Western Energy Blog

BLM issues new rules for drilling permits

In the Salt Lake Tribune yesterday:

[T]he order, which goes into effect May 7, changes how the agency tracks applications to drill, known as APDs.
[...]
BLM must have visited the proposed drilling site with the energy developer and other federal agencies such as the U.S. Forest Service and the federal Fish and Wildlife Service, if necessary. After that visit, the BLM can start work under the National Environmental Policy Act to ensure wildlife, water and cultural protections are enforced without unrealistic deadline pressure.
[...]
The order also deals with split estates... land owners will be allowed to participate in onsite inspection meetings, and drillers may be required to put up larger bonds than previously required to rectify damage caused by drilling or impoundment of by-product saline water.

New Mexico Passes New Surface Rights Law

In the Denver Post yesterday (Mar. 9, 2007):

New Mexico has a new law that requires the oil and gas industry to give notice, as well as clean up afterward and pay up if there's damage.
[...]
"We consider it to be the strongest landowner bill in the country," said Gwen Lachelt, director of the Oil and Gas Accountability Project, a Colorado-based advocacy organization for landowners that participated in the negotiations.

BDS International - an Important New Colorado Preemption Case

An important new Colorado Supreme Court case expands the scope of local regulation of oil and gas drilling projects.  In BDS International, the Colorado Supreme Court held that a "full evidentiary hearing" when it is all but clear that a local regulation affecting oil and gas drilling isn't preempted by the state. Board of County Commissioners of Gunnison County v. BDS International, LLC, 2006 WL 3627604 (Colo. App. Dec. 16, 2006). This "full evidentiary hearing" would investigate how the local regulations operate and whether this operation would "materially impede or destroy the state interest."

Under BDS Int'l, in most instances a special use permit applicant cannot rely on their own understanding of the scope of state and local laws and regulations in determining an "operational conflict" and thus preemption of an asserted local law.  [I]in determining whether the County Regulations are in operational conflict with state statute or regulation, [the court] will construe the County Regulations, if possible, so as to harmonize them with the applicable state statutes or regulations. Where no possible construction of the County Regulations may be harmonized with the state regulatory scheme, we must conclude that a particular regulation is invalid."

The bottom line for oil and gas companies: a "full evidentiary hearing" becomes all but necessary in asserting state preemption against a local regulation.  More broadly, this means more litigation risk and unnecessary compliance costs.

Oil and Gas Regulation in Colorado Faces a "Shake-up"

Several new bills are pending in the Colorado legislature that promise to have substantial impact on how oil and gas companies do business in Colorado.  Among these bills:

1. A bill to give surface owners more rights against gas companies.  (Rep. Ellen Roberts, R-Durango, and Sen. Jim Isgar, D-Hesperus).
2. New rules to curb habitat fragmentation caused by roads and closely spaced well pads.  (Rep. Dan Gibbs, D-Silverthorne).
3. Requiring the Oil and Gas Conservation Commission to cooperate with the state health department to set rules on public health.  (Rep. Kathleen Curry, D-Gunnison).

Gov. Bill Ritter himself is said to be involved in "discussions of a possible significant change in the makeup of the [Oil and Gas Conservation Commission]."  Moreover, "Last year, the commission approved 5,904 drilling permits, setting a record for a third consecutive year. Ritter has said he's not comfortable with the high number of permits being issued."