State regulators on Wednesday approved a mammoth overhaul of rules guiding oil and gas extraction, the culmination of a 16-month effort designed to protect Colorado's prized environment from what has been a booming industry.

The eight-member Colorado Oil and Gas Conservation Commission unanimously voted to accept the new rules over objections from energy companies and some lawmakers who fear tougher oversight will drive away jobs and harm an industry already scaling back its activities amid the recession and a plunge in fossil fuels prices.

Ritter accomplishment

The action marks a signature moment in Democrat Gov. Bill Ritter's administration, one that began when he remade an oil and gas commission once dominated by industry backers into one that gave more voice to public health, the environment and the concerns of affected communities.

The rules "give Colorado a modern, 21st century framework to better protect Colorado's residents, water and wildlife . . . while also allowing one of our most important industries to thrive," said Ritter spokesman Evan Dreyer. "The commission should be congratulated for successfully completing such an important task."

The regulations cover a vast array of activities. They include guidelines on how the industry reports its toxic chemicals, on how far wells can be drilled from drinking water supplies and homes, on pollution linked to pits containing drilling wastes and on steps to reduce impacts on wildlife.

But passage of the rules came under immediate fire from some statehouse Republicans in drilling-heavy regions who warned they would get extensive legislative scrutiny in the upcoming session.

"We need to make sure the rules have the full and fair hearing they deserve," Greg Brophy, R-Wray, said in a statement. "These rules have to be a part of the lawmaking process and should be subject to the approval of the elected representatives of the people."

Legal challenge possible

Industry critics, led by the Colorado Oil & Gas Association, have hinted that they may mount a legal challenge to the new rules.

"These rules just make Colorado more difficult to do business in, and it will cost more jobs," said COGA counsel Ken Wonstolen. "They are subject to appeal, and the whole package is unprecedented."

Wonstolen noted that Colorado lost eight drilling rigs this month, while New Mexico picked up two and Wyoming picked up three.

But others in industry say drilling slowdowns in Colorado and elsewhere are much more closely tied to a sinking economy and a collapse of natural gas and oil prices.

Sixfold jump since 2000

The sweeping rewrite of drilling rules can be traced to a drilling burst that began this decade, with a sixfold increase since 2000. And 2008 will end with a new record for permits, at more than 7,400.

The exploration surge led to rising concern from environmental groups, hunters and some Western Slope communities who feared the industrial spillover of a business carving its way into some of Colorado's most bucolic locales.

In 2007, with the election of a Democratic governor, lawmakers crafted legislation recasting the oil and gas commission - adding representatives from the state's Department of Natural Resources and Department of Public Health and Environment and requiring oil and gas regulators to give greater consideration to the state's wildlife herds when weighing drilling permits.

'Labored mightily'

By mid-2007, the new commission began drafting new rules that took into account drilling's myriad environmental impacts. Since then, industry has criticized the process, saying energy companies didn't have enough input. But regulators have countered that they incorporated ideas and criticism from interests across the spectrum.

And on Wednesday, even commissioners more supportive of industry views voted to pass the rules.

"It was a difficult choice," said Mark Cutright, who voted for the package even though he opposed many of the rules.

He did it, he said, "to move these rules to the next step for legislative review and perhaps a review in the courts if parties choose to litigate."

"We have labored mightily," said Jim Martin, head of the state health department and a member of the commission. The rules "provide the kind of balance between oil and gas production and the environment and public health that the legislature told us to do." he said.