Fate of oil bills rests with Guv

The Colorado Statesman

The legislature this week made significant progress advancing several key pieces of legislation addressing the energy sector. Proposals include increasing fines, reducing conflicts of interest on the Colorado Oil and Gas Conservation Commission, stricter accident reporting requirements, creating a statewide groundwater testing program, beefing up inspections at wells, and raising the rural renewable energy standard.

The fate of many of the proposals rests with Gov. John Hickenlooper, a Democrat with close ties to the oil and gas industry. The governor’s administration already involved itself in negotiations on House Bill 1267, which would increase industry fines.

Sponsored by Sen. Matt Jones, D-Louisville, and Rep. Mike Foote, D-Lafayette, the measure would increase fines from $1,000 per day to $15,000 per day. It was originally written to set a minimum fine of $5,000 per violation per day. But that last provision was stripped from the bill last week in Senate Appropriations after guidance from Hickenlooper’s office.

Democratic Sens. Mary Hodge of Brighton and Pat Steadman of Denver joined Republicans on Appropriations to strike the mandatory minimum requirement in the bill.

When the measure made it to the Senate floor Thursday on second reading, Hodge and Steadman defended the Appropriations report, over objections from Jones.

“Mandatory minimums are an overreach,” Hodge addressed colleagues. “No other state has them. No other department has them… Not even the EPA has them.”

Several Republicans spoke in favor of the Appropriations report, including Sen. Greg Brophy of Wray.
“It takes a more balanced approach, as opposed to an extreme approach to this issue,” he said.

Jones, however, said without the mandatory minimum, his bill loses its teeth.

“This is a reasonable, rational approach in response to what’s been going on on the ground,” he pleaded with fellow lawmakers. “This is for the worst of the worst polluters.”

Sen. Jessie Ulibarri, D-Commerce City, agreed that without the mandatory minimum, there is no incentive for companies to take action.

“When a company understands that they can do business and know there is no cost and therefore are wanton about the public health and impacts, that they allow a public health concern continue… and know that at the end of the day there is no penalty, what causes the impetus for action?” Ulibarri asked.

Sen. Irene Aguilar, D-Denver, was more concerned with the way the amendment was added to the bill. Appropriations is usually reserved for fiscal issues, while the committee of reference is where the policy debate takes place. The Senate State, Veterans and Military Affairs Committee backed the original version by a party-line vote of 3-2.

“We send bills to the committee of reference to debate public policy, and the committee of reference supported the policy as written,” Aguilar reminded colleagues.

The committee report was ultimately backed by the Senate, which then supported the bill. It voted 30-5 to raise the fines. The oil and gas industry has not opposed the amended measure. The House must still concur on Senate amendments.

COGCC conflicts of interest

The Hickenlooper administration has also been active in negotiations concerning conflicts of interest within the COGCC. House Bill 1269, sponsored by Jones and Foote, would prohibit a newly appointed COGCC commissioner from being employed by an oil and gas operator.

The goal is to change the mission of the commission to highlight a more environmental approach.

HB 1269 would also redefine “waste” to reduce it and maximize production. The industry has been concerned about this provision, suggesting that it could allow the state to prevent mineral-rights owners from taking all of their property out of the ground.

The industry is also fearful that the measure could give the COGCC the power to deny permits. Its current duty is to regulate how drilling is done, but it has little authority to deny permits.

The measure was at first amended in the House to allow a COGCC commissioner to be employed by the oil and gas industry if they disclose those relationships. But when it made it to the Senate State, Veterans and Military Affairs Committee on April 29, the committee voted 3-2 on a party line to once again prohibit industry participation.

If the governor, a former geologist, is to receive the bill, it is possible that he could veto the legislation, especially if it prohibits industry membership on the COGCC board.

Mike King, executive director of the Department of Natural Resources — part of the governor’s cabinet — pointed out during the committee meeting that in 2007, changes were made to lessen industry representation on the COGCC. He also said it is unfair to assume a conflict of interest exists, considering there has not been evidence of votes affected by industry representatives.

Meanwhile, environmentalists — especially from Longmont, where voters backed a ban on hydraulic fracturing — used the committee hearing as an opportunity to speak out against fracking, and to attack Hickenlooper for his support of the industry. They call him “Gov. Frackenlooper.”

Animosity towards the governor grew after his administration filed a lawsuit against Longmont for enacting its own strict oil and gas rules and regulations, separate of the state’s rules.

Speaking at the University of Colorado in Boulder on Thursday evening at a forum on fracking, Hickenlooper defended his commitment to the environment. Boulder is the neighbor community to Longmont.

“If we find unhealthy air quality around a community and something coming out of a well that is an issue, we will put the brakes on faster than you can imagine,” he addressed the agitated audience.

But Jones believes further protections are needed, and he says that starts with the COGCC.

“I think we all agree that oil and gas companies should take responsibility for their actions, just like the rest of us do… this bill does that,” Jones said on April 29 at the start of a more than three-hour debate in the Senate State, Veterans and Military Affairs Committee.

“The COGCC has a dual mandate to foster the development of oil and gas and to protect public health welfare and environment,” he continued. “This dual mission has resulted in a board that believes that it must balance public health and welfare with the industry health and welfare.”

HB 1269 was laid over on Friday. The Senate is expected to take the bill up on second reading on Monday.

Rural renewable energy standard

Another energy bill that dominated the conversation this week was Senate Bill 252, which would raise the state’s rural renewable energy standard to 20 percent by 2020.

The original bill had sought a standard of 25 percent. But the House amended the legislation to only raise the standard to 20 percent from its current 10 percent.

The House backed the bill Tuesday by a Democratic party-line vote of 37-27 after more than three hours of debate. Third reading debates typically occur quickly, but the lengthy debate is an indication of the contentious nature of the measure.

The Senate has backed House amendments, sending the bill to Hickenlooper, and so opponents have turned their lobbying effort to the governor. The Colorado Association of Commerce and Industry is calling for Hickenlooper to veto the measure. But his administration has already signaled its support.

The legislation would specifically target the Sedalia-based Intermountain Rural Electric Association, which serves ratepayers in counties south of Denver, as well as Westminster-based Tri-State Generation and Transmission Association, serving customers in 18 rural cooperatives across the state. Those co-ops have more than 100,000 meters and supply electricity on behalf of member cooperatives.

The legislation would allow the co-ops to charge 2 percent of a customer’s bill to pay for the upgrades and changes.

It has been important to the Democrats’ agenda this year, with both House Speaker Mark Ferrandino of Denver and Senate President John Morse of Colorado Springs sponsoring the bill.

“This is a good bill for Colorado,” opined Ferrandino. “It’s going to create jobs, help ensure that we have cleaner energy, and help diversify our portfolio.”

Rep. Claire Levy, D-Boulder, said she has heard from rural ratepayers that they would like to see an increased standard for the future of Colorado.

“They want more renewable energy,” she said. “They want energy-efficient programs, and the leadership of the rural electric associations won’t do it.”

Democrats attempted to quell fears that the measure would raise rates on rural Coloradans who are already struggling. They pointed out that if the rural co-ops can’t meet the mandate within the 2 percent rate hike limit, then the providers could ask for a lower standard.

Ferrandino also pointed out that investor-owned utilities on the Front Range, like Xcel Energy, are already meeting a 30 percent mandate with ease.

Conservationists immediately applauded Democrats for their commitment to the bill: “This legislation will protect Colorado consumers by preventing price spikes on their electricity bills, and give more Coloradans access to clean wind and solar energy,” said Pete Maysmith, executive director of Conservation Colorado.

“By taking advantage of our abundant sunshine and persistent winds, we can generate cleaner energy to reduce air pollution, improve public health, and do our part to tackle climate change for future generations,” he continued.

But the GOP is not convinced: “Shame on you for raising rates on rural families when this does not affect you or your constituents,” Rep. Brian DelGrosso, R-Loveland, addressed Ferrandino and the Speaker’s fellow Denver-area Democrats.

“Senate Bill 252 is again a direct assault on rural Colorado, and shame on you for running this piece of legislation,” DelGrosso continued.

Rep. Lori Saine, R-Dacono, offered an impassioned speech in defense of her rural constituents: “You will not crucify us on the backs of windmills and solar panels,” she lambasted Democrats. “For, if you do, be assured, we will climb down and answer you at the ballot box.”

In a legislative session that has been dominated by several highly controversial debates, including the polarizing gun control conversation, many lawmakers have said that SB 252 has brought the most divisive environment.
“Of all those bills, I personally think this is the worst,” said Rep. Bob Rankin, R-Carbondale.

Other energy bills moving

Three other energy-related bills moved through the legislature this week, including:

• House Bill 1278, which would require an oil and gas operator to report an oil or waste spill of one barrel or more within 24 hours. Rep. Diane Mitsch Bush, D-Steamboat Springs, and Sens. Nancy Todd, D-Aurora, and Cheri Jahn, D-Wheat Ridge, sponsor the measure. It passed the Senate Friday night on a preliminary vote;

• House Bill 1316, which would add the Wattenberg Field in Weld County to the state’s newly adopted groundwater-testing program, which requires water quality testing both before and after a well is drilled. Environmentalists had complained that the heavy drilling patch was offered a loophole in the new rule. House Majority Leader Dickey Lee Hullinghorst, D-Boulder, and Rep. Joe Salazar, D-Thornton, and Ulibarri sponsor the measure. The Senate State, Veterans and Military Affairs Committee on Friday sent the bill to the full Senate on a 3-2 Democratic party-line vote; and

• Senate Bill 202, which would have required the COGCC to use a risk-based strategy for inspecting well sites, and have enough inspectors to inspect each location once per year, was amended to remove the inspector and inspection requirements. The bill changed after Hickenlooper signed the upcoming annual budget, which includes 11 new inspectors. The bill maintains a requirement for a study to identify the riskiest oil and gas activities. The House backed the measure on Wednesday and sent the bill to the governor.

Peter@coloradostatesman.com