|Budget Issue:||May Revision Request for Additional $3.2 Million and 17 Positions to Enhance Underground Injection Control Regulatory Program|
|Program:||Department of Conservation|
|Finding or Recommendation:||Deny the request as proposed and instead appropriate, on a one-time basis, an add'l $2m from the Oil, Gas, and Geothermal Administrative Fund for the Underground Injection Control program, with no new position authority. Adopt budget bill language: (1) specifying how the $2m is to be used in the budget year, and (2) directing the administration to submit, with the Governor's 2011-12 budget, a budget request and workplan to implement the redesigned program to address identified deficiencies.|
The Division of Oil, Gas, and Geothermal Resources (DOGGR) within the Department of Conservation regulates oil, gas, and geothermal resources throughout the state. The division issues production permits and oversees the drilling, operation, maintenance, as well as the plugging and abandonment of wells. The DOGGR also provides detailed production reports on oil and gas output in the state. Within DOGGR, the Underground Injection Control (UIC) program regulates some 25,000 oilfield injection wells operating across the state under state law and federal law (DOGGR received authority, or primacy, to regulate these wells in 1983 from the United States Environmental Protection Agency [USEPA]).
Governor’s Proposal. The Governor’s budget requests an additional 17 positions and $3.2 million in funding from the Oil, Gas, and Geothermal Administrative Fund (OGGAF). These additional resources would be used to improve regulation of the UIC program and to develop regulations for emerging oil recovery technologies and techniques. In order to accommodate the additional expenditure, the per barrel equivalent of oil or gas assessment used to fund DOGGR’s operations would be raised by 1.4 cents per barrel from around 8.8 cents to around 10.2 cents.
Staffing at DOGGR Has Not Kept Pace With Workload. The administration has not requested additional staff since 1983 and so DOGGR is regulating both increasing numbers of injection wells and increasing complexity of injection wells with the same number of staff (12) as in 1983. As such, as recognized by the administration in its budget request, DOGGR is currently failing to meet both its statutory and regulatory responsibilities. For example, the USEPA has a goal that each operational well will be inspected annually—a goal currently not met by DOGGR. In addition, there are often significant delays in permit review for new well operations.
Presentation of Request During May Revision Does Not Allow for Appropriate Review. The issues identified by the administration as justification for the requested positions warrant legislative review and consideration. For example, the administration has stated that DOGGR is not currently meeting its statutory requirements, and has not been for a period of years—an issue the Legislature may wish to address through statutory modifications to the regulatory environment or increased reporting requirements. In addition, the budget request states that the work conducted by the additional resources would lead to the state requesting primacy from the federal government over a new type of injection well—a decision that should be made through the legislative policy process. The timeframe of the May Revision process does not allow for appropriate consideration of these issues by the appropriate policy and budget committees of the Legislature.
However, Need Exists Now to Begin Making Regulatory Program Improvements. Again, given the current shortcomings of DOGGR and the potential environmental harm that could be caused by injection well operations, we find that there is a need for increased resources for DOGGR to begin the process of improving regulation of injection wells as well as regulating new injection technologies. However, as the Legislature cannot fully review the budget request and associated policy implications within the constraints of the May Revision process, we find that the request for 17 permanent positions is premature. Increasing DOGGR’s appropriation from OGGAF by $2 million on a one-time basis, without any position authority, will still give DOGGR sufficient resources, including for contracts, to begin addressing some of the issues identified in the budget request.
Recommendations. We recommend that the Legislature deny the request as proposed and instead appropriate, on a one-time basis, an additional $2 million from the OGGAF for the Underground Injection Control (UIC) program with no new position authority. We also recommend that the Legislature adopt budget bill language (1) specifying that the $2 million is to be used to develop policies and to design and implement program improvements to address the identified current deficiencies in the UIC program, and (2) directing the administration to submit, with the Governor's 2011-12 budget proposal, a budget request to implement the redesigned program, along with a detailed work plan justifying the requested level of resources.