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April 25, 2023 HB 23-1294
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Revised Fiscal Note
(replaces fiscal note dated April 18, 2023)
Drafting Number:
Prime Sponsors:
LLS 23-0131
Rep. Bacon; Willford
Sen. Winter F.; Gonzales
Date:
Bill Status:
Fiscal Analyst:
April 25, 2023
House Appropriations
Matt Bishop | 303-866-4796
matt.bishop@coleg.gov
Bill Topic: POLLUTION PROTECTION MEASURES
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☐ State Transfer
☒ TABOR Refund
☐ Local Government
☐ Statutory Public Entity
The bill updates procedures and requirements for air quality control regulations and
creates a legislative interim committee. It increases state revenue and expenditures
on an ongoing basis.
Appropriation
Summary:
For FY 2023-24, the bill requires appropriations totaling $5.8 million dollars to multiple
state agencies.
Fiscal Note
Status:
This revised fiscal note reflects the introduced bill, as amended by the House Energy
and Environment Committee.
Table 1
State Fiscal Impacts Under HB 23-1294
Budget Year
FY 2023-24
Out Year
FY 2024-25
Revenue Cash Funds $4.0 million $5.7 million
Total Revenue $4.0 million $5.7 million
Expenditures General Fund $2,985,977 -
Cash Funds $2,820,697 $5,598,036
Centrally Appropriated $139,218 $129,593
Total Expenditures $5,945,892 $5,727,629
Total FTE 45.0 FTE 45.8 FTE
Transfers - -
Other Budget Impacts TABOR Refund $4.0 million $5.7 million
General Fund Reserve $747,897 $722,604
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April 25, 2023 HB 23-1294
Summary of Legislation
The bill updates procedures and requirements for how the Air Quality Control Commission in the
Department of Public Health and Environment (CDPHE) and the Colorado Oil and Gas Conservation
Commission in the Department of Natural Resources (DNR) regulate pollution control measures.
Air Quality Control Commission—rulemaking and permitting. CDPHE must adopt rules regarding
electrification and emissions standards for stationary engines used in oil and gas operations by
January 1, 2025. The bill also expands what modifications of stationary sources require permits.
The bill updates the department’s public notice requirements for certain construction permit
applications, renewable operating permit applications, and public hearings.
The bill specifies new control measures that must be included in any state implementation plan for
severe ozone plans in ozone nonattainment areas until the EPA redesignates a serious, severe, or
extreme ozone nonattainment area as a maintenance area.
Air Quality Control Commission—violations and enforcement. The bill specifies that only the filing
of a renewable operating permit application can operate as a defense to an enforcement action for
operating without a permit during the time period that the CDPHE is reviewing the permit
application.
The bill expands CDPHE’s authority to initiative investigations on noncompliance and specifies
timeframes for notification and resolution of any investigation and or hearings requested following a
compliance order. The bill also allows a person to commence a civil action against an alleged violator
of certain clean air regulation, after notifying CDPHE and the alleged violator. After an investigation
into whether an activity meets the requirements of a construction permit, CDPHE may propose
additional terms and conditions of the construction permit. When determining the amount of a civil
penalty, CDPHE must also consider the impact on safety and wildlife and biological resources and
the severity of the violation.
Colorado Oil and Gas Conservation Commission. A person may submit a complaint to the
commission alleging a violation related to oil and gas regulation. The commission must then conduct
an investigation, unless the complaint appears to be trivial or is withdrawn.
Legislative interim committee. The bill creates the Committee on Ozone Air Quality, consisting of
12 legislators, which meets during the 2023 legislative interim. It may meet up to six times and may
introduce up to five bills or resolutions during the 2024 legislative session.
State Revenue
Expanding the scope of modifications to stationary sources increases the number of projects that are
subject to CDPHE permitting requirements. Based on the existing number of permits processed, this
is expected to increase state revenue by $4.0 million in FY 2023-24, and by $5.7 million in FY 2024-25
to the Stationary Sources Control Cash Fund.
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April 25, 2023 HB 23-1294
The Environmental Unit in the COGCC is funded primarily from the Oil and Gas Conservation and
Environmental Response Fund, which receives revenue from a surcharge on the market value of oil
and natural gas. The COGCC has the authority to adjust the surcharge up to 1.7 mills as response
fund obligations may require. No change in the mill levy rate is currently needed; however, if the
requirements in the bill begin to increase fund obligations, the commission will consider available
operating revenue and adjust the mill accordingly.
State Expenditures
The bill increases state expenditures by $5.9 million in FY 2023-24 and $5.7 million in FY 2024-25, paid
from the General Fund and cash funds, in CDPHE, DNR and Legislative Department. These costs are
shown in Table 2 and detailed below.
Table 2
Expenditures Under HB 23-1294
FY 2023-24 FY 2024-25
Department of Public Health and Environment
Personal Services $2,724,235 $2,823,207
Operating Expenses $46,305 $43,605
Capital Outlay Costs $226,780 -
Legal Services $1,332,324 $1,332,324
Employee Benefits $594,717 $618,223
FTE – Personal Services 31.0 FTE 32.3 FTE
FTE – Legal Services 7.0 FTE 7.0 FTE
CDPHE Subtotal $4,924,361 $4,817,359
Department of Natural Resources
Personal Services $589,056 $589,056
Operating Expenses $8,100 $8,100
Capital Outlay Costs $40,020 -
Legal Services $95,166 $95,166
Centrally Appropriated Costs
1
$121,299 $121,299
FTE – Personal Services 6.0 FTE 6.0 FTE
FTE – Legal Services 0.5 FTE 0.5 FTE
DNR Subtotal $853,641 $813,621
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April 25, 2023 HB 23-1294
Table 2
Expenditures Under HB 23-1294 (Cont.)
FY 2023-24 FY 2024-25
Legislative Department
Personal Services $36,349 -
Operating Expenses $675 -
Capital Outlay Costs $6,670 -
Legislator Reimbursements $16,984 -
Travel Costs $938 -
Centrally Appropriated Costs
1
$9,625 -
FTE – Personal Services 0.5 FTE -
Leg. Subtotal $71,241 -
Total $5,874,651 $5,727,629
Total FTE 45.0 FTE 45.8 FTE
1
Centrally appropriated costs are not included in the bill's appropriation for DNR.
Department of Public Health and Environment
The bill increases costs in the CDPHE by $4.9 million in FY 2023-24 and $4.8 million in FY 2024-25 and
future years to conduct rulemaking, increase permit review, investigate complaints, and conduct
additional enforcement activities, as described below. In the first year, it is assumed that half of the
new fee revenue collected in the Stationary Sources Control Cash Fund can be used to pay for expenses
($2.0 million) and that the remainder ($2.9 million) will be paid from the General Fund. In the second
and future years, costs are assumed to be paid from the Stationary Sources Control Cash Fund only.
Staffing. Implementing the requirements above requires 31.0 FTE beginning in FY 2023-24 in the
Air Quality Control Commission, accounting for the General Fund pay date shift, and 32.1 FTE in
subsequent years. In particular, the bill is expected to drive a substantial increase in the number
of permits submitted for modifications to stationary sources under the commission’s purview.
Standard operating and capital outlay costs are included.
Legal services. CDPHE requires 12,600 hours of legal services for rulemaking, general counsel,
and enforcement support annually beginning in FY 2023-24. Legal services are provided by the
Department of Law at a rate of $105.74 per hour.
Employee insurance and supplemental retirement. Pursuant to fiscal note and Joint Budget
Committee policy, centrally appropriated costs for bills involving more than 20 FTE are
appropriated in the bill, rather than through the annual budget process. These costs include
employee insurance and supplemental employee retirement payments.
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April 25, 2023 HB 23-1294
Department of Natural Resources
The bill increases expenditures in the DNR by $0.9 million in FY 2023-24 and $0.8 million in FY 2024-25
and future years, paid from the Oil and Gas Conservation and Environmental Response Fund, to
perform cumulative impacts analysis on oil and gas location assessments, conduct additional analysis
on permit applications, and conduct investigations into alleged violations.
Staffing. Implementing the requirements above requires 6.0 FTE beginning in FY 2023-24,
including additional engineering, environmental protection, and management staff. Standard
operating and capital outlay costs are included.
Legal services. DNR requires 900 hours of legal services annually beginning in FY 2023-24 for
rulemaking, general counsel, and enforcement support. Legal services are provided by the
Department of Law at a rate of $105.74 per hour.
Legislative Department
The bill increases expenditures in the Legislative Department by about $71,000 in FY 2023-24 only for
Legislative Council Staff and the Office of Legislative Legal Services to support the new interim
committee and to compensate legislators for participating on the committee.
Staff support. Supporting the committee is 0.5 FTE of committee staff, research support, and bill
drafting. Travel costs assume one committee field trip.
Legislator reimbursements. The committee includes 12 legislators and meets up to six times.
Costs are based on a per diem of $111.89 and an average of $124 in travel reimbursements per
member for each meeting.
Centrally appropriated costs. Pursuant to a Joint Budget Committee policy, certain costs associated
with this bill are addressed through the annual budget process and centrally appropriated in the Long
Bill or supplemental appropriations bills, rather than in this bill. These costs, which include employee
insurance and supplemental employee retirement payments, are shown in Table 2.
Other Budget Impacts
General Fund reserve. Under current law, an amount equal to 15 percent of General Fund
appropriations must be set aside in the General Fund statutory reserve. Based on this fiscal note, the
bill is expected to increase the amount of General Fund held in reserve by the amounts shown in
Table 1, decreasing the amount of General Fund available for other purposes.
Effective Date
The bill takes effect upon signature of the Governor, or upon becoming law without his signature.
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April 25, 2023 HB 23-1294
Technical Note
According to the CDPHE, the bill expands regulation of station source pollution beyond federal
regulations, and thus would require General Fund to support the new duties under the bill, rather
than the Stationary Sources Control Cash Fund. The fiscal note assumes that fee revenue generated
under the bill can be used to cover associated costs under the bill. However, should the authority to
use the fee revenue not be clarified, General Fund may be required.
Departmental Difference
CDPHE estimates the cost to implement the bill at $26.1 million and 206.6 FTE in FY 2023-24, and
$27.1 million and 223.3 FTE in FY 2024-25, paid from the General Fund. The department’s estimate is
based on the assumption that CDPHE must complete investigations of air quality complaints within
30 days. The fiscal note interprets the bill to only require that the department notify stakeholders of a
complaint within 30 days, not complete an investigation, if any. For this reason, the estimate in the
fiscal note varies from the estimate provided by the department. Also, as noted in the Technical Note
above, the fiscal note assumes that the Stationary Sources Control Cash Fund can be used to cover the
costs of the bill.
State Appropriations
For FY 2023-24, the bill requires the following appropriations:
$4,924,361 to the Department of Public Health and Environment, including $2,924,361 from the
General Fund and $2,000,000 from the Stationary Sources Control Cash Fund, and 31.0 FTE. Of
this amount, $1,332,324 is reappropriated to the Department of Law with an additional 7.0 FTE;
$820,697 to the Department of Natural Resources from the Oil and Gas Conservation and
Environmental Response Fund, and 6.0 FTE. Of this amount, $95,166 is reappropriated to the
Department of Law with an additional 0.5 FTE; and
$61,616 from the General Fund to the Legislative Department, and 0.5 FTE.
State and Local Government Contacts
Judicial Law Legislative
Natural Resources Public Health and Environment
The revenue and expenditure impacts in this fiscal note represent changes from current law under the bill for each
fiscal year. For additional information about fiscal notes, please visit: leg.colorado.gov/fiscalnotes.