UPDATE: The Colorado Oil & Gas Association sent the Peak a statement on the recently-introduced legislation:

The first section of the bill makes note of the prohibition on a local-government-fee authority.  The prohibition exists because local governments earn a large local property tax; 87.5 pct of gross value on oil and gas production was established by the legislature to make sure local governments could pay for impacts from drilling.  If local governments wish to pay for their own inspectors, they have a revenue source.

The second section would require the Colorado Oil and Gas Conservation Commission to inspect every well annually; this is unnecessary.  Not only would that double the size of the COGCC in one year, the Commission would not be able to comply and staff up in an effective manner.  Wells are visited at least weekly and often times daily by company personnel who are incentivized to self-report due to the strict environmental liability laws.  In addition the industry often uses solar powered electronic telemetry to monitor pressures and tank volumes.

In the end, this bill would require a tax increase of at least $7 million, for the additional 70 FTE require. That $7 million doesn’t include the amount local government will charge.

At first read, this bill is full of cumbersome, expensive requirements of dubious merit.

Last week, Democratic Senate Majority Leader Morgan Carroll told the Denver Business Journal that the Senate Democrats planned to introduce an oil and gas regulation package this week.  The first of the regulations, SB13-202, has been submitted to the Senate by the Boulder County Democrat Contingent – Democrat Sen. Matt Jones, with House sponsor Democrat Rep. Jonathan Singer.

One of the most interesting parts of this legislation is the premise that the oil and gas industry “has led to increased risks to Colorado’s natural environment and public health”.  The bill also “declares that this act to increase the frequency of inspections of oil and gas wells is necessary for the immediate preservation of the public peace, health, and safety.”

Again, both of these claims have been refuted time and time again, most recently by a study of wells near Erie, as the Peak recently reported, which found that “a lifetime of exposure to those levels were unlikely to result in adverse health effects for people.”

Colorado Petroleum Association President Stan Dempsey offered commentary to the Peak on the newly-submitted legislation:

“CPA disagrees with the legislative declaration, Colorado’s oil and gas regulatory program is the strongest in the country.  It’s important to remember that owners of wells have an interest themselves to make sure wells are operating properly and compliant with COGCC, as they don’t want to lose product.”

The gist of the legislation is that each of Colorado’s 50,000 oil and gas sites must be inspected once per year.  Additionally, the Colorado oil and gas conservation commission must use a “risk-based strategy for inspecting oil and gas locations that targets the operational phases that are most likely to experience spills, excess emissions, and other types of violations.”

Dempsey further weighed in on the “meat” of the legislation:

“Senator Jones and his environmental allies have chosen to politicize what is administrative function.  We leave it to the Commission staff to decide the correct number of inspectors and frequency of inspections.”

He also raised concern over the removal of a prohibition in the current law that prevents local government from charging fees for inspections of the Commission’s rules.  According to Dempsey, the Commission has worked closely with Gunnison County to allow the County to inspect, not enforce, operations in the County, which has worked out well for both parties. Dempsey added:

“There is no need for a change in statute to allow local governments to work with the Commission to perform these local inspections if both a local government and Commission agree to an arrangement.”

Once again, Democrats have proposed a solution looking for a problem, as payback to their friends with hefty investments in the failing green energy sector to the detriment of Colorado’s booming oil and gas industry.