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March 13, 2024 HB 24-1346
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 24-0904
Rep. Titone; McCormick
Sen. Hansen; Priola
Date:
Bill Status:
Fiscal Analyst:
March 13, 2024
House Energy & Environment
Matt Bishop | 303-866-4796
matt.bishop@coleg.gov
Bill Topic: ENERGY & CARBON MANAGEMENT REGULATION
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☐ State Transfer
☐ TABOR Refund
☒ Local Government
☐ Statutory Public Entity
The bill requires the Energy and Carbon Management Commission to regulate carbon
capture and sequestration activities. It increases state and local revenue and
expenditures beginning in FY 2024-25.
Appropriation
Summary:
No appropriation is required.
Fiscal Note
Status:
The fiscal note reflects the introduced bill.
Summary of Legislation
Senate Bill 23-016 gives the Energy and Carbon Management Commission (ECMC) in the
Department of Natural Resources the authority to pursue Class VI injection well primacy from
the federal Environmental Protection Agency for the purposes of carbon sequestration,
including direct air capture and geologic storage. The bill updates these provisions as follows:
The ECMC must adopt rules regarding the regulation of direct air capture facilities; perform a
cumulative impacts analysis of any proposed direct air capture facility; and deny any
proposal that it determines would have a net negative impact on a disproportionately
impacted community. The ECMC may collect regulatory fees from direct air capture facility
operators.
The bill specifies ownership rights and responsibilities for property used for carbon
sequestration and any injected carbon dioxide. Upon request, the ECMC must provide
technical assistance to local governments in land use and siting regulations for carbon
sequestration.
The Department of Public Health and Environment (CDPHE) must account for net
greenhouse gas emissions changes from direct air capture facilities and geologic storage
operations, with collaboration from the ECMC. Page 2
March 13, 2024 HB 24-1346
Under current law, violations of ECMC rules have a statute of limitation of one year from the
violation. The bill extends the statute of limitations to three years from the discovery of the
violation. In addition, the bill authorizes the ECMC to hire administrative law judges to
conduct hearings on behalf of the commission.
Background
Carbon capture and sequestration is a climate change mitigation strategy that involves storing
greenhouse gases to prevent them from reaching or persisting in the atmosphere. While some
carbon capture occurs at the point of emission (e.g., a power plant smokestack), direct air
capture involves taking previously-emitted carbon dioxide directly from the atmosphere.
Geologic storage, as used in the bill, refers to storing carbon dioxide in porous rocks deep
underground via a Class VI injection well.
State Revenue
The bill increases fee revenue to the Energy and Carbon Management Cash Fund from operators
of direct air capture facilities. The fee amount will be established by the ECMC by rule based on
the anticipated number of permit applicants. Because the development of these projects often
requires years of planning, and because the number of applicants is expected to be low in the
near term, any fee revenue is expected to be minimal for FY 2024-25 and FY 2025-26. This
revenue is subject to TABOR.
State Expenditures
The bill increase state workload in multiple agencies to adopt rules and to regulate carbon
capture and sequestration activities. While no change in appropriations is required for
FY 2024-25, the bill is expected to increase cash fund expenditures in future years as this
industry develops.
ECMC—Department of Natural Resources. The bill increases workload for rulemaking,
hearings, and to establish a new regulatory program. In future fiscal years, resources will be
requested through the annual budget process and paid from the Energy and Carbon
Management Cash Fund.
Rulemaking. The ECMC will adopt rules to regulate direct air capture facilities and geologic
storage operations in FY 2024-25. This effort, which requires legal services support from the
Department of Law, can be accomplished within existing appropriations. Additional
rulemaking will likely be required in future years.
Administrative law judges. Appeals of the ECMC’s enforcement actions come before
hearings officers in the commission. The ECMC will convert one hearings officer to an
administrative law judge in FY 2024-25, which can be accomplished within existing
appropriations. Page 3
March 13, 2024 HB 24-1346
Regulating carbon capture and sequestration activities. Expenditures will increase to
create a regulatory program to review permit applications for direct air capture facilities and
geologic storage operations and to provide technical assistance to local governments. These
impacts are expected to be minimal for several years. As the industry develops and workload
increases, resources will be requested through the annual budget process.
Department of Public Health and Environment. The bill increases workload in the department
to develop carbon dioxide accounting procedures for direct air capture facilities and geologic
storage operations and to coordinate with the ECMC. This can be accomplished within existing
appropriations. Any rulemaking, which requires support from the Department of Law, can be
accomplished within existing legal services appropriations.
Colorado Energy Office. The office participates in rulemaking proceedings of both the ECMC
and CDPHE. To the extent that the bill requires those agencies to adopt or update rules,
workload will increase. Any such effort in FY 2024-25 can be accomplished within existing
appropriations.
Local Government
The bill may increase revenue and expenditures in any local government that regulates direct air
capture facility or geologic storage siting within its jurisdiction. The extent of the impact will
depend on any regulations developed by the local government and the number of projects that
companies pursue in its jurisdiction.
Effective Date
The bill takes effect upon signature of the Governor, or upon becoming law without his
signature.
State and Local Government Contacts
Colorado Energy Office Counties Law
Natural Resources Personnel 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 the General Assembly website.