Political Background
The Colorado political
landscape is controlled by Democrats. As a moderate Democrat, Governor John
Hickenlooper has enjoyed the luxury of having a divided House and Senate to
kill the extreme agenda from either side. This year he will have his hands full
governing with a Democrat Majority in both the House and Senate. His relationship to the oil & gas
industry is strong and he has been a national leader speaking out against the
anti-fracturing forces that have invaded Colorado. His administration has sued one Local
Government over the issue and will likely join an industry lawsuit over a
referendum that banned hydraulic fracturing in that same community. His
appointments to the Colorado Oil and Gas Conservation Commission have been fair
and they are holding the industry to high standards but do have the zeal to
punish the industry as was the case under Governor Ritter.
The Senate numbers
remain unchanged. The Democrats are
still firmly in charge with a 20 - 15 margin.
The Senate President is a moderate but the New Majority Leader is an
anti-oil and gas populist. She has
aspirations of being Attorney General and possibly Governor and is using the
anti-fracturing sentiment to get her wider exposure to the media. The good news is that there are at least
three democrats in the Senate that do not want to have a fight over hydraulic
fracturing and we have a good chance to sway them on that and other oil and gas
issues. On the Republican side, the Minority
Leader is a good friend of industry. We
have strong supporters in the caucus and they will be able to help spread a
pro-industry message. In contrast, the
House of Representatives has flipped back to being strongly Democratic with a
37-28 majority. There are 20 new legislators in the House. Many are trying to hold their commitments to
the environmentalists to a minimum and wish to do more for the industry. The new Democratic Speaker is a moderate on
oil and gas issues and wants to align his position with the Governor wherever
possible. The Majority Leader hales from
Boulder County, a hot bed of anti-oil and gas sentiment. She is trying to be a moderating influence
but has strong proclivities to put local government in control of all oil and
gas siting decisions. The new Minority Leader is also a good friend to industry
and we also have strong supporters throughout the caucus.
LEGISLATIVE ISSUES
Colorado’s 120 day
legislative session, combined with a new Governor and change of control of the
House of Representatives, means that there will likely be many bills affecting
oil and gas development in Colorado.
Chesapeake’s 2013 Priorities are:
·
Work with the
administration to advance NGV station development and vehicle conversion.
·
Oppose hydraulic
fracturing bans, unreasonable setback, and local control legislation.
·
Protect the industry
from unwarranted budget-related tax or fee increases.
·
Respond/capitalize as
needed on other bills that may be forthcoming as the legislature convenes in
mid-January and starts its work.
NGV Development
Chesapeake is providing
the major leadership for reinvigorating natural gas vehicles in Colorado. COGA has developed an outline for where
stations need to be developed. Chesapeake
has developed a relationship with the major investor owned utility and has
performed outreach to municipal and rural utilities. We are working with the administration to
educate DNR and CDOT staff about NGV vehicle and station technologies. The Governor has gotten 22 other Governors
nationally to push forward with fleet conversions as a signal to Detroit that
if you build them there will be a market.
Strategies:
·
The goal for Colorado
will be to bring to fruition a funding source to match Chesapeake’s financial
commitment for station development.
·
Work with the Colorado
Energy Office and Department of Natural Resources and Department of
Transportation to corral $10 million for station development grants from
Federal Congestion Management and Air Quality (CMAQ) funds.
·
Work with the Colorado
Energy Office to support a repeal of the NGV sticker and replace it with a
comparable excise tax like other fuels.
·
Work with Petroleum
Marketers Association to gain access and commitments to station sites.
·
Continue to work with
XCEL and other utilities to improve pipe line and LDC delivery of fuel to
station sites.
·
Support legislation that
encourages state and local fleet conversions.
Setbacks, HYDRAULIC FRACTURING
Bans and LOCAL CONTROL
This is an issue that
will take center stage this session.
Last session there was legislation that would have altered setback
distances and one that would have given outright control of siting decisions to
local governments. The issue is being
driven by one county in particular, Boulder, but several other counties are
interested in pushing this issue as well.
Strategies:
·
Meet with legislators to
describe operational issues associated with setbacks that are too restrictive.
·
Support the Governor,
Weld County, other local governments and businesses who do not want to see a
change.
·
Work with the
agricultural industry associations and Home Builders to be part of a coalition
to oppose anti-industry legislation.
BUDGET
Colorado for the first
time in since 2008 is not facing a declining revenue picture. This is welcome relief. The growth is small and is clearly dependent
on the national recovery and the European monetary crisis. The K-12 interest groups are pushing to
increase revenue to make up for revenue “lost” during the recession. However, the Washington D.C. left “fiscal
cliff” deal is projected to cost the State approximately $100 million of lost
revenue because higher income earners and retirees are selling stocks to get
the lower capital gains rate in 2012.
There will likely be
pressure to eliminate tax credits and exemptions. Severance taxes currently receive about a
$300-500 million credit that was the subject of a ballot initiative two years
ago. The voters rejected the proposal by
nearly 60%, and legislators have not wanted to go after it statutorily
since. However, the Governor has from
time to time mentioned to executives of the industry that he would entertain
the notion of industry helping to solve fiscal issues associated with the state
budget. There is a self-appointed School
Finance interest group that has put out several suggestions for adding money to
K-12 education. Elimination of the
severance tax deduction is on their list for adding revenue to the school
finance formula.
Strategies:
·
Follow the COGA lead of
preparing information about the amount of taxes in all forms that the industry
pays to the state.
·
Talk about the need to
keep tax rates stable and grow the oil and gas economy to increase revenue.
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