Oil and gas got a major gift from the 2024 legislative session — stability

Leaders from both the oil-and-gas and environmental sectors surround Gov. Jared Polis Thursday as he signs two bills significant to the two camps.

As oil-and-gas industry leaders listened to a news conference on Feb. 22 introducing three far-reaching air-quality bills, things looked dim.

While backers — some in legislative leadership — proclaimed it was time for “system-changer” legislation, Colorado Oil & Gas Association President/CEO Dan Haley characterized the proposals very differently, saying they “seek to end the Colorado oil and gas industry.”

Fast-forward three months, and executives from Chevron, Civitas and Oxy flanked Gov. Jared Polis and legislators on a train platform in Westminster as Rep. Jenny Willford, D-Northglenn, boasted of two new laws that “are going to be game-changers in Colorado when it comes to cleaning up our air quality and our air-pollution problem.” The words were similar, but the final products of months of negotiations were decidedly different.

Gone were proposals to pause fracking during summer months, mandate heavy nonnegotiable fines on repeat offenders and ramp up modeling requirements for permits — as well as a separate bill to ban new oil-and-gas drilling altogether by 2030. In were more reasonable approaches to deal with the worst repeat offenders and with new projects in disproportionately impacted communities, a $110 million annual fee on oil-and-gas production — and a promise of no new legislative or ballot demands through 2026.

“Some certainty” for oil and gas

On one hand, the negotiated settlement was a huge win for the industry, giving producers an achievable set of goals that allow for reduction in air pollution via use of the latest technology and equipment rather than debilitating fines and new requirements that Haley told a House committee would “grind air-quality permitting to a halt.” Environmental organizations also cheered, noting that that new fees would go largely to transit, meeting their long-standing goal to beef up one of the least-funded public bus-and-train systems in America and give commuters more options.

Colorado Oil & Gas Association President/CEO Dan Haley speaks at a February news conference about a slate of new environmental bills.

On the other hand, the 2024 session ended in a sense like most sessions since Democrats took control of the House, Senate and governor’s office in 2019 — with more new regulations for industry, albeit ones that moved the goalposts less than in past years. And the two measures that replaced the far-reaching air-quality bills — Senate bills 229 and 230 — still frustrated many, particularly Western Slope leaders like the Grand Junction Chamber of Commerce who complained their producers essentially will be paying new fees to prop up Front Range rail.

Asked broadly for their assessment of the 2024 session, leaders from COGA and American Petroleum Institute Colorado both responded with one theme. The thing they most got out of this session, they said, was a meaningful period of legislative and regulatory stability.

“COGA has advocated numerous times emphasizing the importance of allowing time to implement and evaluate the laws and regulations approved since SB 19-181 before enacting further policy changes,” Haley said, referencing the historic changes from five years ago. “Some certainty on the legislative and regulatory front will enable our members to make long-term investments, championing innovations to provide affordable, reliable energy while further reducing emissions and environmental impacts.”

A year of compromises

Polis acknowledged during a signing ceremony for SBs 229 and 230 at Westminster Station on Thursday that “when this work started out, none of us knew whether this was possible.” But he lauded groups from Earthjustice to GreenLatinos for sitting down with industry leaders and finding what was possible to reduce carbon emissions and air pollution, keep a prominent industry strong and boost transit.

“I think it shows the better angels in all of us that we are able to celebrate today,” the Democratic governor said.

Colorado state Rep. Jenny Willford speaks at a signing ceremony for two oil-and-gas bills Thursday at Westminster Station.

If there was a kumbaya at the end — even if a slightly begrudging one, as some of the early testimony on SBs 229 and 230 showed — it was one that came only after the two sides traveled very different paths to get there.

While oil and gas leaders spoke of their $48 billion economic impact, leaders from some environmental groups referred to the industry as one whose time had run its course and needed to make way for new forms of energy and jobs. In addition to battling four bills that would have set unprecedented regulations on extraction, business leaders fought a later-killed bill to roll back concessions from two 2023 rulemaking hearings and a proposal that essentially would have allowed local governments a veto over any project.

Some trouble spots still remain for oil-and-gas advocates

That latter bill, House Bill 1338, passed after that veto section was removed and should be signed by Polis, despite warnings from Sen. Bob Gardner, R-Colorado Springs, that it unconstitutionally targets an individual company. Among its provisions, the bill funds an expert to oversee regulation of petroleum refineries when the state has just one such refinery, the Suncor USA Corp. plant in Commerce City.

Oil and gas backers like Weld County Commissioner Scott James — who told the House Finance Committee earlier that they had “flogged an industry out of political convenience long enough” — even advanced a bill with their preferred solutions for cleaning the air.

State Sen. Barbara Kirkmeyer speaks to the Senate in April about her Senate Bill 95.

Senate Bill 95, sponsored by Republican Sen. Barbara Kirkmeyer of Brighton and Democratic Senate Majority Leader Robert Rodriguez of Denver, sought to put money toward helping people with the worst-polluting cars to get them fixed and expanding the state’s Clean Screen program to check tailpipe emissions. But after passing the Senate with bipartisan backing, it died in the House Finance Committee on the next-to-last day of the session under questions about how much money it would divert from existing or yet-to-be-proposed programs.

Kudos from green advocates

If the results of the 2024 legislative session were acceptable to the oil-and-gas industry, they also elicited praise from the environmental community, despite the significant cutbacks to proposed regulations that ended up passing.

In statements, groups like the Southwest Energy Efficiency Project and the Colorado Public Interest Research Group (CoPIRG) emphasized it wasn’t just the new regulations but other bills that could go a long way to cleaning the air. The transit-funding boost in SB 230 and other laws will allow people to consider giving up single-occupancy vehicle trips, while Polis’ affordable-housing package focuses on getting new construction along transit lines, allowing for sustainable planning in a way the state has not before, they said.

“I think we had a real impact on the legislative cycle this year,” said Ean Thomas Tafoya, Colorado president of GreenLatinos, which clashed with Polis on some bills that didn’t succeed but worked with him on others and sat at the table for the final grand bargain. “From my perspective as an environmental-justice leader, we had a landmark session in a lot of ways.”

Colorado state Sen. Cleave Simpson listens as GreenLatinos state director Ean Thomas Tafoya testifies on May 2 for new oil-and-gas regulations.

Detente for oil-and-gas proposals?

Beyond the two bills Polis signed Thursday, maybe that give-and-take was epitomized most on House Bill 1346, which sought to give the Colorado Energy and Carbon Management Commission regulatory power over carbon-capture technology, which represents both a way to remove carbon from the air and a new line of business for energy companies. While environmentalists managed to add into the bill a definition of cumulative impacts that will affect ECMC consideration of all oil-and-gas permits, industry officials called it a reluctant but necessary tradeoff to give divergent interest groups what they needed.

As with any session that ends with a promise to put off further regulatory proposals in the future — at least until Polis reaches the end of his second and final term in office in 2026 — the success of this year will be dependent on all parties keeping their promises. But, at least for now, API Colorado Director Kait Schwartz is optimistic that will happen.

“We are hopeful that the conclusion of this legislative session will usher in a period of regulatory and legislative stability,” Schwartz told The Sum & Substance. “The deal struck between the governor’s office, environmental groups and industry signifies progress toward cooperation and gives recently implemented regulations a change to prove their efficacy.”