Legislators assert states rights, encourage Sage Grouse Task Force as session winds down

Two other items of interest as this session of the legislature works toward adjourning sine die:

Senate Joint Memorial 105 has passed both houses.  It calls on Congress to reclaim its Constitutional role over the management of species and public lands. The memorial asks “that Congress re-examine, reform and reauthorize the Endangered Species Act, the National Environmental Policy Act, the Equal Access to Justice Act, and any other federal law that disrespects the role of states and local governments in land management decisions and leads to costly and frivolous lawsuits that strip authority from Congress and place it in the hands of the judiciary.”  It was adopted on a voice vote by the Senate and by a vote of 57-10-3 in the House.

Senate Concurrent Resolution 125 was introduced in the Senate on March 1st and adopted by voice vote on March 5^th.  The resolution endorses and encourages the Governor in his efforts “moving forward with the Governor’s Sage Grouse Task Force.”  It moved on to the House and on March 23^rd it was adopted there on a voice vote.

Agriculture, grazing bills, take circuitous routes through legislature

Some bills start the legislative session as a concept that is discussed and revised in the first weeks until the draft is introduced.  Success for these early concepts is not always guaranteed.

H606, the Agriculture Value Added Income Tax Credit, was such a bill.

H606 was introduced on February 29.  The bill will act as incentive for farmers and ranchers to invest in additional facilities which would add value to agriculture in Idaho through additional processing.  For example: encouraging a dairyman to process his milk into cheese that can be sold, rather than send the milk out of state for processing.  This is a means of increasing jobs in rural areas as well as the amount of Idaho commodities being processed.  The bill provides a tax credit of up to 30% of the investment to build a plant or value added process, capping the amount of the credit at $500,000.  This credit may be utilized annually until the cap is reached or for 14 years.  The legislation has a sunset of 2017.

The concept was revised several times before its introduction.  It was introduced in the House and sent the Revenue & Taxation Committee which sent it to General Orders on the floor for amendment.  On March 30, it was passed as amended by a vote of 62-6-2.

It was sent to the Senate and assigned to the Local Government Committee on March 22.  It has not yet been scheduled for a hearing.

Other bills are printed earlier in the session but do not get heard in committee until later in the session, such as S1271, which deals with management plans for grazing leases.  The bill adds a new section to Idaho Code that requires applicants for grazing leases to submit a grazing management proposal as part of the application.  This lets the Department of Lands evaluate whether the proposal is consistent with the Department’s resource objectives and management expectations for those lands.  If the lease is granted, the proposal becomes the management plan for that lease.

S1271 was introduced on January 30^th and sent to the Senate Resources and Environment Committee.  It was not until March 6^th that committee sent it to the Senate floor where it was passed on a vote of 31-0-4.  The next day it was sent to the House and assigned to the Resources and Conservation Committee.  It was sent to the House floor with a do-pass recommendation.  On March 21^st, almost two months later, it passed and is on its way to the Governor.

An update as the Idaho legislature winds to a close ...

An update on several bills tracked this session by Idaho Council on Industry and the Environment:

H 379:  OIL  AND GAS  The oil and gas severance tax is currently collected and audited by the Oil and Gas Commission while a similar tax is collected by the State Tax Commission. The current tax will not cover the administrative expenses of the oil and gas program.  This bill will allow the State Tax Commission to collect both portion of the severance tax and eliminate the redundant tax collection and enforcement.  It also redirects the general fund portion collected by the State Tax Commission to the Oil and Gas Commission.  The intent is to fund the oil and gas program exclusively from dedicated funds generated by production and permit fees.  Excess funds would be transferred to the general fund.

Passed the House 65-2-3 on 2/14/12; passed the Senate 32-0-3 on 3/8/12; delivered to the Governor on 3/14/12

H460:  OIL ANDGAS WELLS  This bill amends existing code to increase the permit fee for drill permit applications from $100 to $2,000 to cover the additional costs of permitting since there is no production yet to pay for the program.   A fee increase is necessary for the program to become self sufficient and reduce the burden on the general fund.  Fees would be placed into an existing dedicated account for the use of the Commission.

Passed the House 64-3-3 on 2/15/12; passed the Senate 32-0-3 on 3/8/12; delivered to the Governor on 3/14/12

H462: PUBLIC UTILITY REGULATION  The legislation puts the Idaho Public Utilities Commission (IPUC) in charge of safety inspections for the gathering pipelines.  Gathering lines are pipelines and other fixtures used to transport, deliver, or distribute natural gas or crude oil from a well-head to a transmission line or mainline.  IPUC has the program and inspectors because they do safety inspections on main transmission lines. 

Passed the House 67-0-3 on2/15/12; passed the Senate  32-0-3 on 3/8/12; delivered to the Governor on 3/14/12.

H463:  OIL ANDGAS CONSERVATION COMMISSION  The definitions provided in statute are not listed alphabetically and some definitions need revision to be more consistent with current industry standards. The confidentiality of oil and gas well logs currently has no time limit. By changing the confidentiality limitation to one year, other oil and gas operators are can access recent well log data. These changes are consistent with the standards of other states, and are meant to encourage, and promote the development and production of oil and gas in Idaho.  In addition the bill updates the enforcement provisions of the Commission  to give it sufficient authority to conserve oil and gas, protect corrective rights, and prevent the pollution of fresh water supplies more effectively.

Passed the House 64-3-3 on 2/15/12; passed the Senate 32-0-3 on 3/8/12; delivered to the Governor on 3/14/12

H464:  OIL ANDGAS  This legislation updates Idaho’s statutes for oil and gas exploration and production. The changes update the law to align it with currently regulatory standards, protect Idaho’s citizens and clarify the authority of the Oil and Gas Conservation Commission.

This legislation clarifies existing law as follows:

• Provide uniformity and consistency in regulation of oil and gas production in Idaho;

•Clarify the Oil and Gas Conservation Commission’s authority over oil and gas exploration and production;

•Clarify local governments’ role in oversight of the oil and gas industry;

•Provide for mitigation of negative impacts to existing water rights or usable water resources;

•Align the definition of injection wells with the Federal2006 Energy Policy Act.

This was the most controversial of all the measures dealing with the development of natural gas in Idaho.   Those testifying against the bill in committee cited loss of local control as their biggest concern. Under the bill,county ordinances and planning and zoning decisions would be superseded by state control. It passed the House on 2/17/12 and moved on to the Senate.  It survived an attempt in Senate Resource and Environment Committee to send it to the amending order.  The committee sent it to floor with a do pass recommendation.  On 3/9 the Senate voted to send it to the amending order instead. On 3/12 it was returned to the third reading calendar where it passed by a vote of 24-10-1 on 3/14/12.

Idaho Business Review panel sheds light on energy projects that utilize waste

OnTuesday, the Idaho Business Review and Holland and Hart presented “Waste to Wattage,” a panel discussion on energy projects that use waste products as fuel.

Ada County Commissioners are pursuing energy conversion projects that reduce the volume of waste at the landfill, said Ada County Commissioner, Sharon Ullman.  The County is working with Dynamis, which uses a controlled gasification process to create energy from garbage.  This process reduces the volume of the garbage it consumes as fuel by 90 to 95 percent. With this project, Ullman said the fuel supply is continuous and the power it provides can be controlled to fill different needs. Ullman said the County has put $2 million into the project, a figure which she said compares favorably to the $30 million cost of burying waste over the past 6 years.  Nevertheless, Ullman said, this decision has opened the county up to criticism.

Dr.Erin Searcy, a bio fuels engineer with the Idaho National Laboratory, works primarily in wood biomass conversion projects and anaerobic digestion.  She noted that resources need to be put into researching conversion technology and posited that, while a cost effective business model for producing energy from waste at the dairy or farm level is not yet available, it is on the horizon. Anaerobic digesters need to be managed carefully, and are 

complicated to operate, although technologies are advancing toward this point every day.

“You can't just throw some poop in a bucket and make it work,” she said of farmb ased efforts, “you need an engineer.”  Dr. Searcy noted that scientists at the Center for Advanced Energy Studies are actively advancing the technology to address some of these challenges.  One example is a project she is working on to pre-ferment the waste material to stabilize the conversionp rocess.  But such efforts take funding.

“One of the things we have to do to move this energy process forward in Idaho is fund research to make farm-based energy projects less complicated,” she said.

Don Strickler, an energy efficiency engineer at Simplot, noted that Simplot plants currently employ utilize anaerobic digesters, utilizing wastewater that comes from the water in processing vegetables.  Bacteria eat the waste and make that gas that can be burned in generators.  

Mark Stokes, with Idaho Power Company, said that his power supply planning group works on the integrated resource planning processes.  They have contracts with anaerobic digesters, which are considered renewable energy projects subject to the Public Utility Regulatory Practices Act of 1978 or PURPA.  He noted that while most states have renewable energy portfolio standard requirements, Idaho does not.  Because of the abundance of renewable energy generation in Idaho, he said, our state is ahead of what the requirements would be in Oregon or Washington without mandated requirements under a portfolio standard.

Peter Richardson is an attorney who represents developers of PURPA projects.  PURPA requires utilities to buy power from small energy developers at the cost to the utility of developing the resource themselves.  Federal law charges the Public Utilities Commission in each state with setting the methodology, the terms and length of the contracts, and the avoided cost rates under PURPA.  

Richardson noted that a bill was under consideration this session that would have tied the renewable power generated by PURPA projects with the Renewable Energy Credits(or RECS) they earned.  He noted that this would make most renewable energy projects uneconomical, as the developers sell those RECs separately as an additional revenue source.

RECs are fictitious units created primarily to track the environmental attributes of renewable projects.  Once renewable portfolio standards began to be set in various states, RECs were developed as a way to track renewable energy.  

Stokes noted that the cost purchasing power from PURPA projects impacts rate payers.  He said if the RECs were attached to the renewable power they purchased, their value would be passed along to rate payers.

But would a change in the law affect plans for new renewable projects?  Does having access to the RECS they generate make renewable projects more marketable?  Richardson noted that the revenue stream from selling the RECS separate from the energy helps other states fulfill their renewable energy obligations under their renewable energy standards portfolios,and keeps small energy developers solvent.

Idaho Business Review will publish a complete story of the round table discussion in its March 23^rd issue.

Following two days of testimony, committee sends oil and gas bill to the Senate

This week, the Senate Resources and Environment Committee’s agenda included five pieces of legislation to regulate Idaho’s nascent oil and gas industry.  These bills passed the House on a 54-13 vote on February 27^th.  As with the hearings on the regulations and inthe House, there was a crowd prepared to testify, many in opposition to the legislation. The hearing began on Wednesday, and continued to Friday to accommodate all those who wanted to speak.

The first bill on the agenda, H464, is meant to clarify existing law to:

• Provide uniformity and consistency in regulation of oil and gas production in Idaho;

•Clarify the Oil and Gas Conservation Commission’s authority over oil and gas exploration and production;

•Clarify local governments’ role in oversight of the oil and gas industry;

•Provide for mitigation of negative impacts to existingwater rights or usable water resources;

•Align the definition of injection wells with the Federal2006 Energy Policy Act.

The chairman cut off the questioning of the presenters infavor of taking input from the public, allowing those from out of town to testify first. Testimony tended to be lengthy, with several objecting to time limits.

Through both sessions of the hearing, those testifying against the bill cited loss of local control as their biggest concern. Underthe bill, county ordinances and planning and zoning decisions would be superseded by state control.  Industry representatives who testified maintained there is considerable local input—in fact, they asserted, more so than in many other states. There was also concern raised about geothermal wells and beneficial uses,and discussion about injection wells.

Another issue raised was that of air quality including references to downwinders, asbestos, birth defects and radon.  The testimony was often emotional even going as far as one person making the point that the residents cannot afford to make campaign contributions or have paid lobbyists as the industry representatives could.

After one of those testifying went to great length to demonstrate that a vote by the Idaho Association of Counties was not proper, an association representative read a letter to clarify the voting process the association used when decided to support the bill. 

After a motion was made to send the bill to the Senate floor with a do-pass, there was extensive discussion by the committee members—even proposing that the bill be held and changes be made to allay some of the concerns brought by those who currently oppose the bill.

At the end of the nearly 4-hour hearing on Friday, the committee voted 6-3 to send the bill to the House floor with a “do pass”recommendation after defeating a substitute motion to send the bill to the amending order.