The Continuing Saga of Oil and Gas

The new Western soap opera still involves the traditional players: those in white hats; the villains; the law; the victims; and shoot-outs. We’re describing the oil and gas extraction story in Northwest Colorado and almost every week a new chapter is written by the media, Colorado statesmen, the industry, the landowners and citizen protection groups.

Last week’s installment, in case you missed it, concerned the Grand Junction Daily Sentinel, several House bills, legislators, Gov. Ritter, Club 20, the State Constitution and…literally a cast of hundreds.The storyline: Several oil and gas budget expenditures and bills passed by the Colorado legislature are making their way to Ritter’s desk waiting for his signature. In particular, there are budget items earmarked to increase air quality testing; expand the Colorado Oil and Gas Conservation Commission’s enforcement staff; and a bill to double the severance tax designated to impacted communities (HB 1139.)

Scene I: Ritter makes some line-item vetoes that include the two above expenditures, as noted by the Daily Sentinel:

Gov. Bill Ritter vetoed two items in Colorado’s $17.8 billion 2007-2008 budget that would have delivered the Western Slope an air-quality-monitoring station and a Rifle-based Colorado Oil and Gas Conservation Commission enforcement officer.

The two Western Slope budget items he vetoed Wednesday came as part of 88 footnotes and head notes felled by the governor’s pen.

The governor said he decided to strike the $380,000 appropriation for a Western Slope air-quality-monitoring station because of constitutional concerns.

Nonetheless, Ritter said he plans to direct his staff to act in sync with the stricken footnote: “I am committed to improving air quality on the Western Slope. … Therefore, notwithstanding this veto, I will direct the department to comply with this footnote to the extent outlined in the approved budget amendment.”

Sen. Josh Penry, R-Fruita, said Ritter’s Western Slope vetoes came as a surprise.

“For a governor who spends a lot of his time saying he is concerned about the impact of oil and gas on the Western Slope, those are strange vetoes,” Penry said.

Scene II, Act I: Even the oil and gas activists are shocked with Ritter’s vetoes. Duke Cox of the Grand Valley Citizens Alliance in Silt said this was the second time Ritter’s actions have caused him to side with the conservative Grand Junction Republican legislator.

“It’s like being out of sync in the space time continuum when I am forced to agree with Penry,” Cox stated.

The Daily Sentinel was quick on the draw. In an editorial it wrote:

It’s certainly understandable that a governor in the first year of his first term wants to set down specific ground rules on executive powers versus legislative powers, so that lawmakers don’t encroach on the exclusive prerogatives of the executive branch. But, Ritter needs to make sure that budget items needed to handle impacts from the natural gas industry aren’t short-changed in this particular disagreement with the Legislature.

Act II: The governor’s office responded:

Contrary to the Grand Junction Daily Sentinel’s May 3 story about two of the footnotes, Gov. Ritter did not veto any funding for the Western Slope. In fact, the opposite is true, and Gov. Ritter worked closely with state Rep. Bernie Buescher to increase funding for many critical services on the Western Slope.

The letter continued to mention a list of financial support and actions Ritter has designated to help communities with drilling impacts. The monies for air quality testing and the added COGCC staff are still committed and the governor is even planning on more impact funding. Ritter is the good guy here. Really.

Act III: The legislative cavalry shows up and overrides Ritter’s vetoes, not to save this particular funding; the fight is over constitutional power. But that’s not the end of the story.

Scene III, Act I: A new danger lurks. The governor is debating signing HB 1139 which would increase the direct severance tax revenue pot to impacted communities from 15% to 30%, a bill carried by the influential Democrat, Rep. Bernie Buescher of Grand Junction. Ritter’s head of the Department of Local Affairs Jean Kirkpatrick had earlier urged for a year’s delay. DOLA’s funding and grant budget comes from severance tax.

Act II: The Western Slope lobbying group, Club 20 jumps in the fray. However, are they sent to the rescue? As reported in the Glenwood Post Independent:

Club 20 executive director Reeves Brown issued the letter amid concern that Ritter may be considering vetoing the measure, which would reduce general grant distributions from the state Department of Local Affairs (DOLA) from 85 to 70 percent.

Brown wrote that the bill is needed to “push more energy impact monies more quickly to those counties that are being most affected and need immediate assistance.

“DOLA will still be responsible for distributing the vast majority of these energy impact funds … but the increase to local governments will be significant in terms of helping them to meet the challenges of providing much needed social services, law enforcement, and infrastructure.”

Act III: The key word here is “infrastructure.” Club 20 members and energy companies know that much of the severance tax grants are used to fix and build county roads torn up by drilling trucks and equipment. Cox explained one of the possible motives behind the support for more severance tax monies: “The more severance tax, the less the energy companies will be asked to dip into their private funds to rebuild roads.” Still, Cox said he was scratching his head over this bill veto possibility.

Like any good Western, the line between the good and bad guys are blurred.

The Daily Sentinel reported:

“We’re still in that process where some bills, like (House Bill 1139), rise to a different level and will take a conversation with me before I get to a place that I’m comfortable signing it or I think it’s the right thing to veto it,” Ritter said.
House Bill 1139 would double the proportion of severance tax dollars the Department of Local Affairs directly distributes to energy-impacted communities.

The measure passed both the House and Senate this session with nearly unanimous, bipartisan support: 59-5 in the House and 34-1 in the Senate.

“I really have had a lot of discussions about this, so I’ll continue to have those, but I haven’t made a final decision on that bill yet,” Ritter said.

Department of Local Affairs Director Susan Kirkpatrick said earlier this year she wanted to wrap her hands around the current severance tax funding formula and wait a year before making any major revisions.

“We are hoping to listen to the concerns that the representatives have and see if we could respond to those concerns within the current law,” Kirkpatrick said in January. “And then next year, at this time, if we’re not addressing their concerns satisfactorily, (we can) revisit the distribution formula.”

Act IV: That hasn’t been written yet. Stay tuned.

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Leslie Robinson

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