(Colorado Newsline) Another game of ballot-measure chicken between Colorado environmental groups and the oil and gas industry has been called off, top Democrats at the state Capitol announced Monday.

For the third time in a decade, the two sides in Colorado’s long-running oil and gas wars have mutually agreed to withdraw competing sets of initiatives slated for the November ballot, avoiding what Colorado Governor Jared Polis called “costly, risky and divisive” fights this November over whether the state should ban restrictions on natural gas, make it easier to sue drillers for health and safety violations and more.

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The deal also means Democrats will drop a series of legislative proposals targeting ozone pollution from the oil and gas sector. Instead, industry and environmental groups have agreed to endorse a package of clean air policies centered on a new per-barrel fee on oil and gas production, which will be used to fund public transit and wildlife habitat restoration.

“This proposal is thoughtful agreement from environmental advocates and oil and gas producers on the way forward for air quality, for ozone reduction, for climate goals,” Polis said at a press conference Monday afternoon. “It’s better to find a way to work together, to an outcome that everybody can live with and moves the ball down the field in terms of achieving our goals.”

For decades, a nine-county region in and around the Denver metro area has failed to meet the Environmental Protection Agency’s health standards for ozone, a hazardous air pollutant linked to a wide variety of health problems. Significant local contributors to the region’s ozone problem, which peaks in the summer months, include oil and gas operations, gas-powered vehicles, lawn equipment and other industrial sources.

Under the proposal announced Monday, the new fee on oil and gas production would “fluctuate” based on commodity prices, said Senate President Steve Fenberg, a Boulder Democrat. Estimates based on average prices from the last several years show that it would generate roughly $138 million annually. Of that total, 80 percent would be used for transit and rail spending, while the remainder would fund conservation and restoration projects that aim to offset the negative impacts of oil and gas production.

“Transportation is a very large source of emissions and our ozone problem especially along the Front Range,” Fenberg said. “It’s really important that we invest more in diversifying transit options.”

The pair of forthcoming air-quality bills would also codify into statute a mandate on oil and gas producers to reduce emissions of so-called ozone precursors, which Polis first issued in an executive order last year; enact measures to address the problem of orphaned wells; and require what House Speaker Julie McCluskie, a Dillon Democrat, called “greater transparency” and better public outreach by the Energy and Carbon Management Commission, the state agency that regulates drilling.

“I’m deeply proud of how many hours people have put in, listening to one another, working through challenging issues, and coming forward with a policy that really will make a significant impact for Colorado’s future,” McCluskie said.

Oil and gas wars

It’s been 10 years since Polis, then a member of Congress representing Boulder, championed and funded a pair of 2014 ballot measures backed by environmentalists who decried the pollution and other negative impacts brought on by the state’s fracking boom. Industry groups responded with their own high-stakes proposals. Both sets of initiatives were ultimately withdrawn in a deal brokered by then-Governor John Hickenlooper, embittering progressive environmental activists who accused Polis of a betrayal.

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After five years of stalemate, Polis and Democratic majorities in the Legislature succeeded in 2019 in passing Senate Bill 19-181, which strengthened health and safety laws and giving local governments more power to regulate drilling within their borders. Citing the need to “give SB-181 a chance to work,” Polis announced the following year that he had brokered another deal between industry groups and leading environmental organizations to stand down, and that he would “actively oppose ballot initiatives related to oil and gas extraction in 2020 and 2022 from both sides.”

The agreement announced Monday will keep that truce in place for at least one more election cycle. Echoing Polis’ comments following SB-181’s passage, the governor’s office said in a press release Monday that the state “will need time to implement the new, agreed-upon policies and make the investments.” State officials have said they are working toward a goal of bringing the state into compliance with EPA ozone standards by 2027.

Parties to the agreement, according to Polis’ office, include Occidental Petroleum, Civitas Resources and Chevron, the three producers which dominate Colorado’s oil and gas industry, along with environmental groups Earthjustice, Conservation Colorado, the Southwest Energy Efficiency Project, GreenLatinos and Western Resource Advocates.

The 2024 ballot measures sponsored by the oil and gas industry included constitutional protections for “energy choice,” which would have barred state and local governments from restricting natural gas use in homes and businesses and from banning sources of pollution like gas-powered lawn and garden equipment.

The environmentalist-backed initiatives, filed last month, would have held oil and gas companies strictly liable for damages and created a private right of action to enforce environmental regulations. And the parts of Democrats’ ozone legislation that drew the strongest pushback from industry groups, including a summertime pause on drilling and fracking and a crackdown on “repeat violators” of air quality rules, are not included in the compromise legislation announced Monday.

“We have said for years that providing regulatory and legislative certainty for business owners and operators across the state and ensuring stability for a vital industry is of utmost importance. We are pleased to see that the governor agrees,” Kait Schwartz, director of the American Petroleum Institute’s Colorado branch, said in a statement. “The regulatory landscape for our industry has been completely overhauled during the last five years and it is crucial that those regulations, some of which have only just recently been implemented, be given the chance to work.”

“We support the legislation as very important progress to address Colorado’s serious air quality challenges, provide more transit opportunities and protect lands and wildlife,” said Kelly Nordini, CEO of Conservation Colorado. “We appreciate the Governor, legislative leadership and the sponsors’ work to avoid potentially devastating ballot measures that could have rolled back a decade of climate progress in Colorado.”

The legislative session ends May 8.

Newsline’s Sara Wilson contributed to this report.

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