Republicans ask AG to investigate agency
DENVER ” Republican lawmakers asked Attorney General John Suthers on Wednesday to determine if the state Department of Natural Resources violated any laws when agency officials decided not to turn over documents containing a $1.2 million cost estimate for enforcing rules on oil and gas drilling that had yet to be developed.
Republicans also demanded that a bill setting a moratorium on the oil and gas rules, which were developed last year, be revived. The bill was killed in committee last week.
By law, state agencies don’t have to provide financial impact statements to accompany legislation introduced by the administration.
Republicans made their demands after the Department of Natural Resources responded to a Colorado Open Records Act request by providing two financial estimates written in 2007, including one estimating that developing gas regulations could cost less than $7,000 the first year. A separate document put the cost of implementing any regulations that were developed at $1.2 million.
The department gave lawmakers the lower figure. It decided to withhold the higher figure for implementing potential rules because it believed that estimate was, by necessity, “wildly speculative,” and could provide ammunition for Republicans who wanted to kill the rules.
Harris Sherman, the department’s executive director, told lawmakers on Wednesday that he wasn’t in charge of the agency at the time, but he believed the agency turned over all relevant documents to lawmakers while a 2007 bill to promulgate rules was being debated.
“I believe that we have provided accurate information on what would be involved in the preparation of rule-making in the year in which this bill came forward. The department hid nothing and the department is cooperating with this committee and other committees to give you accurate information,” Sherman told the committee.
As it turned out, proposed rules regulating oil and gas development in Colorado weren’t finalized until December. The Department of Natural Resources was in transition at the time of the 2007 bill and was understaffed.
Sen. Greg Brophy, R-Wray, and Rep. Frank McNulty, R-Highlands Ranch, told the attorney general in a letter that although there are no laws requiring state agencies to turn over financial impact statements to the legislature, they wanted a determination on whether the department’s actions “represents a knowing and willful breach of its obligations to the General Assembly.”
Mike King, deputy director of the department, said Wednesday the department didn’t know what any legislation would cost because the rules were still being developed. He said the department had a better idea what the rules might be when it asked state lawmakers for permission to hire 21 people seven months after the bill had passed.
According to documents obtained under the records act, Natural Resources drew up a “Plan A” and a “Plan B” outlining potential costs of the program. It provided Plan B to lawmakers, which estimated total funding for the Colorado Oil and Gas Commission to develop the rules at $6,840, encompassing working expenses. The commission oversees the industry.
Plan A estimated the department would need to hire 12 employees at a cost of $1.2 million to begin enforcing rules. That estimate included hiring a liaison to the state Department of Health, an engineer, four compliance officers, three computer experts, a research scientist and a technician, with salaries of up to $100,000 a year.
The administration also planned to set aside another $1.8 million for a second year if the commission had to begin enforcing new drilling rules.
After being told the department believed it could carry out the program with existing resources, lawmakers approved the bill over objections from Republicans. The bill increased the number of commission members from seven to nine and required the Department of Natural Resources to issue rules to protect public safety and wildlife.
In December, the commission approved about 100 new or amended rules that are pending legislative approval. State officials say the regulations strike a balance between industry and environmental interests. If the Legislature approves the rules, they will take effect April 1.
Last year, the state issued a record 8,027 drilling permits, nearly double the 4,323 approved in 2005. Most of the permits were for natural gas.
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