The state Department of Natural Resources told lawmakers in 2007 that developing state oil and gas regulations could cost less than $7,000 the first year, while an internal department estimate put the cost of implementing the regulations at more than $1 million, according to documents obtained by The Associated Press.

The $7,000 estimate appeared in a February 2007 financial statement given to lawmakers as they deliberated the cost of enforcing a new regulatory regime affecting the energy industry.

Rep. Frank McNulty, R-Highlands Ranch, and Sen. Greg Brophy, R-Wray, questioned the estimate. They and eight other Republican legislators asked state auditors to check it. Auditors concluded the $6,840 cost was "reasonable," but were not given the higher estimate.

By law, state agencies don't have to provide financial impact statements to accompany legislation introduced by the administration.

"This is a major breach of trust," said McNulty, who said he was assured by budget officials last year that any initial enforcement of new oil and gas regulations would not require a substantial increase in state spending.

"We have rules on how we balance the budget. I don't know how they can run a bill that hid more than a million dollars in costs," said Brophy, R-Wray.

A state official stressed that the department didn't know last year what any legislation would cost because the rules were still being developed.

On Tuesday, the House State, Veterans, & Military Affairs Committee approved a bill that would require state agencies to submit financial estimates with legislation. Rep. Jim Kerr, R-Littleton, said he and other lawmakers voted for the oil and gas bill last year without knowing the true cost.

The bill goes to the full House for debate.

According to documents obtained under the Colorado Open Records Act, Natural Resources drew up a "Plan A" and a "Plan B" outlining costs of the program. It provided Plan B to lawmakers, which estimated total funding for the Colorado Oil and Gas Commission to enforce the rules at $6,840, encompassing working expenses. It did not foresee any hiring to enforce the rules. The commission oversees the industry.

Plan A estimated the department would need to hire 12 employees at a cost of $1.2 million in fiscal year 2007-08. It would include hiring a liaison to the state Department of Health, an engineer, four compliance officers, three computer experts, a research scientist and a technician, with salaries of up to $100,000 a year. The administration also planned to set aside another $1.8 million for fiscal year 2008-09 if the commission had to begin enforcing new drilling rules.