American Oil and Gas Reporter - June 2014 - 36

State Legislative Reports

Local Control Unresolved In Colorado
DENVER-Finding a means for local
governments to have a voice in oil and natural gas development while assuring operators development will not be blocked
remained just out of reach during discussions in the final hours of the 2014 session
of the Colorado Legislature.
After the session, Governor John Hickenlooper continued to press for conversations among operators, local governments, legislators and anti-development
activists. He held out the prospect of a special session of the legislature in an effort
to head off what could shape up to be an
expensive, grueling battle over the dozen
or so anti-oil-and-gas ballot initiatives being pursued for the November election, according to reports in the Colorado press.
Hickenlooper told reporters immediately after the session he believed there was
an even chance he would call lawmakers
back for a special session, which likely
would take place in the summer.
That possibility caused one legislator
to quip, "Special sessions are special because they are not fun."
Press accounts quote the governor
saying he supports a legislative compromise on the local control issue as the best
means to avoid a costly, bitter fight over
ballot initiatives leading up to the November election.
As of May 19, the secretary of state's
office reported that issue committees on
both sides of the question had raised
more than $5 million, with oil and gas industry groups reporting 2.5 times more
than proponents of the local control and
fracturing ban initiatives.
However, Doug Flanders, director of
policy and external affairs at the Colorado
Oil & Gas Association, points out that the
main proponent for the ballot initiatives,
which he says basically ban the oil and gas
business, is multimillionaire Congressman
Jared Polis, a Democrat from Boulder, Co.
As the legislative session ended, COGA
positioned itself as an interested observer, but says it is not participating in the discussions. "We are watching, but are not involved in the conversation," Flanders
confirms.
"We are standing back because there isn't a bill on the table to discuss, nor does
there appear there to be bipartisan support
for the proposals so far," he expands. "As
the trade association representing all
types of operators, we don't see broad consensus on a single path forward. As a result, we are not participating in the conversations."
36 THE AMERICAN OIL & GAS REPORTER

Legislative Activity
Otherwise, the 2014 session of the state
legislature was relatively calm and no bills
damaging to the industry passed, while two
bills that COGA supported were approved and were awaiting the governor's
signature, Flanders reports.
"Unlike 2013, when we saw no fewer
than 10 anti-oil-and-gas bills, this session
was one where real conversation and understanding occurred, and real progress
was made with even some of our loudest
critics at the state Capitol," he assesses.
"Unlike our activist friends, industry once
again has shown it is about finding real solutions, rather than creating political issues."
COGA opposed HB 1297, a bill authorizing a study of health impacts from oil and
gas development along Colorado's Front
Range. The bill passed the House, but died
in the Senate Appropriations Committee
near the end of the session. "The Senate
recognized the bill for what it was," comments Flanders: "a political study, conducted under a political process, overseen by
a political committee. That was always our
concern with it."

COGA supported HB 1371, which
clarifies that the point of oil and gas valuation and taxation is at the wellhead. Flanders notes that as development has turned
from vertical to horizontal and directional drilling, wellbores often extend under
different taxing districts. This bill states
that property taxation can be taken only at
the wellhead.
"HB 1371 had bipartisan support,"
Flanders points out. "The benefit of production should be at the point of disturbance and not the far end of the wellbore."
COGA also supported HB 1356, which
raises penalties for violations of the state's
oil and gas regulations. Operators can be
fined up to $15,000 a day for each violation, but there is no mandatory minimum
penalty attached, an idea that was pursued
by industry critics and strongly opposed
by COGA.
"The intent of this bill is to harmonize
penalties for violations across regulatory
bodies and regulated industries," comments
Flanders. "We worked with legislators to
ensure it was fair in punishing violators
while encouraging operator compliance."
❒

Virginia Passes Natural Gas
Infrastructure Incentives Law
RICHMOND, VA.-The Virginia legislative session ended in April, but, Virginia
Oil & Gas Association President Greg Kozera confirms, lawmakers were able to
pass several bills that dealt with natural gas
vehicle incentives before the regular session adjourned.
Virginia Governor Terry McAuliffe
already has signed SB 519, which offers
incentives for natural gas infrastructure development to improve citizens' access to
low-cost shale and coalbed methane gas
supplies, published reports describe.
According to VOGA, the law is designed to encourage utilities to build
pipelines and other infrastructure to bring
natural gas into the state's markets, preferably under long-term arrangements that
may reduce gas supply costs and reduce
price volatility.
The measure provides infrastructure
cost recovery mechanisms, the association
clarifies, adding that transporting gas by
pipeline-without providing service to
end-users within the territory-shall not be

considered operating in the territory of another certificate holder.
Published reports explain that the new
law also will bar the Virginia State Corporation Commission from approving construction for a natural gas compressor station in an area without the locality's certification, but only if the area is zoned exclusively for residential use.
Improving gas price stability will help
both residential and commercial consumers, Kozera states, especially considering that many local fleets are in the
process of or are considering switching to
all-NGV vehicles that would run on compressed or liquefied natural gas.
Even the Commonwealth of Virginia is
in the process of replacing its older cars
with NGVs, he observes. When a fleet vehicle needs to be replaced, Virginia officials are required to buy an NGV unless
there are peculiar circumstances, which
have to be reported and approved before
the requirement can be bypassed.
❒
See Story Page 148



American Oil and Gas Reporter - June 2014

Table of Contents for the Digital Edition of American Oil and Gas Reporter - June 2014

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