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Legislature sees high number of oil and gas bills

Donna GrayGlenwood Springs, CO Colorado
Post Independent file photo/Donna Gray
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GLENWOOD SPRINGS, Colo. Colorado legislators this year are considering a profusion of bills relating to the oil and gas industry. The bills cover everything from measurement of gas production to protecting wildlife habitat and public health. Six bills deal directly with the immediate effects of oil and gas drilling and many more with funding for the bills’ mandates as well as the use of severance taxes paid by the oil and gas industry.”There are probably as many oil and gas bills in (this) one year than in the last five years,” said Greg Schnacke, executive vice president of the Colorado Oil and Gas Association (COGA).House Bill 1139, sponsored by Rep. Kathleen Curry (D-Gunnison) and Sen. Josh Penry (R-Grand Junction), would increase the amount of severance tax revenues local governments would receive in direct payments.

Currently, the state Department of Local Affairs (DOLA) gets 50 percent of those revenues and the Department of Natural Resources the remainder. DOLA gives 15 percent of its share to local governments in direct payments and keeps 85 percent in a local government trust fund which distributes the money as grants to cities, towns or counties directly impacted by energy development.The amount of direct payments is based on the number of employees working in energy-related industries.HB 1139 would increase the direct payment to 30 percent.”That would give more money to areas affected by energy,” said Aron Diaz, executive director of Associated Governments of Northwest Colorado.If the bill passes, “DOLA would have to be more selective (in its grants) than in the past. DOLA has used the grants fund to run around playing Santa Claus with everyone” whether or not they’re directly impacted by energy development, Diaz said.The bill passed the House in a vote of 60-5 last week and is headed to the Senate.”The energy impact grant fund is competitive with Arapaho and Jefferson counties, where there’s no oil and gas,” said Rep. Kathleen Curry, “and they have to come up with matching funds, so the counties with energy impacts have to grovel.”Curry was confident the bill will pass the Senate. “I think it has a good chance. Josh Penry is the sponsor and is famous for working his bills very hard.”Also sponsored by Curry and Rep. Al White (R-Winter Park) is HB 1142 that would make public county assessor records relating to oil and gas property values. Currently, those documents are confidential.The bill was driven by a state auditor’s report, White said, which concluded that more control was needed in oil and gas operations. “I think the oil and gas industry would be a beneficiary” of the bill, he said. “Anything they can do to create transparency (in their operations) should create public confidence that they’re doing what they say.”COGA is working with the sponsors on the language of the bill “to clarify how county assessors can communicate with each other and keep the confidentiality of tax records sacrosanct,” Schnacke said.White is also sponsoring, with Sen. Jim Isgar (D-Hesperus), HB 1180 that would set standards for accurately measuring natural gas production at the well head. It would also require oil and gas companies to explain the deductions and adjustments it takes out of royalty payments.However, gas is accurately measured at the well, Schnacke said. “The issue from our perspective is we’re not certain the state auditor understands how measurement works.”But putting those standards that are already at work into Colorado law “shouldn’t be a big problem,” he added.House Bill 1223, sponsored by Curry, would direct the Colorado Oil and Gas Conservation Commission (COGCC) to formulate a rule that requires it to consult with the Colorado Department of Public Health and Environment regarding the possible effects of oil and gas drilling on public health, before issuing a drilling permit.Curry admits the bill is “contentious. The idea is to minimize public health hazards. … The oil and gas industry hates it.”She said the bill’s future is complicated by the new state administration under Gov. Bill Ritter, which is also looking at possible changes to the oil and gas commission.Curry said she feels caught between the administration asking for more time to look at the whole picture and the timeframe for the bill. “We could land up with nothing,” she said.She also defended the intent of the bill.”If there weren’t health problems” associated with oil and gas operations, COGA wouldn’t have a problem with the bill, she said. “It’s their number one targeted bill, what they’re most up in arms about.”However, Schnacke said COGA is working with Curry on the bill. “At this point there’s a lot of discussion what form it might take,” he said. “(The bill) is pretty vague.”Also relating to COGCC is HB 1252, a further iteration of a bill sponsored by Curry last year to protect surface owners’ rights during gas drilling. Curry withdrew the bill while it was in the Senate, after it was weakened by compromise to the point that some of its initial supporters withdrew their backing. Underlying the bill is the issue of split estate, in which the surface and underlying minerals are owned separately. By law, oil and gas operators have the right to access their mineral leases on separately owned private surface. That has created issues with many surface owners who feel they have little or no say in gas drilling on their land.”Right now COGA can’t support it, but the session is young,” Schnacke said. “This is a fresh approach to surface owner rights and mineral rights. The bill is a departure from previous bills.”He also said there has been an increase in drilling permits issued with surface use agreements in place, and decreased activity under surface owner protection bonds which are called into play when a use agreement can’t be reached.Yet another bill targets the oil and gas commission. HB 1298, sponsored by Rep. Dan Gibbs (D-Silverthorne) and Sen. Lois Tochtrop (D-Adams County), seeks to protect wildlife habitat from the impacts of oil and gas operations. The bill would require the COGCC to establish a rule to mandate oil and gas operators to use best management practices in its operations, including appropriate reclamation of wildlife habitat it disturbs.It would also require operators to consult with the Colorado Division of Wildlife. “We haven’t taken a position on it,” said DOW spokesman Randy Hampton, “nor has the Department of Natural Resources,” which oversees DOW.The bill has won the support of the Colorado Mule Deer Association.”These (oil and gas) companies are flush with cash, and they have the know-how and equipment to avoid or dramatically minimize impacts to our wildlife,” said Bob Elderkin, of Silt, spokesman for the association. The jury is still out with COGA, however.”We’re still studying it,” Schnacke said. “Industry is trying to address it in a positive, proactive way. A lot of it is more of an educational effort for members of the legislature about what industry is doing with wildlife protection projects.”The bills will have their day in the House this week. If they pass with winning votes they will move on to the Senate.”Tuesday and Wednesday will be huge days on these bills,” Curry said. “There’s a lot of momentum for (them), but they’re also highly controversial.”Contact Donna Gray: 945-8515, ext. 16605dgray@postindependent.comPost Independent, Glenwood Springs Colorado CO


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