Colorado House members passed a bill to boost the state’s price-gouging regulations on Monday — but only after scaling it back significantly so that it applies only during periods of declared disasters.
While the change did nothing to ease the concerns of House Republicans — all of them opposed House Bill 1010, along with Democratic Reps. Shannon Bird of Westminster and Bob Marshall of Highlands Ranch — it eased the biggest concerns of business opponents. And it likely got Gov. Jared Polis’ office to back down from its threats to veto the bill if it passed as originally written.
The proposal, sponsored by Democratic Reps. Yara Zokaie of Fort Collins and Kyle Brown of Louisville, still includes the central tenet that a 10% price hike on consumer goods over their average price from the past three months is considered gouging. And it still permits the Colorado Attorney General’s office to investigate companies accused of such price jump and assess them with fines as large as $20,000.
However, sponsors added an amendment during debate in the House on Friday that states that the new protections for consumer goods and other goods essential to public health, welfare and safety kick in only during a declared disaster.
Changes to when state can enforce laws on price gouging
In addition to standing disaster declarations — which can be issued during natural occurrences such as floods and fire, as well as epidemics, droughts and civil disturbances — the governor also can declare a market-disruption disaster. This could involve high inflation or trade disruptions due to conflicts or tariffs, an addition that seemed to consider the possible near-term fallout of proposed federal tariffs.
Brown said the amendment was “heavily negotiated” and aims to fix many of the problems that business interests identified with the bill. Groups like the Colorado Retail Council had said that giving such broad powers to the government could put good-actor businesses on the defensive in having to offer records to justify any price hikes, even when conditions like inflation or rising labor costs demand them.
Following the addition of the amendment Friday, business organizations that had rallied against HB 1010 generally stepped back and said it now is in an acceptable place. Limiting price-gouging investigations to times of declared disasters mirrors most other states with similar laws in place, and the acknowledgement of market emergencies in the bill offers insight into why businesses may have to raise prices that spawn consumer ire.
“We appreciate the work of the sponsors to narrow HB 1010 and recognize the cost impact the original bill would have had on both businesses and consumers,” said Meghan Dollar, Colorado Chamber of Commerce senior vice president of governmental affairs. “The significant changes in the amended version take a more balanced approach to preventing price gouging while preserving our business climate.”
Why supporters say the protections are necessary
Diapers are laid out on the floor of a Denver child’s bedroom.
Zokaie brought the bill, she said, after hearing concerns from income-limited constituents about the ballooning price of everything from diapers to eggs that they need to get by in their daily lives. Parents were skipping meals so that their children could eat, and older adults were being forced to choose between medications and groceries, she said.
While business leaders have said the need to raise prices incorporated everything from spikes in supply pricing to increased wage requirements to regulatory compliance costs, Zokaie argued it was more about corporate greed. Even as she offered the key amendment Friday, she said that boosting state oversight in this area is the one way to protect average Coloradans from the whims of profit-seeking CEOs.
“It is ignorant for us to say that corporate greed is not also a factor. There are businesses raising their prices well beyond their increased costs and prioritizing their bottom line well above the affordability of consumers,” Zokaie said. “They know that our constituents have no choice but to pay up, and they are squeezing them for every last cent.”
Because the rewritten bill inserts the new provision defining price-gouging as a 10% hike into an existing 2020 law barring the practice during disasters, the goods covered by government protection are defined more specifically. That law barred “excessive” hikes on building materials, consumer food items, emergency supplies, medical supplies, other necessities for human or animal survival, repair or reconstruction services, transportation or storage services, or services used in an emergency cleanup.
What is next in debate on price gouging
When the governor declares a disaster specific to an area — say, a flood or drought — the more general prohibition against undefined “excessive” price hikes would go into place, Zokaie explained on the House floor. When he declares a more market-focused financial disaster, the 10% cap on price hikes would take precedent, she said.
While businesses may feel better about the bill, House Republicans do not. Rep. Stephanie Luck, R-Penrose, said the two standards would be confusing for businesses struggling to understand how much they can raise prices when needed, while Rep. Anthony Hartsook, R-Parker, said this adds burdens to business and power to the executive branch.
“It’s not the stores that are increasing prices,” said Rep. Chris Richardson, R-Elizabeth. “It’s the entire regulatory environment that we’ve set in this state that is raising prices.”
Following Monday’s 38-24 approval in the House, HB 1010 now moves to the Senate.