Need for Monitoring Regulatory Burden in Real Time

Colorado’s free enterprise economic system is built upon a combination of federal, state and local laws. While federal policy can play a large role across certain industries, state policy plays a critical role in both accounting for regional differences and determining a state’s relative economic competitiveness.

During the annual state legislative session, lawmakers propose, debate, amend and pass new legislation that adds to the legal and regulatory framework of Colorado.Those policies come with costs and benefits but have the ability to fundamentally change the nature of business for millions of Coloradans, altering the state’s economic competitiveness.

In 2023, we released two reports that identified mounting costs and regulatory burdens. These reports built upon concerns expressed by Colorado business leaders, in both formal surveys and informal interviews, expressing deep concerns about increasing regulatory costs. The reports focused on three broad areas of policy:

2023 Reports   

• Assessing Colorado’s Economic Competitiveness: Mounting Cost of Labor and Environmental Policy | Common Sense Institute (commonsenseinstituteco.org)
• Assessing Colorado’s Economic Competitiveness Growth of Legal Expenses: 43 and Counting | Common Sense Institute (commonsenseinstituteco.org)

The first of these reports identified approximately $2 billion in additional annual costs imposed by approximately 20 pieces of legislation and ballot measures enacted over the preceding several years, just in the areas of Labor & Employment and Energy & the Environment.

The second of these reports examined 43 bills enacted over the same time frame that created, expanded, or modified civil rights of action, in ways that shifted costs to businesses. While these costs could not be quantified, the nature of their impact could be assessed, as well as the likelihood that increased business costs would cascade to consumers.

Midway through the 2024 legislative session, the quantity and pace of potential reform has continued unabated. Accordingly, this brief picks up where the 2023 reports left off. It highlights 24 bills introduced during the 2024 general assembly as of March 26th, to offer a real-time glimpse at the potential laws that will impact Colorado’s free enterprise system in the future. Given the 2024 legislative session will not end until May 8th, the exact outcome and final version of each measure will not be known for some time.

This report includes 2024 legislation that has already been passed, legislation that has been proposed but not yet voted on, and legislation that was voted upon and failed to pass. This latter category is included for two reasons; first, because legislation that fails in one session is often reintroduced in following sessions, and second, because legislation that fails sometimes represents a minority view that warrants discussion and analysis--particularly when so many of the bills that do become law fail to gain bipartisan support.

The following offers summary insights into 15 of the 24 bills featured in the table below.

The six bills in this category have the potential to dramatically undercut the Oil & Gas industry in Colorado, with cascading impacts on the state's economy, tax base, schools, and middle-class workers. In the most extreme case, SB24-159 would terminate oil & gas well permitting by 2030, effectively consigning the industry to a slow extinction. Other bills in this package would significantly increase regulatory oversight and penalties in ways that are likely to drive up costs and make compliance more difficult. The stated aims of this legislation include improved air quality, community health and safety and the protection of vulnerable populations. That these are laudable goals, we can all agree. But clarity is lacking on the degree to which each of these measures will advance these goals, and the degree to which those improvements justify their direct and indirect costs.

Three bills regarding contractor liability push costs in opposite directions when it comes to the cost of construction. SB24-106 creates a right of repair for contractors to fix problems without costly litigation. Its purpose is to stimulate condominium construction by developers that had shunned this work for fear of lawsuits, without limiting consumer protections. Conversely, HB24-1008 and HB24-1230 increase contractor liability for wage claims and residential construction defects, respectively, and it is anticipated that these costs will ultimately be reflected in housing costs for consumers.

A group of proposed bills in the landlord-tenant area will likely shift some costs to landlords, which ultimately puts pressure on rents. These include HB24-1057 (prohibiting the use of algorithms for setting rent amounts), HB24-1298 (making it more difficult for a landlord to evict a tenant), and HB24-1007 (prohibiting local governments from enacting or enforcing certain residential occupancy limits).

HB24-1075 won't in and of itself alter costs because this bill merely authorizes additional analysis, not an implementation, of a single-payer healthcare system. While prior cost-projections of a single-payer system for Colorado suggest there will be some savings from government-imposed payment rate caps, prior CSI work has shown how rate setting in healthcare markets causes costs to shift, and access to be diminished.ⁱⁱⁱ SB24-130 increases the cap for recovery of non-economic damages in medical malpractice cases.

In an excellent illustration of how legislation that is rejected in one year sometimes returns in following sessions, HB24-1014 seeks to resurrect a reform that failed in the 2023 session.  By eliminating the long-standing requirement that a significant number of consumers be harmed before remedies may be available under the Colorado Consumer Protection Act, HB24-1014 expands the number of instances in which businesses can be found to have engaged in deceptive trade practices. When combined with several of the new and expanded causes of civil action identified in CSI's 2023 report on litigation costs, HB24-1014 has the potential to expose businesses to considerably increased litigation risk.  

Bottom Line

Like inflation, regulatory costs are cumulative. Unless they sunset, are repealed or otherwise go away, they aggregate from year to year. Accordingly, the regulatory costs being contemplated in 2024 will augment the costs identified in CSI's 2023 reports. Policymakers should consider how these cumulative costs will impact Colorado's evolving competitive position nationally.

The singular focus on one policy objective, to the exclusion of all others, can have highly negative second and third order consequences for society; for example, the now widely acknowledged educational and mental health consequences for children of lengthy school closures. Though less dramatic than COVID, that same singular focus on one variable to the exclusion of others appears to characterize much of the legislation discussed in this report. One common thread linking many of these regulations is that they appear to have been subjected to little, if any, formal cost-benefit analysis prior to introduction. Efforts to project marginal benefits against marginal costs are largely left to the regulatory process or will be omitted entirely. This complicates the legislative debate needed to seek balance between the two or to question whether “the juice is worth the squeeze.”

Accordingly, with few exceptions, the bills listed in this report will add substantial costs to businesses—costs which will of course cascade to consumers--without a clear understanding of what those costs will be, or whether they are reasonable given the societal benefits of the legislation.

This is not to say that the legislation reviewed here is necessarily bad policy, or that it will convey no benefits. In fact, thorough analysis may point to the opposite conclusion. But the persistent failure to perform that analysis is concerning.

As outlined in prior reports, proved efforts to systematically track the aggregation of regulations in specific areas over time, and to conduct full cost analysis prior to the passage of new laws are needed.

Appendix

List of Civil Action Bills:

1. HB19-1289: Expands the Colorado Consumer Protection Act—lowers the threshold for liability from "knowing" to "reckless," increases penalties significantly, and abolishes the cap on damages.
2. HB19-1309: Creates certain protections for mobile homeowners and establishes the Mobile Home Park Act Dispute Resolution and Enforcement Program Fund
3. SB19-085: Prohibits employers from paying different wages to employees of different sexes for substantially similar work, unless employers can demonstrate that pay is based on at least one of several qualifying methodologies and prohibits employers from asking prospective employees about wage histories or preventing employees from revealing their wage rates.
4. SB19-107: Allows property owners to seek remedy of any damage or injury to property incurred as a result of negligence by a broadband supplier through a civil court process.
5. HB20-1290: Bars an insurer from using a failure-to-cooperate defense in an action regarding the insurer's request for information from the insured about a claim unless one of several conditions is met.
6. HB20-1414: Establishes that a person engages in a deceptive trade practice if the person, within 180 days following the declaration of a disaster or disaster emergency by the president of the United States or the Governor and in the geographic area for which the disaster was declared, sells, offers for sale, provides, or offers to provide goods or services deemed "essential" at prices "so excessive as to amount to price gouging"
7. SB20-205: Requires employers to offer 48h of accrued sick leave per year.
8. HB21-1188: Reversing a 2017 Colorado Supreme Court decision, allows a plaintiff to assert direct negligence claims against an employer arising out of the same incident in which the employer or principal admits liability for the tortious actions of its employee or agent.
9. HB21-1193: Expands civil and criminal liability concerning supplemental restraint systems.
10. HB21-1282: Allows the Attorney General to impose notification, record-keeping, inspection, and other requirements on non-bank lenders and enforce violations through monetary penalties.
11. SB21-057: Provides legal recourse for borrowers and cosigners who are harmed by student loan predatory acts and practices, defines violations as a deceptive trade practice under the CCPA, and imposes penalties on private education lenders and collection agencies that do not comply with the certain requirements.
12. SB21-087: Grants a host of labor rights, including collective bargaining rights, and the right to strike, to agriculture workers.
13. SB21-169: Protects Colorado consumers from insurance practices that result in unfair discrimination on the basis of race, color, national or ethnic origin, religion, sex, sexual orientation, disability, gender identity, or gender expression [significantly amended during session].
14. SB21-173: Provides protections for tenants related to late fees, evictions proceedings, and rental agreements.
15. HB22-1071: States that, in a class action under the Colorado Consumer Protection Act, a successful plaintiff in a class action lawsuit may recover actual damages, injunctive relief allowed by law, and reasonable attorney fees and costs.
16. HB22-1137: Provides homeowners the legal remedy of filing a civil suit against an HOA for up to $25,000 plus costs and attorney fees if the owners prove the HOA violated foreclosure laws.
17. HB22-1272: States that a defendant may not be awarded reasonable attorney fees in cases dismissed prior to trial in which the plaintiff brought non-frivolous claims to challenge precedent or for a similar reason.
18. HB22-1284: Creates a deceptive trade practice if a health care provider fails to provide certain disclosures to consumers.
19. HB22-1287: Updates the Mobile Home Park Act and the Mobile Home Park Act Dispute Resolution and Enforcement Program, grants the Attorney General enforcement powers, and allows homeowners to file civil actions.
20. SB22-097: Expands whistleblower-protection law to all health and safety concerns regardless of whether there is a declared public health emergency.
21. SB22-161: Updates and modifies laws pertaining to the payment of wages and employee misclassification and the enforcement procedures and remedies for violations of those laws.
22. HB23-1004: Adds attorney fees to disputes over insurance document language.
23. HB23-1030: Creates new private rights of action and civil penalties concerning health care staffing.
24. HB23-1032: Adds emotional distress damages and attorney fees for prevailing plaintiff in state ADA lawsuits and eliminates the requirement to exhaust administrative remedies.
25. HB23-1076: Increases the maximum contingent attorney fee that can be charged for uncontested worker’s compensation cases from 20% of the value of the contested benefit to 25%.
26. HB23-1095: Prohibits residential rental agreements from including certain provisions including jury trial waivers (except in certain circumstances), penalties for eviction notices based on violations of the rental agreement, and waivers of the ability to join a class action related to the tenancy.
27. HB23-1099: Requires landlords to accept "screening reports" (employment history, income, credit and criminal history, etc.) from prospective tenants without charging application fees.
28. HB23-1120: Requires landlords, with some exceptions, to mediate with residential tenants who receive public assistance before attempting eviction.
29. HB23-1162: Facilitates plaintiff litigation with lawsuit lending.
30. HB23-1192: Enacts the Colorado State Antitrust Act of 2023 to replace the Colorado Antitrust Act of 1992 and adds a cause of action for facilitating or aiding and abetting violations of the Act.
31. HB23-1196: Amends the Colorado Youth Employment Opportunity Act of 1971 to allow aggrieved parties, including parents of children protected by the act, to pursue remedies at law and in equity for violations of the act in addition to worker’s compensation remedies.
32. HB23-1201: Requires that insurance carriers and pharmacy benefits managers charge policyholders no more for prescription drugs than these entities paid to acquire those drugs.
33. HB23-1215: Prohibits health care providers, with certain exceptions, from charging facility fees (charges that compensate for provider expenses other than direct medical care) for preventative outpatient care if they are not covered by patients' insurance policies.
34. HB23-1254: Expands conditions covered under the warranty of habitability for residential premises to include damage due to an environmental public health event.
35. SB23-017: Expands the scope of potential civil claims against employers under the paid sick leave statute.
36. SB23-046: Expands the scope of potential civil claims against employers under paid family and medical leave law.
37. SB23-077: Prohibits certain terms from being included in residential real estate broker engagement contracts and designates violations as unfair or deceptive trade practices.
38. SB23-093: Expands the scope of medical transactions that are considered violations to the CCPA to include those involving "medical debt."
39. SB23-105: Adding to existing 2019 law (Equal Pay for Equal Work Act), which included a private right of action, makes CDLE investigation and enforcement mandatory and broadens employer disclosure requirements.
40. SB23-168: Permits product liability actions against firearms manufacturers, creates a new private right of action, and grants the CCPA and the Attorney General enforcement against violations of standard of conduct.
41. SB23-172: For purposes of addressing discriminatory or unfair employment practices pursuant to Colorado's anti-discrimination laws (which provide for private actions), the bill enacts the "Protecting Opportunities and Workers' Rights (POWR) Act," which expands definitions of several offenses.
42. SB23-184: Expands causes of actions against landlords.
43. SB23-252: Requires CDPHE to assess hospital adherence to federal price transparency rules and identifies violations of such as deceptive trade practices under the CCPA.

End Notes

[1] McManus, B., Pattee, J., Murphy, N., Phinney, K., Hensen, C., Boggs, E., Tung, G., (2021). Health Care Financing Report. Colorado School of Public Health

[1] https://commonsenseinstituteco.org/the-revamped-public-option-bill/

[1] https://commonsenseinstituteco.org/co-economic-competitiveness/