2021 Leg Session, Energy, Exclusives, Gold Dome, Governor Polis, Uncategorized

Baker & Madsen: Harmful policy, dishonest process; why Governor Polis should veto House Bill 1266

What does establishing a stand-alone emissions cap-and-trade system for the benefit of the Tesla’s of the world have in common with the creation of an ‘environmental justice’ program for ‘disproportionately impacted communities?’ The answer for everyone but most of the Democrats in the Colorado legislature is nothing. The two concepts are separate and distinct legislative issues that would normally require considerable public notice and debate, including an analysis of a high price tag of a cap-and-trade system.

That both of these controversial issues were disingenuously combined and jammed through at the closing gavel of the 2021 Colorado General Assembly is a disservice to the legislative process, and to the many stakeholders and individual Coloradans who will be hugely impacted, many of them negatively so.  We urge Governor Polis to stick to a commitment made earlier this year and take his veto pen to this harmful and haphazard effort.

The bills in question are House Bill 21-1266, “Environmental Justice Disproportionate Impacted Community,” sponsored by Representatives Dominique Jackson and Mike Weissman, and Senators Faith Winter and Janet Buckner, as well as  Senate Bill 21-200, “Reduce Greenhouse Gases,” sponsors by Representative Dominique Jackson, and Senators Winter and Dominick Moreno.

Polis opposition to SB-200

HB-1266 was introduced into the House on April 6 and went through the normal legislative system with minor amendments, passed the House on May 13 and moved to the Senate where it was assigned to the Finance Committee. The bill as introduced was about disproportionately burdened communities in Colorado who have been impacted by adverse human health or environmental affects. It was also meant to give those communities a voice in the decision-making process by the creation of a new State Task Force.

Separately, SB-200 was introduced on March 29 and assigned to the Senate Transportation and Energy Committee, chaired by Senator Winter. Upon introduction the bill received major opposition from the Polis Administration, industry, public utilities, labor unions, and local governments.

Will Toor, Executive Director of the Colorado Energy Office sent Senators Winter and Moreno, Representative Jackson, and the members of the committee a letter outlining his concerns. “Achieving our climate goals requires not only regulation, but market transformation…achieving our climate goals in a manner that is durable and aligned with co-imperative to ensure, affordability, equity, just transition for affected workers, high quality job growth, and reliability of our energy system cannot feasibly be accomplished through a singular rulemaking process at the AQCC (Air Quality Control Commission),” wrote Toor.

At the hearing, Mr. Toor expressed concern that the language of SB-200 would “upend” the work already underway on the AQCC rulemaking on this issue.

Scott Prestidge, Director of Communications & Public Affairs for the Colorado Oil and Gas Association (COGA) echoed this concern, “two years ago, Colorado passed aggressive emission reduction with House Bill 1261 and the bill set targets for a 30-year time frame and that work is well under way. There is no instant gratification nor immediate solutions for meeting global climate change.”

Bottom line you cannot change a 30-year timeline into a short-term requirement.

In fact, HB-1261 was referenced many times by the opposition to SB-200. The 2019 law sets statewide greenhouse gas (GHG) emission reduction goals for 2025, 2030, and 2050. It also directed the AQCC to implement policies and promulgate rules to reduce GHG emissions, and transition Colorado communities towards these goals. HB-1261 was also championed and sponsored by Senator Winter, the same author of this year’s SB-200, even though the provisions of the bill would directly undermine her efforts from 2019.

For his part, Governor Polis publicly threatened to veto SB-200 and the bill languished on the legislative calendar. In the meantime, HB 1266 passed the House on May 13 and was introduced into the Senate that same day.

Two bills become one

On June 7, the next to last day of the legislative session, Senator Winter proposed a 25-page amendment (amendment L.009) to HB-1266 in the Senate Finance Committee. Winter explained that the amendment would add provisions of SB-200 to HB-1266. Numerous opponents to the bill appeared to testify in opposition, including representatives from the Colorado Rural Electric Association, the Colorado Chamber of Commerce, Weld County, Xcel Energy, Black Hills Energy, and the American Petroleum Institute (API).

Jack Ihle, Director of Environmental policy at Xcel stated that they wanted to ensure that the bill did not create double regulation and create unnecessary costs to customers. Tyler Mansholt, Legal Counsel for Black Hills, was also concerned with the cap-and-trade program, he mentioned that there was a federal program under consideration and that this legislation could pose even more issues with having to be involved with both federal and state trading programs.

The members of the opposition had less than 24 hours to prepare, digest, and unpack the 25-page amendment and less than 48 hours before the Senate adjourned Sine Die.

The rush to get this amended legislation passed in the final two days of the legislative session resulted in a haphazard and harmful bill. HB-1266–already approved by the House–was amended in the Senate, meaning the portions of SB-200 that were added never went through the standard committee process in the lower chamber. The amended bill passed out of committee on a party line vote, was sent to Appropriations and then to a 2nd reading, all in one day.

The following day, June 8 (the last day of the session) the bill passed the Senate with amendments. Notably Senate President Garcia opposed the bill. The Senate then adjourned Sine Die, which means it is the final adjournment of the assembly without a day being set for reconvening. The House then had the following options, they could adhere to their original position on the bill, the bill could go to conference committee, or they could accept the Senate’s version of the bill, which is what they did, with all Republicans voting against the bill as amended, along with Democrats Esgar, Snyder, and Valdez.

The consequences of cap-and-trade

There are numerous troubling issues that HB-1266 as amended presents. One being the sheer cost of establishing a cap-and-trade program. The total budget for HB-1266 is $2,550,218, with 75% of that allocated to the AQCC and the new cap-and-trade program. The bill sets forth the following language: “$1,417,544…for use by the air pollution control division for personal services related to stationary sources, which amount is based on an assumption that the division will require an additional 20.4 FTE; (b) $510,353… for use by the air pollution control division for operating costs related to stationary sources.”

The AQCC also has several rulemaking deadlines to meet. No later than January 1, 2022 they must adopt and implement rules that reduce statewide greenhouse gas (GHG) emissions from oil and gas exploration.  Then, no later than December 31, 2022 they must promulgate a list of air pollutants. No later than June 1, 2023 they must adopt rules to set a threshold of affected pollutants, and every three years they must revisit their identification of disproportionately impacted communities. And finally, no later than September 20, 2024 they must adopt rules that reduce statewide GHG emissions from industrial and manufacturing sectors. Each rulemaking has the potential of increasing cost to the state and the affected industries.

Moreover, the addition of the cap-and-trade program to HB-1266 undermines the entire purpose of the Democrats’ so-called ‘environmental justice’ initiative.

Cap-and-trade systems have historically negatively affected poorer communities and households. The point of such a system is to raise prices of “dirty” energy to force companies to look to “cleaner” sources. However, when the prices of fossil-fuel energy rise, households with limited incomes are affected the most. According to the Center on Budget and Policy Priorities, low-income households “spend a larger share of their budget on energy than better-off households do.” Cheri Witt-Brown, Executive Director of the Greeley-Weld Habitat for Humanity, voiced these same concerns at the April 20 SB-200 hearing. “This legislation will impact the communities we serve by driving up energy costs for low-income families at a time where they are already struggling to get by,” said Witt-Brown.

Moreover, as Weld County Commissioner Lori Saine noted, “the rush to rulemaking does not leave enough time for the outreach, engagement, and meaningful conversation with the stated goal of in person meetings with these disproportionally impacted communities.” In the June 7 Senate Finance Committee hearing Saine also noted, “the fact is that the new amendments from the previous SB-200 are taking valuable time away from discussing the more critical aspects of HB-1266. This is an affront to importance of the mission of HB-1266, which purportedly was to reduce the real burdens on our disproportionately impacted communities, not to kowtow to environmental organizations who insert their special interests last minute to confuse and suppress the voice of the grassroots.”

This is not the type of legislation Colorado needs, nor deserves. Colorado deserves well rounded, well thought out, and planned legislation. However, even in the face of a major opposition brought by the executive branch and the regulated sector representatives, the cap-and-trade program from SB-200, which Governor Polis opposed, found its new home in HB-1266.

Single subject violated

One final issue brought forward by Commissioner Saine is that HB-1266 violates the single subject provisions of the Colorado Constitution, Article V, Sections 17 & 21. The title of 1266 reads as follows: Concerning Efforts to Redress the Affects of Environmental Injustice and Disproportionate Impacted Communities, and in connection therewith, making an appropriation.

Nothing in this title remotely suggests the creation of the cap-and-trade program.

Given all of this, Governor Polis should draw a hard line in the sand and stick to his original commitment around Senate Bill 200 by vetoing House Bill 1266.

Tyler Baker, a recent graduate of Creighton Law School, is energy and environmental policy legal researcher at the Independence Institute, a free market think tank in Denver.  Shayne Madsen directs the Institute’s Political Law Center. 

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