Our View: Withholding severance tax revenues punitive
May 5, 2012
There is more than a little irony that in the same week state lawmakers shot down a bill that would make it tougher for Colorado residents to put constitutional amendments on the ballot, a Republican state representative from Sterling pushed forward a bill so punitive and counterproductive that even his own party won't get near it.
Routt County would be among those hurt by Rep. Jerry Sonnenberg's House Bill 1356, which as originally proposed would withhold mining and energy-related severance tax revenues for counties that "in any way restricted or delayed the ability of an oil and gas producer to" exercise its rights to extract oil and gas.
In other words, Sonnenberg thinks local governments that do anything other than give a blanket green light to energy exploration should be punished financially. In Routt County, that could mean the loss of more than $500,000 each year the county receives in severance tax revenues for coal mining operations. The county deposits that money into its Road and Bridge Department fund and uses it to maintain the rural roads the coal industry relies upon to haul its product.
Fortunately, HB 1356 appears dead on arrival, even with potential amendments that would limit the scope of the bill to counties that place moratoriums on oil and gas drilling. That's as it should be. But Sonnenberg's measure — whether a political stunt — underscores the fierce battle playing out in Denver and Washington, D.C., about who has the final say in energy-industry regulation.
We've previously advocated for a commonsense approach that allows local governments like Routt County a powerful voice in safeguarding public health and safety within their boundaries. The Colorado Oil and Gas Conservation Commission currently holds most of the cards when it comes to regulatory jurisdiction, and now, the feds appear poised to jump headlong into the fray. The Obama administration announced Friday proposed rules for oil and gas drilling on public lands, specifically as it pertains to fracking.
With many interests at play and significant money at stake, it probably shouldn't come as a surprise that Sonnenberg proposed such a draconian bill. But what fellow lawmakers like Randy Baumgardner should remind him is that counties like Routt use severance tax revenues to maintain the infrastructure needed for industry to continue to operate. That means that not only is HB 1356 punitive, it's also counterproductive.