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A bill to ban new oil and gas drilling in Colorado after 2030 — which sparked a spate of industry TV ads with dire warnings — was rejected Thursday by a bipartisan majority of the Senate Agriculture and Energy Committee after a marathon hearing.
The legislation, Senate Bill 159 — sponsored by two Democratic senators, Kevin Priola, of Henderson, and Sonya Jaquez Lewis, of Boulder County — would have required state oil and gas regulators to stop issuing new drilling permits starting in 2030, with those permits to be used by 2032.
Faced with projections of potentially severe impacts of climate change and the Front Range’s continuing struggles to curb ozone pollution, the bill was a necessary step to transition to cleaner energy, Priola said.
In an attempt to deal with the growing risk of wells being abandoned, or orphaned, as small companies go out of business, the legislation also included a section giving the state the power to go after former owners of the wells for cleanup costs.
The bill, however, faced pushback at the hearing from the industry, local and country governments, which depended upon severance taxes to fund schools and services, business groups, such as the Denver Metro Chamber of Commerce, and individuals, many of whom live and work in oil and gas areas.
API-Colorado, an industry trade group, had run TV ads prior to the hearing calling the legislation “extreme” and saying it could jeopardize school funding and 300,000 jobs. About 50,000 people work directly in the Colorado oil and gas industry.
The Energy and Carbon Management Commission, which oversees oil and gas activities, also opposed the bill.
“The state is concerned that cutting supply rather than reducing demand will hurt low-income consumers, rather than cutting emissions,” Julie Murphy, ECMC executive director testified. She said the commission was concerned about “unintended consequences.”
The bill did draw support from a wide range of environmental and grassroots groups and some public officials. In all, more than 200 people testified over nine hours.
The fiscal note for the bill estimated a loss to the state of $305 million in revenue annually by 2035, primarily in severance taxes and lease funds. Those taxes make up a significant portion of local funding for schools, fire districts and other services.
An oil and gas well activity pumps from the ground in Rio Blanco County Colorado February 23, 2020. (William Woody, Special to The Colorado Sun)
Rio Blanco Commissioner Jennifer O’Hearon testified that her county is already set to lose 36% of gross domestic product with the closure of coal-fired power plants and mines by 2030.
Shutting down oil and gas operations would wipe out most of the rest of the county’s GDP, she said.
While hearing testimony focused on the costs of the legislation to the oil and gas industry and to school funding, Priola said there was little discussion of the costs of climate change to other economic sectors, such as the ski industry, which is facing reduced days of operation, and agriculture, struggling with a 20-year drought.
Before a final vote, amendments were added that in effect gutted the legislation, one removing the cap on permits and allowing continuing operations as long as those operations led to a net zero emissions by 2030.
Another limited the liability for the cleanup and plugging of oil and gas wells to their last owner. Even with those changes the bill could not muster a majority.
Sen. Dylan Roberts, an Eagle County Democrat and chairman of the committee, and Sen. Janice Marchman, a Loveland Democrat, voted with the committee’s three Republicans to defeat the bill.
Marchman said the bill needed reworking and more collaboration with stakeholders. “You get what you get and this is what we’ve got,” she said. “As introduced, this bill is a problem for me.”
The bill clearly will reduce funding for schools, but has no plans for how that gap will be backfilled, Marchman said, calling it “shortsighted and irresponsible.”
Coal sits at Craig Station, the power plant in Craig in November 2021. The town in northwestern Colorado is losing its coal plant, and residents fear it is the beginning of the end for their community. (AP Photo/Rick Bowmer)
Roberts represents Craig and Hayden, which are seeing coal-fired power plants and mines close, as well as Rio Blanco County. All are already facing “a hard cutoff of energy production with a significant loss of revenue,” he said.
“I acknowledge climate change is a threat to our state but this is not the right way to solve that problem,” Roberts said.
After the hearing, Dan Haley, the president of the Colorado Oil and Gas Association, a trade group, issued a statement calling the vote “a win for our state, for the environment and for common sense.”
“It seems the deck was stacked against this bill from the beginning,” Mike Foote, an attorney who represented the environmental group 350 Colorado, said. “The message seemed to be that the bill should die. Everyone knew it was going to be an uphill battle when it was assigned to the Agriculture and Energy Committee.”
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