Colorado moves ahead on deal for compromise laws struck by environmentalists, oil and gas industry giants

Colorado Gov. Jared Polis said the unlikely partners found "common ground" to avoid costly fights.
Oil gas deal
Posted at 5:37 PM, May 10, 2024
and last updated 2024-05-13 08:38:21-04

DENVER — In a deal struck between unlikely partners, Colorado Gov. Jared Polis announced that the state’s biggest oil and gas producers and most outspoken environmental advocates agreed on new laws to push forward and others to set aside.

Gov. Polis said last week that the two sides, usually at odds, found common ground, which is “really the Colorado way.”

The deal includes a verbal agreement to pause any new ballot initiatives or legislative proposals affecting fossil fuel drilling and production until after 2027.

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“This is a win,” said Ean Thomas Tafoya from Green Latinos, one of the environmental groups that joined the talks. Earthjustice, Conservation Colorado, Southwest Energy Efficiency Project, CoPIRG, Earthworks, Western Resource Advocates and Healthy Air and Water Colorado also participated.

Also at the table: Civitas, Chevron and Occidental Petroleum, also known as Oxy, which accounted for 73% of oil and 44% of natural gas production in Colorado last year.

Colorado environmentalists, oil and gas giants strike deal

Gov. Polis intended for the negotiations to avoid costly fights between environmentalists and the oil and gas industry.

“Over the years, the environmental justice community and our power has grown, and we have carved out more and more equity programs,” Tafoya said.

“The oil and gas industry responded by spending tens of millions of dollars running ads, tearing down our bills and filing their own ballot issues,” he said.

This year, both sides proposed more than a dozen competing issues expected to appear on the ballot in November. But those who came to the table verbally agreed to take down their ballot initiatives.

They also agreed Colorado lawmakers would give up on all pending industry- and environmentalist-backed bills, including a set of air quality bills with tougher regulations industry leaders said would harm the state's economy.

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Earlier this week, just before the end of this year’s legislative session, Colorado lawmakers also passed two bills coming from those negotiations: Senate Bill 24-230 and Senate Bill 24-229.

“This legislation is the result of hundreds of hours of work," a spokesperson in Gov. Polis’ office told Denver7. "These bills will provide certainty for Colorado, build on our nation-leading climate work, and help us protect our state for future generations. The Governor looks forward to signing these bills."

One of the new laws aims to reduce air pollution by expanding accountability. Tafoya said it includes “increased enforcement, more penalties, the ability to remove permits [and] an entire well program specifically for closing wells in disproportionately impacted communities.”

Tafoya said the deal and the new laws only apply to oil and gas pre-production and production, not other parts of the industry, like midstream transport or oil refining like that done by Suncor.

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The second bill passed as part of the deal will charge oil and gas producers new fees to fund improved public transit.

“Even if you don't use public transit, this will benefit you because it means fewer cars on the road, less traffic, cleaner air for us to breathe and also tackles greenhouse gas emissions and climate change,” said Matt Frommer, a transportation expert with the Southwest Energy Efficiency Project, which also joined the negotiations.

Frommer said it makes sense to fund public transit this way because the top two sources of ozone-creating emissions are transportation and oil and gas drilling and production. The new law charges one source of pollution to reduce another.

This also marks the first time Colorado has created a “pot of state money to directly support more transit service so that we have those buses and trains running more frequently,” Frommer said.

The new law will take Colorado from ranking 44th to 22nd in the country when it comes to state funding for local and regional transit. The funding will increase bus and rail service, create grants for transit operations and capital projects and improve rail projects, including the unbuilt Regional Transportation District FasTracks projects. The law will ask RTD to prioritize completing the B Line between Denver and Longmont, the N Line to Adams County and several other rail projects.

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Oil and gas companies will be charged production fees based on benchmark prices adjusted quarterly. At current prices, the maximum fee a producer could face is 36 cents per barrel.

Oxy spokesperson Jennifer Brice told Denver7 the company is “encouraged by the new legislative approach and anticipate a period of stability in our essential industry in Colorado.” She said Oxy is "the lowest greenhouse gas operator in Colorado,” and will “actively collaborate with the state to find innovative ways to reduce our emissions even further.”

But not all oil and gas producers feel the same way. In recent years, the industry has consolidated and concentrated output into the three major producers that joined the deal. But some smaller oil and gas producers are frustrated they were left out of the process, but are still on the hook for new fees.

At a Colorado Senate hearing earlier this week, Ed Ingve, who owns Renegade Oil and Gas, asked lawmakers when Big Oil "got in bed with government."

“When did the environmental groups all of a sudden come running to support Big Oil?” Ingve continued, adding concerns that “once again, small producers get killed. We get left out of any discussion, or any input that we have is completely disregarded, to the benefit of several big producers.”

Still, Tafoya said “there's so many gains” for Colorado communities. And the process isn’t over yet.

"We have all the other tools of the regulatory system still in play,” he said. “And I think all of those pieces together are going to lead to better outcomes.”

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