Leading Colorado Democrats and the state's oil and gas industry announced a preemptive truce Monday — one aimed at defusing the latest round of dueling ballot initiatives and legislation targeting the industry and its environmental impacts.
The proposals, presented to reporters by Governor Jared Polis and the Legislature, include imposing a new per-barrel production fee on the industry and implementing new environmental standards. In return, industry, lawmakers and several environmental groups agreed to halt recent attempts at regulatory legislation and ballot initiatives backed by deep pockets.
“By coming together, this diverse group agreed that costly, divisive ballot measures and legislation are not in the best interest of the state – and that it is better to find a way to work together toward an outcome where everyone can sympathize and move the ball down. field in terms of achieving our goals,” Polis said.
A key part of the deal takes the form of two new bills that will be introduced in the coming days — about a week before the end of the 2024 legislative session.
One bill would impose a fluctuating production fee on oil and gas, which is expected to generate roughly $138 million annually, based on recent years' returns. Much of that money would go toward supporting public transportation in Colorado, including possibly the Denver metro Regional Transportation District. The state would also set aside a portion to help restore public lands affected by oil and gas production.
The second bill would aim to reduce emissions and improve air quality through a new permitting and enforcement authority. It would include funding to plug orphan wells and strategies to help communities disproportionately affected by the oil and gas industry, Polis and legislative leaders said at the late afternoon news conference Monday.
Polis said the negotiations involved major players in the oil and gas industry, lawmakers who had wanted stricter regulations on production and several environmental groups, eight of which were named in a news release.
The deal means that ballot initiatives filed by both industry and environmentalists — and at various stages of state review — will be abandoned. Those backed by the industry, which has the money to run effective campaigns, were seen as particularly troubling for environmentalists, as the intent included thwarting state and local regulations.
In turn, environmental groups filed ballot measures aimed at addressing the industry's damage to public health and the environment.
Democrats in the Legislature agreed to drop four bills that had passed the chambers. These measures were intended to reduce emissions by changing the state's permitting process, halting summer drilling and increasing possible penalties for companies that violate their air pollution permits.
If the two new bills win passage, environmental groups, lawmakers and key industry players agree not to pass any new ballot measures or legislation in the coming years. Policy and Senate President Steve Fenberg told reporters that the timeout was intended to give the new policy time to be implemented.
But if the bills fail, the state will continue with the “status quo,” Fenberg said.
The political breakthrough was welcomed by Dan Haley, the president and CEO of the Colorado Oil and Gas Association. He said in a statement that the industry is still absorbing dozens of new regulations at various stages of implementation.
“Colorado's oil and natural gas industry has led the way in reducing emissions and has been at the table for more than two dozen regulations in recent years,” he said. “But political and legislative stability and certainty are essential to the future success of our industry here, and we are pleased to see that our state's political leaders share that vision.”
Kait Schwartz, director of the Colorado chapter of the American Petroleum Institute, reiterated in a statement that “stability for a vital industry is of paramount importance.”
Helen H. Richardson, Denver Post file
An oil derrick pumps oil near homes in Dacono in Weld County in a 2017 file photo. (Photo by Helen H. Richardson/JS)
The oil and gas industry supported 54,420 direct jobs and 249,320 indirect jobs in the state in 2021, accounting for about 7.7% of the state's total employment, according to figures a report from last May from the American Petroleum Institute. The industry contributed $48.7 billion to the state's economic output, or about 11% of the total.
The governor's office said oil and gas producers Occidental, Civitas and Chevron were involved in the coalition and supported the new legislation.
A collection of environmental groups participating in the talks sent out a joint statement at about the same time as the industry, calling on the Legislature to approve the package.
Signed by Conservation Colorado, GreenLatinos, the Southwest Energy Efficiency Project and others, the statement warned that without the bills, the state would see “potentially devastating ballot measures from the oil and gas industry that could have reversed a decade of climate progress in Colorado.” .”
Republican leadership in the state House did not immediately comment on the proposals.
Sen. Barbara Kirkmeyer, a Republican from Brighton, said she had not seen the new legislation. Her district includes Weld County, which produces most of the state's oil and gas. She said she would review any bill carefully before committing one way or another, keeping workers in mind as she considered it.
“It's not about the oil and gas companies getting anything. “It's not about whether we will please the environmentalists,” she said. “It's really about: How do we protect those workers in the industry and give them the assurance that they have a future where they're going to earn a great income to provide for their families?”
House Speaker Julie McCluskie said the permitting and air quality bill would include funding “specific to orphan wells and marginal wells,” plus specific directions for the Colorado Energy and Carbon Management Commission 'around minimizing the impact' communities disproportionately affected. This refers to communities that are likely to experience significant damage as a result of poor environmental quality.
The bill would codify a 30% reduction in nitric oxide in oil and gas production by 2025 and a 50% reduction by 2030, McCluskie said, and it would also strengthen “enforcement mechanisms.”
Under the Oil and Gas Production Fees Act, 80% of proceeds would go to local transit agencies like RTD as well as rail projects and a competitive transit grant program. The remaining 20% would go toward “habitat conservation and restoration as mitigation of oil and gas activities” on public lands, Polis said.
The governor said the per barrel fee, which will fluctuate based on market conditions, would have minimal impact on energy prices in the state as it filters through international markets. He noted that other states have higher severance taxes than Colorado and would continue to do so under this proposal.
Staff writer Aldo Svaldi contributed to this story.
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