Conventional wisdom puts Democrats as the party that favors regulation and Republicans as the party against regulation.  The facts make a more complicated picture.

Take the arguments on Monday in the House Local Government Committee on fracking rules.  Representative Su Ryden (D), HD-36, put up HB12-1176, a bill to place in statute a regulation to enforce 1000 feet setbacks on oil or gas drilling rigs from residential areas and schools.   

Ryden brought her bill because constituents in Aurora complained that fracking rigs, industrial in strength, may be positioned as close as 350 feet to their houses and education facilities.  These Aurorans worry about health and safety as well as property values.  One proposed rig would drill just blocks away from Aurora's new P-20 education facility. 

Other local governments have raised a howl over drilling as well, including Commerce City, Colorado Springs, Longmont, and Arapahoe County.  They aren't thrilled to have huge trucks lumbering over their roads, pounding compressors drumming the ears of the locals, and open evaporation pits sending pollutants into the air or ground water.

Typically, Republicans support local control.  But in this case, Representative David Balmer (R), HD-39, from Aurora, objected that the 1000 foot setback regulation would ruin Colorado's chances for job growth.  "This bill will send another shock wave across the country that Colorado doesn’t want to do oil and gas development – it will cause us to lose jobs! Why do you want to run a bill that will cause Colorado to lose jobs?"  Balmer prefers to leave the rule at a 350 foot setback allowed by the Colorado Oil and Gas Conservation Commission (COGCC), the state's regulatory body for oil and gas drilling.

Representative Bob Gardner (R), HD-21, Colorado Springs, responded in an ironic tone to the testimony of the Colorado Petroleum Association and Colorado Association of Commerce and Industry.  He said he would prefer to defer to the regulators, who are going to hold hearings on the issue sometime in March or April.

As Gardner implied, Republican faith in COGCC regulators represents a sharp turnaround from 2008 when they were excoriated for rules too strict for drillers. 

Republicans are also known to place a high value on property rights. Surface rights are inferior to mineral rights in Colorado.  Mineral rights owners can drill under the property of the surface right owner.  In residential areas, the surface right is held by the homeowner, or potentially a developer, and the mineral right is held by the driller.  Home owners can easily see their property values drop when rigs crop up 350 feet away from their properties, with fracking potentially going on directly underneath their homes.

At this point, the lines seem to be drawn this way:  Democrats support the residential property right owner while Republicans support the mineral right owner. And the fight over regulation has moved to which regulator will best protect which interest.

This conflict is likely to grow across the front range as drillers come closer to suburban and urban neighborhoods to capture the oil and gas from the Niobrara Formation, which, at this point, hasn't taken a position one way or the other.  PEN at CCW

 

This post was published on February 7, 2012. Permalink ». Comments are disabled at this time.

Trust is at the heart of much of the controversy over Colorado Oil and Gas Conservation Commission (COGCC) rules related to fracking fluids used to bring oil and gas to the surface out of shale 8000 feet under the earth's surface. On one side, oil and gas drillers want to preserve their fluid mix trade secrets. On the other, public interest groups want to know what's in the chemical mix for public safety.

The COGCC will navigate these fault lines revising its chemical disclosure rules. The proposed revisions will require, in short:

• Vendor and service provider disclosure of each "hydraulic fracturing additive" used in the fracking fluid, including the trade name and intended use. Disclosure must occur within 60 days of the end of the fracking or no later than 120 days from the beginning of the fracking.
• Disclosure of each chemical intentionally added to the base fluid.
• Maximum concentrations, in percent of mass, of each chemical.
• Notification that certain chemicals in the fracking fluid are "trade secrets," which do not have to be disclosed other than the chemical family associated with the chemical.
• A form containing contact information in the case of trade secrets to ensure proper treatment in emergencies.
• A database that searches for chemicals by geographic area, ingredient, chemical abstract service number, time period, and operator.

The oil and gas industry argues that chemical additives in fracking fluid represent only 1% of the total fluid, which consists of approximately 90% water and 9% sand. The additives swim in 16 acre feet of water, or approximately 5-6 million gallons of water and sand. That figures to roughly 50,000 gallons of additives that are trucked to the well site, mixed, pumped down to the shale, and then ooze back up with the released oil or gas.

When the goop returns to the surface, it's contained in ponds for evaporation or collected and trucked to waste disposal sites.

COGCC sees fracking fluid disclosure as a tertiary issue related to public safety. From a practical perspective, it believes, proper well construction and maintaining safety in the fracking process is more important. The main reason for rule revision, states the COGCC, is that "Members of the public have expressed interest in learning the identity of chemicals in hydraulic fracturing fluid."

The Western Colorado Congress sees the COGCC attitude as "dismissive of the potential real health effects of exposure to hydraulic fracturing fluids." The Congress believes "the draft rule is insufficient to protect the public living in regions being drilled for oil and gas."

Drillers such as Andarko and Noble Energy claim that disclosure of trade secret chemicals will reduce drilling in Colorado as companies protect their products. They also state that additional disclosure will be expensive for the state, as staff time will be diverted to disclosure rather than well monitoring.

Public interest groups argue that disclosure is already legislated in other states, such as Texas, Montana, and Wyoming. They also contend that fracking fluid notification should occur before the wells are fracked rather than 60 days after.

These issues will become more contentious as drilling creeps ever closer to residential neighborhoods and water supply sources. Home rule cities are looking for ways to prevent drilling within city limits. Rural areas and unincorporated spaces may have little redress to prevent drilling.

Already, the State Land Board has sold millions of acres of mineral rights to oil and gas companies, and the federal government, primarily through the Bureau of Land Management, has sold additional millions.

Drillers have five to ten years to make progress on wells, or they give up on their rights. That time frame explains some of the drilling buildup, especially in eastern Colorado. The drilling will only increase as more lands go under lease. Recent Land Board auctions involved rights from Larimer County down to southeast Colorado, and as far west as Park County, home to the Denver water supply.

COGCC will set its rules on Monday, December 12, in Greeley.

This post was published on December 7, 2011. Permalink ». Comments are disabled at this time.

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This post was published on August 23, 2011. Permalink ». Comments are disabled at this time.

HB11-1014, a child care tax credit bill, and HB11-1300, a conservation easement tax credit bill, hit Senate Appropriations today.  HB11-1300 sailed through to the Senate floor; HB11-1014 is tacking back to Senate Finance. 

HB-1014, sponsored by Sen. Evie Hudak (D-Arvada) and Sen. Ellen Roberts (R-Durango), is a value statement bill. HB11-1300, sponsored by Sen. Kevin Grantham (R-S.CO) and Sen. Jeanne Nickelson(D-C.Mtns) is a clean up the big mess bill. 

Both tax credits started up in the free money years of 1999, and now, despite the "value statement" of HB11-1014, the tax credits are treated very differently.  The Child
Care Contribution Income Tax Credit allows individuals and businesses to donate up to $100,000/year to child care supporters such as United Way and the YMCA, but only when the state's General Funds appropriations annual increase exceeds 6 percent.  The state would have had to collect $226 million more to meet the trigger in 2010. HB-1014 removes the trigger in 2014, which will create an estimated $26.6 million hole in the state's budget that year.

Sen. Pat Steadman, D-Denver, a member of the Joint Budget Committee, offered an amendment to offset the hole by taking back money from the state vendor fee in 2014.  Sen. Ted Harvey, R-Highlands Ranch, accused Steadman of "attacking the budget" and breaking the deals between Democrats and Republicans.  Steadman countered that HB11-1014, introduced on the first day of the session, should have been part of the budget discussions all along, and the bill shouldn't have been left hanging until the very end of the session. 

Meanwhile, the committee took up discussion of HB11-1300.  This bill provides a fast track dispute resolution process for conservation easement donors whose easements are contested by the state.  Over 600 easements are in play, at $156 million in principal, and up to $68.9 million in interest and penalties to be paid to the state's Department of Revenue (DOR).

DOR has found some easements overvalued up to 10,000 percent.  To fix this mess, HB-1300 will allow donors and tax credit users to receive expedited litigation by setting up a special court with three judges and a total of 16 other staff to resolve the cases.  To pay the roughly $3.4 million a year price tag on the bill, DOR will lower the $26 million cap on conservation easements claimed in tax years 2011 and 2012 by $4 million in each year. The state will then give the money back in 2013 by raising the cap $8 million to $34 million.

Based on these two bills, the state will not provide any tax credit for child care donations until at least 2014, and then only if the state can fill the budget hole.  But the state is going to pay roughly $6 million to litigate the alleged fraud on conservation easements and keep that tax credit going, taking off any cap after 2013.

The Senate's value statement is this:  the state won't support child care with tax credits until 2014, at the earliest, and never to the level of conservation easements; the state will provide lots of extra help to easement donors with bad appraisals, and in 2014, those easement tax credits will be back to the races.  Child care tax credits came in at $11 million+ in 2009, the first year the state tracked the number; tax credits for conservation easements came in at over $100 million in 2007 and at $62 million in 2008. PEN 5/10/11

This post was published on May 10, 2011. Permalink ». Comments are disabled at this time.

Many District Courts, including ten in the FrontRange, have pre-trial service programs to help judges decide which defendants should go straight to jail, bond out, or join a diversion program.  These services need funding, and SB11-186 looks to get the money out of defendant bail bonds.

Defendants needing a bond typically turn to bail bondsmen to put up the 5% or 10% deposit they need to stay out of jail. Many times, bondsmen will allow defendants to pay for the bond in weekly installments because they can't afford the whole amount.

Pre-trial services, as yet, are not in the bail business.  They help judges assess defendants for bail worthiness.  They also oversee pre-trial surveillance and other conditions of release such as drug testing and work. Pre-trial services also help with drug diversion programs and community service.  But today, it's the bail bondsmen's job to make sure the defendant gets to court for trial. If the defendant doesn't appear, bail bondsmen are liable for the full bond.

SB11-186 allows defendants to bail themselves out by putting up 15% of the bond with the court's pre-trial service programs. Sponsored by Sen. John Morse (D-CoSpgs) and Rep. Mark Waller (R-CoSpgs), the bill essentially replaces the bail bondsmen with state staff. It puts the state in the middle of collecting bail "to enrich the public treasury," which, according to the Colorado State Supreme Court in its Smith v. People decision, "is no part of the object at which the proceeding is aimed." Bail is "to serve the convenience of the party accused but not convicted, without interfering with or defeating the  administration of justice."

No one knows at this time whether the bill will make money for the state or lose it. When defendants make it to court for trial, the state will return the 50% not taken for the pretrial services programs.  Under SB-186, when defendants jump bail, the state will probably lose money, sometimes substantial amounts, because no bail bondsmen or insurance companies will cover the cost of catching the defendant, as they do today. The brunt of that work, as well as the cost, will devolve to the state's sheriff's office.

Under today's system, bail bondsmen put down a cash deposit and provide the courts with a bond power, issued by insurance companies, that defendants will come to trial.  If defendants don't appear, bondsmen have a financial incentive to track them down. If bondsmen or bounty hunters find defendants in other states, they are responsible to pay extradition costs to the Colorado sheriff who will pick up the defendant. It can cost anywhere from $6000 to $10000 to pick up bail jumpers and return them to Colorado jurisdiction.

If bondsmen don't locate their defendants within a certain timeframe, they are forced to pay the full amount of the bond to the court.  If the bondsman can't pay that amount, the insurance company securing the bond must pay or face a $500,000 fine from the state's insurance commissioner.  That makes two entities with strong incentives to find the defendant - the bondsmen and the insurance companies. The state simply waits for the money to come in, or the defendant, or both.

If pre-trial services handle these situations, the state may lose the whole bond amount as well as their defendant.  The state will  have to collect the remaining bond security from defendants themselves, which is unlikely. 

The present bill, as structured, greatly expands the responsibilities of pretrial services into new territory.  Under SB11-1186, a wealthy defendant, such as a drug kingpin or Ponzi schemer, can post a 15% bond with pretrial services and vanish with no one to search for them, because they can afford to.  What then?

Many questions exist as to whether these added responsibilities are a good use of pre-trial services' time and resources to do this job effectively.  The bill's fiscal note says it cannot determine how the bill will affect state funds.

The bill passed the Senate on an 18-17 vote. It has moved to the House with three days to go. PEN  5-9-11

 

This post was published on May 9, 2011. Permalink ». Comments are disabled at this time.