Colorado lawmakers: State withheld budget figure on energy
DENVER, Colorado The Department of Natural Resources told lawmakers in 2007 that developing state oil and gas regulations could cost less than $7,000 the first year, while an internal department estimate put the cost of implementing the regulations at more than $1 million, according to documents obtained by The Associated Press.The $7,000 estimate appeared in a February 2007 financial statement given to lawmakers as they deliberated the cost of enforcing a new regulatory regime affecting the energy industry.Rep. Frank McNulty, R-Highlands Ranch, and Sen. Greg Brophy, R-Wray, questioned the estimate. They and eight other Republican legislators asked state auditors to check it. Auditors concluded the $6,840 cost was “reasonable” but were not given a department document containing the higher estimate.By law, state agencies don’t have to provide financial impact statements to accompany legislation introduced by the administration.”This is a major breach of trust,” said McNulty, who said he was assured by state budget officials last year that any initial enforcement of new oil and gas regulations would not require a substantial increase in state spending.”We have rules on how we balance the budget. I don’t know how they can run a bill that hid more than a million dollars in costs,” said Brophy, R-Wray.A state official stressed that the department didn’t know last year what any legislation would cost because the rules were still being developed.On Tuesday, the House State, Veterans, & Military Affairs Committee approved a bill that would require state agencies to submit financial estimates with legislation. Rep. Jim Kerr, R-Littleton, said he and other lawmakers voted for the oil and gas bill last year without knowing the true cost.The bill goes to the full House for debate.According to documents obtained under the Colorado Open Records Act, Natural Resources drew up a “Plan A” and a “Plan B” outlining costs of the program. It provided Plan B to lawmakers, which estimated total funding for the Colorado Oil and Gas Commission to enforce the rules at $6,840, encompassing working expenses. It did not foresee hiring of any staff to enforce the rules. The commission oversees the industry.Plan A estimated the department would need to hire 12 employees at a cost of $1.2 million in fiscal year 2007-2008. it would include 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 fiscal year 2008-2009 if the commission had to begin enforcing new drilling rules.The commission approved about 100 new or amended rules in December that are pending legislative approval. State officials say the regulations strike a balance between industry and environmental interests.Mike Mauer, executive director of the Legislative Council, which issues budget estimates for legislators, said his officials were never given Plan A.Craig Welling, deputy legal counsel to Gov. Bill Ritter, said there are no records that suggest Ritter knew of the alternate plan.Mike King, a deputy director of the Department of Natural Resources who helped the department compile the financial estimates, said the original bill introduced in February 2007 was only one paragraph long. It only called for the department to consult with the Department of Public Health and Environment before approving applications for oil and gas drilling, he said.King said the department felt it could handle applications with existing staff and that the department believed the $1.2 million estimate to hire 12 people was “wildly speculative.” He said he was concerned opponents would use the higher figure to kill the bill.He also emphasized that the department didn’t know the true cost of the legislation because it didn’t know which rules would be adopted.”I simply wasn’t comfortable letting a fiscal note drive a bill into the ground,” King said.King said a statement was tacked on to the bill that warned costs could be substantially higher if lawmakers required inspections of proposed drilling sites instead of consultations.As it turned out, lawmakers killed the original bill (House Bill 1223). They approved another bill, House Bill 1341, that 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. Ritter signed the bill into law May 29.If the Legislature approves the rules, they will take effect April 1.The rules would implement two laws requiring more weight be given to the environment, public health and safety and wildlife when approving oil and gas development.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.