Rules review bill at center of last 2011 legislative battle

The Colorado Statesman

The last great act of gamesmanship, initiated Tuesday by House Republicans, brought high tension to an already spent General Assembly in its last day. But the last play may have been won by Gov. John Hickenlooper, who hinted he might bring the Legislature back for a special session for a bill that generates little fanfare and usually, even less attention.

The annual rules review bill rarely draws controversy, but on the last day of the 2011 session Republicans and Democrats battled over a change to the bill that would in effect enact legislation killed last week over payday loans.

The rules review bill gives the legislative stamp of approval to rules and regulations adopted by state agencies. In Senate Bill 11-078, that applied to 594 rules adopted between November 1, 2009 and November 1, 2010. Without legislative authorization, those rules would all expire on May 15.

Some rules and regulations can be re-adopted by state agencies under emergency rules procedures, but not all, according to Rep. Mark Ferrandino, D-Denver. Those not enacted under emergency rules procedures would have to go through the entire 60-day review process all over again. Ferrandino said Wednesday that if the bill died, it would jeopardize $795 million from the federal government tied to hospital provider fees and would result in 30,000 people getting kicked off of CHiP and Medicaid rolls.

SB 78 passed the Senate unanimously on April 26, but it ran into trouble on the House floor on Tuesday. That’s when Rep. Bob Gardner, R-Colorado Springs, introduced an amendment that would strike a rule enacted by the Attorney General last November.

The amendment would eliminate a rule dealing with fees paid by consumers who take out payday loans. Under the AG’s rules, the origination fee is partially refundable when the consumer pays off the payday loan early. The Gardner amendment struck the entire rule, which also deals with refunds on interest and monthly maintenance fees for payday loans.

The General Assembly has already dealt with this issue; last week, the Senate Local Government Committee killed a bill that would have made the origination fee fully earned at the time the consumer takes out the loan. Opponents of House Bill 11-1290 claimed making the origination fee fully earned would dramatically increase the cost of payday loans for consumers who want to pay off their loans early, as well as incentivize payday lenders to get consumers to take out more loans. The bill’s proponents, including Sen. Rollie Heath, D-Boulder, claimed it was always their intention that the origination fee be fully earned, while the bill’s original sponsors have claimed they always intended that the origination fee, which can be as high as $75 for a $500 loan, would be refundable.

The Gardner amendment made House Democrats furious. House Minority Leader Sal Pace, D-Pueblo, called the amendment “a giveaway to special interests.”

Rep. Claire Levy, D-Boulder, called the amendment an effort by the Republicans to engage in a game of Russian Roulette. “The Speaker and the sponsor of this amendment know exactly what they’re doing,” she said during the debate. Levy is a member of the joint Committee on Legal Services that approved SB 78 in its original form, and said that the issue did not come up when the bill was in the committee. If the bill fails “it will not be because of the Senate, it will be because of this amendment,” she said. “This is a corruption of the process… and a hijacking of the rule review bill.”

The debate went on for more than an hour, including a lengthy discussion by Ferrandino, who read the payday loan rules at length, and continued his filibuster with a reading of the Truth in Lending Act.

The gamesmanship between the House and Senate was brought up by Speaker of the House Frank McNulty, R-Highlands Ranch, who tried to deflect the blame for the controversy by saying that if the amendment was adopted it would be on the Senate to kill the bill if they decided not to concur. “That’s their choice,” he told the House Tuesday. But Democrats weren’t falling for it, stating that if the bill failed it would be on the House Republicans who put the amendment on the bill. “The House GOP is jeopardizing a year’s worth of work and rules that impact everyone from hunters and skiers to oil and gas employees to school districts, all for a special interest giveaway to predatory lenders,” Pace said in a statement after SB 78 passed Wednesday.

In the Senate, both Democratic members of the legal services committee told The Colorado Statesman they would not allow the amendment to stand. Senate Majority Leader John Morse, D-Colorado Springs and Morgan Carroll, D-Aurora, both indicated they would recommend the Senate adhere to its position.

However, Corrine Fowler, of Coloradans for Payday Lending Reform, told The Statesman Tuesday she was not willing to allow the bill to die over the payday lending issue. Fowler, whose organization sponsored the 2010 reform legislation that brought about the rule, said the 594 rules were more important. And Fowler did not rule out legal action to overturn the amendment at some later date.

The fight over the rules review bill also got the governor’s attention. Through a spokesman Tuesday, Hickenlooper said it was “irresponsible to play games with this bill, as it impacts Colorado’s economy and everything from hunting licenses to oil and gas permits. Holding up this bill is not good government” and that using payday lending as a “poison pill to play politics is not acceptable.”

Moments before the House began its final debate on SB 78 Wednesday, the Denver Post reported that Hickenlooper was threatening a special session that might begin the very next day if the bill died. A special session would cost the state about $21,000 per day with a three-day minimum.

Gardner told the House Wednesday that putting the amendment into the rule review bill was appropriate. “We intend for the charge to be fully earned,” which Republicans tried to make clear in HB 1290. Rep. Mark Waller, R-Colorado Springs, said the state agency went beyond its statutory authority in enacting the rule, but Rep. Jeanne Labuda, D-Denver, claimed the amendment would illegally enact legislation through the rule review bill.

SB 78 passed on a straight 33-32 party line vote in the House, and that included “no” votes from the four Democrats who had voted for HB 1290. House Democrats from the legal services committee also had their names removed as co-sponsors.

Once back in the Senate, Republicans were split over supporting the amendment and the most appropriate place to deal with payday lending. Sen. Ellen Roberts, R-Durango, a member of the legal services committee, voted to adhere, while Sen. Shawn Mitchell, R-Broomfield, called adherence “a self-indulgent tantrum disguised as a motion.”

Three Senate Democrats who had opposed last year’s payday reform bill sided with the rest of their caucus in adherence, and it also was supported by Heath, the Senate sponsor of HB 1290.

As the end of the day, and the session, drew near, the bill was back in the House for their final decision, and whether the game of chicken would result in the House backing down or whether a special session would be necessary.

Nearing 6:30 p.m., the House blinked. Gardner, McNulty, Pace and Ferrandino asked the House to recede from its position. McNulty said he continued to believe that the Attorney General had exceeded his authority, and that by doing so jobs are lost and families are hurt “and there’s not much we can do about it… The one thing I’m most proud of, when it comes to the question of who’s willing to govern, the House has come to the table and stood strong…We put the state of Colorado first and the people first…” McNulty said the Senate Democrats were unwilling to go to conference committee on the matter, but also said now is not the time for negotiations.

Both Pace and Ferrandino noted that in receding the General Assembly would avoid a threatened special session, and the House voted unanimously not only to recede from its position on the amendment but to adopt the bill.

And that was that.