Bill links oil & gas development, severance taxes

Sonnenberg calls city in his Eastern Plains district ‘greedy’
The Colorado Statesman

Rep. Jerry Sonnenberg, a Republican from Sterling, has found himself at odds with his own district over a proposal to prohibit the distribution of severance tax dollars to local governments that restrict or delay oil and gas operations.

The Eastern Plains lawmaker is unapologetic in defending his House Bill 1356, calling Sterling government officials “greedy” for opposing the measure. He says it is about property rights and limiting government spending, while encouraging oil and gas development across the state.

Rep. Jerry Sonnenberg

The bill was laid over Monday and then again on Wednesday in the House Agriculture, Livestock & Natural Resources Committee as Sonnenberg works to amend the bill on oil and gas development moratoriums declared by local governments. Critics are concerned about the impact on local governments to declare a moratorium on new wells without losing severance tax dollars, despite having already allowed existing development.

Rep. J. Paul Brown, R-Ignacio, attempted to assist Sonnenberg with the clarification by offering an amendment that would have blocked the severance tax dollars to local governments only when they “indefinitely prohibit” development.

“This amendment is to say, ‘If you’re just trying to prohibit the production of oil and gas and you’re doing everything that you possibly can to just prohibit it… then in that case we would hold back severance taxes,’” explained Brown.

But several on the committee raised concerns that the definition was still unclear, perhaps restricting a local government’s ability to take a careful look at new drilling operations.

“Is it your intent to withhold all severance dollars because of a specific moratorium on a new well?” asked Rep. Marsha Looper, R-Calhan.

The amendment ultimately failed on a vote of 8-5 and the bill was laid over yet again, suggesting that the legislation faces a tough battle and could be killed in the few days left in the legislative session.

Lots of opposition to the bill

Overall, the legislation is being opposed by many and supported by few. Sonnenberg says he introduced the late bill himself based on his own principles. Sen. Greg Brophy, R-Wray, is the Senate sponsor of the bill but it is truly the brainchild of Sonnenberg. He says he has not received pressure from the oil and gas industry, from Republican leadership, or from any individual companies or interests.

“It came solely from me,” said Sonnenberg, who chairs the House Agriculture, Livestock & Natural Resources Committee. “I thought it quite frankly didn’t make sense that there were counties sharing in the rewards of severance taxes while restricting the ability for us to receive that severance tax.”

The introduction of the bill has perplexed Sterling officials, as well as citizens who oppose the measure over environmental and health concerns related to drilling operations. They note that there is no outward support for the measure. At Monday’s hearing, several witnesses signed up to testify against the bill, but no one offered supporting testimony. The Colorado Oil and Gas Association says it also hasn’t pushed the issue, or even developed a public opinion concerning the bill.

Speculation had swirled that Sonnenberg introduced the legislation at the request of House Speaker Frank McNulty, R-Highlands Ranch. But Sonnenberg shrugged off that talk, saying he had to actually state his case to McNulty to have the bill introduced as a late bill, which it was on April 27.

The controversy over the bill crosses the political aisle, with both Republicans and Democrats opposing the measure. Looper, for example, said she also questions the origins of the bill. She wonders whether the bill is in response to a four-month moratorium on oil and gas permits enacted by her El Paso County in late September 2011. County commissioners enacted the moratorium to give county leaders more time to create local land use regulations in an effort to protect water sources from drilling activities.

“Is this a slap in the face to El Paso County for trying to figure out our water issues?” asked Looper. “I want to know, because if that’s what this is, then you cannot retaliate with legislation. That’s against the law.”

Alan Curtis, with the law firm White & Jankowski, is representing Sterling officials, and pointed out during testimony that there “doesn’t appear to be somebody that’s requested this bill.” In an interview with The Colorado Statesman on Tuesday, Curtis said he worries that the bill would do more damage than good, insisting that the measure is unnecessary.

“Nobody’s asked for a solution to a problem, and we’re creating more issues here that are going to distance people rather than getting the solution figured out,” he said.

Following Curtis’ testimony on Monday, Sonnenberg unabashedly took a jab at part of his own district, posting a Tweet to his @RepSonnenberg account that read, “City of Sterling just testified they should get oil and gas money even if the city stops the industry from producing. Can you say greed?”

In an interview on Tuesday, Sonnenberg told The Statesman that he’s not looking to woo Sterling government officials. “I’m at odds with the City of Sterling all the time,” he quipped. “Maybe if governments voted it would matter, but I think the people of Sterling are more for limiting government spending… and that’s what I’m trying to do here.”

Curtis said he and Sterling officials don’t take the jab personally, but he is concerned by the messaging. “We’re not talking about somebody being greedy, we’re talking about local counties having the ability to impose reasonable control to protect their assets and their citizens going forward.”

On Tuesday, Sonnenberg followed up with yet another electronic communication, this time to his Website, ElectSonnenberg.com. He called the post “Modern Day Version of Henny Penny.” The rhyme read like this:

“Who will help me drill for oil and gas?”
“Not I,” said the county government.
“Who will help me produce the oil and gas?”
“Not I,” said the environmentalists.
“Who will help me refine the oil and gas?”
“Not I,” said the municipalities.
“Who would like to use the oil and gas to heat and light their homes and drive their cars?”
“I would, I would, I would!” said the general public.

But citizens and organizations lined up to oppose Sonnenberg’s efforts, calling the measure “unsavory public policy.”

“It’s like when the federal government says, ‘We don’t like what you’re doing Colorado, and until you do what we say to do, we’re going to withhold your transportation dollars…’” decried Kevin Bommer, legislative advocacy manager for the Colorado Municipal League. “No one likes that and this is no different.”

Peter@coloradostatesman.com