State bill would withhold revenues from counties that thwart oil drilling | SteamboatToday.com

State bill would withhold revenues from counties that thwart oil drilling

— 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