5 Colo. Code Regs. § 1001-26-E-I
This Statement of Basis, Specific Statutory Authority, and Purpose complies with the requirements of the State Administrative Procedure Act, § 24-4-103(4), C.R.S., the Colorado Air Pollution Prevention and Control Act, §§ 25-7-110 and 25-7-110.5 ., C.R.S., and the Air Quality Control Commission's ("Commission") Procedural Rules, 5 Code Colo. Reg. §1001-1.
Basis
During the 2019 legislative session, Colorado's General Assembly adopted House Bill 2019-1261 (concerning the reduction of greenhouse gas pollution) (HB 19-1261) amending the legislative declaration in § 25-7-102 of the Act, and Senate Bill 2019-096 (concerning the collection of greenhouse gas emissions data) (SB 19-096) creating § 25-7-140 of the Act. HB 19-1261 and SB 19-096 both define greenhouse gas pollution (GHG) as including carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6) and nitrogen trifluoride (NF3). In HB 19-1261, now codified in part at §§ 25-7-102(2) and -105(1)(e), C.R.S., the General Assembly declared that "climate change adversely affects Colorado's economy, air quality and public health, ecosystems, natural resources, and quality of life[,]" acknowledged that "Colorado is already experiencing harmful climate impacts[,]" and that "many of these impacts disproportionately affect" certain disadvantaged communities. § 25-7-102(2), C.R.S.
Consequently, the General Assembly updated Colorado's statewide greenhouse gas pollution (GHG) reduction goals requiring the Commission to implement regulations to achieve a 26% reduction of statewide GHG by 2025; 50% reduction by 2030; and 90% reduction by 2050 as compared to 2005 levels. § 25-7-102(2) (g), C.R.S. To accomplish these important goals, the legislature also passed SB 19-096, now codified as § 25-7-140, C.R.S., directing the Air Quality Control Commission (Commission) to undertake two phases of rulemaking aimed first at requiring GHG emitters to monitor and report GHG emissions, § 25-7-140(2)(a)(I), C.R.S., and second to implement measures allowing the state to cost-effectively meet its GHG reduction goals. § 25-7-140(2)(a)(III), C.R.S. With respect to GHG reporting and the statewide inventory, § 25-7-140(2)(a)(I), C.R.S., requires the Commission to adopt rules by June 1, 2020, "requiring greenhouse gas-emitting entities to monitor and publicly report their emissions as the Commission deems appropriate to support Colorado's [GHG] inventory efforts and to facilitate implementation of rules that will timely achieve Colorado's greenhouse gas emission reduction goals." Further, § 25-7-140(2)(a), C.R.S., requires the Commission to consider what information is already being reported for Colorado under the United States Environmental Protection Agency's (EPA) current federal GHG reporting rule, otherwise known as the Mandatory Greenhouse Gas Reporting Rule codified in Title 40 CFR Part 98 (Part 98), and tailor new reporting requirements to fill any gaps in data as determined to be appropriate to allow for a comprehensive and robust state GHG inventory.
§ 25-7-140(2)(a)(I), C.R.S., also requires these rules to "include requirements for providers of retail or wholesale electric service in the state of Colorado to track and report emissions from all generation sources within the state and elsewhere that electricity consumption by their customers in this state causes to be emitted." § 25-7-105, C.R.S, setting forth the duties of the Commission, also directs development of rules for evaluating how public utilities are meeting obligations under Clean Energy Plans with the Public Utility Commission through considerations of facility ownership and purchased power. § 25-7-1051(e)(VIII)(E), C.R.S.
§§ 25-7-105(1)(e) and 140(2)(a)(III), C.R.S., further requires the Commission to implement GHG reduction strategies to achieve the reduction goals set forth in § 25-7-102(2)(g), C.R.S. HFCs are highly potent GHGs generally used in aerosols, refrigeration and air conditioning, and foam blowing. Phasing out HFCs from most manufacturing processes and end-uses is adopted as a strategy towards accomplishing the mandated GHG reductions.
Regulation Number 22, Parts A and B, Section I. are intended to satisfy the requirements set forth by the General Assembly in § 25-7-140(2)(a)(I), C.R.S., with respect to statewide GHG reporting and an initial GHG reduction strategy towards addressing statewide reductions required by § 25-7-140(2)(a)(III), C.R.S., and § 25-7-105(1)(e), C.R.S., by implementing the phase-out of HFCs in manufacturing and end-use products in Colorado.
Specific Statutory Authority
The Act, specifically § 25-7-105(1), C.R.S., directs the Commission to promulgate such rules and regulations as are consistent with the legislative declaration set forth in § 25-7-102, C.R.S., and that are necessary for the proper implementation and administration of the Act.
§ 25-7-102(2), C.R.S., declares that "climate change adversely affects Colorado's economy, air quality and public health, ecosystems, natural resources, and quality of life" that reducing GHG is necessary "to limit the increase in the global average temperature" and that "reducing [GHG], Colorado will also reduce other harmful air pollutants, which will, in turn, improve public health, reduce health care costs, improve air quality, and help sustain the environment[.]" Further, § 25-7-102(2), C.R.S., declares that reducing GHG will result in economic benefits to Colorado by creating new markets, spurring innovation, and driving investment in low-carbon technologies thus positioning Colorado's "economy, technology centers, financial institutions, and businesses to benefit from national and international efforts to reduce [GHG.]" § 25-7-102(2)(f), C.R.S.
§ 25-7-106, C.R.S., provides the Commission maximum flexibility in developing an effective air quality program and promulgating such a combination of regulations as may be necessary or desirable to carry out that program. § 25-7-106(6), C.R.S., further authorizes the Commission to require owners and operators of any air pollution source to monitor, record, and report emission data and other information as the Commission may require.
§ 25-7-140(2)(a)(I), C.R.S., specifically directs the Commission to, by June 1, 2020, "adopt rules requiring [GHG]-emitting entities to monitor and publicly report their emissions as the commission deems appropriate to support Colorado's greenhouse gas emission inventory efforts and to facilitate implementation of rules that will timely achieve Colorado's greenhouse gas emission reduction goals. The commission shall consider what information is already being publicly reported by the federal environmental protection agency and tailor new reporting requirements to fill any gaps in data, as it determines is appropriate, to allow for maintaining and updating state inventories that are sufficiently comprehensive and robust. The rules must include requirements for providers of retail or wholesale electric service in the state of Colorado to track and report emissions from all generation sources within the state and elsewhere that electricity consumption by their customers in this state causes to be emitted. The commission may require emitting entities to report the amount of emissions of each of the seven individual components of greenhouse gases as well as the carbon dioxide equivalent of those emissions."
§ 25-7-140(2)(a)(III), C.R.S., requires the Commission to implement measures to cost-effectively allow the state to meet its GHG emission reduction goals, which includes reduction of HFCs as potent GHGs. § 25-7-105(e), C.R.S., authorizes the Commission to promulgate implementing rules and regulations to achieve statewide GHG emission reduction goals, including emission reduction strategies that have been deployed by another jurisdiction to reduce multi-sector GHG emissions. § 25-7-109(2), C.R.S., authorizes the Commission to adopt emission control regulations to reduce emissions of various pollutants, including chemical substances such as HFCs.
Purpose
The following section sets forth the Commission's purpose in adopting Regulation Number 22, and includes the technological and scientific rationale for the adoption of Regulation Number 22:
Part A: Greenhouse Gas Reporting
Part A has been developed to allow the reporters and the Division to leverage existing EPA reporting tools that are currently used by the majority of sources covered by this regulation, as well as for consistency with other U.S. Climate Alliance states that have implemented GHG reporting regulations. The Division intends to develop a mechanism to receive XML files that are exported from EPA's electronic GHG reporting tool, known as e-GGRT. The EPA tool can be used by entities with emissions below the federal reporting thresholds to compile, summarize, and export GHG emissions data in the XML file. The information contained in the XML files will then be uploaded into a database for use in future inventories and planning activities. Use of existing EPA reporting tools will allow for the GHG data reporting program in Colorado to begin as expeditiously as possible and minimize the burden on the regulated sources.
Additionally, consistency with EPA and other state data collection programs will be necessary if Colorado joins a regional program at some point in the future and will allow for a smooth transition if additional federal legislation or regulation is adopted for GHGs. To ensure consistency and allow for comparison with other states, GHG data reporting by the affected sources under Part A, will be performed using the Intergovernmental Panel on Climate Change (IPCC) 4th Assessment Report, 100-year time horizon GWP values. Part A covers the collection of the GHG data pursuant to § 25-7-140(2)(a)(I), C.R.S., and does not address how that data will be used in the Colorado GHG Inventory or other planning activities. Because the data will be collected for each individual GHG pollutant, the Division will be capable of converting and comparing reported data to CO2e using other IPCC Assessment Reports' GWP values and/or time horizons.
In the statewide GHG inventory, the Division will publish data by the mass and GWP value of each GHG pollutant pursuant to the IPCC's 4th and 5th Assessment Reports as well as, at the direction of the Commission, future IPSS Assessment Reports. The use of the 100-year time frame IPCC 4th Assessment report in these regulations is not intended to convey that those values should be used for planning purposes or are otherwise more appropriate than more recent analysis.
Consistent with the Federal Mandatory Reporting Rule (Part 98), emissions of each GHG constituent, as required and defined in § 25-7-140, C.R.S., will be reported in metric tons of CO2e. Where existing emissions reporting under Colorado regulations is used to meet the obligations of this regulation, emissions will be reported by the source in the unit of measure required by the referenced regulation. In addition, each GHG constituent will be reported individually, enabling the Division to convert reported data using more updated GWP values and/or time horizons, as appropriate, for developing the Colorado GHG inventory or other planning activities. The Division will convert the emissions to metric tons for use in the GHG inventory or other planning activities. While Part A utilizes the reporting tools and protocols of Part 98, the Division is requiring reporting from certain source categories in Colorado regardless of the related federal reporting threshold in order to obtain a more complete and granular data set to inform the inventory and planning processes.
More detailed data will also inform local governments as they pursue their own climate change goals. Source categories required to report all GHG emissions, regardless of reporting thresholds under Part 98, include all electricity generation and distribution (whether subject to PUC jurisdiction under § 40-1-103, C.R.S., or not), local distribution companies, industrial waste landfills, active underground coal mines, and industrial wastewater facilities.
GHG emissions reporting for oil and natural gas operations and equipment at or upstream of a natural gas processing plant and natural gas transmission and storage covered under Section III.C. will be gathered in accordance with Commission Regulation Number 7. These reporting requirements and protocols fill gaps in the federal reporting requirements by expanding the facilities required to report as well as the data reported under Regulation Number 7, Part D, Sections IV. and V. As such, the Commission recognizes that information reported under Regulation Number 7 may differ from that reported under Part 98 as the inventory required under Regulation Number 7 is more comprehensive, detailed and takes into account information relevant to Colorado operators.
Under Part A, suppliers engaged in activities covered by Subparts LL, MM, NN, OO, PP, and QQ of Part 98 are required to report GHGs based upon the quantity that would be associated with combustion or use of the products supplied. This differs from other reporting under Part 98 since the reported data does not always reflect a direct emission. Suppliers covered by Subparts LL (coal-to-liquid suppliers), MM (petroleum product suppliers), and NN (natural gas and natural gas liquids) report the GHGs that would result from total combustion or release of the product being supplied. The information obtained through these reports is important to developing a comprehensive statewide GHG inventory, however the nature of the data requires special attention to account for the type of supply and locus of GHG emissions, if any. For instance, under Subpart PP, carbon dioxide suppliers report carbon dioxide that is produced by mass, and not as emissions. The Commission acknowledges that carbon dioxide supply may not always equate directly to GHG emissions because it is not combusted by an end user and may not be released into the atmosphere depending on its end use. Likewise, Subpart NN suppliers are required to assume that all fractionated products are combusted as fuel despite the fact that a substantial quantity of those products are not combusted but used as chemical feedstocks. In fact, EPA's technical support document for Subpart NN indicates that fuel uses make up just under 30% of total natural gas liquids (NGL) product sales. As a result, the reporting under Subpart NN does not necessarily equate entirely to GHG emissions as provided in a Part 98 report. Thus, the Division will be required to analyze if and how GHGs reported from these source categories are properly included in the statewide GHG inventory and reduction efforts.
EPA made advance determinations that certain elements of Part 98 reports are subject to federal Confidential Business Information (CBI) protections and has published those determinations at https://www.epa.gov/ghgreporting/confidential-business-information-ghg-reporting (updated April 8, 2020). As part of submissions pursuant to Part A, Section IV.B., a statement that the entity is following EPA's guidelines for Part 98 with respect to designation of information as CBI in the certification statement under Section IV.B.6. shall satisfy the company's obligation to identify information in the report as CBI. The Commission does not, however, intend that such statements be determinative of whether the information is CBI under Colorado law, but expects that information will be made available as required and permitted by the Colorado Open Records Act.
A significant gap in GHG reporting that is imperfectly captured by Part 98 relates to fuel supplied, consumed, and combusted in the state. While reporting from local distribution companies and suppliers required to report under Part A provide important pieces of the fuel supply chain, end-uses including where the fuel is actually combusted, such as in-state or out-of-state, are more difficult to accurately account for. Thus, the Division will utilize other sources of information to fill gaps necessary to fully inform the statewide GHG inventory related to the end use and combustion location of fuels.
To accomplish this, the Division may use sources including, but not limited to, the Energy Information Administration's "prime supplier" reporting through its EIA-782C form and information obtained from the Colorado Department of Revenue regarding fuel distributors. Having considered all relevant factors, including but not limited to, current federal GHG reporting under Part 98, statutory requirements under §§ 24-4-103 (2.7) and 29-1-304.5, C.R.S., and feedback from stakeholders, the Commission has decided to provide for optional GHG reporting from domestic wastewater plants and active municipal solid waste landfills not otherwise required to report under Part 98.
Any facilities or operations for which GHG reporting is optional should report in accordance with the protocols and deadlines set forth in Part A, Sections III and IV. In doing so, these facilities and operations will enable the Commission to establish a more robust statewide GHG inventory and better inform future reduction strategies. The Commission recognizes the lack of universally accepted GHG calculation or reporting protocols for some voluntary reporting source categories, such as domestic wastewater treatment plants and agricultural operations. The Division will continue to consult with potential voluntary reporters in these categories to reach consensus on appropriate and acceptable protocols for reporting purposes. For domestic wastewater treatment plants at Part A, Section III.B.8., examples of such protocols may include the "U.S. Community Protocol for Accounting and Reporting of Greenhouse Gas Emissions" (Version 1.2, July 2019), at Appendix F: Wastewater and Water Emission Activities and Sources, published by ICLEI: Local Governments for Sustainability, and protocols developed by the IPCC or based on IPCC protocols. The Division expects that all direct GHG emissions from a domestic wastewater treatments plant will be calculated and reported by a voluntary reporter. For an agricultural operation identified in Part A, Section III.A.9., examples of such protocols may include those specified in Subpart JJ of 40 CFR, Part 98 and developed by the IPCC and the U.S. Department of Agriculture (USDA) for the sector.
The reporting form will include calculation methodologies and data sources, prioritizing more specific sources over less specific sources for determining GHG emissions from imported electricity when the generation source of the energy is unknown, which can occur through various market transaction mechanisms. Quantification of GHG emissions associated with electricity exported from Colorado will also be accomplished through the use of the supplemental data form because understanding the complete energy flow through the transmission and distribution systems is necessary to determine energy consumed in Colorado. Direct reporting of this annual summary information using a consistent form, rather than relying on summaries provided through the Department of Energy or other sources, will provide necessary completeness and granularity of the data for state and local GHG strategy development. Additionally, direct reporting to the Division will also allow for more timely incorporation into the Colorado GHG Inventory process and more detailed analysis and trending to assess the progress toward achieving the statewide GHG reduction goals.
In adopting the reporting requirements of this Regulation No. 22, Part A, IV.C.2 the Commission does not take a position on what information should be utilized to determine GHG emission reductions as part of a Clean Energy Plan. The requirements for submitting data associated with Clean Energy Plans, and the process by which the Division will evaluate the emissions reduction projections and provide recommendations to the Public Utilities Commission, will be developed and published through a separate process from this Regulation Number 22 rulemaking. Subpart A will also establish ongoing reporting for utilities that have received approval of a Clean Energy Plan by the Public Utilities Commission. Tracking of GHG reduction progress achieved by these plans will inform development, assessment, and refinement of strategies to achieve the statewide GHG targets.
Sources of Sulfur Hexafluoride (SF6) owning or operating electrical transmission and distribution equipment facilities located in more than one state that calculate SF6 emissions on a system-wide basis for recordkeeping and reporting under EPA's Part 98 may determine its Colorado SF6 emissions by estimating the Colorado portion of its system-wide emissions based on the percentage of its total transmission line miles that exist in Colorado.
Given recent and ongoing deregulation efforts by the federal government, and especially those focused on air quality and climate change, the Commission finds it necessary to protect Colorado's regulatory regime in these areas from potential federal deregulation or rollbacks. This must be balanced with the legislative directive in § 25-7-140(2)(a)(I), C.R.S., to "consider what information is already being publicly reported by the [EPA,]" which the Commission is doing by leveraging Part 98 reporting and tools available thereunder, including e-GGRT. In doing so, the Commission is cognizant that these programs and tools are subject to change in ways that may either improve or diminish their utility for Colorado's GHG emission reporting and inventory efforts.
By incorporating by reference Part 98 and its related subparts as they are effective July 1, 2019, and by referencing applicable provisions of Part 98 in Part A, Sections III.A. and B of this Regulation Number 22, the Commission intends to protect against potential federal rollbacks by specifying those currently subject to federal GHG reporting will continue to report under the federal requirements as they currently stand in the event the federal GHG reporting rules are revised or rescinded. Should the EPA indicate, through public notice or otherwise, an intent in any way diminish or rollback the requirements of Part 98, its related subparts, or associated tools, including but not limited to e-GGRT, the Commission and Division will endeavor to promptly establish reporting requirements and tools necessary to maintain the GHG reporting and inventory regime adopted in this Regulation Number 22, Part A. However, the Commission also recognizes that some future changes might enhance GHG reporting, so the Commission may also choose to update the incorporation date if those future revisions align with and advance Colorado's goals.
Part B, Section I.: Prohibitions on Use of Certain Hydrofluorocarbons in Aerosol Propellants, Chillers, Foam, and Stationary Refrigeration End-Uses
The federal EPA adopted two rules under its Significant New Alternatives Policy (SNAP), Rule 20 in July 2015, and Rule 21 in December 2016, which require phasing out the use of high-GWP HFCs in retail and residential refrigeration and air conditioning (AC), aerosol products, and rigid and spray foam end-uses. Under SNAP Rule 20, the compliance dates for eliminating unacceptable HFCs ranged from July 2016 to January 2022, depending on the application. The compliance dates under SNAP Rule 21 ranged from January 2017 to January 2025. In August 2017, the D.C. Circuit of the United States Court of Appeals vacated SNAP Rule 20 to the extent it requires manufacturers to replace HFCs with a substitute substance finding the EPA had exceeded its authority under Section 612 of the Clean Air Act (42 U.S.C. § 7671k). However, the D.C. Circuit found that EPA's removal of HFCs from the list of safe substitutes under SNAP was lawful thus enabling the EPA to prohibit or limit prospective use of HFCs in manufacturing and end uses. Yet, in 2018, EPA guidance advised that it would not be enforcing SNAP Rule 20 until it developed new rules based on the D.C. Circuit's ruling, which has not occurred. In April 2019, the D.C Circuit vacated SNAP Rule 21 to the same extent and on the same grounds as SNAP 20.
Absent federal enforcement regulating use of these highly potent GHGs, individual states have adopted, or are in the process of adopting, statutes and regulations phasing out the use of HFCs in manufacturing and end-use products. The U.S. Climate Alliance has drafted a model framework to promote uniformity of HFC regulation across member states. Part B., Section I. is based upon the U.S. Climate Alliance's model framework as are proposed HFC rules under consideration in other states. Based on stakeholder feedback and significant economic impacts, the Commission adopted an alternative requirement for positive displacement chillers that differs from the U.S. Climate Alliance's model framework. The purpose of this provision is to address GHG emissions associated with use of prohibited high-GWP HFCs in the manufacture of positive displacement chillers in lieu of phasing out the use of these HFCs in chillers destined for sale or installation outside of Colorado or other states with similar HFC prohibitions.
This alternative approach requires GHGs associated with the use of prohibited high-GWP HFCs in this specific manufacturing process to be mitigated through best management practices at the manufacturing facility and any remaining emissions to be addressed through GHG reduction projects completed in the State of Colorado. Positive displacement chillers manufactured for sale or installation in Colorado after the January 1, 2024 prohibition date will still be restricted from using prohibited HFCs.
The Division, in considering emission reduction projects under Section I.C.3.a.(v), will give preference to projects that have environmental co-benefits or benefits to the local community. While projects can include those developed or owned by the manufacturer, such projects must be additional to any efforts planned or undertaken as part of an overall GHG emissions reduction program the manufacturer may have and must not be projects or activities that would be carried out in the ordinary course of business. Additionally, based on public comment and stakeholder feedback, Part B., Section I. differs from the U.S. Climate Alliance's model framework in the treatment of bear spray and law enforcement pepper spray. These two products in the aerosol-propellant category have been exempted in Part B., Section I.
Additional Considerations
The following are additional findings of the Commission made in accordance with the Act:
§ 25-7-110.5(5)(b), C.R.S.
As these revisions exceed and may differ from the federal rules under the federal act, in accordance with § 25-7-110.5(5)(b), C.R.S., the Commission determines:
Part A: In order to improve the nationwide inventory of GHG emissions, Part 98 sets forth the federal GHG reporting requirements for qualifying source categories in accordance with the Federal Clean Air Act. The Subparts to Part 98 establish the reporting protocols and methodologies for each source category. Part 98 effectively establishes three groups of source categories required to report annual GHG emissions: sources required to report regardless of emission volumes; sources only required to report if emissions meet or exceed specified thresholds (generally 25,000 metric tons of CO2e in combined emissions from stationary sources); and fuel suppliers that import or export product equivalent to 25,000 metric tons of CO2e or more. Through Part A, the Commission builds upon established federal reporting requirements and closes reporting gaps by eliminating reporting thresholds for certain sources and expanding certain other source categories to report GHG emissions in order to establish a more robust and accurate GHG inventory for Colorado.
Part B., Section I.: To the extent Part B., Section I. requires manufacturers to replace HFCs, there are no applicable federal requirements as a result of the D.C. Circuit Court's vacature of SNAP Rules 20 and 21 and EPA's lack of progress in further regulating HFCs. To the extent that Part B., Section I. prohibits or restricts prospective uses of prohibited HFCs (phases out), it does not conflict with any applicable current federal regulations.
Part A: There are no control requirements associated with the Part A GHG reporting rule.
Part B., Section I.: To the extent SNAP Rules 20 and 21 remain in effect and are enforceable, the federal HFC rules are primarily technology-based in that the rules largely proscribe or severely limit the use of HFCs in certain manufacturing processes and end-uses thus requiring substitution or replacement with lower GWP substances.
Part A: Colorado's General Assembly has determined that climate change adversely affects Colorado's economy, air quality and public health, ecosystems, natural resources, and quality of life and that reducing statewide GHG emissions can mitigate these impacts. § 25-7-102, C.R.S. While the EPA also indicated that its "mandatory GHG reporting program [set forth in Part 98] will provide EPA, other government agencies, and outside stakeholders with economy-wide data on facility-level (and in some cases corporate-level) GHG emissions," § 25-7-140, C.R.S. explicitly requires the Commission to adopt GHG reporting requirements to fill any gaps in the federal reporting requirements.
To the extent that reporting under 40 CFR Part 98 establishes adequate GHG reporting to satisfy this legislative directive, those requirements and reporting protocols have been adopted. To the extent that the Commission has determined certain source categories may be underreporting due to reporting thresholds or exemptions of certain source categories, those thresholds or exemptions have been eliminated. Additionally, Part A establishes new reporting requirements for certain source categories for which there are no federal reporting requirements.
Part B., Section I.: To the extent Part B., Section I. requires manufacturers to replace HFCs, there are no current applicable federal requirements as contemplated in this regulation. As a result of the D.C. Circuit Court's vacature of SNAP Rules 20 and 21 and EPA's lack of progress in further regulating HFCs, there are no current applicable federal requirements relating to the phase-out of HFCs as contemplated in this regulation. To the extent that Part B., Section I. prohibits or restricts prospective uses of prohibited HFCs (phases out), it does not conflict with any current applicable federal regulations.
Part A: Part A will maintain reporting requirements for facilities already required to report under Part 98 and will require additional facilities to report under reporting protocols either set forth in Part 98 and related subparts or under state reporting requirements already in place (i.e. oil and natural gas operations reporting under Regulation Number 7). By leveraging existing protocols and reporting procedures, Part A minimizes inefficiencies while still accomplishing the legislative mandate set forth in § 25-7-140, C.R.S.
Part B., Section I: To the extent Part B., Section I. requires manufacturers to replace HFCs, there are no applicable federal requirements as contemplated in this regulation. As a result of the D.C. Circuit Court's partial vacature of SNAP Rules 20 and 21 and EPA's lack of progress in further regulating HFCs, there are no current applicable federal requirements relating to the phase-out of HFCs as contemplated in this regulation However, Part B., Section I imposes restrictions on the same substances as those restricted under SNAP Rules 20 and 21 with which the regulated community had already started to comply before those rules were vacated.
Absent federal progress in regulating use of these highly potent GHGs, individual states have adopted, or are in the process of adopting, statutes and regulations phasing out the use of HFCs in manufacturing and end-use products. The U.S. Climate Alliance has drafted a model framework to promote uniformity of HFC regulation. Part B., Section I. is based upon the U.S. Climate Alliance's model framework as are proposed HFC rules under consideration in other states. This consistency is intended to improve the regulated community's ability to comply in a more cost-effective manner.
Part A: The March 31 annual reporting deadline is the same under Regulation Number 22 and Part 98 for all reporters. Regulation Number 22 does not affect federal GHG reporting requirements for those sources subject to federal reporting requirements. With respect to any sources required to report under Regulation Number 22 but not under federal requirements, there is no timing issue related to implementation of any federal requirements.
Part B., Section I.: To the extent Regulation Number 22, Part B., Section I., requires manufacturers to replace HFCs, there are no applicable federal requirements as a result of the D.C. Circuit Court's vacature of SNAP Rules 20 and 21 and EPA's lack of progress in further regulating HFCs. To the extent that Regulation Number 22, Part B., Section I., prohibits or restricts prospective uses of prohibited HFCs (phases out), there are no timing issues that justify changing the time frame for implementation of any federal requirements.
Part A: Part A's annual GHG reporting requirements are retrospective in that they are a report of past emissions and therefore are not subject to uncertainty and do not hinder or negatively affect future growth of facilities required to report past emissions.
Part B., Section I.: The HFC phase-out in Part B., Section I. allows a reasonable time to comply and permits the substitution of lower-GWP substances or retrofit of components. As such, affected businesses or industrial sectors are afforded a reasonable margin for accommodation of uncertainty and future growth.
Part A: With respect to any sources already required to report GHG emissions under the federal reporting requirements, Part A, maintains reasonable equity as reporting requirements are the same for each source type. With respect to any sources newly required to report GHG emissions under Part A, the rule establishes reasonable equity as reporting requirements are the same for each source type.
Part B., Section I.: Part B., Section I., phases-out the use of HFCs across specific end-uses and manufacturing processes, with only limited exemptions or alternative compliance requirements. Reasonable equity is established among these end-uses and processes by use of phase-out dates that are the same as those determined to be achievable with industry input in the development of the SNAP rules and the U.S. Climate Alliance's model framework. Part B., Section I. was also based upon the U.S. Climate Alliance's model framework to allow those subject to the rule to avoid varying requirements across states to the extent possible while still addressing the serious climate change impacts these substances present.
Part A: No, it is not anticipated there would be increased direct costs to others if a more stringent rule is not enacted.
Part B., Section I.: The legislature has acknowledged that climate change impacts Colorado's economy and directed that GHG emissions should be reduced across the many sectors of our economy. Colorado has established specific GHG reduction goals. A more stringent HFC rule could achieve additional GHG reductions. Reductions not achieved in one sector will require measures in other sectors of the economy to achieve the state's GHG reduction goals. The HFC rule is drafted to strike a balance between the costs to the entities impacted under the rule and further measures that will need to be utilized in other sectors of the economy.
Part A: Reporting requirements beyond those required under federal Part 98 are necessary to effectively quantify and measure Colorado's progress toward statewide GHG reductions and to achieve the public health, safety and welfare goals set forth in § 25-7-102, C.R.S., § 25-7-140(2)(a)(I), C.R.S., dictates that the Commission tailor new [GHG] reporting requirements to fill any gaps in the existing federal reporting requirements and "allow for maintaining and updating state inventories that are sufficiently comprehensive and robust."
Through Part A, the Division proposes building upon established federal reporting requirements and closes reporting gaps by lowering or eliminating reporting thresholds for certain sources, expanding certain other source categories, and requiring new source categories to report GHG emissions in order to establish a more robust and accurate GHG inventory for Colorado. Filling gaps in emission data from those select sources not otherwise required to report under Part 98 in order to more accurately determine statewide GHG emissions and develop reduction strategies is a compelling reason to expand the reporting requirements. Additionally, under Part A, Section IV.C., electric service providers and electric utilities will be required to submit supplemental data necessary to verify GHG emissions attributable to imported and exported electricity and to verify plans submitted to the Public Utilities Commission. Under this requirement, owners and operators of these sources will be required to compile and report directly to the Division information collected by or available to them for business or other regulatory purposes. While this may overlap with some other federal reporting requirements, it is expected there will be reporting beyond what is required federally.
Part B., Section I: To the extent Part B., Section I., requires manufacturers to replace HFCs, there are no current applicable federal requirements as a result of the D.C. Circuit Court's vacature of SNAP Rules 20 and 21 and EPA's lack of progress in further regulating HFCs.
Part A: Part A maintains reporting requirements for facilities already required to report under Part 98 and will require additional facilities to report under reporting protocols either set forth in Part 98 and related subparts or under state reporting requirements already in place (i.e. oil and gas operations). Demonstrated technology exists to enable compliance with the reporting requirements of Regulation Number 22.
Part B., Section I.: Yes, non-HFC replacements with significantly lower GWP are generally available and widely used in manufacturing processes and end-uses phased out in Part B., Section I.
Part A: Under Part A, the Commission will develop a sufficiently comprehensive and robust GHG inventory to enable and inform future implementation strategies to cost-effectively reduce statewide GHG emissions to meet the legislative directive of § 25-7-102(2)(g), C.R.S.
Part B., Section I: The General Assembly has acknowledged that climate change impacts Colorado's economy and directed that GHG emissions should be reduced across the many sectors of our economy. Colorado has established specific GHG reduction goals. HFCs are a highly potent GHG such that small volumes of reduction can affect significant reductions of GHG emissions measured in CO2e. A more stringent HFC rule could achieve additional GHG reductions. Reductions not achieved in one sector will require compensating measures in other sectors of the economy to achieve the state's GHG reduction goals. Part B., Section I. is drafted to strike a balance between the costs to the entities impacted under the rule and further measures that will need to be utilized in other sectors of the economy.
Part A: § 25-7-140, C.R.S., does not permit a no-action alternative and requires the Commission to adopt GHG reporting regulations "to allow for maintaining and updating state inventories that are sufficiently comprehensive and robust." Further, the statute requires the rules "include requirements for providers of retail and wholesale electric service in the state of Colorado to track and report emissions from all generation sources within the state and elsewhere that electricity consumption by their customers in this state causes to be emitted." While alternative requirements could address these mandates, the Commission has determined that the proposed reporting requirements are appropriate to establish statewide progress towards the GHG emission reduction goals mandated by the General Assembly in § 25-7-102, C.R.S. To the extent alternative reporting thresholds and source categories were considered, they were determined to be inadequate to satisfy the directives set forth in § 25-7-140, C.R.S.
Part B., Section I.: §§ 25-7-105(1)(e) and -140(2)(a)(III), C.R.S., require the Commission to implement GHG emission reduction strategies in order to accomplish the statewide GHG emission reduction goals set forth in § 25-7-102(g), C.R.S. HFCs are a highly potent GHG such that small volumes of reduction can affect significant reductions of GHG emissions measured in CO2e. A more stringent HFC rule could achieve additional GHG reductions. Reductions not achieved in one sector will require compensating measures in other sectors of the economy to achieve the state's GHG reduction goals.
Part B, Section I. rule is drafted to strike a balance between the costs to the entities impacted under the rule and further measures that will need to be utilized in other sectors of the economy. While the General Assembly has not explicitly required implementation of an HFC phase-out as a reduction strategy and therefore a no-action alternative is possible, given the statewide reduction goals and the potency of HFCs, no action on HFCs would require more stringent measures in other sectors in order to achieve the same GHG reductions.
§ 25-7-110.8, C.R.S.
To the extent that the § 25-7-110.8, C.R.S., requirements apply to this rulemaking, and after considering all the information in the record, the Commission hereby makes the determination that:
§ 25-7-105(1)(e), C.R.S. - Statewide GHG Pollution Abatement
To the extent that the § 25-7-105(1)(e), C.R.S., requirements apply to this rulemaking, and after considering all the information in the record, the Commission hereby makes the determination that:
Any impacts to disproportionately impacted communities and (IV) Coordination with other state agencies, stakeholders, and the public:
The Commission carefully considered the concerns of and potential impacts on communities disproportionately impacted by climate change in the following ways:
Stakeholder engagement: The Division provided multiple ways for the public, local governments, industry, environmental groups, and other stakeholders to provide comment during the development of the proposed rules. Opportunities for input included email, remote stakeholder meeting participation, and in-person meeting participation. Public stakeholder meetings were held from early afternoon until after 6pm in both Denver and Glenwood Springs, to maximize access for working and busy individuals. Language interpretation services for stakeholder meetings were made available (though none were requested during this process).
Potential economic impacts: The Division conducted outreach to determine potential impacts to disproportionately impacted communities for Parts A and B., Section I. With respect to Part A, impacts on local governments and small rural operations were significant considerations in determining whether to require mandatory GHG reporting from domestic wastewater treatment facilities and municipal solid waste landfills with emissions below the reporting threshold in 40 CFR Part 98.
Ultimately, in this rulemaking the Commission elected against mandatory reporting from these source categories, but to allow voluntary reporting. While more robust GHG data has the potential to enhance local climate efforts and ultimately reduce a variety of negative impacts on Colorado's communities, the Division recognizes that providing data can represent an administrative burden, particularly for small operations with fewer staff and serving smaller communities.
For both domestic wastewater treatment and municipal solid waste landfill emissions (below the 40 CFR Part 98 threshold) reporting, the Division identified available reporting protocols to minimize the burden of the reporting process for any sources wishing to report voluntarily. In addition to public comments, the Division considered stakeholder comments from organizations representing local governments, local wastewater districts and the Wastewater Utility Council, and conducted outreach to the Solid Waste Association of North America's Colorado Chapter in the drafting of the proposed GHG reporting rule.
For Part B., Section I., Division outreach efforts sought to determine if any manufacturers (large or small) of equipment or small niche end-uses that might be impacted by the proposed HFC reduction rule exist in the state. Based on discussions with industry partners and trade groups, as well as online research and communication with the Colorado Department of Labor & Employment (CDLE), the Division was able to confirm that Trane has a chiller manufacturing facility in Pueblo, Colorado that employs approximately 500 individuals. The potential impacts of Part B., Section I. on this facility and area jobs was carefully considered in the development of Part B, Section I. and the Commission has adopted an innovative solution to protect these important jobs while also achieving necessary climate benefits. Accordingly, the Commission has determined that the HFC-phase out in Part B., Section I. will not result in an accumulation of negative or lack of positive environmental, health, economic, or social conditions in a manner that disproportionately impacts certain communities within the state.
Coordination with other jurisdictions:
Absent federal enforcement regulating HFCs, individual states have adopted, or are in the process of adopting, statutes and regulations phasing out the use of HFCs in manufacturing and end-use products. The U.S. Climate Alliance has drafted a model framework to promote uniformity of HFC regulation. Part B., Section I. is based upon the U.S. Climate Alliance's model framework as are draft rules under consideration in other states.
Additional Considerations:
Having considered all relevant information in the record and those factors set forth in § 25-7-105(1)(e)(VI), C.R.S., the Commission has determined that Parts A and B., Section I. are appropriate measures necessary to implement statewide GHG pollution abatement. The Commission concludes that GHG reporting in Part A and the HFC phase-out in Part B., Section I. will either directly result in health, environmental, and air quality benefits or otherwise enable the Commission and General Assembly to better regulate GHG emissions in the future through a more robust inventory.
Furthermore, based on the Division's Final Economic Impact Analysis, the costs of compliance with Parts A and B., Section I. and any negative impacts to Colorado's jobs and economy are considerably outweighed by these benefits. Based on the Division's analysis, Part B., Section I. is anticipated to result in statewide GHG reductions in Colorado of about 560 thousand metric tons CO2e in 2025 and 1.15 million metric tons CO2e in 2030. Additionally, as these regulations will lower GHG emissions and the General Assembly has determined that reducing GHG emissions will result in economic and jobs growth by creating new markets, spurring innovation, and driving investments in low-carbon technologies. The time necessary for compliance under Parts A and B., Section I. reflect consideration of existing state and federal requirements as well as feedback from stakeholders. As described in significant detail, Part A will enable the Commission to better inventory analyze statewide GHG emission sources across diverse sectors and sources by utilizing existing federal reporting requirements in 40 CFR Part 98 and also expanding those requirements. Parts A and B., Section I. are therefore determined to be appropriate and cost-effective.
5 CCR 1001-26-E-I