Time:07:39 AM to 08:48 AM
Place:HCR 0107
Gardner C.
This Meeting was called to order by
Senator Isgar
This Report was prepared by
David Beaujon
X = Present, E = Excused, A = Absent, * = Present after roll call
Bills Addressed: Action Taken:
Industrial Hemp Production
Implementation of HB 07-1180
Briefing only
Briefing only

07:39 AM -- Industrial Hemp Production

Trevor Kloeck, Senior Development Officer - Biofibres, Alberta Research Council (ARC), explained that the ARC is a government-owned, applied research and development corporation that develops and converts early stage research into marketable technology products and services. Its clients include industry, agricultural producers, government agencies, and nongovernmental organizations. The ARC is conducting research on biomass options including the use of crop residue, switchgrass, fiber crops, such as hemp, and agro-forestry. He explained that hemp was widely cultivated in Canada to make sail cloth and other materials before it become illegal to possess. In late 1990's, Canada reauthorized industrial hemp production. The ARC has conducted research that identified the agronomic benefits of hemp that include its high fiber and high biomass content and its vigorous growth with limited need for water and pesticides. In response to questions from the committee, Mr. Kloeck explained that hemp can be rotated with other crops and it poses little threat of becoming a noxious weed as it is easily controlled with common herbicides. He explained that markets for industrial hemp include pulp and paper, fiber board, and automotive manufacturing that would use hemp fiber as an alternative to fiberglass. He also identified other environmental benefits of industrial hemp production including the capture and storage of CO2.

07:54 AM

Mr. Kloeck explained that equipment used to harvest wheat may be modified without substantial cost to harvest hemp. He responded to questions from the committee about obstacles to increasing the production and use of hemp in the U.S. He explained that hemp production has a stigma due to its association with marijuana. Competing industries, such as fiberglass manufacturers, may also oppose hemp production. He also described the use of hemp in "bioplastics."

08:01 AM

Lynda Parker, Colorado Industrial Hemp Initiative, identified states that are considering legislation to allow industrial hemp production. She also described litigation in federal court between North Dakota farmers and the federal Drug Enforcement Agency that seeks to determine whether federal marijuana laws apply to industrial hemp production. If the court determines that federal marijuana restrictions do not apply to industrial hemp, Ms. Parker explained that legislation in Colorado may be necessary to clarify that industrial hemp is legal and to create a licensing program for hemp producers.

08:05 AM

Mr. Kloeck responded to questions about how to process hemp. He also explained that hemp seeds may be legally imported in U.S. to process into food, cosmetics, and other products. However, these seeds may not be used to grow hemp.

08:09 AM -- Implementation of HB 07-1180

David Neslin, Acting Director of the Colorado Oil and Gas Conservation Commission (COGCC), described the implementation of HB 07-1180 that requires the COGCC, by January 1, 2008, to promulgate rules ensuring the accuracy of oil and gas measurement and reporting (Attachment A). At a minimum, these rules are required to address engineering standards, heating value, specific gravity, pressure, temperature, meter certification and calibration and a methodology for sales reconciliation to wellhead meters. The bill requires the rules to be consistent with standards established by applicable standards-setting organizations. The amended bill also requires, upon request of a royalty owner, an oil and gas operator to provide a written explanation for deductions or adjustments to royalty payments, including, if necessary, meter calibration testing and production reporting records. He also described rule amendments adopted by the COGCC in response to HB 07-1180 that were published in the Colorado Register on May 30, 2008 (Attachment B).

090401AttachA.pdf 090401AttachB.pdf

08:15 AM

Mr. Neslin provided an update on the rules adopted by COGCC on December 11, 2008, to implement HB 07-1341 and HB 07-1298. HB 07-1341 required the COGCC, in consultation with the Department of Public Health and Environment, to promulgate rules that protect the health, safety, and welfare of the general public in the conduct of oil and gas operations. HB 07-1298 required the COGCC to consult with the Colorado Wildlife Commission and the Division of Wildlife (DOW) in establishing rules for oil and gas operations that would minimize adverse impacts on wildlife resources and habitat. These rules take effect today.

08:19 AM

Mr. Neslin described auditing and other procedures used in certain states to ensure the accuracy of oil and gas measurements and reporting. He also responded to questions from the committee about the reason for the delay in rule making to implement the final provisions of HB 07-1180 and the ability to the Attorney General's Office to handle the current rulemaking workload. He also described the state law that regulates the payment of proceeds derived from oil and gas sales (Section 34-60-18.5, C.R.S.) and how it interacts with HB 07-1180. Mr. Neslin responded to questions from the committee about the meaning of provisions in HB 07-1180 that defines the authority of the COGCC to address the methodology for sales reconciliation to wellhead meters.

08:35 AM

Mr. Neslin responded to questions about the lack of uniform standards for oil and gas payments to royalty owners. He also explained that state law allows royalty owners to request a hearing before the COGCC concerning payment of royalties.

08:38 AM

Harris Sherman, Executive Director, Colorado Department of Natural Resources, described the challenge of determining the intent of the General Assembly when implementing legislation. He also invited members of the General Assembly to participate in the COGCC stakeholder process to implement HB 07-1180 that is tentatively scheduled to start in June of 2009.

08:46 AM

Senator Schwartz recommended that the Water Resources Review Committee receive an update on the gas in domestic water wells during the 2009 interim.

08:48 AM

The meeting adjourned.