February 4 Colorado Energy Cheat Sheet: Local governments face production-related revenue downturn; more red tape sought for resource development; Wyoming’s cautionary tale

Pushing for bans on fracking or other measures to limit responsible natural resource development will only exacerbate problems at the local level, putting education, infrastructure, and other critical services at risk, on top of the drop noted here in the Denver Post due to commodity prices tanking:

Because 97 percent of Platte Valley’s budget comes from taxes paid on mineral production and equipment — a property tax known as ad valorem — McClain said his district could be looking at a budget reduction between $300,000 and nearly $1 million next school year.

How that plays out in terms of potential cuts or program impacts is yet to be seen, he said.

“You’re always concerned about your folks,” McClain said. “You worry about it taking the forward momentum and positivity out.”

It’s not just schools that are suffering. Municipal budgets, local businesses and even hospitals in mineral-rich pockets of Colorado are watching closely to see how long prices remain depressed.

Combine that with a 72.3 percent drop in severance tax revenue–down to $77.6 million this year compared with $280 million last fiscal year–and you’ll get, in the words of the Post, “the state’s direct distributions of those proceeds to cities, counties, towns and schools will be reduced from a little more than $40 million in 2015 to just $11.9 million this year.”

Nearly 75 percent drop, just from falling oil prices. Put on top of that more red tape, or eliminate the practice altogether, and eventually those figures will head toward zero (no production = no tax revenue).

This is what is at stake when it comes to pushing back against the repetitively dubbed “common sense” regulation that threatens a rather large portion of the state’s economy.

***

Speaking of restrictions:

BRIGHTON — Adams County leaders made it clear Wednesday morning that they won’t support a 10-month ban on new oil and gas activity in urban parts of the county after hearing nearly eight hours of testimony that began Tuesday night.

Commissioner Chaz Tedesco said he wasn’t comfortable imposing a moratorium on an industry that has proved critical to Adams County’s economy. He said he supported hiring an attorney that can make sure the county is making the best deals with industry as possible.

“I want to make the right decision with the right information,” Tedesco said.

His colleague, Erik Hansen, said oil and gas workers are not the villains their opponents make them out to be and that the county has a good site-by-site evaluation system already in place.

“You know what? The folks who work in the industry care about their kids too,” he said.

Those families–the workers and the kids–live in the communities. It may be stunning to anti-energy activists, but those developing and producing the energy that drives your car (gas OR electric), heats and cools your home, keeps your iPads and laptops running, and generally produces an incredible standard of living for you might live right next door. *shudder*

Good on Adams County for rejecting hyperbolic, paranoid nonsense.

***

And not to be outdone by the anti-fracking ballot measures proposed at the state level, Colorado legislators are looking to add more red tape, because enough is never enough, and the Colorado Oil and Gas Conservation Commission’s rulemaking last month did not address those concerns, say energy development opponents:

Democrats in the Colorado House, where that party has a majority, are expected to introduce two measures later this session, one making it easier for surface property owners to collect damages from mineral rights owners if their properties are damaged, and a second measure to give local governments more regulatory authority over drilling within their jurisdictions.

House Speaker Dickey Lee Hullinghorst, D-Boulder, said that second idea is something she highly supports.

“I think this bill would be a very reasonable approach,” she said. “I have always felt that’s where you have to get at, the conflict in property rights.”

Regardless of those measures, the backers of several proposed ballot measures dealing with fracking are still going ahead with their ideas.

Those proponents, who could not be reached for comment, have said they were not satisfied with new regulations approved by the Colorado Oil and Gas Conservation Commission last week. They said those new rules, the result of a special task force established by Gov. John Hickenlooper as a compromise to keep the proposals off the ballot in 2014, didn’t go far enough.

Rest assured, short of the outright ban, anti-energy folks will not back off even if all of the proposed measures are put into place. New development might be blocked, but continuing extraction would still be a target. They will never be satisfied, until all development is 100 percent eliminated.

Don’t take my word for it:

The Sierra Club Rocky Mountain Chapter would like the entire state of Colorado to be 100% renewable, beginning with Denver. Becky English, the executive committee chair for the Sierra Club, responded to an email about a sustainability summit scheduled for early December in Denver:

I would have liked to share that the Sierra Club national board has declared a goal of powering the electric sector by 100% renewable energy nationwide, and that the Rocky Mountain Chapter has adopted the goal for Colorado. I will approach you offline about how best to work toward this goal in Denver.

And that’s just the Sierra Club–see also here and here.

***

Stakeholder meetings or dog-and-pony shows supporting the Clean Power Plan and the state’s agencies dedicated to enforcing the rule (Colorado Department of Public Health and Environment)–the Gazette certainly has an opinion:

Reality struck when the Colorado Department of Public Health and Environment took the show to Brush, a rural eastern plains town where people work hard to earn a buck.

Four of five panel members were cheerleaders for the president’s plan, which has the full support of Gov. John Hickenlooper. Panelist Kent Singer, an attorney and executive director of the Colorado Rural Electric Association, offered the panel’s only balance. He said public utilities and electric cooperatives are supposed to provide reliable energy at a price households, farms, ranches and businesses can afford. The president’s plan, he worries, would impose hardships.

Audience participants crashed the party to explain how eastern Coloradans have invested in hundreds of wind turbines that won’t count toward the proposed standards, as the plan would disqualify assets built before 2013.

State Sen. Jerry Sonnenberg told state officials he represents 21,000 square miles that host more wind turbines than the rest of the state combined, and most would not qualify. He worries about constituents having to fund investments they already made in vain.

“We can look at the lower middle class, the working poor, the poor and the elderly and see how they would be impacted, and how it would make it even tougher for them,” Sonnenberg said. A farmer who spends $10,000 on energy to irrigate a field would take a big hit, the senator explained, at a time when some crop prices have plunged.

State health officials need to get serious about their presentation for the remaining “All Stakeholder” meetings in Pueblo and Craig. This plan poses serious consequences for those who cannot afford haphazard and experimental efforts to control the climate. We need a balance of experts presenting a variety of views, not another panel stacked with support for a political agenda.

Having attended one of the first CDPHE “stakeholder” events back in September 2015, I can assure the reader that comments in favor of the Clean Power Plan ran about 15 to 1, with plenty of others from industry to rural electric co-ops basically pleading for the agency to implement the rule as mercifully as possible.

It’s clear from the first few events that the stakeholder process is nothing more than a three ring circus for advocates like activists and renewable energy businesses to show up and applaud the agency, giving it a rather unnecessary shot in the arm of confidence. Meanwhile, the folks who actually bear the brunt of the rule itself, whether it’s the ratepayer who pays for the energy and the guaranteed profit for the utilities (all stranded assets like coal plants having to be replaced with more expensive energy alternatives), the taxpayer who is on the hook for subsidizing unaffordable and unreliable energy alternatives, the farmers and investors who were sold a bill of goods in years past of being part of a “New Energy Economy” by previous politicians only to be passed over and not counted as renewables anyway . . . the list goes on and on.

The CDPHE process is really illustrative of quite a few economic concepts, from crony capitalism to captive regulation, concentrated benefits vs. dispersed costs, and government intrusion in the free market to pick energy winners and losers. In this case, the winners repeatedly show up and applaud. The potential losers are taken out of the process, and must rely on lawsuits like the multi-state challenge joined by Attorney General Cynthia Coffman, or the much more distant hope of an administrative change in policy due to a shift in the political climate at the Federal level.

***

Turning to updates on the Gold King Mine spill:

DENVER – Southwest Colorado feels forgotten in the aftermath of the Gold King Mine spill, state lawmakers heard Wednesday.

Rep. Don Coram, R-Montrose, expressed the sentiment to a House committee just before the panel killed his legislation that would have allowed the state to file lawsuits against the federal government on behalf of individuals impacted by the spill.

Coram was especially irked by the fact that the measure was assigned to the House State, Veterans and Military Affairs Committee, a committee sometimes used by the majority party to kill legislation deemed unpopular by leadership. Democrats control the House.

The bill died on a 5-4 party-line vote.

“If this (Gold King spill) had happened in a metropolitan area, we would be doing something. But the fact is, in rural Southwest Colorado, we … have the opinion that the Front Range does not care who suffers in rural Colorado,” Coram told the committee.

And while state efforts to provide relief failed, Congressional inquiries into the EPA-caused spill continue apace, with calls for transparency and clarification over the role of the EPA in a report from the Department of the Interior that was supposed to be impartial and independent:

A key report on the Gold King Mine disaster, which poisoned drinking water for three states and the Navajo Nation, is now being questioned by congressional committee and subcommittee chairmen.

New evidence may “contradict” Environmental Protection Agency Administrator (EPA) Gina McCarthy’s “repeated assertions” to the Senate Committee on Environment and Public Works (EPW) “that EPA had reviewed only a [Department of the Interior] press release and had no role in DOI’s independent review” of the Gold King Mine blowout, according to a Wednesday letter to McCarthy.

“Please clarify … that DOI did not have a conflict of interest, that its review would be independent and that EPA officials had no involvement in DOI’s review,” committee Chairman Jim Inhofe and Superfund, Waste Management and Regulatory Oversight Subcommittee Chairman M. Michael Rounds wrote.

The DOI report detailed that the EPA-caused Gold King Mine spill, which sent three million gallons of wastewater into Colorado’s Animas River, was preventable. The report stated, however, events at the site before and after the incident were beyond the investigation’s scope – even though such details were sought by the EPW committee.

We’ll keep an eye on this development.

***

News from our Wyoming neighbors, a cautionary tale of how the current administration’s push to kill coal will likely kill local communities too:

President Barack Obama’s administration has ordered a three-year moratorium on sales of federal coal reserves, and it’s putting a rare mood on folks in Gillette, a ranching-turned-energy town of 32,000: pessimism.

“Most of the time it comes back. This time, I don’t know,” said Bobbie Garcia, watching her daughter summit a two-story climbing structure at the town’s $53 million recreation center largely built with coal money.

Until recently, the Powder River Basin of Wyoming and Montana remained a rare bright spot for the industry. Even as Appalachian mines shut down and cheap natural gas started crowding out coal as a power plant fuel, economies of scale kept the region rumbling.

Massive strip mines sprawled across tens of thousands of acres, much of it in the Thunder Basin National Grassland, produce roughly 40 percent of the nation’s supply of the fuel.

For Gillette and other communities, that means more than 7,000 mining industry jobs. And not just fly-by-night, roughneck gigs, but the sort that sustain families year after year, pointed out Michael Von Flatern, a state senator who has lived in Gillette since the early 1970s.

The sort of jobs that are likely irreplaceable. Also, it’s no easy task replacing 40 percent of the country’s coal, considering that 23 percent of U.S. energy production still comes from that resource. Compare that to 0.5 percent for solar and 2 percent for wind, according to the Energy Information Administration through 2014 (the last full year).

If you want to know what’s headed for Colorado, look north. Or ask the folks in Moffat County about the Colowyo Mine situation from last year.

January 27 Colorado Energy Cheat Sheet: COGCC rulemaking pleases no one; anti-fracking measures disastrous for Colorado economy; pushing back against Clean Power Plan

Even small changes to oil and gas regulations can have deep and damaging effects on Colorado’s economy, according to researchers at the University of Colorado:

A statewide, 2,000-foot buffer zone between drilling rigs and homes, schools and businesses would take a hammer to Colorado’s oil and gas industry, already reeling from low commodity prices, as well as the state’s wider economy, according to a new study from University of Colorado Boulder’s Leeds School of Business.

Such a setback requirement “could result in slower economic growth” for Colorado’s economy as well as state revenue, according to the study released Wednesday.

The study said its forecast on the effects of a 2,000-foot setback included:

Production of oil and gas statewide could drop between 25 percent and 50 percent;
A $6 billion to $11 billion drop in Colorado’s gross domestic product;
A loss of 33,000 and 62,000 jobs between 2015 and 2030;
Loss of $214 million to $428 million in per year in tax revenues from oil and gas companies.

Given that the Colorado Oil and Gas Conservation Commission just concluded a round of rulemaking based on the Governor’s Oil and Gas Task Force recommendations from 2015, new and more onerous regulations like the setback examined by CU researchers or the more dangerous proposed fracking bans and various setback ballot measures could have catastrophic consequences on top of the recent commodity downturns impacting the state.

Anti-energy activists have intimated that even more proposals could be in the offing for 2016:

Larimer County resident Katherine Hall, who testified in favor of local control, said she would not be surprised if a citizen-initiated measure ended up on November’s ballot.

“The final outcome of the rule making does not go far enough to ease the concerns of Colorado citizens,” Hall said.

Remember when this blog said the Oil and Gas Task Force was merely kicking the can down the road?

We’ve made our way down that road, and the can is about ready to explode.

In the near term, the COGCC rules could go into effect in as few as 6 to 8 weeks, subject to review by the legislature and the Attorney General:

Compton said the months of rulemakings were “the most difficult” that he’s been through — a string that included the 2008 wholesale overhaul of Colorado’s oil and gas regulations.

The commissioners voted 5-4 to define “large” oil and gas facilities, the threshold that triggers the communication process between energy companies and local governments, as eight new wells and storage tanks that can hold up to 4,000 barrels of oil and natural gas liquids. The commissioners restricted the rule to large facilities in “urban” areas, defined as 22 buildings within 1,000 feet of the wellsite, rejecting request from some quarters to take the rule statewide.

But the rules appear to exceed the recommendations, and create ambiguities that will only incur more procedural red tape:

The process approved by the COGCC will triple, from 90 days to 270 days, the amount of time needed to get a hearing on a large project before the oil and gas commissioners, said Tracee Bentley, the executive director of the Colorado Petroleum Council, an arm of the American Petroleum Institute.

The final rules also said facilities should be “as far as possible” from existing buildings, a phrase Bentley called “vague and confusing” that would cost energy companies time and money to comply with.

The commissioners also rejected a request that existing surface-use agreements between energy companies and landowners be grandfathered, and allowed to avoid the notification and consultation process.

“We feel the industry brought reasonable solutions to the table that were largely ignored, and the rules still go beyond the recommendations of the task force,” said Dan Haley, president and CEO of the Colorado Oil & Gas Association.

Bringing reasonable solutions and constructive dialogue should be expected of the industry, but the same can’t be said for the forces calling for the end of natural resource development altogether:

Activists addressing a state oil and gas rulemaking hearing this week levied a barrage of accusations and insults toward state officials and even renewed calls to eliminate Colorado’s state agency responsible for regulating oil and gas development.

Speaking at the Colorado Oil and Gas Conservation Commission (COGCC) hearing, Lauren Swain, representing national climate activist group 350.org, largely ignored the fact that the rulemaking was supposed to be the focus of the hearing and instead used her time to complain about the agency. From Swain’s testimony:

“With this new proposed rule, the COGCC has proven once again that it can no longer be considered a legitimate state agency because the COGCC continues to facilitate the pace of hazardous polluting oil and gas drilling and fracking operations near homes and schools subjecting communities to the risks of toxic emissions, spills and explosions.”

But Swain took her testimony even farther by lobbying for disbanding the agency in favor of creating a new agency that would “swiftly” transition the state to 100 percent renewables using the Solutions Project at Stanford as a guide. From Swain:

“The COGCC must be replaced with one or more agencies charged with one, facilitating to protect Coloradans from the harmful impact of oil and gas production and two, to aid and foster Colorado’s swift transition to one hundred percent renewable energy production and consumption using the Solutions Project developed at Stanford University as a guide.”

Up next was testimony from an activist who has previously accused the oil and gas industry of having a “personality disorder” and of being “socially deviant.” This time, Amanda Harper called oil and gas producers a “short sighted, selfish and sociopathic industry.”

Not a lot of balance or reasonable tone, it seems.

Colorado Governor John Hickenlooper offered his comments at an event that saw journalists kicked out and required an open records request to seek audio of the Democrat’s comments–and while he questioned the leverage of the anti-energy groups to get the proposed measures on the 2016 ballot, he surreptitiously argued that the COGCC rules discussed above had, in his opinion as well, gone further than his own Oil and Gas Task Force had recommended:

“I haven’t heard of any funding source for any of them,” Hickenlooper began. “Like the normal, large funders of those initiatives, you know, I haven’t heard of. So, maybe they’ll get on the ballot, but without a lot of money, I don’t think they’re going to do well. I can guarantee you there’ll be money spent showing that, the, the problems associated with any of those initiatives.” (Forum Q & A – 17:05)

Moments later, he added, “Again, we’re going further even than the commission recommended, and in certain cases, to try and give local, local municipal elected officials more, a greater role.”

Further.

We’ll see how that plays out.

***

The Environmental Protection Agency’s Clean Power Plan received a stay of its own last week when the DC circuit refused to grant a stay of the rule, forcing 26 states to appeal the case to the US Supreme Court.

Meanwhile at the Colorado legislature, Sen. John Cooke (R-Greeley) has championed measures designed to keep the implementation of the Clean Power Plan at arms’ length, allowing lawsuits to be completed before the state moves forward, something Coloradans clearly support:

Two weeks into the 2016 legislative session, Sen. John Cooke, a Republican from the heart of the Front Range oil and gas patch in Greeley, has introduced two bills that take aim at the plan, which requires power plants to cut carbon emissions by 32 percent from 2005 levels by 2030, largely by shutting down or converting coal-fired plants to alternative fuel sources.

One of Cooke’s bills couldn’t be more timely. After several state attorneys general, including Colorado’s Cynthia Coffman, failed to win a stay of the plan from a federal court Thursday, Cooke’s Senate Bill 46 jumps into the ring like a tag-team wrestler, working from another angle to stall implementation of the Obama administration plan.

“Well, it wasn’t really a surprise that the court in D.C. struck down the stay request,” Cooke told The Colorado Statesman. “Unfortunately, the bill is more relevant now.”

The “Preserve State Clean Power Plan Options Act” aims to “slow down the implementation process” in part by suspending it “until all [related] lawsuits are done,” Cooke told members of three rural Colorado advocacy groups, including some representing coal mining areas, who were visiting the Capitol Friday.

In effect, Colorado wouldn’t need a stay from a court because it would have passed a stay for itself, written by Cooke.

Cooke’s other bill, SB 61 or “Ratepayer Protection Act,” would require the Colorado Department of Public Health and Environment to pay for costs generated as a result of Clean Power Plan implementation.

***

NEWS ROUNDUP:
Silverton punts on Superfund designation

How the EPA handled Flint, MI water contamination, vs. Animas River spill

Plunging oil prices means lower severance tax revenue in Colorado

Lower gas prices? Let’s raise taxes!

Anti-energy activists oppose coal development on the Western Slope. News at 11.

Trading: Coal extraction for sage grouse habitat

August 27 Colorado Energy Cheat Sheet: Bennet says ozone rule “not going to work”; net metering gets a boost from PUC

bennet

Sen. Michael Bennet, joined a bipartisan group of officials in Colorado questioning the proposed Environmental Protection Agency’s new ozone rule proposal at the recent Colorado Oil and Gas Association Energy Summit in Denver:

Senator Bennet and Gardner participated on a panel hosted by the Colorado Oil and Gas Association on August 26. Below is the question posed to Senator Bennet, and his response:

Manu Raju, Politico: Senator Bennet, a big issue here in the room is the ozone standards. Environmental groups, EPA officials are concerned about excessive levels of ozone; that they could lead to premature death and respiratory problems. The business community warns that the standards EPA is proposing would be very bad here in Colorado; it would cost a lot of jobs. The current ground-level ozone standard set in 2008 is 75 parts per billion. EPA’s proposal is lowering it to 65 to 70 parts per billion, and it could go even lower. Question to you: Do you think the EPA proposal is fair? Should they go to 65 parts per billion?

Senator Bennet: I’m deeply concerned about it. I think we should understand how they arrived at that conclusion, because the way some statutes are written, they don’t sometimes have the flexibility we think they should have. And this is the perfect example of applying the law and doing it in a way that doesn’t make sense on the ground. Because of the pollution that’s come in from other Western states, from across the globe, from wildfires in the West, we have significant parts of our state that would be in non-attainment [unintelligible] from the very beginning of the law. That doesn’t make any sense. That’s not going to work.[emphasis added] Having said that, we need to care a lot about our kids and the elderly and the quality of the air that they breathe, and we need to care about children in our state that have asthma. So my hope is that we can work together to get to a rational outcome, but I’m not—The one that’s been proposed is not yet there.

Earlier this month, The Center for Regulatory Solutions issued a report that included opinions from Democrats, Republicans, and other elected officials from across the state opposing or pushing back against the EPA ozone rule. A sampling of those statement can be found in our August 13 edition.

***

Net metering, a handout from folks who don’t own solar panels to those who do, in the form of retail price reimbursement for the electricity they generate–gets a boost from a unanimous Public Utilities Commission decision to keep the current rates in place:

Colorado’s Public Utility Commission ruled Wednesday afternoon that no changes were needed to the state’s net metering process, meaning that homeowners with solar arrays will continue to receive retail rates for energy they produce.

“The PUC voted (3-0) today to maintain the status quo for the net metering program and close the docket,” PUC spokesman Terry Bote confirmed via email.

Net metering provides a credit for every kilowatt-hour an array puts on the grid at the same price residential customers are charged for electricity – about 10.5 cents.

Xcel Energy, the state’s largest electric utility, has been pushing a plan to cut the incentives for each kilowatt-hour produced to a fraction of a penny, but solar users and industry groups have lobbied hard against changes that would remove a key financial incentive.

“This appears to be the outcome we have been working towards in more than a year of work on this docket,” said Rebecca Cantwell, executive director of the Colorado Solar Energy Industries Association. “We have worked in full collaboration with other members of the solar industry, and this represents a tremendous amount of hard work from many people. Xcel officials could not immediately be reached for comment.

“Key financial incentive” = subsidy.

From my op-ed late in 2014, as the PUC was steering through a slate of meetings to determine the “value of solar”:

At issue is the method of calculating the “value of rooftop solar,” as the Public Utilities Commission chairperson put it this year. Solar proponents believe the credits for excess electricity generated by solar panels and pushed back onto the grid should continue to get 10.5 cents per kilowatt-hour — the average of annual residential retail rates.

Xcel is arguing for a reduction to 4.6 cents, saying the costs associated with maintaining the grid made the reimbursement unfair.

Xcel representatives called maintaining the 10.5-cent credit a “hidden cost” for its 1.2 million Colorado ratepayers. “Everybody needs to pay for the cost of the grid,” said spokesperson Hollie Velazquez Horvath.

Rooftop solar uses the grid in multiple ways. For customers pulling energy when the sun isn’t out (or near maximum generation) or pushing electricity onto the grid at the peak of summer, the grid balances supply and demand, regulating and stabilizing electrical output. It also acts as the exchange mechanism when a customer goes from generating and reselling excess electricity, to periods when the customer needs more electricity than the solar panel provides.

Customers who generate enough “revenue” from their net metering credits end up paying little or nothing for the grid costs. The costs get shifted to the utilities’ non-solar customers.

In other words, solar proponents advocate that non-solar ratepayers continue to subsidize grid maintenance for solar customers and then purchase electricity from those same solar customers at a price higher than they would pay for Xcel to generate the power.

The PUC has closed the docket on this proposal, but the legislature may look to take up the issue of net metering in future sessions.

***

Speaking of Sen. Michael Bennet (D-CO), the Democrat up for reelection in 2016 has some words of advice for embattled Democratic Party presidential frontrunner Hillary Clinton on #KeystoneXL:

DENVER — Sen. Michael Bennet (D-Colo.) on Wednesday dinged Hillary Clinton for punting on the issue of Keystone XL oil pipeline.

“I think she should take a position,” Bennet said of his party’s presidential frontrunner at a Colorado Oil and Gas Association conference here. “She should take a position for it — or she should take a position against it.”

Speaking at a forum moderated by POLITICO, Bennet said he supports building the pipeline. He is up for reelection next year in this perennial swing state and could face a tough battle if the GOP fields a formidable opponent.

***

A Colorado Association of Commerce and Industry panel of five of the state’s Congressional delegation was split on whether federal or state and local authorities were the best in dealing with oil and gas regulations–an issue Colorado registered voters in a recent Independence Institute poll said should go the state’s way, 37 to 5 percent, over DC-based rulemaking:

On energy legislation, the three Democrats and two Republicans who represent portions of metro Denver took not two but three different stances on which government should be most responsible for oversight of the oil and gas industry:

Democratic U.S. Rep. Diana DeGette of Denver said that while she respects the laws the state has drafted, the federal government must play a role in regulating the effects of drilling on waterways that flow between states.

Coffman said that regulations should fall to the state government, where bodies like the Colorado Oil and Gas Conservation Commission are much more in touch with the needs of local residents.

And Democratic U.S. Rep. Jared Polis of Boulder — who last year backed two state constitutional amendments to increase the role of cities and counties in regulation of drilling before pulling the measures— said it is actually local governments like those in Weld County that should decide where and how oil rigs should be allowed to operate in their communities. “I don’t trust the D.C. politicians. I don’t trust the Denver politicians,” said Polis, a fourth-term congressman. “This is a decision that should be made at the local level.”

Don’t be too impressed with Polis’s “local level” mantra as anti-fracking activists look to resurrect ballot issues designed to ban oil and gas development under the guise of “local community control.” Polis backed similar measures in 2014 before they were pulled in favor of Governor John Hickenlooper’s oil and gas commission.

***

The Clean Power Plan may have been finalized on August 3, but serious questions about the EPA’s assumptions for the rule remain, as an analysis by Raymond L. Gifford, Gregory E. Sopkin, and Matthew S. Larson show (all emphases added):

• EPA scaled back on carbon dioxide reductions from coal plant improvements and energy
efficiency in its Final Rule under the Clean Power Plan, but nevertheless increased its
carbon reduction mandate from 30 percent to 32 percent by 2030. EPA did so through its
use of “potential renewables” as the variable driving eventual state carbon budgets. EPA now
forecasts that incremental renewable energy electric generation (Building Block 3) will more
than double, from 335,370 gigawatt hours in the Proposed Rule to 706,030 GWh in the Final
Rule.

• EPA uses a complicated and unprecedented methodology to achieve its new renewable
energy forecast for the years 2024 through 2030. Looking to historic renewable capacity
additions during 2010-2014, EPA selects the maximum change in capacity for each renewable
resource type that occurred in any year over the five-year period, and adds this maximum
capacity change year-over-year from 2024 through 2030. The maximum capacity addition
year selected by EPA for each resource is more than twice as much as the average over 2010
- 2014.

EPA’s methodology fails to account for the fact that expiration of the production tax
credit, or PTC, drove the development of renewable energy resources during 2012.

Renewable energy capacity additions fluctuated substantially between 2010 and 2014,
especially the largest component of Building Block 3, onshore wind power. EPA uses the
anomalous year, 2012, to predict future growth of wind power. In 2012, the wind production
tax credit was expected to expire at the end of the year, causing producers to rush to install as
much wind capacity as possible. Other renewable resource types also showed non-linear and
unpredictable trends during 2010 – 2014.

• EPA’s renewable energy expectations diverge by an order of magnitude from the EIA’s
base case renewable energy capacity and generation forecasts over the 2022 – 2030 period.
Notwithstanding these incongruences with EIA’s forecasts, EPA suggests that its forecasted
renewable energy additions would occur in the normal course even without the CPP.

EPA assumes that fossil fuel generation could be displaced based on the average capacity
factors of renewable energy resource types (e.g., 41.8 percent for onshore wind power).
However, utilities and restructured market system operators assign a much lower capacity value
for wind power, in the 10-15 percent range, because wind production is often not available during
peak load conditions.
To the extent that the EPA’s assumed renewable energy displacement of
fossil fuel resources does not occur because wind, solar, or other intermittent generation is not
available, system capacity will in real terms be lost absent planners assigning a much lower
capacity value to the given renewable resource (and in turn adding additional capacity, be it
fossil-based or renewable).

The authors conclude:

Setting aside enforceability, the President gave EPA a goal in his Climate Action Plan: achieve a 30% carbon emission reduction by 2030. EPA proceeded to solve for that goal with a capacious construction of the BSER [Best System of Emission Reduction] under the Clean Air Act. While gas “won” in the near-term under the Proposed Rule, in the end renewable energy resources assume a Brobdingnagian role in determining the level of carbon emission reductions that are purportedly possible under the BSER. EPA’s Final Rule constructs a method that solves for a conclusion, instead of having a method that yields a conclusion. Of even greater concern, EPA’s use of renewable average capacity factors instead of capacity credit exacerbates reliability risks to the electric system during peak load conditions. The end result may be unknown, but the method of getting there is highly questionable at best.

***

LINKS

Despite tanking oil prices, a new outfit, Evolution Midstream, announced a planned $300 million launch, saying of the current situation that “this too shall pass.”

Paving the way for the EPA’s Clean Power Plan, the billionaire Tom Steyer funded and pushed a “state-level advocacy network” to prop up the controversial plan and give endangered politicians cover.

Colorado’s oil and gas production projected to fall, according to a University of Colorado study.

***

Animas River updates

EPA officials knew of a “blowout” potential as much as a year before the Animas River spill, but even the release of this info took place late on a Friday, in what AP reporter Nick Riccardi called a “very late-night document dump on Gold King mine”:

U.S. officials knew of the potential for a catastrophic “blowout” of poisonous wastewater from an inactive gold mine, yet appeared to have only a cursory plan to deal with such an event when a government cleanup team triggered a 3-million-gallon spill, according to internal documents released by the Environmental Protection Agency.

The EPA released the documents late Friday following weeks of prodding from The Associated Press and other media organizations. While shedding some light on the circumstances surrounding the accident, the newly disclosed information also raises more questions about whether enough was done to prevent it.

The Aug. 5 spill came as workers excavated the entrance to the idled Gold King Mine near Silverton, Colorado, unleashing a torrent of toxic water that fouled rivers in three states.

A June 2014 work order for a planned cleanup noted the mine had not been accessible since 1995, when the entrance partially collapsed.

“This condition has likely caused impounding of water behind the collapse,” the report said. “Conditions may exist that could result in a blowout of the blockages and cause a release of large volumes of contaminated mine waters and sediment from inside the mine.”

An EPA internal review post-spill revealed that they never checked the water levels or the pressure contained within the mine despite their June 2014 work order:

Dangerously high water pressure levels behind the collapsed opening of the Gold King Mine were never checked by the Environmental Protection Agency, in part because of costs and time oversights.

The revelations came Wednesday as the EPA released an internal review of a massive Aug. 5 blowout at the mine above Silverton. The report called an underestimation of the pressure the most significant factor leading to the spill.

According to the report, had crews drilled into the mine’s collapsed opening, as they had done at a nearby site, they “may have been able to discover the pressurized conditions that turned out to cause the blowout.”

EPA officials claim they were caught unaware:

EPA supervisor Hays Griswold, who was at the scene of the blowout Aug. 5, told The Denver Post in an interview this month conditions in the mine were worse than anticipated.

“Nobody expected (the acid water backed up in the mine) to be that high,” he said.

The report says, however, that decreased wastewater flows from the mine, which had been leaching for years, could have offered a clue to the pressurization. Also, a June 2014 task order about work at the mine said “conditions may exist that could result in a blowout of the blockages.”

The inability to obtain an actual measurement of the mine water pressure behind the mine’s blocked opening “seems to be a primary issue,” according to the review. It went on to say if the pressure information was obtained, other steps could have been considered.

It did not elaborate on what those steps could have been.

“Despite the available information suggesting low water pressure behind the debris at the adit entrance, there was, in fact, sufficiently high pressure to cause the blowout,” the review says. “Because the pressure of the water in the adit was higher than anticipated, the precautions that were part of the work plan turned out to be insufficient.”

Stan Meiburg, EPA’s deputy administrator, said during the call that “provisions for a worst-case scenario were not included in the work plan.”

The 3 million gallon orange spill was, apparently, the worst-case scenario.

The internal investigation called the agency’s preparedness when it came to analysis of the water issue as “insufficient.”

It may take a while–many years–to know how the toxic minerals and metals released by the EPA will settle in the sediment of the Animas River and further downstream:

As communities along the Animas River continue to wonder about the long-term consequences of the Gold King Mine spill, one of the biggest questions remaining is the orange sediment lying along riverbeds and riverbanks.

What’s in it? How long will it be there? How might it affect our drinking water and our health? These are all concerns for community members, and many experts say we may not know until time goes by and a few spring runoffs continue to wash it downstream.

The EPA isn’t getting off the hook with the release of internal reports admitting lack of preparation or failure to measure water levels, or even late-night docu-dumps:

Republicans say the administration has been too wrapped up in guarding the world against climate change to address environmental dangers closer to home and should be held accountable, according to Texas Republican Lamar Smith, who is leading a probe into the spill in the House.

“Even in the face of self-imposed environmental disaster, this administration continues to prioritize its extreme agenda over the interests and well-being of Americans,” said Smith, chairman of the House Science, Space and Technology Committee.

The committee has scheduled a Sept. 9 hearing on the spill and has requested the head of EPA and the contractor involved in the mine incident to testify. It appears from the internal reports that the contractor involved in the spill was the same one that drafted the blowout report.

The report that was released “in the dead of night” Friday raises new questions about the depth of EPA’s culpability, according to Smith. “The actions that caused this spill are either the result of EPA negligence or incompetence,” he said. “We must hear from all those involved to determine the cause of what happened and how to prevent future disasters like this.”

The agency’s lack of timely dissemination of documents and details has been a theme since the spill erupted earlier this month.

But partisan flaps at the federal level between Republicans in Congress and one of the administration’s favorite agencies is not the only scene of squabbles, as local officials allege Republican Attorney General Cynthia Coffman had a partisan agenda in mind when scheduling meetings in Durango in the aftermath of the spill.

And finally, Silverton decided to seek federal funds for clean up operations after years of reservations over possible “Superfund” designation:

After two decades resisting Environmental Protection Agency funds for cleanup of the festering mines that dot its surroundings, Silverton on Tuesday announced it is seeking federal help.

A joint resolution passed by the town’s board and the San Juan County Commission says officials will work with neighboring communities to petition Congress for federal disaster dollars they hope will address leaching sites quickly.

“Silverton and San Juan County understand that this problem is in our district, and we feel we bear a greater responsibility to our downstream neighbors to help find a solution,” the resolution said.

The decision is a paradigm shift for the small town of about 650 year-round residents in the wake of a 3 million-gallon wastewater spill Aug. 5 at the Gold King Mine in the mountains to the north.