Colorado House Passes S.B. 19-181, Sending the Amended Bill Back to the Senate
On March 29, 2019, the Colorado House of Representatives
passed S.B. 19-181, the sweeping oil and gas reform legislation introduced by
Senate Democrats on March 1. The final House vote to pass the legislation
followed nearly six hours of floor debate, the adoption of almost a dozen
amendments, and the rejection of several others. While the majority of
the amendments adopted by the House are minor and clarifying in nature, several
affected the substance of S.B. 19-181:
- New language requires local governments to regulate the
surface impacts of oil and gas operations “in a reasonable manner.”
- The House made significant changes to the provisions
relating to the composition of the Colorado Oil and Gas Conservation
Commission (“COGCC”). The amended bill now requires a seven-member,
“professional” COGCC. This means that the five COGCC members
appointed by the Governor (subject to the consent of the Colorado Senate)
will be excluded from other employment and entitled to compensation. The remaining two COGCC members comprising the seven-person commission
will consist of the directors of the state agencies for natural resources
and public health and environment, who will serve as non-voting members.
- New language clarifies that the reports issued by the
technical review board, the COGCC-appointed body made available to review
“issues in dispute” as between local governments and operators in the
siting process, must not address the economic effects of local
governments’ preliminary or final siting determinations.
- The House lowered the percentage of owners necessary to
force pooling from 50% to 45%.
Despite these amendments, the key provisions of S.B. 19-181 remain in place. The bill will now return to the Senate
for a floor vote to consider the amended legislation. That vote is
currently scheduled for April 2, although additional delays remain possible. If the Senate votes to pass S.B. 19-181 as amended, the bill would move to
Governor Polis’s desk for signature. Governor Polis has already expressed
his support for the legislation. Read the current version of S.B. 19-181
as amended here.
Colorado S.B. 19-181 Passes Senate
The Colorado Senate voted along party lines on March 13, 2019, to pass S.B. 19-181, the sweeping oil and gas reform legislation introduced by Senate Democrats less than two weeks ago. The Senate vote was not without controversy. In an attempt to delay action on S.B. 19-181, Senator John Cooke requested on March 11th that a 2,000-page bill be read in its entirety on the Senate floor. Senate Democrats responded by using five computers to simultaneously read various portions of the bill out loud at speeds well beyond the capacity of human speech. Cooke, along with other Senate Republicans, brought suit against Democratic leadership on March 12th, arguing that the bill must be read intelligibly. Although a Denver judge has issued a temporary restraining order against Democratic leadership and further proceedings in that case are scheduled for March 19th, the fact remains that the Colorado Senate has passed S.B. 19-181, which will now move to the Colorado House of Representatives for further consideration.
The precise timing for House action on S.B. 19-181 remains unknown; currently, the bill does not appear on the House calendar. Nonetheless, given how quickly the bill has moved thus far, and the composition of the Colorado House—41 Democrats to 24 Republicans—the bill could reach the Governor’s desk as early as the week of March 18th. Governor Polis has already expressed his support for the legislation.
While additional amendments remain possible, oil and gas operators in Colorado should consider the version of S.B. 19-181 that passed the Senate likely to become law, and likely very quickly. The reengrossed version of the bill—including all amendments—passed by the Senate is available here. Notable amendments include:
- requiring the Colorado Oil and Gas Conservation Commission (“COGCC”) to review its leak detection and repair rules to consider making them more stringent;
- requiring the COGCC to promulgate rules (i) regulating wellbore integrity and (ii) requiring certification for certain oil and gas industry workers, including compliance officers responsible for OSHA and industry standard codes, those handling hazardous materials, and welders;
- allowing local governments and operators to seek review of local governments’ location and siting decisions by a technical review board appointed by the COGCC Director to assess any “issues in dispute,” including whether (i) the local government’s siting determination “could affect oil and gas resource recovery,” (ii) the local government’s determination is “impracticable” or would require technologies that are “not available,” and (iii) the operator is proposing to use “best management practices”;
- stating explicitly that local governments may regulate the land use and siting of oil and gas facilities in a manner “more protective or stricter” than the state-level requirements; and
- requiring the COGCC Director to submit a report to the Colorado General Assembly by January 1, 2021, regarding “any recommended structural changes to the Commission.”
The REMI Partnership, a “partnership of public and private organizations” that aims “to develop independent, fact-based analysis that quantifies the broader economic impacts associated with policy changes” in Colorado has estimated that if S.B. 19-181 cuts new oil and gas production in the state by 50%, Colorado would lose 120,000 jobs, more than $8 billion in state and local tax revenue, and over $58 billion in GDP by 2030. Read our updated analysis of S.B. 19-181 in its entirety here.
Colorado S.B. 19-181 Advancing Quickly As Hearings Continue
Colorado S.B. 19-181, the sweeping oil and gas reform legislation introduced last week in the Colorado General Assembly, is advancing quickly through the six committee hearings necessary to reach a floor vote. The bill has already been approved by the Senate Transportation and Energy Committee and the Senate Finance Committee after votes along party lines. The Senate Transportation and Energy Committee’s hearing on March 5th demonstrated the controversial nature of S.B. 19-181, drawing almost 200 people to testify over the course of a twelve-hour hearing. Thus far, the amendments made to the bill have been largely clarifying in nature, although additional amendments remain possible should the legislation continue to advance.
S.B. 19-181 is set for hearing by the Senate Appropriations Committee on March 8th. Given the pace at which this bill is currently moving, it remains imperative that all oil and gas operators in Colorado familiarize themselves with this legislation as soon as possible and monitor its continued progress through the General Assembly. Read our analysis of S.B. 19-181 here. The full text of the proposed legislation as introduced is available here.