Senate Committee on Judiciary (05/02/2012)

Final
STAFF SUMMARY OF MEETING

SENATE COMMITTEE ON JUDICIARY

Date:	05/02/2012	ATTENDANCE

Time:	01:37 PM to 05:58 PM	Giron	*
		King S.	X
Place:	SupCt	Lundberg	*
		Nicholson	X
This Meeting was called to order by		Roberts	X
	Senator Carroll	Guzman	X
		Carroll	X
This Report was prepared by
	Hillary Smith
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
SB12-107		Amended, Referred to Appropriations

01:37 PM -- Senate Bill 12-107

Senator Carroll, chair, called the meeting to order.

Senator Carroll, sponsor, presented Senate Bill 12-107. The bill enacts the "Water Rights Protection Act," which requires the Colorado Oil and Gas Conservation Commission (COGCC) to establish rules for:

• hydraulic fracturing near Superfund sites and radioactive materials; and
• shutting down operations when monitoring equipment detects a pressure drop.

Prior to fracturing a well, oil and gas operators are required to conduct water quality and quantity studies and submit reports of their findings to the COGCC. The COGCC is to make these reports available to the public online in a searchable format. Operators are prohibited from inserting chemicals into the ground that are known or reasonably anticipated to cause cancer. Operators engaging in high-risk hydraulic fracturing are required to obtain an environmental bond or other financial assurance that will be forfeited if the operations cause damage to water rights or nontributary water. The bill establishes a definition for high-risk hydraulic fracturing as hydraulic fracturing occurring within one-half mile of a Superfund site, radioactive materials, surface water, or a federally designated wilderness.

Unless rebutted by one or more of the defenses established in the bill, an operator is presumed to be responsible for the pollution of a water supply that is within one-half mile of a line between the well head and the surface projection of the bottom hole location of the well, if the pollution occurred within six months after the completion of the hydraulic fracturing of the well. The five affirmative defenses are:

• the pollution existed prior to the hydraulic fracturing;
• the surface owner or water well owner did not allow the operator access to conduct a predrilling or prealteration survey;

• the water supply is not within one-half mile of the well;
• the pollution occurred more than six months after the completion of the hydraulic fracturing of the well; or
• the pollution occurred as a result of some cause other than the hydraulic fracturing of the well.

Finally, the bill requires that operators use a closed-loop system when conducting hydraulic fracturing within one-half mile of any surface water and allows the COGCC or local governments to adopt more stringent local protections.

Background. Hydraulic fracturing, commonly referred to as fracking, is the process of creating small cracks, or fractures, in underground geological formations to allow oil or natural gas to flow into the well bore, thereby increasing production. To fracture the formation, special fracturing fluids are injected down the well bore and into the formation. These fluids typically consist of water, sand, and chemical additives. The pressure created by injecting the fluid opens the fractures. Sand is carried into the fractures by the fluid and keeps the fractures open to increase the flow of oil or natural gas to the well bore. Most of the hydrocarbon bearing formations in Colorado have low porosity and permeability. These formations would not produce economic quantities of hydrocarbons without hydraulic fracturing. Fracture treatment of oil and gas wells in Colorado began in the 1970s and has evolved since then.

01:38 PM

Senator Guzman explained that each witness would be given three minutes to testify, questions not included. Senator Carroll distributed prepared Amendment L.002 (Attachment A), and a memorandum prepared by Legislative Council Staff concerning the effect of the amendment (Attachment B). Senator Carroll walked the committee through the provisions of prepared Amendment L.002. She said that the bill does not stop or ban fracking, but ensures that appropriate protections are enforced. She spoke about the volume of water needed in the fracking process.

01:48 PM

Senator Carroll continued to explain why she feels that the bill is necessary. She spoke about concerns specific to her district. Senator Lundberg asked for additional detail regarding the provisions on page 2, lines 24 through 29 of prepared Amendment L.002, concerning bonding requirements. Senator Carroll explained her reasons for including this language in the bill. Conversation then continued between Senator Lundberg and Senator Carroll concerning the federal Clean Water Act.

01:55 PM

Senator S. King quoted language from a petition that Senator Carroll provided. He spoke about the position of Governor Hickenlooper on this issue. Discussion ensued between Senator Carroll and Senator S. King.

02:00 PM

Senator Roberts referred to language on page 1, lines 25 through 27 of prepared Amendment L.002, concerning shutting down drilling operations in response to certain pressure readings. Senator Carroll responded to her remarks, noting that the bill requires the COGCC to promulgate rules to address this issue. Senator Roberts asked if Senator Carroll feels that the COGCC is not adequately responding to fracking. Discussion continued between Senator Roberts and Senator Carroll.

The following individuals testified regarding the bill:

02:09 PM -- Mr. Wes Wilson, representing Be the Change, testified in support of the bill. He spoke about how current regulations for fracking differ from those for other industries. He referred specifically to language in the bill concerning a rebuttable presumption regarding pollution of a water supply. He discussed a study concerning contamination of domestic wells by fracking. Mr. Wilson also spoke about air pollution. Senator Carroll asked Mr. Wilson to address a previous question from Senator Lundberg concerning laws that prohibit private individuals from putting fracking chemicals in the ground.

02:14 PM -- Professor Mark Williams, representing himself, testified on the bill from a neutral position. He made several suggestions for ways to improve water quality testing. He said that unconventional gas extraction can be done safely, but regulation does not equal compliance. Professor Williams responded to questions from Senator Roberts concerning depletion of water resources in the San Juan Basin. Senator Carroll spoke about compliance with voluntary water testing. She asked Professor Williams to expand on his comments concerning this issue.

02:21 PM -- Reverend Mary Ann Dimand, representing herself, testified regarding the bill. She spoke about her experience as an economist and how economic theories relate to fracking. She said in some cases taxes and regulation produces better outcomes than a free market. Rev. Dimand responded to questions from Senator Roberts.

02:28 PM -- Mr. Phil Doe, representing Be the Change, testified in support of the bill. He said that the state does not have enough information concerning the water required by all the fracking in the state. He spoke about the cleanup of the Rocky Mountain Arsenal. He said that bonding and transparency are important. He concluded his remarks by citing statistics concerning how regulation affects jobs.

02:33 PM -- Ms. Sonia Skakich-Scrima, representing herself, testified in support of the bill. She said that the appropriate data-collection and research needed to ensure that fracking is safe has not been done. Ms. Skakich-Scrima distributed a packet of information to the committee (Attachment C). She responded to questions from the committee.

02:44 PM -- Ms. Jen Palazzolo, representing Erie Rising, testified in support of the bill. She said that the burden of proof that fracking does not cause harm lies with the oil and gas industry. Ms. Palazzolo responded to questions from Senator S. King concerning water quality monitoring.

02:48 PM -- Mr. Rick Blotter, representing the Elbert County Oil and Gas Interest Group, testified in support of the bill. He said that the oil and gas industry believes it is too costly to comply with regulations. He said that the same industry makes billions of dollars and is subsidized by tax dollars. Discussion ensued between Senator S. King and Mr. Blotter concerning lobbying efforts by the oil and gas industry. Senator Roberts asked if Mr. Blotter is aware of new regulations that have passed in the past five years concerning this issue. Conversation continued.

02:56 PM -- Ms. Sandy Toland, representing What the Frack?! Arapahoe, testified in support of the bill. She discussed the use of water in the fracking process.

02:58 PM -- Mr. Keith Wolfe, representing himself and his family, testified in support of the bill. He said that water is very precious for people like him who produce food on their land.

03:01 PM -- Ms. Janet Damon, representing herself, testified in support of the bill. She spoke about fracking in Green Valley Ranch. She described her concerns about the health risks of having fracking operations near her home. Senator Roberts asked Ms. Damon to examine efforts made by the legislature in recent years to regulate fracking. Ms. Damon responded to Senator Roberts' comments. Conversation continued.

03:11 PM -- Ms. Beth Barta, representing herself, testified in support of the bill. She said that she lives near the Rocky Mountain Arsenal. She said that the legislature must continue to protect communities.

03:14 PM -- Mr. Jim Crawford, representing himself, testified in support of the bill. He spoke about the resources used in fracking operations. He referred to studies that discuss the negative impacts of fracking. He spoke about the money earned by the oil and gas industry in Colorado.

03:17 PM -- Ms. Toni Panetta, representing National Abortion and Reproductive Rights Action League (NARAL) Pro-choice Colorado, testified from a neutral position. She expressed support for continuing to learn more about the health effects of fracking. She spoke about the potential health effects of chemicals that are commonly used in fracking.

03:21 PM -- Ms. Jodee Brekke, representing herself and Commerce City Unite Now, testified in support of the bill. She said that in Commerce City, where she lives, current laws are not being adequately enforced. She asked how many jobs are worth her children's health. She spoke about different kinds of fracking.

03:25 PM -- Ms. Kathy McIntyre, representing Commerce City Unite Now, testified in support of the bill. She read excerpts from articles regarding the current regulatory system for the oil and gas industry. She asked the committee to support the bill.

03:29 PM -- Ms. Randee Webb, representing herself, her family, her friends, and others, testified in support of the bill. She said that horizontal drilling is only about seven years old, and is very different from vertical drilling. She asked the committee to vote for the bill.

03:32 PM -- Ms. Michele Swenson, representing herself, testified in support of the bill. She cited studies concerning contamination by fracking. She distributed a handout to the committee (Attachment D).

03:36 PM -- Ms. Frances Shure, representing herself, testified in support of the bill. She cited articles concerning the Lowry Landfill. She provided copies of both articles for the archives (Attachments E and F).

03:41 PM -- Ms. Kristi Douglas, representing herself, testified in support of the bill. She spoke about the relationship between fracking and earthquakes. She discussed the effect of fracking on her home in Commerce City.

03:46 PM -- Ms. Leslie Glustrom, representing Clean Energy Action, testified in support of the bill. She thanked Senator Roberts for her work on this issue. She distributed an excerpt from a study to the committee (Attachment G) and briefly summarized its conclusions. She spoke about the need for sustainable jobs.

03:50 PM -- Mr. Tim Lopez, representing himself, testified in support of the bill. He said it is very important to regulate fracking. He discussed his conversations with Congresswoman Diana DeGette on this issue. Senator Lundberg asked if Mr. Lopez traveled to the committee hearing by a means that required oil or gas. Senator Lundberg asked what Mr. Lopez's solution would be if all fracking is outlawed. Discussion ensued between Mr. Lopez and Senator Lundberg. Senator Carroll clarified that the bill doesn't ban fracking, but aims to institute safe practices.

03:58 PM -- Mr. Michael Collins, representing himself, testified in support of the bill. He stated that he lost his larynx after exposure to Agent Orange in Vietnam. He spoke about the importance of clean water. He referred to fracking as a Ponzi scheme.

04:01 PM -- Mr. Bill Dvorak, representing the Colorado River Outfitters' Association, testified in support of the bill. He spoke about the effects of fracking on water. He discussed the importance of water quality to Colorado's tourism industry. He referred to past legislation on this issue.

04:05 PM -- Mr. Earl Staelin, representing himself, testified in support of the bill. He spoke about his experience as a lawyer representing individuals who are exposed to dangerous chemicals. He said that two chemicals that may be relatively harmless alone may turn dangerous when combined. He said that there is not adequate enforcement to ensure that people are not exposed to chemicals that are known to be toxic. Senator S. King asked Mr. Staelin why he believes that there is no enforcement regarding oil spills. Mr. Staelin clarified that he believes the enforcement is not adequate.

04:09 PM -- Mr. Stan Dempsey, representing the Colorado Petroleum Association, testified in opposition to the bill. He spoke about average salaries for those who work in the oil and gas industry. He discussed the importance of the industry to Colorado's economy. He explained why the Colorado Petroleum Association does not support the bill. He referred to specific language in prepared Amendment L.002. Mr. Dempsey spoke about current rules and regulations addressing fracking. He also spoke about a stakeholder process that the COGCC has begun. He continued to list his concerns with the bill, and with its potential effects on mill levy calculations. He said that the industry supports strong regulation.

04:18 PM

Senator Roberts asked Mr. Dempsey to provide a brief overview of recent regulatory changes for the oil and gas industry. Senator S. King spoke about statistics provided by Senator Carroll concerning spills. He asked what the general response is to such spills. Mr. Dempsey said that no spill is acceptable to the industry. He said that the COGCC may be the best source for specific data on spills. Discussion continued between Senator S. King and Mr. Dempsey concerning how Colorado's response to spills compares to responses in other states. Mr. Dempsey spoke about discussions on the Governor's Oil and Gas Task Force concerning access to the COGCC database. He responded to further questions from Senator Roberts.

04:27 PM

Senator Roberts asked Mr. Dempsey to comment on how "new" fracking is. Senator Guzman asked Mr. Dempsey to address concerns about fracking in the Lowry area. He indicated that the COGCC is just beginning its work in the area of fracking. Senator Roberts asked for Mr. Dempsey's input on the wording of Amendment L.002. Mr. Dempsey addressed the language in the amendment about funding and fee-collection. Senator Carroll commented about the fiscal impact of the bill. Mr. Dempsey expressed his opinion that the regulatory and rule-making requirements in the bill cannot be accomplished within existing resources. He also commented that existing rules address the issue of shutting down fracking operations on the basis of pressure readings. Senator S. King asked how long pressure charts and well logs must be kept.

04:40 PM -- Ms. Trish Watson, representing herself, testified in support of the bill. Ms. Watson expressed concern about the practices of the oil and gas industry. She spoke about the importance of regulations and solid rules. She discussed the environment and stated her opinion that fracking wastes too much water. She complimented Senator Carroll on her efforts.

04:44 PM -- Mr. Ken Wonstolen, representing the Colorado Oil and Gas Association, testified in opposition to the bill. Mr. Wonstolen spoke about his experience in the process of writing the COGCC rule book. He expressed the view that the issues addressed by the bill are already addressed by rules debated and passed during 2008 and 2009. He walked the committee through his objections to the bill. He discussed the fiscal note and expressed concerns about the financial assurances provisions in the bill. Mr. Wonstolen distributed copies of his testimony to the committee (Attachment H). Senator Roberts asked if any bonding companies would provide adequate coverage, given the language in the bill. Discussion ensued between Senator Roberts and Mr. Wonstolen.

04:55 PM

Senator S. King asked how the COGCC takes public safety issues into account during the permitting process. He asked for specific information concerning sites like Lowry or areas near schools. Mr. Wonstolen walked the committee through the process. Senator S. King asked for information concerning well telemetry. Senator Guzman asked how many drilling companies in Colorado are small companies.

05:01 PM -- Mr. Troy Bredenkamp, representing the Colorado Farm Bureau, testified in opposition to the bill. He said that the COGCC already has the authority to promulgate rules addressing fracking. He spoke about ongoing work concerning setbacks. He also spoke about recent state disclosure rules regarding materials used during the fracking process. Mr. Bredenkamp expressed concern that the bill could affect the mineral rights of property owners. Senator Roberts asked how significant royalties from mineral rights are to the average farming family. Senator Roberts then asked how feasible it would be for the COGCC to take on the new responsibilities of the bill within existing appropriations.

05:08 PM -- Mr. Tracy Cook, representing himself, testified in support of the bill. He spoke about past legislation concerning this issue. He said that the new rules and regulations have not driven the industry out of the state. He said it is important to consult independent studies rather than studies published by the industry. Senator S. King spoke about the effects of new oil and gas regulations on the Western Slope.

05:14 PM -- Ms. Carly Dollar, representing the Colorado Association of Commerce and Industry, testified in opposition to the bill. She said that Colorado's current regulations set a standard for the nation. She suggested that the bill has a negative impact on the existing regulatory process.

05:16 PM -- Mr. Kent Holsinger, representing the Colorado Cattlemen's Association, testified in opposition of the bill. He agreed with previous testimony concerning the possible effect of the bill on private property rights. He spoke about his personal situation as part of a ranching family. He said that there are far greater threats to Colorado water than oil and gas. Senator Roberts asked Mr. Holsinger to comment on the effects of recent legislative and regulatory changes on the oil and gas industry. Senator Lundberg asked how the bill would affect the value of his family's property. Mr. Holsinger said that his family and his neighbors are already struggling under the current regulatory system. Senator Guzman asked for information about setbacks. Mr. Holsinger said that setting a one-size-fits-all approach fails to take local circumstances and needs into account.

05:24 PM -- Ms. Marsha Miller, representing herself, testified in support of the bill. She said America has a history of realizing that, in hindsight, more regulations were needed with regards to sites that become Superfund sites. She expressed concern that the oil and gas industry has been exempted from the federal Clean Air Act and the federal Clean Water Act. She said that the fox is not a good guard of the henhouse. Senator Lundberg questioned Ms. Miller's comments concerning exemptions for the oil and gas industry.

05:29 PM -- Mr. Jeff Jetter, representing himself, testified in support of the bill. He referred to the film "Erin Brockovich." He spoke about exemptions for the oil and gas industry. He spoke about the importance of renewable energy to Colorado and its quality of life.

05:32 PM

Senator Carroll provided closing comments in favor of the bill. She referred to comments from opponents who indicated that the COGCC already has the authority to implement the provisions of the bill. She said that the bill uses the rule-making process. She said that it is better to use best practices and avoid problems on the front end. Senator Carroll continued to address arguments from the bill's opponents.

05:43 PM

Senator Carroll continued her remarks. She noted that technology is always changing. She spoke about voluntary water testing by the oil and gas industry. She then referred to comments concerning the bonding requirement. Senator Carroll commented on the fiscal note for the bill. She said that the bill is of statewide interest.

05:48 PM

Senator Roberts explained her position on the bill. She referred to the memorandum prepared by Legislative Council Staff concerning prepared Amendment L.002. She said that the oil and gas industry is a large economic driver in the state. Senator Nicholson explained her position on the bill. She said that health trumps money. Senator Lundberg explained his position on the bill. He said that health and capital are not mutually exclusive. He said that the bill unnecessarily drives up the costs of the extraordinary asset of fracking. He said that it is important for other nations that the economic prosperity of the United States continues.


BILL:	SB12-107
TIME:	05:57:21 PM
MOVED:	Carroll
MOTION:	Adopt prepared Amendment L.002 (Attachment A). The motion passed without objection.
SECONDED:
		VOTE
	Giron
	King S.
	Lundberg
	Nicholson
	Roberts
	Guzman
	Carroll

YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	SB12-107
TIME:	05:58:10 PM
MOVED:	Carroll
MOTION:	Refer Senate Bill 12-107, as amended, to the Committee on Appropriations. The motion passed on a vote of 4-3.
SECONDED:
		VOTE
	Giron	Yes
	King S.	No
	Lundberg	No
	Nicholson	Yes
	Roberts	No
	Guzman	Yes
	Carroll	Yes

Final YES: 4 NO: 3 EXC: 0 ABS: 0 FINAL ACTION: PASS

05:58 PM

The committee adjourned.