Gov. Jared Polis and Democrats in the legislature unveiled a deal Monday with the oil and gas industry and environmentalists to tighten the state’s air quality regulations and raise millions of new dollars for transit projects in exchange for all sides pausing their pursuit of other legislation or ballot measures for the next several years.
The grand compromise, which will be accomplished through two bills expected to be passed in the final days of Colorado’s 2024 legislative session, is aimed at heading off the General Assembly’s passage of more stringent rules for the drilling industry, as well as an expensive ballot box fight in November.
“In coming together, this diverse group agreed that costly, divisive ballot measures and legislation are not in the interest of the state,” Polis told reporters at a news conference Monday at the Colorado Capitol. “It’s better to find a way to work together to have an outcome that everybody can live with and move the ball down the field in terms of achieving our goals.”
The agreement marks the most significant deal between the industry, environmentalists and Democrats since 2014, the last time a major ballot measure battle on drilling was on the horizon. Polis was central to that compromise, too.
Democrats have introduced a wave of legislation at the Capitol this year aimed at curbing the oil and gas industry’s emissions. That includes an ambitious package of ozone-fighting bills that would “pause” oil and gas drilling in summer months, set caps on miles driven in gasoline-powered cars and increase pollution fines for “repeat offenders” like the Suncor refinery in Commerce City.
Meanwhile, the industry has been pursuing a measure for the November ballot that would restrict the government from forcing consumers to use electric appliances. Additionally, environmentalists have been working ballot measures of their own to tighten the state’s air quality rules.
“The goal here is certainty and stability,” said Senate President Steve Fenberg, a Boulder Democrat who will shepherd the legislation through the legislature. “It’s going to take some time to implement. Folks on both sides of the issue feel that there’s not a not need to run major legislation or ballot measures in that time period.”
Polis said the sponsors of this year’s ozone legislation, as well as the oil and gas industry and environmentalists, have agreed to all back off their proposals to endorse the deal.
The governor’s office said the groups that were part of the negotiations included Earthjustice, Conservation Colorado, GreenLatinos, Southwest Energy Efficiency Project and major oil and gas operators like Occidental, Civitas and Chevron.
“We have said for years that providing regulatory and legislative certainty for business owners and operators across the state and ensuring stability for a vital industry is of utmost importance,” Kait Schwartz, the director of the American Petroleum Institute branch in Colorado, said in a written statement. “We are pleased to see that the governor agrees.”
Margaret Kran-Annexstein, director of the Colorado Sierra Club, said the bills mark an important step toward combating Colorado’s air pollution issues.
“Further, we are glad to avoid ballot measures filed by the oil and gas industry that would have rolled back the climate progress that Coloradans need and want,” she said in a statement.
The structure of the deal includes an agreement that the legislature will pass two bills:
- One that will fund efforts to cap abandoned and low-producing wells to prevent them from leaking greenhouse gasses and set new emissions reductions targets in state law, including a 30% oil and gas industry reduction in nitrogen oxides by 2025 and a 50% reduction by 2030. The bill will also have new enforcement mechanism and require modeling of emissions affects on disproportionately impacted communities in the Denver area.
- One that will impose a new fee on every barrel of oil produced in Colorado that will fluctuate based on market prices but generate an estimated $138 million a year. Eighty percent of the revenue from the fee will go toward transit projects, including possibly the creation of a new Front Range passenger system, while the rest will go toward public lands, specifically renewing areas that have been affected by drilling.
Polis and his Colorado Energy Office and Colorado Department of Transportation have been pushing alongside other state leaders for a major expansion of passenger rail transit in Colorado, as they also seek new land use laws promoting affordable housing development concentrated at transit stops.
But the rail promoters need new sources of revenue to pay for billions in train costs. The Front Range Passenger Rail authority is considering whether to seek a fall 2024 ballot measure to initiate a sales tax dedicated to northern Front Range rail additions. A spokesperson for the authority said Monday the board was awaiting polling results in mid-May and more information from modeling studies before making final decisions on pursuing a fall vote.
Environmental groups, meanwhile, have for years pursued legislation and new state rules that would curb emissions leading to summer ozone problems that exceed EPA limits for the northern Front Range.
The EPA has declared nine northern Front Range counties to be in “severe” violation of limits for toxic ground-level ozone. Oil and gas drilling and production, driving fossil fuel powered vehicles, and industrial activity such as power plants and refineries are major contributors to ozone-causing emissions.
Fenberg and House Speaker Julie McCluskie, D-Dillon, said the ballot measures will be formally introduced in the legislature as soon as Tuesday. The lawmaking term ends May 8.
Colorado Sun staff writer Michael Booth contributed to this report.