State bill would withhold revenues from counties that thwart oil drilling

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Oil & gas issues in Routt County

— A bill before the Colorado Legislature that appears to threaten hundreds of thousands of dollars in annual revenue to Routt County from energy severance taxes is on hold after a hearing before the House Agriculture, Livestock and Natural Resources Committee on Monday.

As it stands, House Bill 1356 would have imposed a financial penalty on any local governments in Colorado that “in any way restricted or delayed the ability of an oil and gas producer to” exercise rights to extract oil and gas.

The penalty would come from the withholding of mining and energy-related severance taxes returned to local governments by the state.

County Finance Director Dan Strnad confirmed Tuesday that Routt County received $528,106 in severance tax revenues through the Colorado Department of Local Affairs in 2011. The money goes in the county’s Road and Bridge Department fund, Strnad said.

It appears the sanctions in the bill won’t be as far reaching when it returns to committee Wednesday.

The Durango Herald reported Tuesday that state Rep. Jerry Sonnenberg, R-Sterling, who co-sponsored the bill and chairs the committee, began Monday’s session by announcing he intends to rewrite the bill so that it applies only to governments that impose moratoriums on new drilling permits.

“After we heard testimony yesterday, the bill was laid over,” state Rep. Randy Baumgardner, R-Cowdrey, said Tuesday. Baumgardner, whose House District 57 includes Routt County, is vice chairman of the Agriculture, Livestock and Natural Resources Committee. He said Sonnenberg sought a timeout after hearing testimony, including opposition from Colorado Counties Inc. and the Colorado Municipal League. The other co-sponsor of the bill is state Sen. Greg Brophy, R-Wray.

Baumgardner has not endorsed the bill.

“It may come back (to committee), or it may not,” he said. “Or there may be some amendments offered if we ever hear it again. I’m still just listening. I’m here to represent my constituents.”

Baumgardner is challenging state Sen. Jean White, R-Hayden, in the June 26 primary race for Senate District 8, which includes Garfield, Grand, Jackson, Moffat, Rio Blanco, Routt and Summit counties. Breckenridge resident Emily Tracy, a Democrat, also is seeking the seat. Craig Libertarian Sacha Weiss declared for the seat in late March.

White said late Tuesday afternoon that she does not support holding up severance tax dollars due local governments and expects the language of the bill to be changed as soon as Wednesday.

“I oppose it in its present state,” White said. “For the most part, it’s bad for local governments.”

The bill as written would have penalized local governments that delay oil and gas producers by withholding severance tax revenues that typically are funneled back to local governments where energy and mineral extraction take place. It also would have affected future energy impact grants.

Routt County Commissioner Diane Mitsch Bush said Tuesday that the bill would usurp local authority.

“In my mind, this is another attempt to take away local land-use authority,” Mitsch Bush said.

Mitsch Bush is running as a Democrat for the newly created House District 26, comprising Eagle and Routt counties.

The annual amount of Routt County’s severance tax revenues is calculated through a complex formula and varies widely, in part because of changing prices paid for extracted minerals and different forms of energy, Strnad said. In 2009, Routt received $957,244, and in 2010, the number dipped to $263,797.

The bill’s late entry into the legislative process — it was introduced Thursday, and the sessions ends May 9 — comes as the Routt County commissioners are forming a task force to explore what steps they can take to require that energy exploration companies cooperate with efforts to monitor changes in local air and water quality that could result from oil well drilling. That task force was undertaken April 24 as the commissioners tabled a drilling permit application from Quicksilver Resources for the Camilletti Ranch north of Milner.

“This late bill is bad news for local government and our citizens who have worked so hard with us on the issue of oil and gas development in Routt County,” Commissioner Nancy Stahoviak wrote in an email Tuesday.

Baumgardner said he doesn’t think the final draft of the bill, if there is one, will impact Routt County.

“In Routt County, we’ve got mining,” in the form of Peabody Energy’s Twentymile Coal Co., Baumgardner said. “Again, I don’t think it’s really going to affect Routt County.”

To reach Tom Ross, call 970-871-4205 or email tross@SteamboatToday.com

Comments

Steve Lewis 1 year, 11 months ago

This bill is impressive - in its unadulterated gall.

What stumps me, is why a House Representative from district x would have any interest in twisting the arm of constituents in district y. All on behalf of any industry activity outside his district.

The other case would be that the Representative would twist the arms of his own district's counties or cities.

Either scenario says to me, Big Oil owns more of the Colorado House than I thought possible.

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mark hartless 1 year, 11 months ago

They couldn't own a government that wasn't for sale. Are these democrats or republicans? Where is the support? Why don't you report back to us on the exact vote count?

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jerry carlton 1 year, 11 months ago

All governments are for sale at all levels. The prime directive of most politicians is lining their own pockets. The ultimate example in our country is the senate and the house. Makes no difference if they are republicans or democrats or whatever.

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kathy foos 1 year, 11 months ago

Sounds like a lawsuit between the County's and State.They can't force us to live with cancer causing chemicals and pollution's.The EPA will make oil company's be safer,but for the time being it's not safe and we don't have to have it unsafe in our neighborhoods.The tourist industry would be compromised also for 500,000 ?That is just not much money anyway considering the impact of gas fracking truck traffic on the local roads.Hopefully voter's will get even by voting out the individual's responsible for this horrific bully attempt.Gee I wonder where kids learn to be bully's?

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Brent Boyer 1 year, 11 months ago

For what it's worth, here's the Denver Post's editorial take today on the proposed legislation and the greater issue of state vs. local jurisdiction:

http://www.denverpost.com/opinion/ci_20524998/editorial-find-common-ground-colorado-oil-and-gas

Brent

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Steve Lewis 1 year, 11 months ago

Regardless of R or D, the sponsors of this and the bills referenced in the DP editorial completely forgot who they were elected to represent. The scale of lobby influence that would make this bill seem "o.k." just amazes me.

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Fred Duckels 1 year, 11 months ago

Lewi, Did you ever think that maybe people just don't agree with you. Maybe their minds aren't being corrupted. Does the "majority" not count?

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Steve Lewis 1 year, 11 months ago

Fred, Sure the majority count. And if they are on your side, make that part of your case. I posted such polls for you. A majority of people, 67% if I recall correctly, favor stricter regulation of this industry. Forget?

And it appears that more and more local groups in Colorado are trying to improve on the abysmally low standards of the State for Oil and Gas extraction:

"Centerra residents seek moratorium on oil and gas drilling"

http://www.denverpost.com/energy/ci_20526919/centerra-residents-seek-moratorium-oil-and-gas-drilling?source=rss

Longmont's new oil/gas rules still too strict say state, COGA

http://www.denverpost.com/energy/ci_20526230/longmonts-new-oil-gas-rules-still-too-strict?source=rss

Fred, are you against local control by these cities?

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John St Pierre 1 year, 11 months ago

Last week I came back to Steamboat at night via west 70...... I was extremely shocked at what you see at night verses day... there seemed to be a Oil drilling tower all lit up every couple yards from just outside Grand Junction to Glenwood Springs...... thought I was driving thru Texas there for minute...... We had better wake up to what is coming.... was was really scary is the fact most are within a 1/4 mile to 1/2 mile of the Colorado River..... if anything happens BP spill will be nothing to what will happen to this watershed.......

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Chad Fleischer 1 year, 11 months ago

Rigs in routt county are gas rigs not oil rigs and the supply of nat gas is so endless and price so low, and will be for so long, that this measure means nothing. Democrats or republicans? For real? Oil companies don't own government they do produce jobs and generate a revenue stream that no one else in routt county can or will. This bill is about thwarting efforts for new oil and gas exploration and not getting money because of it. How would this not make sense? If we don't want to gas companies drilling we aren't entitled to revenue.
In regard to chemicals, fracking and the BP oil spill I encourage all of you to research where we sit geologically, what fracking is, what rigs would be erected and where and understand the supply/demand chain for gas currently. You have got two coal burning power plants within 40 miles of you that could be switched to nat gas burning yet you are concerned with this? If you are concerned the environment I would start with this. This bill entitles counties that let mineral exploitation occur get paid for it. I think it's fair and i think it's important to focus on the bill and the facts not get caught up in politics and conspiracy theories.

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Steve Lewis 1 year, 11 months ago

Chad, They are after oil here, not gas, according to Quicksilver's presentations. But they are also still probing.

The bill as proposed applies to ANY local restriction on extraction. We would be barred, for instance, from requiring water quality monitoring. Sorry Chad, but that is industry greed, plain and simple. And it leaves no doubt about oil lobby power in Denver. It is not a conspiracy, when the District x Representative votes or sponsors for a bill curtailing the land use rights of District y. That is front page politics, and the worst kind.

The article suggests a second version of the bill will reduce the prohibition of "any restriction" to prohibit only moratoriums and bans. But no one in Colorado has a ban. Only home rule jurisdictions could ever have one, and those are few, including only 2 counties, Pitkin and Weld. Neither is seeking a ban. I would not insist a city allow fracking. Maybe you would.

Of course a ban would end royalties from O&G. That is already true. But this bill would also allow the State to withhold coal and other royalties as well. Its extortion.

That leaves moratoriums, a time out used to prepare regulation. Barring that time out only serves oil companies and hurts the local interest.

Local control is and should remain our right. Routt's commissioners are entirely correct when they point to environmental protection as fundamental to our economy. We cannot watch it be degraded to the preferences of any outside industry, or to the preferences of outsiders.

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Scott Wedel 1 year, 11 months ago

But did anyone notice this bill is on hold? That it never even made it out of committee? That it was so obviously a bad idea that most members of both parties said they would not support it?

I doubt oil and gas lobbyists were behind this because competent lobbyists are more subtle and are better at getting their stuff passed. Like how the state regulations are not that strong and they prevent local governments from being stricter. That was a clever move by the lobbyists since almost no one realized what was being proposed until it was being approved.

This proposed bill looks more like the work of some ideologue that is personally upset that someone is not being allowed to drill someplace.

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