Jerry Sonnenberg, Colorado Representative, Pushes Drilling Severance Tax Study Through House

DENVER (AP) — Colorado averted a potentially nasty showdown over oil and gas drilling Monday when a Republican lawmaker backed off his plan to punish local governments that interfere with drilling.

Rep. Jerry Sonnenberg's measure would have yanked severance tax payments from local governments that took steps to slow or prevent oil and gas drilling. Sonnenberg argued that governments that ban drilling shouldn't get severance tax compensation, but the bill was widely panned as a punitive measure aimed at preventing cities and counties from seeking regulations beyond state minimums.

Sonnenberg took a new course Monday and changed the measure to a study of severance taxes. It passed a House committee 7-5 in the weaker form.

Sonnenberg argued his bill is still valuable as a study because he said Colorado needs a better handle on how drilling moratoriums or regulation affect overall severance taxes, which are taxes paid by oil and gas drillers. Severance taxes are a major source of funding for many local governments.

Some Republicans agreed. "I think this is very important, so that everybody knows exactly where we stand," said Ignacio Republican J. Paul Brown.

However, the vote Monday was viewed as the last gasp for the idea to punish local governments through severance taxes. With only two legislative days remaining, the bill faced an uphill battle in the Republican House and certain doom in the Democratic Senate.

Oil and gas drilling has been an underlying spot of tension all year for Colorado lawmakers. Because of technological advances, energy companies are seeking drilling permits in new, more populous areas. In response, some of those areas have sought to control how and where drilling is allowed, prompting a turf war over who controls drilling.

Republican Attorney General John Suthers and Democratic Gov. John Hickenlooper sided with state energy regulators and the oil and gas companies. A few Democratic lawmakers proposed bills giving locals more say, while Republicans unsuccessfully pushed rival proposals strengthening the oil and gas industry.

Hickenlooper convened a task force in March to settle the dispute, and a panel of local government and energy representatives, along with some environmentalists, concluded that no new legislation was needed. But not long after, Sonnenberg's measure threatened to break the truce.

Meanwhile, a Senate Democrat from a Denver suburb affected by drilling, Aurora Sen. Morgan Carroll, proposed a bill requiring additional safeguards of the oil and gas drillers. That bill, like Sonnenberg's study, is pending in its original chamber and appears certain to fail.

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Comments

[D-Driller]

09:44 PM on 05/08/2012

If the local towns disallow drilling, they won't get any severance taxes anyway, will they? Granted, I don't believe areas that won't allow drilling should be given any part of drilling-related revenue (that seems fair - they don't want to drill, and so should not benefit from areas that do, obviously), but the law in this form is too watered down to do much good. Plus, counties like Boulder and some in the high country that are against drilling would SCREAM if you took away any monies they get from the state coffers that are sourced from oil and gas!