This State for Sale: A Special Report

The state's oil and gas industry proves that the squeaky wheel gets the grease.

Sid Lindauer's family has been ranching in western Colorado for three generations, fighting winter storms, brushfires and outbreaks of disease, but never worrying much about what went on in the state legislature.

Until now.
The area around Lindauer's ranch just outside Parachute is dotted with natural-gas wells, part of a huge pumping operation by the Unocal Corporation. Lindauer and several of his neighbors have been trying to get some control over the location and size of the gas wells the company has drilled around their homes, but they've discovered that Colorado law is written to give the oil-and-gas industry final say over almost all of those decisions.

"We're trying to preserve our ranch as much as we can," says Lindauer. "All the rules and regulations work toward their interests."

Lindauer has appealed to the Colorado Oil and Gas Conservation Commission, which is charged with regulating the industry, to reduce the impact of the often noisy and smelly wells. But the commission has never been much help. "They told me over the phone, 'Our business is not protecting the public, it's contributing to the development of oil and gas in Colorado,'" says Lindauer.

Colorado's legal bias in favor of the oil-and-gas industry is no accident. And Bill Owens did much to make it that way--during his fourteen years as head of the oil industry's main lobbying group--at the same time that he served in the state House and Senate.

Owens was state director for the Rocky Mountain Oil and Gas Association, a federation of 400 companies that lobbies for lower taxes and less regulation. He was paid up to $75,000 a year by the group, on top of his legislative salary. During those years, Owens regularly voted on legislation affecting the industry, including safety requirements, tax rates and appointments to the oil and gas commission, casting 52 out of 54 votes in favor of oil-and-gas producers. In 1989 he cast the deciding vote to kill a proposal that would have increased the liability of gas-station owners for leaking underground storage tanks.

In 1994 Owens resigned his position with the oil and gas association to make a successful run for the state treasurer's office. During last fall's campaign, he told reporters that during his time in the legislature he had never violated the state's ethics law, which bans elected officials from voting on bills in which they have "a personal or private interest." For a politician with nothing to hide, however, Owens's official biography on the State of Colorado Web site makes a curious omission. Rather mysteriously, that document says "Owens was named executive director for a Colorado trade association in 1980," making no reference to the energy business.

As governor, Owens is now in a position to do a host of favors for the industry that once employed him. In March he appointed three members to the oil and gas commission; two of those new commissioners, Daniel Skrabacz and Abe Phillips, have worked in the petroleum industry for years. Phillips also donated $100 to Owens's campaign.

All of this is troubling to Lindauer, who recently testified at the legislature in favor of Representative Bill Kaufman's bill, which would have prohibited most members of the oil and gas commission from having a "significant financial interest" in the industry they're charged with regulating. The bill was killed in the House after the oil industry lobbied against it.

Owens knew that many people around the state thought the oil and gas commission needed independent voices, Lindauer says, but the governor chose to ignore that sentiment when he named the new commissioners. "I was very disappointed with his appointments," he adds. "That board has to be balanced out to protect the public interest."

But the governor's spokesman, Dick Wadhams, says it would be ridiculous for Owens to avoid nominating industry people to the commissions that regulate their fields. "If it's not good for someone with an energy background to be on the oil and gas commission, should we not have people with agricultural backgrounds on the state agriculture board?" he asks.

Although his background includes work as a petroleum engineer, new commissioner Skrabacz insists he can be fair to landowners who come into conflict with natural-gas producers.

"I'm not carrying an agenda for the industry," Skrabacz says. "I know what my objective is: listening and having a dialogue with the surface owners."

The oil and gas industry rallied around Owens last fall, pumping thousands of dollars into his campaign. Prominent contributors included oilmen Cort Dietler, Philip Anschutz, Bruce Benson, Sam Gary, Fred Hamilton and Phillip Marcum. Companies that helped fund Owens's effort included Texaco, Sinclair, Amoco, Total Petroleum, Chevron, Gerrity Oil and Gas, and Patina Oil and Gas.

The industry's largesse didn't end with the campaign, either. For the extravagant inaugural ball that marked the beginning of the Owens administration, many of the new governor's friends from his days as an industry cheerleader opened their wallets. Benson, Dietler, Amoco and Texaco all ponied up $15,000 for the exclusive party, while Colorado Interstate Gas contributed $12,500.

Despite Owens's long affiliation with the industry, Greg Schnacke, executive vice president of the Colorado Oil and Gas Association, insists Colorado's new governor is not a tool of oil and gas interests. "I think the governor understands the nature of the oil and gas industry," he says, "but I don't think he's given us any special attention."

Owens's critics in La Plata County would disagree.
These days, the state's most bitter disputes over natural-gas pumping are coming from its southwestern corner. Dozens of residents have complained about noise and groundwater contamination from the 1,000 natural-gas wells in La Plata County.

"We produce the most natural gas in the state in La Plata County," says Gwen Lachelt of the San Juan Citizens Alliance, a Durango-based group that has clashed with the gas industry. "Here's this incredible gas resource, and it's right in people's backyards."

The nature of rural Colorado has changed, Lachelt explains, and residents increasingly live on 35-acre plots of land instead of the large ranches that once dominated the area. While a rancher could easily ignore pumping taking place in a corner of his ranch, that's not so easy when the pumping may be going on next door, she says.

"Colorado is a much different state now than it was in the 1950s," she observes.

In La Plata County, as in many other parts of Colorado, people have purchased land to build homes without buying the underground mineral rights. That means a gas company that acquires those rights can pump gas on the land legally. And even if a landowner has the mineral rights, under the legal concept of "pooling," he can be forced to allow the construction of a natural-gas well if the gas company owns the mineral rights on adjacent tracts.

Beyond the noise and smell of these wells, though, the biggest issue for their neighbors is water contamination. Since almost all rural Coloradans get their water from underground aquifers, they're concerned about the substantial amount of runoff from natural-gas pumping. They worry that chemical-laden water will be allowed to sink into the ground and get into their drinking water.

"We have hundreds of people here who have methane contamination of their well water," says Lachelt.

Such complaints led the La Plata County commissioners to create their own regulations for the industry last year. That law, a first for Colorado, says that surface-property owners should have the right to determine where a natural-gas well can be built on their property.

While Lachelt insists that her organization simply wants to give landowners some say over the location of gas wells on their land, Schnacke says that the people fighting the industry in La Plata county want to shut down natural-gas production altogether. "It's a 'not in my backyard' group," he claims. "They're opposed to all gas development."

Schnacke notes that La Plata County collects significant amounts of property-tax revenue from gas pumping and says that many in the area favor natural-gas development. The county's new regulations aren't fair to them or to the industry overall, he claims: "That regulation diminishes the rights of the mineral estate."

La Plata County's rules are being challenged in court by Owens's former employer, the Rocky Mountain Oil and Gas Association, as well as the Colorado Oil and Gas Association. The state Oil and Gas Conservation Commission recently joined those groups in their lawsuit against La Plata County, an action that infuriated many locals.

"I'm very disappointed they took the stance they did," says La Plata County Commissioner Josh Joswick. "I think the oil and gas industry has a real large voice at the state level--at the oil and gas commission, in the legislature and at the governor's office."

The county's regulations aren't designed to prevent gas pumping, he explains, but to give some say to property owners about what goes on next to their homes. "We're saying the guy who has the surface rights shouldn't be run over roughshod," Joswick says.

But Joswick also recognizes that La Plata County is up against a powerful adversary that enjoys unique access to Colorado's corridors of power--all the way from the oil and gas commission to the governor's office.

"We're saying that we don't agree that they can do whatever the hell they want to do," he adds. "But it's an uphill fight.

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