Colorado Capitol Report

CACI Joins Broad Business Coalition to Oppose Bill Targeting Oil-and-Gas Sector

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State Policy News

CACI Joins Broad Business Coalition to Oppose Bill Targeting Oil-and-Gas Sector

House Bill-16-1310 – Regarding Liability For the Conduct of Oil and Gas Operations –  represents one of the most aggressive anti-industry bills thus far introduced during the 2016 Colorado Legislative Session.  Introduced by two Colorado Democrats, Representative Joe Salazar (HD-31-Thornton) and Senator Morgan Carroll (SD-29-Aurora), just one week ago, the bill was rushed to its first committee hearing yesterday before Colorado’s House Health, Insurance, and Environment Committee, where it narrowly passed on a strict party line vote.  Both Democrats are trial lawyers in their non-legislative professional lives, and both are running hotly contested campaigns for election this November.  Rep. Salazar is seeking reelection to his current HD-31 seat that he very narrowly won in 2014 and Senator Carroll challenging sitting Colorado Congressman Mike Coffman in the 6th Congressional District.  And at a broad level, the aggressive anti-oil and gas industry focus of this bill mirrors the intent of the numerous anti-industry ballot measures that have been filed for possible consideration on this November’s statewide ballot.

The Salazar/Carroll bill includes two primary components, seeking to 1) lower the legal standard of material injury, presumably making it far easier for any citizen who feels harmed by oil and gas activities to bring law suits against the industry; and 2) impose strict liability on oil and gas operators for any harm to persons or property that result from earthquakes “induced” by oil and gas operations, including hydraulic fracturing, or fracking.

In over 5 hours of testimony and discussion on the bill, CACI joined representatives of the oil and gas industry trade associations and a long list of business organizations in voicing strong opposition to HB-1310.  CACI highlighted the strong benefits that a diverse economy, including a thriving oil and gas industry, have yielded Colorado as the state has ascended to one of the top-rated pro-business states in the nation.  CACI also joined a chorus of leading business organizations in voicing concerns that should Colorado adopt the policies included in HB-1310 – that expose a specific industry to a presumption of guilt that results in nearly unlimited liability – then operators would ultimately minimize or cease their operations in Colorado, resulting in 1000s of lost jobs and untold damage to the state economy.

Testimony from several engineering and geological experts highlighted that HB-1310 is, at best, a very problematic solution in search of a problem that does not exist.  Colorado has not experienced significant changes in seismic activity near or after specific oil and gas industry operations.  Furthermore, leading scientific research on the issue of “induced seismicity,” or earthquakes resulting from industrial activities, is inconclusive and unable to produce accurate, reliable conclusions that connect specific well activities to specific seismic events.  While research in other states has been able to loosely connect injection well activities to isolated seismic activity, research on the specific seismic impacts of oil and gas well drilling or hydraulic fracturing operations is both lacking and inconclusive.  Additionally, research has been particularly unsettled in seismically active areas such as the Rocky Mountain region where it is more difficult to determine whether seismic events occurred naturally or resulted from some other cause.

Legal experts also testified that the changes proposed by HB-1310 would effectively impose a first in the nation blanket liability without fault, or strict liability, program on the oil and gas industry in Colorado.  Leading attorneys noted that HB-1310 would completely undercut longstanding civil laws that provide individuals the opportunity to pursue legal remedies for harms they’ve experienced and the layers of state laws, regulations, and rules that have gained Colorado national and international recognition for implementing the most stringent oil and gas oversight.  Concerns were also raised that the broad language in the bill lacks reasonable limits, and would subject oil and gas operators to virtually unlimited liability without any consideration of whether operators acted reasonably or proving that an operator’s actions had a direct causal link to the alleged harms.

HB-1310 is very unlikely to gain approval in the Republican-controlled Senate, and it remains to be seen if any House Democrats will join Republicans in opposing the bill.  CACI will continue to actively engage with its oil and gas industry partners, and partner trade and business organizations to oppose HB-1310.

If you have questions or concerns regarding this legislation, please contact CACI State Government Affairs Representative, Daniel O’Connell, at [email protected] or 303-866-9622.

House Sends Hotly Debated Off-Shore Tax Bill to Senate

On Wednesday, after lengthy debate, the Democrat-controlled House passed on Final and Third Reading HB-1275 by a partisan 34-30 recorded vote, which sends the bill to the Republican-controlled Senate.  Representative Bob Rankin (R-Carbondale) was excused and did not vote.

The bill’s primary House advocate is Representative Mike Foote (D-Lafayette).

HB-1275 would empower the Colorado Department of Revenue (DOR) to “black list” countries that it alleges are “tax havens.”  Colorado corporations with subsidiaries or affiliates operating in these countries would then have to prove to the DOR that their operations are legitimate business activities and are not attempts to shelter income from the Colorado corporate income tax of 4.63 percent.

The CACI lobbying team and members of the CACI Tax Council have worked hard over the least two weeks to stop HB-1275, including assembling a large business coalition to fight the proposal.

Making the bill a House Democrat caucus priority, Speaker Dicky Lee Hullinghorst (D-Boulder) has fast-tracked the proposal.  Here’s how quickly the bill sailed through the House:

02/17/2016 Introduced In House – Assigned to Finance
02/24/2016 House Committee on Finance Refer Amended to Appropriations
03/04/2016 House Committee on Appropriations Refer Unamended to House Committee of the Whole
03/07/2016 House Second Reading Passed with Amendments – Committee, Floor

It has been clear to statehouse observers that the Speaker “locked down” her caucus on HB-1275 and would not tolerate any members defecting to oppose the bill.

The Senate co-sponsors of the bill are Senator Matt Jones (D-Louisville) and Senator Kerry Donovan (D-Wilcott).  The Senate Republican leadership Wednesday afternoon assigned the bill to the Senate State, Veterans and Military Affairs Committee, but it has not yet been calendared for a hearing.

CACI members are encouraged to contact the members of the Committee to express their opposition to HB-1275 and to encourage the senators to kill the bill:

The House gave a preliminary endorsement of HB-1275 on Monday on Second Reading when it passed by a voice vote.  Three amendments were added to the bill during Second Reading.

On Wednesday, The Denver Post carried an editorial that said that “it would be a major mistake for Colorado to start officially labeling countries like the Netherlands, Ireland and Singapore as tax havens and requiring companies that operate there to prove they are not trying to dodge state corporate income taxes.”

Lengthy, often testy debate between the Democrats and the Republicans preceded the two floor votes of the House on HB-1275 Monday and Wednesday.

During the House floor debate, progressive Democrats sought to paint multinational corporations as possessing an unfair advantage over small businesses that lack high-paid lawyers and accountants who help corporations hide income earned in Colorado in off-shore tax havens.

Two hundred to three hundred Colorado companies are engaged in sheltering income through “shell companies” in off-shore tax havens, Representative Foote alleged, although he did not release a list of the companies.  These companies “don’t follow the rules,” he said.  He also said that “fancy and expensive lobbyists” for big business were fighting HB-1275 and that their argument “rests on a house of cards.”

Representative Joe Salazar (D-Thornton) said he was” tired of corporate welfare” and that corporations “get to skirt their fair share” of paying taxes by sheltering their income off-shore in the tax havens.

Republican House members questioned why Governor John Hickenlooper (D) and Fiona Arnold, executive director of the Colorado Office of Economic Development and International Trade, have not spoken out against the bill, given that some of the corporations named in the U.S. PIRG report were corporations that the Governor and his economic team had recruited to Colorado in highly publicized fashion.

In a dramatic moment Wednesday, the Speaker suddenly relinquished her gavel while presiding over the chamber and came down from the dais to the “well” to address the representatives.  She expressed her “strong support” for the bill and said it was about “fairness” and that government’s role is to “level the playing field.”  The Speaker said the bill’s opponents were the “well-paid lobbyists” standing outside the chamber.  She said she wants to send a “message” that “we stand behind” “hard-working Coloradans” in opposition to the large multi-national corporations that the bill would target.

CACI thanks the following Republican Representatives who spoke against HB-1275:  House Minority Leader Brian DelGrosso, Kathleen Conti, Kit Roupe, Perry Buck, Dan Thurlow, Polly Lawrence, J. Paul Brown, Don Coram, Kevin Priola, Lori Saine, Yeulin Willet, Jon Becker, Jim Wilson and Kevin Van Winkle.

In this highly combustible political year–given the high stakes of Colorado’s legislative elections as well as Congressional elections and the Presidential election–it’s no surprise that HB-1275 fits neatly into the liberal Democrats’ national campaign about income equality that targets Wall Street, large corporations and wealthy individuals.

Proponents of HB-1275, however, could not produce a single shred of evidence that a Colorado corporation with operations abroad is guilty of illegal behavior.

Instead, they have largely relied on a study, “Offshore Shell Games 2015” from the CoPIRG Foundation and Citizens for Tax Justice that claims that at least 358 of the Fortune 500 corporations have subsidiaries in countries the study labeled as “tax havens.”  The study contains no evidence, however, that the corporations have engaged in illegal stashing of income in the black-listed countries.

Eight of the corporations named in the report are headquartered in Colorado:

  1. Arrow Electronics,
  2. Ball Corporation,
  3. CH2M Hill,
  4. Davita,
  5. Level 3 Communications,
  6. Liberty Interactive,
  7. Newmont Mining, and
  8. Western Union.

A number of the other corporations named in the study are headquartered elsewhere in the U.S. but have operations in Colorado.  These companies, for example, include Walmart, Google, Wells Fargo, PepsiCo, Coca-Cola, Safeway, Anadarko and IBM.

The report was apparently funded by the FACT Coalition and the Open Society Foundation.  The report says this about the CoPIRG Foundation:  “With public debate around important issues often dominated by special interests pursuing their own narrows agendas, CoPIRG Foundation offers an independent voice that works on behalf of the public interest.”  The report also states: “We investigate problems, craft solutions, educate the public, and offer Coloradans meaningful opportunities for civic participation.”

CACI members with questions about HB-1275 should contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.

For more information about HB-1275, read:

Colorado tax-haven bill passes after ‘big business vs. little guy’ debate,” by Ed Sealover, The Denver Business Journal, March 9th.

Hickenlooper, OEDIT director staying out of corporate tax-haven fight,” by Ed Sealover, The Denver Business Journal, March 8th.

Tax plan a threat to Colorado jobs,” editorial, The Denver Post, March 7th.

HB-1275: ‘Black List’ Countries, then Make Colorado Corporations Prove Their ‘Innocence,’” CACI Colorado Capitol Report, March 4th.

House Finance Committee OKs Tax Haven Bill,” CACI Colorado Capitol Report, February 25th.

House Committee Kills Mandatory E-Verify Bill

On Wednesday, the House State, Veterans and Military Affairs Committee on a party-line 7-2 vote killed HB-1202, which would have mandated that private-sector employers use the Federal E-Verify system to determine work-eligibility status when hiring new workers.

The E-Verify system is housed within the U.S. Citizenship and Immigration Services.

CACI opposed the bill, just as it has opposed similar bills since 2006 when then-Governor Bill Owens (R) called a special session of the legislature to consider various issues surrounding illegal immigration.

The bill was sponsored by Representative Cole Wist (R-Centennial).  Here’s how the bill’s nonpartisan fiscal note summarized the bill:

Summary of Legislation

On or after January 1, 2017, this bill requires each employer in Colorado, defined as any person or entity engaged in business with 10 or more employees, to enroll and participate in the federal E-Verify program to verify the work eligibility status of all newly hired employees. Employers must maintain documentation of enrollment in the program and a written or electronic copy of the employment eligibility information it receives through the program.

Employers that do not maintain enrollment with the E-Verify program or that fail to verify the eligibility status of new employees may be fined up to $5,000 for the first offense and up to $25,000 for the second offense. For subsequent offenses, the state may fine the employer up to $25,000 and suspend his or her business license for up to six months. The bill includes a safe harbor provision for employers that comply in good faith with the act but unintentionally employ an unauthorized alien or wrongfully terminate an employee after receiving a final notice of ineligibility through the E-Verify program.

The bill requires the Colorado Department of Labor and Employment (CDLE) to notify every employer of the requirements and to publish a notice of the requirements on its website and in its electronic communications. The Secretary of State is also required to publish on its website the requirements for participation in the E-Verify program.


Under current law, the Division of Labor in CDLE requires employers to maintain specific documentation, including an affirmation that the employer has examined specific documents to confirm the legal work status of each newly hired employee. The director of the division can conduct random audits of this documentation or, if he or she suspects that an employer has not complied with the employment verification requirements, require the employer to submit the documentation. The division can fine employers ($5,000 for the first offense and $25,000 for the second and subsequent offenses) for failing to submit documentation or for submitting false documentation. Part of the current verification process focuses on state contracting and is funded by indirect cost recoveries credited to the Employment Verification Cash Fund.

CACI members with questions about HB-1002 should contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.

For background on the 2006 special session, read:

In Colorado, a Deal on Immigration Bills,” T.R. Reid, The Washington Post, July 12, 2006.

A deal in Colorado on Benefits for Illegal Immigrants,” by Katie Kelley, The New York Times, July 11, 2006.

Senate Committee Kills Parental-Leave Bill

On Wednesday, the Senate State, Veterans and Military Affairs Committee killed HB-1002, the bill that would have reinstituted the parental-leave law that sunset last year.  The bill died on a partisan 3-2 vote.

The Senate sponsor was Senator Andy Kerr (D-Lakewood).

Three women representing 9-5 Colorado testified in support of the bill.  Other advocates of the measure included the progressive Bell Policy Center, the Colorado Children’s Campaign, the American Federation of Teachers (Colorado), the Colorado Parent-Teachers Association and the Women’s Lobby of Colorado.

CACI took a neutral position on HB-1002 after the introduced version in the House was amended to resemble the 2009 law, which had a five-year sunset provision.

During the 2015 session, CACI opposed continuation of the 2009 law when the sponsors sought to expand its provisions and make the law permanent.  CACI worked with the sponsors in 2009, and the compromise that was forged allowed CACI to take a neutral position then.

CACI members with questions about HB-1002 should contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.

For more information on the bill, read:

Colorado Senate blocks effort to resurrect parental-leave policy,” by Ed Sealover, The Denver Business Journal, March 9th.

House Sends Amended Parental Leave Bill to the Senate,” CACI Colorado Capitol Report, February 5th.

House Committee Passes Amended Parental-Leave Bill & CACI Goes ‘Neutral,’CACI Colorado Capitol Report, January 29th.

News Media Coverage

Below is recent news-media coverage of state and federal political, policy and governmental issues of interest to CACI:

Glut of Colorado ballot initiatives could cause problems getting any passed in 2016,” by Ed Sealover, The Denver Business Journal, March 10th.

Building a better Colorado’s final initiatives submitted for November ballot,” by Ed Sealover, The Denver Business Journal, March 8th.

House speaker: TABOR blocks transportation, other needs,” by Joey Bunch, The Denver Post, March 8th.

No, Colorado should not follow Clean Power Plan after Supreme Court ruling,” opinion, by Stuart Sanderson, Perspective, The Denver Post, March 5th.

EPA ozone data a jolt for Denver,” editorial, The Denver Post, March 4th.

Colorado faces boomerang effect on Amazon tax collections,” by Aldo Svaldi, The Denver Post, March 3rd.

Former Republican Sen. Al White to run as independent in Senate District 8,” by Joey Bunch, The Denver Post, March 2nd.