- Associated Press - Wednesday, February 17, 2016

LINCOLN, Neb. (AP) - An effort to impose new regulations on Nebraska’s oil and gas industry drew support Wednesday from environmental advocates but opposition from company officials, who say the proposals are unnecessary and redundant.

The bills were introduced in response to a public outcry that began when a Colorado energy company sought state approval to discard oil and natural gas wastewater underground in northwest Nebraska. Terex Energy Corp. later scrapped its plan, but landowners and environmental groups argue that it highlights the need for more state regulations to protect the groundwater.

One measure would require companies to carry at least $1 million in liability insurance for injection and disposal wells and at least $5 million for any site that disposes of more than 500 barrels of wastewater a day.

“The people who are in business to make a profit from wastewater disposal should have sufficient insurance coverage so that landowners and taxpayers are not left holding the bag,” Sen. Ken Haar of Malcolm, the bill’s sponsor, said in testimony to the Legislature’s Natural Affairs Committee.

Haar said several states impose similar requirements.

Industry officials argued that the bill was too vague because it doesn’t make clear whether the insurance requirement applies to each well a company owns or all of them collectively. Dana Wreath, a vice president at Berexco LLC, a Kansas-based drilling company, said his firm already has insurance for its wells in Nebraska, but smaller businesses may not be able to afford it.

Chris Peterson, a lobbyist for the Nebraska Petroleum Producers Association, said the bill could have a “chilling effect” on the industry’s growth in the state. Oil and gas drilling is a far smaller industry in Nebraska than in Colorado, Oklahoma, Kansas and other nearby states.

A second bill by would mandate the disclosure of a well’s location to nearby local governments and periodic testing at each site, among other requirements. Sen. Ken Schilz of Ogallala, the committee chairman, said he introduced the bill in response to public input last year during a series of hearings focused on Nebraska’s gas and oil industry.

The measure would change the mission of the Nebraska Oil and Gas Conservation Commission, which is required by law to “foster, encourage and promote the development” of oil and natural gas. Critics have said the state commission needs to regulate the industry instead of being a cheerleader for it.

Jane Kleeb, director of the progressive group Bold Nebraska, said the bill represents “a step in the right direction” to protect the state’s water although it doesn’t go as far as her group would like.

“We don’t feel that we should be accepting fracking waste,” Kleeb said. She also raised concerns about fracking linked to earthquakes in Oklahoma and other states.

Leon Rodak, a vice president for the Kansas-based Murfin Drilling Co., said many of the requirements proposed in the bill already exist in state regulations. Rodak said the industry has operated in Nebraska for roughly six decades, yet the state has never seen a major leak or environmental problem.

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The bills are LB1070 and LB1082

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