Final
STAFF SUMMARY OF MEETING
RURAL ISSUES
Date:
10/27/2005
ATTENDANCE
Time:
09:01 AM
to
11:28 AM
Entz
*
Fitz-Gerald
X
Place:
HCR 0112
Gallegos
X
Gardner
X
This Meeting was called to order by
Kester
X
Representative
Hodge
Klein
X
McKinley
E
This Report was prepared by
Rose
X
Ron Kirk
Shaffer
X
Whitefeather
X
Isgar
X
Hodge
X
X = Present, E = Excused, A = Absent, * = Present after roll call
Bills Addressed:
Action Taken:
Presentations
Bill 1
Bill 2
Bill 3
Bill 4
Bill 5
-
Amended, Recommended to Legislative Council
Referred to Legislative Council
Postponed Indefinitely
Postponed Indefinitely
Amended, Recommended to Legislative Council
09:01 AM -- Call To Order
Representative Hodge, Chair, called the meeting to order and welcomed the public to the event. Representative Hodge mentioned that the committee would be hearing presentations that related to the bills the committee would be considering. Staff present were Natalie Mullis and Ron Kirk, Legislative Council Staff, and Karen Epps and Tom Morris, Office of Legislative Legal Services.
09:03 AM -- Presentation by Legislative Council Staff
Mr. Mike Mauer, Chief Economist, Legislative Council Staff, began by discussing the impact of various tax policy changes on the TABOR spending base. If Referendum C fails, the state General Fund would be in the same situation as it was for many years prior to the 2001 recession when the state had a TABOR surplus. Tax cuts reduce surplus revenues during years for which the state has a surplus. However, if a recession happens in the future and the state does not have a TABOR surplus, tax cuts will worsen the ratchet-down effect and result in a lower TABOR spending base than would otherwise occur if the tax reductions were not enacted. Thus, during years for which there is a surplus, tax cuts just simply redistribute who gets TABOR refund surplus dollars while during a recession, tax cuts can affect the state General Fund and the ability of the state to fund programs and balance its budget.
Mr. Mauer closed by saying that if Referendum C passes, any future tax cuts will reduce the new spending base if state revenue collections are above the current limit.
09:10 AM -- Presentation by the Colorado Petroleum Association, Petroleum Marketers Association, and the Division of Oil and Public Safety
Mr. Stan Dempsey, Colorado Petroleum Association, commented on Bill 1, which would require that all gasoline sold in Colorado be blended with ethanol. He discussed the ethanol mandates under the Federal Clean Air Act that work toward cleaner air during the winter months. Mr. Dempsey also spoke to the increased market penetration that ethanol has made in recent years and said that generally, the ethanol industry is doing well. Currently, about 85 percent of all gas blended in the Denver metro area contains ethanol. Mr. Dempsey expressed concern that the state does not need an ethanol mandate because the marketplace is governing the overall production and usage of ethanol in gasoline.
Mr. Dempsey commented that specifically, ethanol-gasoline blends that exceed 10 percent may be problematic because they require a waiver from the Environmental Protection Agency (EPA). Mr. Dempsey commented on the difficulties the rule-making process presents that makes it difficult for the state to receive waivers from the EPA. The EPA will reject a state's request for an ethanol waiver whenever the agency believes air quality is compromised.
The committee and Mr. Dempsey engaged in a discussion about the EPA rule-making process that has made it difficult for Colorado to receive waivers in prior years. The discussion shifted to the ethanol blending process and the benefits of ethanol.
09:25 AM
The committee discussed some of the benefits of using ethanol in gasoline. Senator Shaffer mentioned that there are environmental and financial advantages tied to ethanol. In addition, the use of ethanol will reduce the dependence America has on foreign oil because less foreign oil will need to be imported. Finally, farmers will benefit as more corn will be needed for ethanol production. Senator Shaffer commented that the state must take a active role in setting policy decisions that will affect and potentially reduce our national oil consumption.
09:31 AM
Mr. Roy Turner, Petroleum Marketers Association, began by commenting on the EPA waivers that have allowed Colorado to use ethanol blends based on the season of the year. He also spoke about the requirements under the Clean Air Act. Mr. Turner also commented on state ethanol production and the increased national production that will be needed to meet new federal mandates for renewable fuels. By 2006, the nation will be producing 4 billion gallons of ethanol per year. Mr. Turner expressed his concern that the ethanol industry cannot keep up with current national demands as the nation is currently importing ethanol from other countries such as Brazil.
Mr. Turner continued by saying that federal mandates will result in an increased demand for corn and increased costs to taxpayers for gasoline subsidies. It is estimated that future federal mandates will cost taxpayers up to $7 billion in 2012. The committee engaged in a brief discussion on state ethanol production and ethanol's ability to reduce air pollutants during the winter months.
Mr. Dempsey commented on some of the unintended consequences of mandates in the marketplace that could result from federal EPA standards. Mr. Dempsey concluded by saying that mandates are a concern because market conditions can change. If ethanol becomes more expensive as demand increases, it may cost consumers more money for ethanol blend gasolines than conventional fuel without ethanol.
09:57 AM
The committee continued to discuss some of the benefits of ethanol use in gasoline that pertain to the United States dependency on foreign oil.
10:02 AM
The committee asked Mr. John Cevette from the Colorado Corngrowers Association to respond to committee questions. Mr. Cevette began by commenting on the advantages of blending ethanol with convention gasoline and talked about the environmental advantages in regard to maintaining ozone protection. He continued the discussion by commenting on the subsidies the oil industry receives from the federal government in terms of national defense spending and closed by commenting on the advantages that oil companies have due to market share.
10:12 AM
Mr. Dick Piper, Division of Oil and Public Safety for the Department of Labor and Employment, briefly talked about the ASTM standards that industries rely on and the testing methods that the professional association employs to arrive at industry standards.
Mr. Piper pointed out that should the committee recommend the legislation (Bill 1), the state would have to modify the language in the statutes that refer to ASTM standards and EPA waivers. The way the legislation is drafted, it may conflict with the 10 percent ethanol standard that is referenced in current law. Mr. Piper closed the discussion with a technical explanation on vapor pressure standards that determine the allowable level of ethanol that can be blended with gasoline in different states. The Colorado vapor pressure standard is 7.8 lbs.
10:20 AM -- Presentation by Mr. Stephen Hill, Summit County and the State Architect and Energy Engineer
Mr. Stephen Hill Special Projects Manager for Summit County, commented on a feasibility study that looks at the use of biofuels for heating government buildings. Mr. Hill commented on the variables that affect the cost of biofuels such as availability, transportation costs, and the type of combustible fuels used by different heating systems.
Mr. Larry Friedberg, State Architect, briefly commented on the life cycle analysis required by state law that looks at the cost of energy alternatives for state buildings. Mr. Friedberg closed by commenting on a study performed by Adams State College on biofuels.
Mr. Rod Vanderwall, State Energy Engineer, briefly talked about the state's life cycle cost analysis that is used to evaluate energy alternatives for state buildings.
The committee closed the discussion by briefly talking about the availability and types of biomass fuel in Colorado and the potential costs that may be associated with the use of biofuels to heat government buildings.
10:50 AM
Break.
11:00 AM
Representative Hodge briefly discussed the intent of Bill 1 on ethanol gasoline. She clarified that the legislation would require gasoline sold in Colorado to be blended with ethanol. The bill was placed on the table for action. Senator Shaffer commented on Bill 1 and proposed a conceptual amendment that changed the ethanol by volume percentage requirements. The conceptual amendment would allow the 5 and 10 percent ethanol by volume requirements to remain the same. For the 15 and 20 percent blend requirements, the mandate would only become effective if: the state receives a waiver from the Environmental Protection Agency; blends are compatible with ASTM fuel standards and federal energy laws; and blends do not void an auto manufacturer's engine warranty.
Prior to the committee voting on the Senator Shaffer conceptual amendment to Bill 1, Representative Gardner made a substitute motion that would strike the provisions that pertain to the 15 and 20 percent ethanol by volume requirements. The substitution motion failed on a 6-3 vote and the original motion passed without objection by those members of the General Assembly present. The legislation was adopted as amended on a 8-0 vote by those members present of the General Assembly.
BILL:
Bill 1
(Ethanol Gasoline)
TIME:
11:02:06 AM
MOVED:
Shaffer
MOTION:
Senator Shaffer moved a conceptual amendment that changed the ethanol by volume percentage requirements. The conceptual amendment would allow the 5 and 10 percent ethanol by volume requirements to remain the same. For 15 and 20 percent blend requirements, the mandate would only become effective if: the state receives a waiver from the Environmental Protection Agency; blends are compatible with ASTM fuel standards and federal energy laws; and blends do not void an auto manufacturer's engine warranty. After the following substitute motion failed, the motion passed without objection by those members of the General Assembly present.
SECONDED:
Gallegos
VOTE
Entz
Fitz-Gerald
Gallegos
Gardner
Kester
Klein
McKinley
Excused
Rose
Shaffer
Whitefeather
Isgar
Hodge
Not Final
YES:
0
NO:
0
EXC:
1
ABS:
0
FINAL ACTION:
Pass Without Objection
BILL:
Bill 1 (Ethanol Gasoline)
TIME:
11:11:53 AM
MOVED:
Gardner
MOTION:
Moved a substitute motion that would strike the provisions that pertained to the 15 and 20 percent ethanol by volume requirements. The substitution motion failed on a 6-3 vote and the original motion (above vote sheet) passed without objection by those members of the General Assembly present.
SECONDED:
Rose
VOTE
Entz
No
Fitz-Gerald
Yes
Gallegos
No
Gardner
Yes
Kester
No
Klein
McKinley
Excused
Rose
Yes
Shaffer
No
Whitefeather
Isgar
No
Hodge
No
Not Final
YES:
3
NO:
6
EXC:
1
ABS:
0
FINAL ACTION:
FAIL
BILL:
Bill 1 (Ethanol Gasoline)
TIME:
11:13:55 AM
MOVED:
Shaffer
MOTION:
Moved to adopt Bill 1 as amended. Bill 1 was adopted as amended on a 8-0 vote by those members of the General Assembly present. Representative Hodge, Chair, named Senator Shaffer as the prime sponsor.
SECONDED:
Gallegos
VOTE
Entz
Yes
Fitz-Gerald
Yes
Gallegos
Yes
Gardner
Yes
Kester
Yes
Klein
McKinley
Excused
Rose
Yes
Shaffer
Yes
Whitefeather
Isgar
Excused
Hodge
Yes
Final
YES:
8
NO:
0
EXC:
2
ABS:
0
FINAL ACTION:
PASS
11:19 PM
Representative Hodge, Chair, placed Bill 2 on the table for action and commented that the bill would require all state-owned diesel vehicles and equipment to use a fuel blend of 20 percent biodiesel and 80 percent petroleum diesel subject to availability.
BILL:
Bill 2
(State-Vehicle Biodiesel Fuel Requirement)
TIME:
11:20:42 AM
MOVED:
Entz
MOTION:
Moved to adopt Bill 2. The motion passed on a 8-0 vote by those members of the General Assembly present. Representative Hodge, Chair, named Senator Entz as the prime sponsor.
SECONDED:
Kester
VOTE
Entz
Yes
Fitz-Gerald
Yes
Gallegos
Yes
Gardner
Yes
Kester
Yes
Klein
McKinley
Excused
Rose
Yes
Shaffer
Yes
Whitefeather
Isgar
Excused
Hodge
Yes
Final
YES:
8
NO:
0
EXC:
2
ABS:
0
FINAL ACTION:
PASS
11:23 AM
Representative Hodge, Chair, moved that Bill 3 (state income tax credit for agricultural producers of plant or animal matter that is used to produce renewable fuels) not be adopted by the committee.
BILL:
Bill 3
(State Income Tax Credit For Agricultural Producers)
TIME:
11:23:37 AM
MOVED:
Hodge
MOTION:
Moved that the committee not adopt Bill 3. The motion passed on a 7-2 vote by those members of the General Assembly present.
SECONDED:
Kester
VOTE
Entz
Yes
Fitz-Gerald
Yes
Gallegos
No
Gardner
Yes
Kester
Yes
Klein
McKinley
Excused
Rose
No
Shaffer
Yes
Whitefeather
Isgar
Yes
Hodge
Yes
Final
YES:
7
NO:
2
EXC:
1
ABS:
0
FINAL ACTION:
PASS
11:24 AM
Representative Hodge, Chair, moved that Bill 4 (state income tax credit for biodiesel producers) not be adopted by the committee.
BILL:
Bill 4
(State Income Tax Credit For Biodiesel Producers)
TIME:
11:24:50 AM
MOVED:
Hodge
MOTION:
Moved that the committee not adopt Bill 4. The motion passed on a 6-3 vote by those members of the General Assembly present.
SECONDED:
Fitz-Gerald
VOTE
Entz
No
Fitz-Gerald
Yes
Gallegos
No
Gardner
Yes
Kester
Yes
Klein
McKinley
Excused
Rose
No
Shaffer
Yes
Whitefeather
Isgar
Yes
Hodge
Yes
Final
YES:
6
NO:
3
EXC:
1
ABS:
0
FINAL ACTION:
PASS
11:25 PM
Representative Hodge, Chair, placed Bill 5 on the table for action and commented that the bill would require the life-cycle cost analysis performed for each state-owned facility to include an analysis of the use of biofuel to provide supplemental or exclusive heating, power, or both for the facility.
BILL:
Bill 5
(Biofuels In State Buildings)
TIME:
11:26:14 AM
MOVED:
Entz
MOTION:
Moved to add a safety clause to the legislation. The motion passed without objection by those members of the General Assembly present.
SECONDED:
Gallegos
VOTE
Entz
Fitz-Gerald
Gallegos
Gardner
Kester
Klein
McKinley
Excused
Rose
Shaffer
Whitefeather
Isgar
Hodge
Not Final
YES:
0
NO:
0
EXC:
1
ABS:
0
FINAL ACTION:
Pass Without Objection
BILL:
Bill 5
(Biofuels In State Buildings)
TIME:
11:27:18 AM
MOVED:
Rose
MOTION:
Moved to adopt Bill 5. The motion passed on a 9-0 vote by those members of the General Assembly present. Representative Hodge, Chair, named Senator Kester as the prime sponsor.
SECONDED:
Kester
VOTE
Entz
Yes
Fitz-Gerald
Yes
Gallegos
Yes
Gardner
Yes
Kester
Yes
Klein
McKinley
Excused
Rose
Yes
Shaffer
Yes
Whitefeather
Isgar
Yes
Hodge
Yes
Final
YES:
9
NO:
0
EXC:
1
ABS:
0
FINAL ACTION:
PASS
11:28 AM
Adjourn.