both before and after a well is drilled.

Environmentalists had complained that the heavy drilling patch was given a loophole in the new rule.

House Majority Leader Dickey Lee Hullinghorst, D-Boulder, and Rep. Joe Salazar, D-Thornton, and Sen. Jessie Ulibarri, D-Commerce City, sponsored the measure.

The fate of the three oil and gas bills this week fell in line with a series of other measures targeting the industry, all of which died this year. Those include:

• House Bill 1268, sponsored by Rep. Dominick Moreno, D-Commerce City, which would have required sellers of real estate to disclose any mineral rights associated with the property. The measure died in a Senate committee on May 1;

• House Bill 1273, sponsored by Rep. Randy Fischer, D-Fort Collins, which would have required oil and gas operators to pay a state fee to offset local government’s costs of having a designated person work with the COGCC on reviewing applications for drilling and operating permits within those local jurisdictions. The measure died in a Senate committee on April 30;

• House Bill 1275, sponsored by Rep. Joann Ginal, D-Fort Collins, which would have authorized a review of health data related to the effects of oil and gas operations in Larimer, Weld, Boulder and Arapahoe counties. The measure died in a House committee on April 11; and

• Senate Bill 284, sponsored by Sen. Morgan Carroll, D-Aurora, which would have expedited the health department’s review process for oil and gas operators committed to honor enhanced air and water pollution control standards.

In total, Democrats had pushed nine oil and gas bills this year, but only two made it through. Those include:

• Senate Bill 202, sponsored by Jones, which would require a study to identify the riskiest oil and gas activities in order to create a risk-based strategy for inspecting well sites. The bill had originally sought to have enough inspectors to inspect each location once per year, but it was later amended. The bill is awaiting the governor’s signature; and

• House Bill 1278, sponsored by Rep. Diane Mitsch Bush, D-Steamboat Springs, which would require an oil and gas operator to report an oil or waste spill of one barrel or more within 24 hours. The measure is awaiting the governor’s signature.

The fight continues

Democratic leadership acknowledged this week that their ambitious oil and gas agenda was not nearly as successful as they would have liked. They say the key is empowering citizens to rise up against the massive oil and gas lobby. Convincing the governor is also key to their agenda.

Hickenlooper said he is open to a discussion, acknowledging that he would continue to have a voice on oil and gas bills. The governor also expressed his faith in the industry.

“We certainly had a voice…” said Hickenlooper. “But the vast majority of oil and gas companies are very careful, never make mistakes, or rarely make mistakes. And when they do make a mistake, they’re happy to pay a fine to make sure there’s an aggressive cleanup.”

Democrats say they will be back next year with more proposals, perhaps in-cluding empowering local governments to enact their own rules and regulations without fear of the state suing.

“Oil and gas is just getting started,” said Carroll. “We did get some smaller pieces through that by no means are insignificant. But the record pace of oil and gas drilling, places that are closer and closer within municipal city limits, means that this issue is affecting property owners throughout the state. So, there’s a lot of unresolved issues.”

Hullinghorst agreed with the Senate majority leader, committing to addressing the issue again next year.

‘’I think what happened was a good start on a very complex issue and one where there isn’t broad consensus, particularly among the leadership and the leaders in this area…” explained Hullinghorst. “We as a group of Democrats in the House, and some in the Senate, worked very hard to put forward common sense, reasonable approaches. We didn’t succeed a whole lot this year, but that doesn’t mean we won’t in the future.”

Maysmith agreed, adding that environmentalists also plan to carry the torch: “Even with the defeat of these common sense bills, Coloradans will continue our work to make sure the oil and gas industry takes responsibility for its actions, just like the rest of us do, and is held accountable for its impacts on our state and our neighborhoods,” he stated.

Meanwhile, the oil and gas industry is preparing for another battle next year: “The most disturbing aspect of this session’s tone was the vilification of Coloradans who provide the oil and gas that we all require,” stated Tisha Schuller, president and chief executive of the Colorado Oil and Gas Association.

“There were bills that tried to rewrite the oil and gas rules that were overhauled less than five years ago, with some attempting to rewrite rules passed in January that hadn’t even gone into effect,” she continued about the recent rulemaking of the COGCC.

“Confrontation is easy, however, successful collaboration takes effort and diligence,” concluded Schuller. “We look forward to a continuing dialogue with our legislators.”

Peter@coloradostatesman.com