Oil and gas group sues regulators over new energy rules

The battle over Colorado’s new oil and gas rules will shift to the courtroom as a result of a lawsuit that labels them “the most costly and burdensome” regulations the industry faces in any state in the nation.

The Colorado Oil & Gas Association filed the suit Friday in Denver District Court against the Colorado Oil and Gas Conservation Commission.

The industry group accuses the commission of failing to fully consider the impacts of the new rules, which took effect April 1 on nonfederal lands.

“As a result, the New and Amended rules can negatively impact the state’s business climate by impeding the ability of local businesses to compete with out-of-state businesses, by discouraging new or existing businesses from moving to this state, and by hindering economic competitiveness and job creation,” the suit states.

The commission’s director, Dave Neslin, defended the new rules, saying they included a lot of compromise and industry input, and passed legal muster with the state Attorney General’s Office and lawyers for the state legislature.

“We look forward to presenting our case to the court and we’re confident that the court, like the Attorney General’s Office and the attorneys for the legislature, will uphold the commission’s actions,” he said.

COGA says the commission’s required regulatory and cost-benefit analysis understates or entirely omits economic impacts, probable costs and consequences of the new rules. It says the state failed to analyze less costly or less intrusive methods for achieving the rules’ purported purposes, or to disclose the rules’ effects on consumers, private markets, small businesses and jobs.

The state this year has seen a sharp reduction in drilling activity, which the industry has blamed partly on the new rules. However, Neslin said he believes the rules are balanced and will create a sustainable framework for the industry to succeed once natural gas prices rise, the credit market loosens and pipeline capacity increases.

Neslin said he believes the state satisfied all the legal requirements for the regulatory and cost-benefit analysis. Working with two economic consulting firms, commission staff spent more than 300 hours on a document that is more than 180 pages long and addresses 13 specific questions for each rule, he said.


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