Colorado Capitol Report

Colorado Chamber-Opposed Oil-and-Gas Bill Passed by House

Colorado Chamber-Opposed Oil-and-Gas Bill Passed by House

The arguably most important bill of the 2019 legislative session—one that will likely drastically affect a significant sector of the state’s economy, jobs and tax revenue—was given final approval on a recorded Third Reading vote this morning by the Colorado House of Representatives.  The vote follows a lengthy, almost six-hour Second  Reading debate on the House Floor last night.

Colorado Chamber’s Position

“The Colorado Chamber is very concerned about SB-181 and we fear that it could have a detrimental impact on the state’s overall economy, putting thousands of jobs at risk and resulting in billions in lost revenue,” said Chuck Berry, Colorado Chamber president  and former Speaker of the Colorado House of Representatives, “We’re urging the Senate to reconsider its support of the bill.”

In recent legislative history, there has been no comparable legislation to SB-181, “Protect Public Welfare Oil And Gas Operations,” that would impact a major economic sector in Colorado to the extent that this bill may do.

The proposal was introduced in the Senate on March 1st, approved by three committee and passed by the Senate on March 13th.  It was introduced in the House on March 14th, approved by three committees and passed by the House today.

In other words, the Democrat-controlled legislature took only 28 days of the 120-day session to essentially pass the bill, although a little house-keeping remains to be done until the bill goes to Governor Jared Polis (D) for his signature.  Because SB-181 was amended in the House Appropriations Committee and by the House yesterday, the bill returns to the Senate for concurrence.  If the Senate agrees with the House amendments, the bill then goes to the Governor.

The Importance of the Oil-and-Gas Industry to Colorado

Two studies issued this month spotlight the importance of the oil-and-gas sector to the Colorado economy and the potential impact of SB-181 to harm the sector and the overall economy.

A report issued this month by the Global Energy Management Program at the University of Colorado Denver Business School on the economic and fiscal contributions of the industry sponsored by the Colorado Oil and Gas Association reached the following major conclusions about the importance of the industry in Colorado (using 2017 data), which:

  • Contributes $13.5 billion to the Colorado economy;
  • Provides almost $1 billion in taxes to fund state and local governments,; and
  • Employs 89,000 workers in “upstream and mid-stream” jobs alone, not counting those in such “downstream” jobs as retail oil-and-gas operations.

A separate study issued this month by the Common Sense Policy Roundtable also highlights the importance of the sector to the Colorado economy.  The report ran seven scenarios for the likely impact on tax revenue, jobs and state domestic product of SB-181 if 33 percent of new production was eliminated by 2030:

  • 61,000 fewer jobs;
  • $4.4 billion lost tax revenue for the period 2020-2030; and
  • $84 billion less state domestic product for the period 2020-2030.

What does SB-181 Mean to Colorado?

In broad terms, the bill will essentially establish the statewide regulation of the industry by the Colorado Oil and Gas Conservation Commission as the floor and allow local governments to impose additional regulatory requirements on the industry.

Colorado Politics quoted Representative Mike Weissman (D-Aurora) as saying during the debate last night, “Local control is at the heart of this bill.”

Under SB-181, the industry would face a patch-work of decisions and policies put in place by local governments, which could, among other things, decide where operations could be located relative to businesses, schools and residential areas.

About the Bill

Sponsors of the bill are House Speaker KC Becker (D-Boulder), Representative Yadira Caraveo (Thornton), Senate Majority Leader Stephen Fenberg (D-Boulder) and Senator Mike Foote (D-Louisville).

  • The House Third Reading vote of 36-to-28 was noteworthy in that four Democrats defected from their caucus and voted with the minority Republicans against the bill.  The lengthy Second Reading debate last night featured 12 amendments added to the measure and seven amendments defeated.  The bill passed the Senate on a party-line 19-to-15 vote.

SB-181 would:

  • Prioritize health, safety and the environment above production for the state commission that governs the industry and decrease representation on the commission of people with backgrounds in the industry.
  • Provide local governments with greater authority and discretion to regulate the industry.

The bill’s March 26th Fiscal Note, which does not reflect the House amendments, summarizes the complicated proposal:

This bill modifies the composition and the regulatory charge of the Colorado Oil and Gas Conservation Commission (COGCC) in the Department of Natural Resources (DNR), expands the regulatory charge of the Colorado Department of Public Health and Environment (CDPHE), imposes new requirements on oil and gas operators, and provides additional regulatory authority over oil and gas operations to local governments.

Colorado Chamber Committee Testimony

Here’s an excerpted portion of the prepared testimony of Colorado Chamber contract lobbyist Bill Skewes before the House Energy and Environment Committee on March 18th:

The Chamber’s Energy & Environment Council is opposed to Senate Bill 181 based on a number of concerns.

First of all, the bill repeals the requirement that the commission take into consideration cost-effectiveness and technical feasibility when regulating the industry. While the Senate did amend the bill to include a necessary and reasonable standard to protect public health, it is not clear how this applies to the commission’s regulatory authority. Repealing the cost-effectiveness and technical feasibility language might allow a regulatory body to place standards on an industry that may be impossible to meet. We are concerned about the impact this may have on the industry and Colorado’s economy, as well as, the message it sends to any company considering moving to or expanding its operations in Colorado.

Second, the bill authorizes a potential moratorium on new permits until some of the rulemaking required in the bill is complete. It is our understanding this includes three rulemakings that could take months to complete. We are concerned the impact of preventing all new oil and gas development for any period of time will have on Colorado’s economy.

Finally, the bill authorizes local governments to regulate oil & gas operations. We are concerned this may create a patchwork of regulation around Colorado that will increase the burden on the industry and have an adverse impact on Colorado’s economy and business environment.

For these reasons, we ask you to vote no on Senate Bill 181. Thank you and I am happy to try to answer any questions.

Bill also testified against the bill on March 7th before the Senate Finance Committee.

More Information

For more information about SB-181, contact Bill Skewes at 303.765.4766.

For recent news media coverage of the measure, read:

Colorado oil and gas reforms are amended, but continue to speed forward,” by Greg Avery, The Denver Business Journal, March 29th.

Colorado House gives initial OK to oil-and-gas rules,” by Joey Bunch, Colorado Politics, March 29th.

House gives preliminary OK to oil and gas bill that has roiled Colorado General Assembly,” by Judith Kohler, The Denver Post, March 28th.

Bill Sponsors Plan to Offer Multiple Amendments to Try to Address Business Concerns with SB 188

In an exclusive interview this afternoon with statehouse reporter Ed Sealover of The Denver Business Journal, the two senators who are the prime co-sponsors of SB-188, the FAMLI bill, announced that they have agree to numerous amendments to the bill, which is due to be brought up again before the Senate Finance Committee next week.

As introduced, the bill would have imposed an “insurance premium” on every worker and every company and government entity in Colorado to fund a state-run, family-and-medical leave insurance program.

Senator Angela Williams (D-Denver) and Senator Faith Winter (D-Thornton) met with Sealover, who wrote:

The senators said they hope that the changes, which they plan to detail to business groups over the weekend and on Monday, will be enough to get business groups to drop their opposition to the bill — a move that likely would quell reported concerns even among some Senate Democrats that had put the fate of the bill as written into question.

The Colorado Chamber has not yet seen the amendments but maintains its position of opposition to the bill as introduced in the meantime.

The bill is now scheduled to be heard when the Committee convenes at 2 p.m. on Tuesday in SCR 357 at the State Capitol.

According to Sealover, the amendments will include the following:

  • Workers would pay more in a percentage amount in the FAMLI program than would employers;
  • Companies that already have a paid family-and-medical leave program could apply to the FAMLI program to opt out;
  • An employer would not have to hold a position open for a seasonal worker (agriculture, the ski industry, etc.) whose leave has been completed.

“Skeptics of the bill had testified that not only would most employers now offering a more generous plan be very likely to drop that plan rather than have to pay into a state-run system that they would not use but that elimination of such private plans would cost the state nearly $9 million a year in tax revenues from the policies,” Sealover wrote.

The two senators told Sealover that they had held numerous meetings with the business community and had heard concerns about cost, abuse of the system and leaving positions open.

Wrote Sealover:

Other coming amendments would require the labor department to complete an actuarial analysis of the program before it launches, to conduct a study on whether it would be better for the state or third-party organization like Pinnacol Assurance to administer the multi-billion-dollar program, and to bar employees from taking paid leave while they also are receiving workers’ compensation benefits. Because the program envisions that employees could collect between 50 percent and 90 percent of their wages while on leave — capped at $1,000 per week — the possibility had existed that they could add that to workers’ comp earnings and actually get more than 100 percent of their pay level while out, Winter noted.

Sealover wrote that the Colorado Chamber’s Loren Furman told him that a few other states either had to borrow funds or increase premium taxes to fund paid family-and-medical leave programs when costs exceeded original projections.

The Committee first heard testimony on SB-188 on March 19th but concerns among some Committee Democrats about the potential impact on businesses resulted in the bill being laid over.

The bill will still contain such provisions as:

  • Requiring a worker to first file a complaint with the FAMLI Division of the CDLE and go through an administrative review process before being able to file a lawsuit against the employer.
  • All employers would be required to participate in the program unless they were granted approval by the FAMLI Division to opt out.

The program would be administered by a new FAMLI Division created within the Colorado Department of Labor and Employment.  It would be a state enterprise.

Previous versions of this bill have been attempted in the past and have died on a bipartisan vote, in part due to the steep price tag.

For More Information

Get the facts on the FAMLI bill

Read the op-ed by Loren Furman in ColoradoPolitics

Joint Press Release from Colorado Employers

For information on the bill, Chamber members with questions should contact Loren Furman, Chamber Senior Vice President, State and Local Relations, at 303.866.9642.

For news-media coverage of the bill, read:

“Major changes coming to Colorado paid-family-leave proposal in response to business outcry,” by Ed Sealover, The Denver Business Journal, March 29th.

Paid Family Leave will Cost Every Employer and Employee,” Colorado Chamber Capitol Report, March 15th.\

Paid family medical leave gets initial approval  — with breaks for smallest businesses,” by Nic Garcia, The Denver Post, March 13th.