Democrats Press the Accelerator on the “Boulder Bill” As Concerns Mount
Within just one week of being introduced, legislation in Colorado that would drastically overhaul many aspects of the state’s oil and gas regulations is barreling toward a Senate floor vote.
Last Friday at around 5 p.m., Democrats quietly released the text of the bill, which had been long awaited by both industry and environmental groups who had just endured a long and arduous campaign surrounding ballot measure Proposition 112 this past November.
Within one business day, the bill was already being heard in the Senate Transportation and Energy Committee, a fact that had many calling out the sponsors for being unfair and unnecessarily speeding through the legislative process. The committee voted in favor of the bill along a party-line vote at 2 a.m. after a marathon hearing that saw hundreds of people testify. It then went to the Finance committee and passed through on a party-line vote on Thursday evening. Not even 12 hours later, the Appropriations Committee caught many off-guard by holding its own hearing on the bill at 7:30 this morning. Co-sponsors Senate Majority Leader Steve Fenberg and Speaker of the House KC Becker downplayed these criticisms, and yet, it appears that Democrats are pressing the accelerator at a time when fiscal concerns about the bill are emerging.
- Here’s EID’s first take on the bill’s contents.
- Here’s a fact check of activists claims cited in testimony.
- And here is EID’s recap of the events from Tuesday.
Things are moving fast. Here’s the latest update on everything you need to know about SB 181.
#1 It’s not just industry who’s critical of the bill or the process.
The Denver Post was one of the first prominent voices to call for a more thoughtful and inclusive consideration of SB 181. They put out a house editorial on Wednesday with the very appropriate headline, “Slow your roll, Democrats,” noting that they weren’t ready to actually take a stand one way or another on the bill and were surprised members of the Senate Transportation and Energy Committee were.
“Here’s a bit of unsolicited advice to Speaker of the House KC Becker, D-Boulder, and Senate President Leroy Garcia, D-Pueblo: It doesn’t matter how thoughtful a bill is if the public perceives that it was intentionally kept secret in order to quell opposition.”
“SB 181 is a huge omnibus oil and gas reform effort that proposes solutions to many unrelated problems that have proved elusive for years. It fundamentally changes the way the Oil and Gas Conservation Commission operates, and it also changes rules for how companies can develop the mineral rights of others without their consent. The bill requires continuous monitoring of emissions, and it also gives local communities control over the siting of wellheads. Putting all of this together in a bill that industry leaders say they didn’t see until Friday (or even anticipate) is a bit brash.”
The Grand Junction Sentinel followed suit with their own house editorial, “Give SB181 the careful consideration it deserves.”
“The big fear of the sweeping reforms of oil and gas drilling proposed in Senate Bill 181 is that the legislation will be passed so hastily as to create unintended consequences that jeopardize thousands of industry jobs and billions in state revenue.”
Meanwhile, one of Colorado’s most prominent Democrats and former elected officials is warning the rest of the state about SB 181’s potential consequences. Ken Salazar, whose long resume includes stints as Colorado Attorney General, U.S. Senator and Secretary of the Interior during the Obama Administration, spoke in no uncertain terms when discussing the bill. In an opinion piece for the Denver Post, he wrote:
“Senate Bill 181 concerning oil and gas operations is too extreme for Colorado and harmful to Colorado’s workers, schools, and businesses. The bill should be opposed as introduced…This bill will give unfettered control to local governments to do what they want, including effectively banning oil and gas development within their jurisdictions. When this framework has been adopted in other states and other countries, it has over time created a de facto moratorium on oil and gas development. That would be the wrong result for Colorado.”
In an interview with the Denver Post, he went even further, pointing out how a few politicians from Boulder were drafting oil and gas laws that the rest of the energy producing state had to deal with. Salazar hinted that he was misled by Polis during the 2018 election, in which Salazar endorsed and campaigned for him.
“I love Jared Polis,” Salazar said Wednesday. “Part of what I fear here is that the way this bill is written, driven essentially by a Boulder view of the world, that it jeopardizes the Democratic control that we have here in Colorado. And that was not supposed to happen. In my many conversations during the campaign, it was about governing for everybody. Governing for a centrist point of view, bringing people together, solving problems for the long term.”
Former Denver Mayor Wellington Webb, another strong Democratic voice, published an opinion piece yesterday in which he called for cooperation instead of polarization.
“Rather than rush to judgment — on an issue Colorado voters have already weighed in on — slow the train down, put down your weapons, and give everyone the opportunity to be heard. This should not be public health and safety vs. jobs and economic growth. In Colorado, we can achieve both, but it requires a cease fire and sitting around a table with open ears to get there.”
Business Organizations and Local Governments
Mesa County officials Rose Pugliese, Chair of the Board of County Commissioners, and Barbara Traylor Smith, Mayor of Grand Junction, Colo., sent their own letter expressing concern about SB 181.
“The loss of Colorado’s energy sector that would result if SB19-181 passes would devastate Colorado’s economy, cripple both state and local budgets, and threaten thousands of working families, both in and out of the energy industry.”
And in committee hearing testimony this week, both the Colorado Chamber of Commerce and the Colorado Home Builders Association came out in opposition to the bill.
“The Colorado Chamber is opposed to Senate Bill 181 based on a number of concerns. We’re concerned with the impact certain provisions in the bill will have on state revenues and Colorado’s economy. Most concerning are the provisions authorizing a potential moratorium on new permits and the provisions that may cause an operator to choose to stop or reduce its operations in Colorado, both of which would lower state revenues.”
So, is speeding up the bill a tactic to drown out dissent?
#2 No one’s actually studied how the bill will affect the economy or tax revenue, but there is a lot of money at stake.
The Finance Committee hearing was the first time we heard of the fiscal implications of the bill. The actual fiscal note simply denotes a cost of around $970,000, mostly allocated to hiring new personnel. It also only looks at its cost over the next two years. One would think with a major piece of legislation like the one being proposed, the actual implications of different scenarios under the bill would have been explored. After all, Colorado’s economy depends on oil and gas for about $31 billion in GDP per year. If a temporary moratorium is implemented while the rules are sorted out, as is stipulated in the bill’s language, or if local communities start heavily regulating oil and gas to the point that companies are forced out of their borders, there would be serious financial impacts. But it seems that no one has bothered to figure out what those impacts may be.
This morning at the Appropriations hearing a representative from Legislative Council Staff, analyst Josh Abram, said as much.
“The fiscal implications on the state’s expenditures and revenues as a result of those rules are not addressed in the fiscal note.”
The law states that permitting will be halted after the bill passes until all rulemakings are resolved. With several complicated rulemakings in the mix that could, and probably will, take years. What’s the fall out of a permitting freeze?
“There is a gap there that is uncertain. We just don’t have any way of knowing what that will mean vis a vis expenditures to the state… certainly, regulation is coming. And certainly that will have some impact on production levels which ergo will have some impact on severance tax collections and property tax collections. All of that is very speculative at this point, I can’t predict what local governments will do, I can’t predict what those rules that are adopted by the Department of Natural Resources of the Department of Public Health, as is required by the bill, we have no idea what those will look like.”
The state of Colorado might have no idea what this will actually cost, but a powerful panel comprised of Weld County officials delved into how their communities might be impacted. Weld County is home to about 90 percent of Colorado’s oil and nearly 40 percent of its natural gas output, and thus has a lot to lose when it comes to the potential for reduced output as these regulations progress. Weld County Commissioner Barbara Kirkmeyer outlined the financial importance of the industry.
“In 2019 we’re anticipating that there will be $490 million taxes, ad valorem property taxes paid by energy companies. Those energy companies will be paying $200 million in property taxes to the school districts in Weld county. Here’s what’s not in your fiscal note: There would be nothing about the decrease in ad valorem property taxes going to school districts across the state. Mine alone, an impact of almost $200 million. We anticipate that at least a third of that would occur in the first year or so that this bill is enacted.”
So while it’s unclear what, if any, financial hit will accompany SB 181, there is a lot at stake.
#3 Air Pollution Control Division Director says Colorado is already doing the right things.
Perhaps unintentionally, the Director of the Air Pollution Control Division of the Colorado Department of Health almost made the case that Colorado is in a good place when it comes to regulations and the ability to work with industry to improve upon them during his testimony in front of the Finance Committee.
“I do want to very briefly maybe address a little bit of the broader implications, because we have within my division and my commission have a long history of adopting air quality control requirements for industry. I’ve been personally working at it for almost 15 years and during that time we’ve adopted what we believe is the most rigorous ever air quality requirements in the country.”
He then touted Colorado’s track record of implementing rules that have drastically decreased emissions while working with industry and doing so in a way that was economically feasible. If that’s the case, then why does SB 181 remove from the COGCC’s mission to “take into consideration cost-effectiveness and technical feasibility” when undertaking rulemaking?
Bottom Line: Love it or hate it, most have to agree that SB 181 seems to be flying through the state legislature at an unprecedented pace. Why rush a vote before we can fully grasp the implications of the bill?
Check back next week and be sure to follow @EIDMtnStates on Twitter for updates on SB 181.