Since 2010, the state has fined Suncor, the oil refinery in Commerce City, $3.7 million for violating the state’s air quality laws more than 100 times, according to the state Air Pollution Control Division. Despite the hefty penalties, on Dec. 11, an equipment malfunction spewed yellow ash that settled over parts of the city. Two days later, the state sent the company a 56-page letter listing potential air quality violations from an earlier inspection, including failing to burn off cancer-causing benzene emissions and repeatedly exceeding emissions caps for the toxic gases hydrogen sulfide and sulfur dioxide.
In the minds of some Democratic lawmakers, the current fines are not doing enough.
“A state like ours should have some of the highest air and water quality violation fines in the country,” said Rep. Serena Gonzales-Gutierrez, a Democrat from north Denver, during a news conference this month. “Anyone who disrespects our air and water should have to pay the price.”
Gonzales-Gutierrez is sponsoring a bill that would raise the maximum penalties that air polluters like Suncor could pay three-fold from the current $15,000 per violation to the federal maximum of $47,357. It also would increase the water quality violations cap of $10,000 to the same federal maximum. The hope, lawmakers say, is that steeper fines will deter companies from violating environmental laws.
The bill is not the only effort to make polluters pay more. Another bill, sponsored by Senate Majority Leader Steve Fenberg, a Democrat from Boulder, would eliminate the legal limit on fees air quality regulators can charge for oil and gas and other industrial air pollution permits, potentially generating $3 million for air monitoring and health studies next fiscal year. Fenberg’s bill is yet to be introduced. The Polis administration also wants to eliminate a cap that limits fees the state can charge a company for each ton of pollution it emits. This would only affect large polluters, such as Tri-State and Xcel, both of which are electric utilities that own and operate coal-fired power plants. Eliminating the cap would raise about $116,000, according to the Colorado Department of Public Health and Environment.
But as lawmakers seek to hold polluters accountable through larger fees and fines they are running into a roadblock with the state’s complicated fiscal policy. That’s forcing them to work around constitutional limits on the size of the state budget.
Under the Taxpayer Bill of Rights, or TABOR, which voters passed in 1992, any revenue that the state collects from fines and fees counts toward the so-called TABOR cap, which places a limit on how much revenue the state can keep before sending some of it back to taxpayers in the form of TABOR refunds. Because revenue will exceed the cap this year, every additional dollar the state collects from fees and fines, an equal amount needs to be scraped off the top of the $30-plus-billion state budget in the form of cuts to programs or reductions in discretionary spending in order to pay for those refunds.
That budget bind creates a problem with Democrats, who don’t want to cut programs like K-12 education or Medicaid, and who have a number of pricey policy priorities this year, including Gov. Jared Polis’s $27 million effort to expand access to preschool.
The move to increase maximum fines comes as the Front Range grapples with ground-level ozone pollution, predominantly stemming from emissions from people driving automobiles and drilling for oil and gas. Meanwhile, the north Denver neighborhoods of Elyria-Swansea and Globeville have the most polluted zip code in the nation, 80216, sandwiched between traffic and construction on I-70 to the south and the Suncor oil refinery and the Xcel’s Cherokee Generating Station gas-fired power plant to the north. The city of Fountain is also working to clean up toxic PFAS chemicals in its water. These neighborhoods are among the more affordable and ethnically diverse in the Front Range, drawing concerns about environmental injustices.
For Gonzales-Gutierrez’s bill, in both a strategic and semantic maneuver, sponsors have proposed dubbing the fines collected as “damages.” Doing so has the effect of avoiding additional TABOR refunds.
For Fenberg’s bill, backers want to set up an enterprise fund to hold the extra money that comes in through fees on air pollution permits. This is different than calling the fees damages but would have a similar effect of avoiding TABOR refund requirements. Enterprise funds are like bank accounts not subject to TABOR.
Even so, TABOR places some restrictions on this kind of budgeting, limiting the amount of other state money, such as general fund revenue from sales and income taxes, that can be used to pay for programs that rely on money in an enterprise fund.
Scott Wasserman, president of the Bell Policy Center in Denver, a left-leaning think-tank, said TABOR makes it harder for lawmakers to use economic incentives or disincentives to address climate change or environmental pollution.
“Any additional revenue that comes in displaces other programs,” Wasserman said. “This is one more example that we can’t act like other states.”
The dilemma this year comes after voters rejected Proposition CC last November. The ballot measure, which failed by 10 points, would have allowed lawmakers to keep the money that exceeded the TABOR revenue cap.
As a result, conservatives suspected Democrats, who control the state legislature and the governor’s office, would try to skirt around TABOR by putting revenue into enterprise funds, said Michael Fields, the executive director for Colorado Rising Action, a conservative political advocacy group. Fields, whose nonprofit doesn’t disclose its donors, donated more than $12,000 to fight Proposition CC.
And on Friday, he filed a ballot measure with the Secretary of State that would require lawmakers to get voter approval for the creation of fee-based enterprises. TABOR already requires that voters approve a tax increase, and since 1992, only three out of 15 proposed tax increases have been approved.
“A lot of people are going to have complaints about those fees,” said Fields, referencing the air pollution permit fees as well as an effort to raise the gas tax by calling it a fee.
The ballot measure wouldn’t affect the bills under consideration this year. And it would change the law, not the Colorado constitution, which means lawmakers could repeal it if they wanted to. But, if the measure passed, it would make it harder politically for lawmakers to rely on enterprises in the future. “I think more than anything we would hope the legislature would listen to the will of the people,” Fields said.
Despite the legislative push to increase maximum fines, the Colorado Department of Public Health and Environment, which enforces the state and federal air quality laws, rarely imposes the existing maximum fines, according to state records. The official view is that high fines can invite costly legal fights, said John Putnam, the agency’s environmental programs manager.
Even so, Putnam said, the department sees the proposed legislation as a signal that the agency should fine companies a bit more. According to a fiscal note from nonpartisan Legislative Council, the state is expected to collect an additional $2.8 million in the fiscal year 2022-23 by raising the fine limits.
The pollution fines bill, sponsored by Gonzales-Gutierrez, would set up a seven-member board to decide how to spend that money. Four of the members would be appointed by the minority and majority parties in the legislature and three members would be appointed by CDPHE’s executive director, one of whom must be a resident from a neighborhood affected by pollution. The goal of this board is to give local communities affected by pollution a voice in how it’s spent.
“Because of my lived experience, I know how it feels to feel as though you’re not being heard and to not feel as though you’re empowered,” said Rep. Dominique Jackson of Aurora, a lead bill sponsor on the bill.
Sen. Faith Winter of Westminster, also backing the pollution fines bill, said the money could be spent on cleaning up pollution, staffing a health clinic or creating more open space for recreation.
“A lot of these communities that have more pollution also tend to have less parks, openspace and bike paths,” Winter said. “And that’s another form of environmental injustice.”
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