Bill would reverse major business concessions in new manufacturing emissions rules

An aerial view of the Natural Soda plant in Rio Blanco County

A trio of Democratic legislators has introduced a bill that would overturn many of the major concessions that business leaders won in a rulemaking process last year that set first-of-their-kind emissions regulations on the state’s largest manufacturers.

Rep. Mike Weissman of Aurora, a prime sponsor of both the new House Bill 1339 and the 2021 Environmental Justice Act that mandated the GEMM 2 regulations, said the Air Quality Control Commission rulemaking process did not hew closely enough to the requirements in the 2021 law. He and his cosponsors — Rep. Manny Rutinel of Commerce City and Sen. Faith Winter of Broomfield — particularly are concerned that allowances for credit trading and planned growth of some of the 18 regulated facilities will not reduce air pollution in disproportionately impacted communities, he said.

But John Jacus, a partner with Davis Graham & Stubbs who represented several of the affected facilities in the September rulemaking, said the proposed changes seek the reversal of a complex regulatory process that ended in a 5-2 vote to include the contested concessions as a way of protecting both the environment and the economy. The changes contemplated by HB 1339 would stop major employers from expanding in Colorado and would send jobs out of state while requiring some goods to have to be brought in by truck or rail from other states, which would do nothing to decrease overall emissions, he said.

“The environmental justice advocates didn’t like the outcome because they didn’t get everything they wanted,” Jacus said. “It’s throwing the baby out with the bathwater.”

The GEMM 2 rulemaking

The Greenhouse Gas Emissions and Energy Management for Manufacturing rules require large manufacturers to begin cutting emissions by 2026, reduce greenhouse gases by as much as 15.5% by 2030 and face more stringent regulations if they can’t hit near-term goals. They impact facilities that produces at least 25,000 metric tons of carbon dioxide equivalents per year, ranging from the Suncor Energy refinery in Commerce City to the Molson Coors Beverage Co. plant in Golden to the Natural Soda mine in Rio Blanco County.

While acknowledging the need to clean up the air, business interests, including a coalition led by the Colorado Chamber of Commerce, got several concessions from the AQCC that they said will make their improvements feasible rather than forcing business out of state. Those included allowances of greater emissions baselines for companies now undertaking major expansions, creation of a fund into which facilities could pay as a means of compliance and creation of a future carbon-capture option as a way to cut emissions.

HB 1339, scheduled for a March 14 hearing in the House Energy & Environment Committee, would cap cumulative greenhouse gas emissions from the major-manufacturing sector at 97 million metric tons of carbon dioxide equivalent between 2025-30. That would eliminate the higher baseline for expanding plants like Natural Soda that reflects planned growth.

It also would prohibit an affected facility from complying with the new rules by paying into a fund, effectively scratching the option to pay into a statewide improvements account if the plant upgrades needed to meet the new standards proved infeasible. And it would establish source-specific emissions-reduction requirements for a facility in a disproportionately impacted community — as the vast majority of GEMM 2 plans are — must be met through emissions cuts at that facility.

Changes to AQCC

Finally, the bill would expand the nine-member commission by two members — one who represents a disproportionately impacted community and one climate scientist employed by an organization that doesn’t derive income from any business regulated by the AQCC. Weissman said that would ensure that the commission hears a wider range of voices, particularly those of people living within the communities that could benefit the most from the raft of new regulations the AQCC has been passing and will consider.

Weissman acknowledged the AQCC’s GEMM 2 decision disappointed sponsors of the 2021 Environmental Justice Act, who felt that some of the allowances commissioners made went beyond what the law required in terms of halting the increase of industrial emissions. Rather than completely restart the rulemaking process, as was asked by the Environmental Defense Fund and other environmental advocates as a way of coming to a better policy than the AQCC approved, this tries to surgically correct where the group fell short, he said.

HB 1339 comes as legislators passing major policies around the environment and other matters in recent years have entrusted appointed boards and state-government officials increasingly with the details of implementing big-picture policy. This is not a repudiation of that process or of this commission, he said, but a belief that in this one instance the AQCC did not follow the underlying law that seeks to aid the poorer communities impacted by decades of pollution that need near-term relief.

“Modern environmental law is administrative law. It necessarily is. A legislative body sets down policy goals, volume goals, broad strokes. But more than in a lot of other areas, this is extremely nuanced and extremely detailed, and it is one of the things that expert bodies are charged to do,” Weissman said. “Yes, there’s been frustration from environmentally minded legislators and environmental organizations with some of the rulemakings that have come forward. It doesn’t mean there’s not a role for an agency.”

A chasm on views of new manufacturing rules

Environmental groups that fought before the AQCC for stricter regulation applauded Monday’s introduction of HB 1339 in a news release. A Colorado Sierra Club official said the bill will close “loopholes and insufficient requirements in current regulations,” while GreenLatinos Colorado State Director Ean Thomas Tafoya said the bill will restore legislative intent that was “lost in a broken public regulatory process that favors industry.”

Jacus countered, however, that what HB 1339 will do is stop major employers from being able to undertake job-creation expansions that they’ve been preparing for years — expansions that will be done far more cleanly because of the rules that were passed. The hard cap on sector emissions, for example, will eliminate emissions-limit requirements that gradually increase over three years, a timeframe that allows companies both to put in new manufacturing equipment and emissions-reduction equipment.

The elimination of the market-based fund into which companies could pay to reach new goals — and which could spend that money on disproportionately impacted communities even if the emissions didn’t originate there — will make compliance nearly impossible in some cases, Jacus said. Without this certain path to compliance, national and international companies may well choose to move expansions to other states that don’t have similar emissions regulations and just ship goods to Colorado in a way that increases their carbon footprint while decreasing their economic impact, he said.

Potential effect on manufacturing sector

And the inability of companies to expand within disproportionately impacted communities even as they clean their facilities will cost jobs to people in those communities who need them, he added.

“What you’re going to do with this stuff the EJ community is pushing is you’re going to drive employers out of disproportionately impacted communities. Then the people who live in the disproportionately impacted communities get to drive further to get to work,” Jacus said. “At some point, if I’m an employer I’m certainly not going to invest in DICs, and I’m probably going to relocate.”

The introduction of HB 1339 came simultaneously with HB 1338, a Colorado Department of Public Health and Environment bill that would create new regulations for oil refineries and give local governments more of a voice in possibly stopping permitting for a facility within their boundaries. And it comes after legislative Democrats have introduced four bills that could have major impacts on oil and gas production, including the banning of new wells after 2030 and major fine increases for repeat violators of state rules.