Second Regular Session Seventy-fourth General Assembly STATE OF COLORADO REREVISED This Version Includes All Amendments Adopted in the Second House LLS NO. 24-1188.01 Jennifer Berman x3286 SENATE BILL 24-229 Senate Committees House Committees Finance Finance Appropriations Appropriations A BILL FOR AN ACT C ONCERNING MEASURES TO MITIGATE OZONE POLLUTION IN THE101 STATE, AND, IN CONNECTION THEREWITH , MAKING AN 102 APPROPRIATION.103 Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://leg.colorado.gov .) Section 2 of the bill requires the division of administration (division) in the department of public health and environment (department) to propose rules to the air quality control commission (commission) to reduce certain emissions of oxides of nitrogen (NOx) generated by upstream oil and gas operations in certain areas of the state HOUSE 3rd Reading Unamended May 6, 2024 HOUSE Amended 2nd Reading May 5, 2024 SENATE 3rd Reading Unamended May 4, 2024 SENATE Amended 2nd Reading May 3, 2024 SENATE SPONSORSHIP Winter F. and Priola, Buckner, Coleman, Cutter, Exum, Fenberg, Hansen, Jaquez Lewis, Marchman, Michaelson Jenet, Gonzales, Hinrichsen, Kolker HOUSE SPONSORSHIP Bacon and Willford, Amabile, Boesenecker, Brown, Clifford, deGruy Kennedy, Daugherty, English, Froelich, Garcia, Hernandez, Herod, Jodeh, Joseph, Kipp, Lindsay, Lindstedt, Marvin, McCluskie, McCormick, Ortiz, Ricks, Rutinel, Story, Titone, Valdez, Velasco, Vigil, Weissman, Woodrow, Bird, Epps, Hamrick, Lukens, Mabrey, Marshall, Parenti, Sirota, Snyder Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment. Capital letters or bold & italic numbers indicate new material to be added to existing law. Dashes through the words or numbers indicate deletions from existing law. by 50% by 2030 relative to 2017 NOx emission levels. Section 3 requires the division to prepare an annual air quality enforcement benchmark report to summarize the division's statewide enforcement actions, including civil penalties assessed. Under current law, the division or commission, in an enforcement action, cannot obtain a temporary restraining order or preliminary injunction if there is probable cause that the temporary restraining order or preliminary injunction would cause serious harm to the person affected by the temporary restraining order or preliminary injunction or another person or if the source to which the enforcement action pertains has obtained a renewable operating permit and continues operations in compliance with that permit. Section 4 repeals those limitations on temporary restraining orders and preliminary injunctions. Section 4 also authorizes a district attorney or the attorney general to seek injunctive relief to reduce the potential for a recurrence of a violation. Sections 5 and 6 clarify that the division has authority to impose civil penalties for violations of requirements related to toxic air contaminants, fenceline and community-based monitoring, and, if enacted in House Bill 24-1338, petroleum refinery emissions monitoring. Section 8 authorizes the director of the energy and carbon management commission (ECMC) to hire at least 2 community liaisons to serve as dedicated resources for disproportionately impacted communities, and section 12 authorizes funding of the community liaison positions from the energy and carbon management cash fund. Under current law, an oil and gas operator (operator) is required to obtain a permit from the ECMC to commence oil and gas drilling operations. Section 9 requires the operator to also obtain from the ECMC a license to conduct oil and gas operations. Section 9 also requires operators to take actions in accordance with ECMC rules to reduce certain emissions of NOx generated from oil and gas production and preproduction operations. The ECMC is also required, in consultation with the department, to adopt rules to require enhanced systems and practices to avoid, minimize, and mitigate emissions of ozone precursors from oil and gas operations at newly permitted oil and gas locations in certain parts of the state. Section 10 limits a court's authority to postpone the effective date of an ECMC order suspending or revoking an operator's license to conduct oil and gas operations or a certificate of clearance, requiring the court to first consider various factors, including whether the moving party would face real, immediate, and irreparable injury if the effective date is not postponed and the effect that such postponement would have on the public interest. Section 11 expands the ECMC's enforcement authority to include revoking an operator's license to conduct oil and gas operations and expands the types of violations that are subject to suspension of all of the 229 -2- operator's permits and certificates of clearance and the operator's license to conduct oil and gas operations to include violations resulting in a penalty of $1,000,000 or more, violations that cause a major adverse impact, as defined by the ECMC by rule, and violations that cause death or serious bodily injury. Section 13 expands the scope of the orphaned wells mitigation enterprise to help finance the plugging, reclamation, and remediation of marginal wells that are at the highest risk of becoming orphaned. Be it enacted by the General Assembly of the State of Colorado:1 SECTION 1. Legislative declaration. (1) The general assembly2 finds and determines that:3 (a) Emissions of ozone precursors, such as oxides of nitrogen4 (NOx) and volatile organic compounds, contribute to the formation of5 ozone and to public health impacts for individuals exposed to higher6 levels of air pollution;7 (b) Oil and gas activities are among the largest anthropogenic8 contributors to ozone precursor emissions in the ozone nonattainment9 area;10 (c) Sources of NOx from upstream oil and gas operations present11 significant opportunities to reduce ozone precursors and improve public12 health;13 (d) Residents of disproportionately impacted communities in the14 ozone nonattainment area may be exposed to higher levels of NOx than15 other Coloradans;16 (e) The air quality control commission adopted rules in December17 2023 designed to achieve a thirty percent reduction in NOx emissions18 generated by upstream oil and gas operations, including preproduction19 operations, by 2025;20 (f) Despite efforts to reduce ozone precursor emissions in the21 229-3- ozone nonattainment area, more work is necessary to protect public1 health;2 (g) State agencies cannot improve air quality through regulations3 alone and need more permitting and enforcement authority to ensure4 compliance with the state's environmental statutes and rules; and5 (h) Transparency for the public regarding the state's efforts is6 critical.7 (2) Therefore, the general assembly declares that:8 (a) Both the Colorado department of public health and9 environment and the energy and carbon management commission need10 to do more, both together and individually, to address the state's ozone11 problems;12 (b) More accountability for sources of pollution and for the state13 will build public trust and improve air quality;14 (c) The Colorado department of public health and environment's15 air pollution control division should consider more stringent approaches16 in the process of conducting dispersion modeling of proposed sources of17 increased NOx to better protect residents of disproportionately impacted18 communities in the ozone nonattainment area;19 (d) Further action needs to be taken to require steady, measurable20 emission reductions from upstream oil and gas operations, including21 preproduction operations, to ensure the oil and gas industry adequately22 contributes to ozone precursor pollution reductions; and23 (e) The energy and carbon management commission should24 encourage and facilitate the plugging, abandonment, and remediation of25 marginal wells to address emissions of ozone precursors from production26 activities, especially in disproportionately impacted communities.27 229 -4- SECTION 2. In Colorado Revised Statutes, 25-7-109, add1 (10)(d) as follows:2 25-7-109. Commission to promulgate emission control3 regulations. (10) (d) O N OR BEFORE AUGUST 31, 2026, THE DIVISION4 SHALL PROPOSE RULES DESIGNED TO REDUCE EMISSIONS OF OXIDES OF5 NITROGEN (NOX) GENERATED BY UPSTREAM OIL AND GAS OPERATIONS , AS6 DEFINED BY THE COMMISSION BY RULE , INCLUDING PREPRODUCTION7 OPERATIONS, BETWEEN MAY 1 AND SEPTEMBER 30 IN THE EIGHT-HOUR8 OZONE CONTROL AREA AND NORTHERN WELD COUNTY, AS THOSE TERMS9 ARE DEFINED BY THE COMMISSION BY RULE , BY FIFTY PERCENT BY 203010 RELATIVE TO 2017 NOX EMISSION LEVELS. NOX EMISSION LEVELS ARE11 CHARACTERIZED BY THE MOST RECENT STATE INVENTORY OF NOX12 EMISSIONS FOR 2017 THAT THE COMMISSION ADOPTED FOR THE PURPOSE13 OF INCLUSION IN THE STATE IMPLEMENTATION PLAN FOR THE 201514 EIGHT-HOUR OZONE NATIONAL AMBIENT AIR QUALITY STANDARD , OR AS15 PUBLISHED CONCURRENTLY WITH PROPOSED RULES CONSISTENT WITH THIS16 SUBSECTION (10)(d) IN A NOTICE OF PROPOSED RULE-MAKING PUBLISHED17 IN ACCORDANCE WITH SECTION 25-7-110 (1).18 SECTION 3. In Colorado Revised Statutes, 25-7-115, amend19 (3)(b)(III) introductory portion and (3)(b)(III)(C); and add20 (3)(b)(III)(C.5), (12), and (13) as follows:21 25-7-115. Enforcement - civil actions - definitions - reporting22 - repeal. (3) (b) (III) The order ISSUED IN ACCORDANCE WITH23 SUBSECTION (3)(b)(I) OF THIS SECTION may:24 (C) In addition to civil penalties, include a requirement to perform25 one or more projects to mitigate violations related to excess emissions;26 and 27 229 -5- (C.5) IN ADDITION TO CIVIL PENALTIES, INCLUDE A REQUIREMENT1 TO PERFORM ONE OR MORE PROJECTS TO REDUCE THE POTENTIAL FOR A2 RECURRENCE OF A VIOLATION FOR WHICH THE DIVISION COMMENCED3 ENFORCEMENT PURSUANT TO SUBSECTION (2)(c)(I) OF THIS SECTION; AND4 (12) (a) (I) O N OR BEFORE DECEMBER 31, 2024, THE DIVISION5 SHALL PREPARE AN AIR QUALITY ENFORCEMENT BENCHMARK REPORT AND6 POST THE REPORT ON THE DIVISION'S WEBSITE. THE REPORT MUST COVER7 THE FEDERAL FISCAL YEARS FROM OCTOBER 1, 2019, THROUGH8 S EPTEMBER 30, 2023, AND INCLUDE THE FOLLOWING STATEWIDE9 INFORMATION:10 (A) T HE TOTAL NUMBER OF ENFORCEMENT ACTIONS THAT THE11 DIVISION COMMENCED PURSUANT TO SUBSECTION (2)(c)(I) OF THIS12 SECTION;13 (B) T HE TOTAL NUMBER OF DECISIONS NOT TO IMPOSE A PENALTY14 FOR AN ENFORCEMENT ACTION THAT THE DIVISION COMMENCED15 PURSUANT TO SUBSECTION (2)(c)(I) OF THIS SECTION;16 (C) T HE TOTAL NUMBER OF ENFORCEMENT ACTIONS THAT THE17 DIVISION RESOLVED PURSUANT TO SUBSECTION (3)(b) OF THIS SECTION;18 AND19 (D) W ITH RESPECT TO CIVIL PENALTIES ASSESSED PURSUANT TO20 SECTION 25-7-122 (1)(b), THE TOTAL AMOUNT OF CIVIL PENALTIES , THE21 AVERAGE CIVIL PENALTY, THE MEDIAN CIVIL PENALTY, THE HIGHEST CIVIL22 PENALTY, AND THE LOWEST CIVIL PENALTY.23 (II) T HIS SUBSECTION (12)(a) IS REPEALED, EFFECTIVE JULY 1,24 2025.25 (b) O N OR BEFORE APRIL 1, 2025, AND ON OR BEFORE FEBRUARY26 1 OF EACH YEAR THEREAFTER , THE DIVISION SHALL PREPARE AN AIR27 229 -6- QUALITY ENFORCEMENT REPORT AND POST THE REPORT ON THE DIVISION 'S1 WEBSITE. THE FIRST REPORT MUST COVER THE FEDERAL FISCAL YEAR2 STARTING OCTOBER 1, 2023, THROUGH SEPTEMBER 30, 2024, AND EACH3 SUBSEQUENT REPORT MUST COVER THE FEDERAL FISCAL YEAR PERIOD OF4 O CTOBER 1 THROUGH SEPTEMBER 30 PRECEDING THE ISSUANCE OF THE5 REPORT. THE REPORTS PREPARED PURSUANT TO THIS SUBSECTION (12)(b)6 MUST INCLUDE THE FOLLOWING STATEWIDE INFORMATION :7 (I) T HE TOTAL NUMBER OF ENFORCEMENT ACTIONS THAT THE8 DIVISION COMMENCED PURSUANT TO SUBSECTION (2)(c)(I) OF THIS9 SECTION;10 (II) T HE NUMBER OF COMPLAINTS RECEIVED PURSUANT TO11 SUBSECTION (2)(a) OF THIS SECTION THAT RESULTED IN AN ENFORCEMENT12 ACTION THAT THE DIVISION COMMENCED UNDER SUBSECTION (2)(c)(I) OF13 THIS SECTION AND THE IDENTIFYING CASE NUMBER ;14 (III) T HE TOTAL NUMBER OF DECISIONS NOT TO IMPOSE A PENALTY15 FOR AN ENFORCEMENT ACTION THAT THE DIVISION COMMENCED16 PURSUANT TO SUBSECTION (2)(c)(I) OF THIS SECTION;17 (IV) T HE TOTAL NUMBER OF FORMAL ENFORCEMENT ACTIONS18 THAT THE DIVISION RESOLVED PURSUANT TO SUBSECTION (3)(b) OF THIS19 SECTION AND THE TOTAL NUMBER OF ACTIONS THAT INCLUDED20 VIOLATIONS WITHIN AREAS OF CONCERN , SUCH AS:21 (A) T HE AREA THAT THE UNITED STATES ENVIRONMENTAL22 PROTECTION AGENCY HAS DESIGNATED AN OZONE NONATTAINMENT AREA ;23 AND24 (B) A N AREA THAT IS IN A DISPROPORTIONATELY IMPACTED25 COMMUNITY; AND26 (V) W ITH RESPECT TO CIVIL PENALTIES ASSESSED PURSUANT TO27 229 -7- SECTION 25-7-122 (1)(b), THE TOTAL AMOUNT OF CIVIL PENALTIES , THE1 AVERAGE CIVIL PENALTY, THE MEDIAN CIVIL PENALTY, THE HIGHEST CIVIL2 PENALTY, THE LOWEST CIVIL PENALTY, AND THE TOTAL AMOUNT OF CIVIL3 PENALTIES ASSESSED FOR EACH ACTION THAT INCLUDES VIOLATIONS IN4 AREAS OF CONCERN, SUCH AS:5 (A) T HE AREA THAT THE UNITED STATES ENVIRONMENTAL6 PROTECTION AGENCY HAS DESIGNATED AN OZONE NONATTAINMENT AREA ;7 AND8 (B) A N AREA THAT IS IN A DISPROPORTIONATELY IMPACTED9 COMMUNITY.10 (13) T HE DIVISION SHALL IMPLEMENT AN AIR QUALITY11 ENFORCEMENT E-MAIL MAILING GROUP OR A SIMILAR COMMUNICATION12 FUNCTION TO SHARE ENFORCEMENT -RELATED UPDATES WITH INTERESTED13 PARTIES THAT OPT IN TO THE E -MAIL MAILING GROUP OR SIMILAR14 COMMUNICATION FUNCTION . THE DIVISION MAY SHARE INFORMATION15 THROUGH THE E-MAIL MAILING GROUP OR SIMILAR COMMUNICATION16 FUNCTION THAT INCLUDES:17 (a) A NOTICE OF VIOLATION OR NONCOMPLIANCE SENT PURSUANT18 TO SUBSECTION (2)(c)(I) OF THIS SECTION;19 (b) A SETTLEMENT OR OTHER ORDER ISSUED PURSUANT TO20 SUBSECTION (3)(b) OF THIS SECTION TO RESOLVE A CASE; AND21 (c) A LINK TO THE ANNUAL AIR QUALITY ENFORCEMENT22 BENCHMARK REPORT THAT THE DIVISION PREPARES PURSUANT TO23 SUBSECTION (12) OF THIS SECTION.24 SECTION 4. In Colorado Revised Statutes, amend 25-7-121 as25 follows:26 25-7-121. Injunctions. (1) In the event any person fails to27 229 -8- comply with a final order of the division or the commission that is not1 subject to stay pending administrative or judicial review or in the event2 any person violates any emission control regulation of the commission,3 the requirements of the state implementation plan, or any provision of OR4 COMMISSION RULE ADOPTED PURSUANT TO parts 1 to 4 of this article 5 ARTICLE 7, including any term or condition contained in any permit6 required under this article ARTICLE 7, the division or the commission, as7 the case may be, may request the district attorney for the district in which8 the alleged violation occurs or the attorney general to bring, and if so9 requested it is his or her THE DISTRICT ATTORNEY'S OR THE ATTORNEY10 GENERAL'S duty to bring, a suit for an injunction to:11 (a) Prevent any further or continued violation;12 (b) R EDUCE THE POTENTIAL FOR A RECURRENCE OF A VIOLATION13 FOR WHICH THE DIVISION HAS PREVIOUSLY COMMENCED ENFORCEMENT14 PURSUANT TO SECTION 25-7-115 (2)(c)(I); OR15 (c) O BTAIN ANY PERMIT REQUIRED TO CONSTRUCT OR OPERATE .16 (2) In any proceedings brought pursuant to this section to enforce 17 an order of the division or the commission, a temporary restraining order18 or preliminary injunction, if sought, shall not issue if there is probable19 cause to believe that granting such temporary restraining order or20 preliminary injunction will cause serious harm to the affected person or21 any other person and:22 (a) That the alleged violation or activity to which the order23 pertains will not continue or be repeated; or24 (b) That granting such temporary restraining order or preliminary25 injunction would be without sufficient corresponding public benefit.26 (3) Notwithstanding any other provision in this section, no action27 229 -9- for injunction may be taken where the source has obtained a renewable1 operating permit and conducts its operations in compliance with the2 permit terms, as provided in section 25-7-114.4 (3).3 SECTION 5. In Colorado Revised Statutes, 25-7-122, amend4 (1)(b) introductory portion, (1)(c), (2)(a)(I), (2)(a)(II), (2)(a)(III),5 (2)(a)(VIII), (2)(a)(IX), (2)(b) introductory portion, and (2)(b)(IV);6 repeal (2)(b)(V) and (3); and add (2)(a)(X) as follows:7 25-7-122. Civil penalties - rules - definitions. (1) Upon8 application of the division, the division may collect penalties as9 determined under this article 7 by instituting an action in the district court10 for the district in which the air pollution source affected is located, in11 accordance with the following provisions:12 (b) Any person who violates any requirement or prohibition of A13 FINAL ORDER OF THE DIVISION OR COMMISSION , an applicable emission14 control regulation of the commission, the state implementation plan, a15 construction permit, any provision for the prevention of significant16 deterioration under part 2 of this article 7, any provision related to17 attainment under part 3 of this article 7, or ANY PROVISION OF OR18 COMMISSION RULE ADOPTED PURSUANT TO section 25-7-105, 25-7-106,19 25-7-106.3, 25-7-108, 25-7-109, 25-7-109.5, 25-7-111, 25-7-112,20 25-7-113, 25-7-114.2, 25-7-114.5, 25-7-118, 25-7-141, 25-7-206,21 25-7-403, 25-7-404, 25-7-405, 25-7-407, 42-4-403, 42-4-404, 42-4-405,22 42-4-406, 42-4-407, 42-4-409, 42-4-410, or 42-4-414 is subject to a civil23 penalty of not more than forty-seven thousand three hundred fifty-seven24 dollars per day for each day of the violation; except that:25 (c) Any person failing to comply with the provisions of section26 25-7-114.1 shall be subject to a civil penalty of not more than five 27 229 -10- hundred ONE THOUSAND dollars PER DAY PER VIOLATION.1 (2) (a) In determining the amount of any civil penalty, the division2 shall consider the following factors:3 (I) The violator's compliance history, INCLUDING THE COMPLIANCE4 HISTORY OF THE VIOLATOR'S CORPORATE AFFILIATES, SUBSIDIARIES, AND5 PARENT ORGANIZATIONS;6 (II) L ACK OF good faith efforts on behalf of the violator to7 comply;8 (III) Payment by the violator of penalties previously assessed for 9 the same violation WHETHER THE VIOLATOR PREVIOUSLY COMMITTED THE10 SAME OR A SIMILAR VIOLATION, REGARDLESS OF WHETHER THE DIVISION11 OR COMMISSION COMMENCED AN ENFORCEMENT ACTION PURSUANT TO12 SECTION 25-7-115 FOR ANY SUCH VIOLATION;13 (VIII) Whether legal and factual theories were advanced for14 purposes of delay; and15 (IX) The severity of the violation or noncompliance; AND16 (X) W HETHER THE VIOLATION OCCURRED WITHIN OR IMPACTED A17 DISPROPORTIONATELY IMPACTED COMMUNITY .18 (b) In addition to the factors set forth in paragraph (a) of this 19 subsection (2) SUBSECTION (2)(a) OF THIS SECTION, THE DIVISION SHALL20 CONSIDER the following circumstances shall be considered as grounds for21 reducing or eliminating civil penalties:22 (IV) Substantial economic impact of a penalty on the violator;23 AND24 (V) Nonfeasance; and 25 (3) Notwithstanding any other provision in this section, no action26 for civil enforcement of this article may be taken where the source has27 229 -11- obtained a renewable operating permit and conducts its operations in1 compliance with the permit terms, as provided in section 25-7-114.4 (3).2 SECTION 6. In Colorado Revised Statutes, 25-7-122, amend3 (1)(b) introductory portion, (1)(c), (2)(a)(I), (2)(a)(II), (2)(a)(III),4 (2)(a)(VIII), (2)(a)(IX), (2)(b) introductory portion, and (2)(b)(IV);5 repeal (2)(b)(V) and (3); and add (2)(a)(X) as follows:6 25-7-122. Civil penalties - rules - definitions. (1) Upon7 application of the division, the division may collect penalties as8 determined under this article 7 by instituting an action in the district court9 for the district in which the air pollution source affected is located, in10 accordance with the following provisions:11 (b) Any person who violates any requirement or prohibition of A12 FINAL ORDER OF THE DIVISION OR COMMISSION , an applicable emission13 control regulation of the commission, the state implementation plan, a14 construction permit, any provision for the prevention of significant15 deterioration under part 2 of this article 7, any provision related to16 attainment under part 3 of this article 7, or ANY PROVISION OF OR17 COMMISSION RULE ADOPTED PURSUANT TO section 25-7-105, 25-7-106,18 25-7-106.3, 25-7-108, 25-7-109, 25-7-109.5, 25-7-111, 25-7-112,19 25-7-113, 25-7-114.2, 25-7-114.5, 25-7-118, 25-7-141, 25-7-146,20 25-7-206, 25-7-403, 25-7-404, 25-7-405, 25-7-407, 42-4-403, 42-4-404,21 42-4-405, 42-4-406, 42-4-407, 42-4-409, 42-4-410, or 42-4-414 is subject22 to a civil penalty of not more than forty-seven thousand three hundred23 fifty-seven dollars per day for each day of the violation; except that:24 (c) Any person failing to comply with the provisions of section25 25-7-114.1 shall be subject to a civil penalty of not more than five 26 hundred ONE THOUSAND dollars PER DAY PER VIOLATION.27 229 -12- (2) (a) In determining the amount of any civil penalty, the division1 shall consider the following factors:2 (I) The violator's compliance history, INCLUDING THE COMPLIANCE3 HISTORY OF THE VIOLATOR'S CORPORATE AFFILIATES, SUBSIDIARIES, AND4 PARENT ORGANIZATIONS;5 (II) L ACK OF good faith efforts on behalf of the violator to6 comply;7 (III) Payment by the violator of penalties previously assessed for 8 the same violation WHETHER THE VIOLATOR PREVIOUSLY COMMITTED THE9 SAME OR A SIMILAR VIOLATION, REGARDLESS OF WHETHER THE DIVISION10 OR COMMISSION COMMENCED AN ENFORCEMENT ACTION PURSUANT TO11 SECTION 25-7-115 FOR ANY SUCH VIOLATION;12 (VIII) Whether legal and factual theories were advanced for13 purposes of delay; and14 (IX) The severity of the violation or noncompliance; AND15 (X) W HETHER THE VIOLATION OCCURRED WITHIN OR IMPACTED A16 DISPROPORTIONATELY IMPACTED COMMUNITY .17 (b) In addition to the factors set forth in paragraph (a) of this 18 subsection (2) SUBSECTION (2)(a) OF THIS SECTION, THE DIVISION SHALL19 CONSIDER the following circumstances shall be considered as grounds for20 reducing or eliminating civil penalties:21 (IV) Substantial economic impact of a penalty on the violator;22 AND23 (V) Nonfeasance; and 24 (3) Notwithstanding any other provision in this section, no action25 for civil enforcement of this article may be taken where the source has26 obtained a renewable operating permit and conducts its operations in27 229 -13- compliance with the permit terms, as provided in section 25-7-114.4 (3).1 SECTION 7. In Colorado Revised Statutes, 25-7-114.5, amend2 (3) as follows:3 25-7-114.5. Application review - public participation. (3) The4 division shall also determine whether applications are for a new source5 activity that may have an impact upon areas which, as of the projected6 new source start-up date, are in compliance with national ambient air7 quality standards as of the date of the permit application, or for new8 source activity that may have an impact upon areas which, as of the9 projected new source start-up date, are not in compliance with national10 ambient air quality standards as of the date of the permit application. IN11 IMPLEMENTING THIS SUBSECTION (3), THE DIVISION MAY CONSIDER MORE12 STRINGENT METHODS FOR NEW SOURCES OF OXIDES OF NITROGEN IN13 DISPROPORTIONATELY IMPACTED COMMUNITIES IN THE AREA DESIGNATED14 NONATTAINMENT FOR OZONE BY THE UNITED STATES ENVIRONMENTAL15 PROTECTION AGENCY.16 SECTION 8. In Colorado Revised Statutes, 34-60-103, add (4.2)17 as follows:18 34-60-103. Definitions. As used in this article 60, unless the19 context otherwise requires:20 (4.2) "D ISPROPORTIONATELY IMPACTED COMMUNITY " HAS THE21 MEANING SET FORTH IN SECTION 24-4-109 (2)(b)(II).22 SECTION 9. In Colorado Revised Statutes, 34-60-104.5, amend23 (2)(d)(I); and add (2)(d)(III) as follows:24 34-60-104.5. Director of commission - duties. (2) The director25 of the commission shall:26 (d) (I) Appoint, pursuant to section 13 of article XII of the state27 229 -14- constitution, such clerical and professional staff and consultants as may1 be necessary for the efficient and effective operation of the commission,2 including at least one and up to OR two deputy directors; and3 (III) A PPOINT AT LEAST TWO COMMUNITY LIAISONS TO SERVE AS4 DEDICATED RESOURCES FOR DISPROPORTIONATELY IMPACTED5 COMMUNITIES REGARDING COMMISSION REGULATION . THE COMMUNITY6 LIAISONS SHALL PERFORM DUTIES INCLUDING :7 (A) S ERVING AS AN ADVOCATE FOR DISPROPORTIONATELY8 IMPACTED COMMUNITIES IN A NONLEGAL CAPACITY AND , WHILE TAKING9 INTO CONSIDERATION THE ENGAGEMENT PRACTICES DESCRIBED IN10 SECTION 24-4-109 (3)(b), ACTING AS A LIAISON BETWEEN11 DISPROPORTIONATELY IMPACTED COMMUNITY MEMBERS AND THE12 COMMISSION, INCLUDING WITH RESPECT TO COMMUNICATIONS REGARDING13 THE PERMITTING PROCESS;14 (B) P ROVIDING COMMUNITY MEMBERS WITH RELEVANT15 INFORMATION REGARDING THIRD -PARTY RESOURCES SUCH AS LEGAL16 ASSISTANCE TO ASSIST COMMUNITY MEMBERS IN PRESENTING THEIR VIEWS17 TO THE COMMISSION;18 (C) W ORKING TO IMPROVE THE RELATIONSHIPS AND INTERACTIONS19 BETWEEN DISPROPORTIONATELY IMPACTED COMMUNITIES AND THE20 COMMISSION;21 (D) A CTING AS A RESOURCE FOR SHARING INFORMATION BETWEEN22 THE COMMISSION AND DISPROPORTIONATELY IMPACTED COMMUNITIES ;23 (E) E NGAGING IN OUTREACH TO DISPROPORTIONATELY IMPACTED24 COMMUNITIES; AND25 (F) O RGANIZING AND ATTENDING IN -PERSON MEETINGS WITHIN26 DISPROPORTIONATELY IMPACTED COMMUNITIES .27 229 -15- SECTION 10. In Colorado Revised Statutes, 34-60-106, amend1 (1)(f)(I)(B), (3), and (11)(c)(I); and add (1)(f)(I.5), (11)(c)(III), and (20.5)2 as follows:3 34-60-106. Additional powers of commission - rules -4 definitions - repeal. (1) The commission also shall require:5 (f) (I) That no operations for the drilling of a well for oil and gas6 shall be commenced without first:7 (B) Obtaining a permit from the commission, under rules8 prescribed by the commission; and9 (I.5) T HAT OIL AND GAS OPERATIONS SHALL NOT OCCUR WITHOUT10 THE OPERATOR OBTAINING AND MAINTAINING ANY NECESSARY PERMITS11 AND A LICENSE TO CONDUCT OIL AND GAS OPERATIONS FROM THE12 COMMISSION, IN ACCORDANCE WITH RULES PROMULGATED BY THE13 COMMISSION; AND14 (3) The commission also has the authority to:15 (a) Limit the production of oil or gas, or both, from any pool or16 field for the prevention of waste, and to limit and to allocate the17 production from such pool or field among or between tracts of land18 having separate ownerships therein IN THE TRACTS OF LAND, on a fair and19 equitable basis so that each such tract will be permitted to produce no20 more than its just and equitable share from the pool and so as to prevent,21 insofar as is practicable, reasonably avoidable drainage from each such22 tract which THAT is not equalized by counter-drainage; and23 (b) Classify wells as oil or gas wells for purposes material to the24 interpretation or enforcement of this article ARTICLE 60;25 (c) A FTER CONSULTATION WITH THE DIVISION OF ADMINISTRATION26 IN THE DEPARTMENT OF PUBLIC HEALTH AND ENVIRONMENT , REQUIRE27 229 -16- OPERATORS TO TAKE SUCH ACTIONS BETWEEN MAY 1 AND SEPTEMBER 301 OF EACH YEAR TO REDUCE EMISSIONS OF OXIDES OF NITROGEN (NOX)2 GENERATED FROM PRODUCTION AND PREPRODUCTION OPERATIONS AS THE3 COMMISSION DEEMS APPROPRIATE TO ASSURE COMPLIANCE WITH :4 (I) NO X INTENSITY TARGETS; AND5 (II) O THER NOX RULES THAT THE AIR QUALITY CONTROL6 COMMISSION ADOPTS BY RULE TO ACHIEVE SECTOR -WIDE COMPLIANCE7 WITH THE STATE'S 2030 GOALS FOR NOX EMISSION REDUCTIONS; AND8 (d) W HEN REQUIRING OPERATORS TO TAKE ACTION PURSUANT TO9 SUBSECTION (3)(c) OF THIS SECTION, PRIORITIZE ACTIONS BY THOSE10 OPERATORS THAT DO NOT DEMONSTRATE COMPLIANCE WITH ANY11 APPLICABLE NOX INTENSITY TARGETS OR OTHER NOX RULES THAT THE12 AIR QUALITY CONTROL COMMISSION ADOPTS TO ACHIEVE SECTOR -WIDE13 COMPLIANCE WITH THE STATE 'S 2030 GOALS FOR NOX EMISSION14 REDUCTIONS.15 (11) (c) The commission shall adopt rules that:16 (I) Adopt an alternative location analysis process and specify17 criteria used to identify oil and gas locations and facilities proposed to be18 located near populated areas that will be subject to the alternative location19 analysis process; and 20 (III) I N CONSULTATION WITH THE DEPARTMENT OF PUBLIC HEALTH21 AND ENVIRONMENT, REQUIRE ENHANCED SYSTEMS AND PRACTICES TO22 AVOID, MINIMIZE, AND MITIGATE EMISSIONS OF OZONE PRECURSORS FROM23 OPERATIONS AT NEWLY PERMITTED OIL AND GAS LOCATIONS IN THE24 EIGHT-HOUR OZONE CONTROL AREA AND NORTHERN WELD COUNTY, AS25 THOSE TERMS ARE DEFINED BY THE AIR QUALITY CONTROL COMMISSION BY26 RULE. IN ADOPTING THE RULES PURSUANT TO THIS SUBSECTION27 229 -17- (11)(c)(III), THE COMMISSION SHALL:1 (A) B Y SEPTEMBER 30, 2024, ADOPT AN INITIAL LIST OF ENHANCED2 SYSTEMS AND PRACTICES CONSIDERING THE BEST MANAGEMENT3 PRACTICES THAT HAVE BEEN RECOMMENDED BY THE DEPARTMENT OF4 PUBLIC HEALTH AND ENVIRONMENT IN CONSULTATION WITH OPERATORS ;5 (B) C ONSIDER A PROPOSED OIL AND GAS LOCATION 'S POTENTIAL6 TO CONTRIBUTE TO ADVERSE IMPACTS THROUGH EMISSIONS OF OZONE7 PRECURSORS;8 (C) C ONSIDER ANY AVAILABLE PHOTOCHEMICAL SENSITIVITY9 MODELING ANALYSES CONDUCTED BY THE DEPARTMENT OF PUBLIC10 HEALTH AND ENVIRONMENT ; AND11 (D) E VALUATE THE POTENTIAL FOR UPDATES TO THE REQUIRED12 ENHANCED SYSTEMS AND PRACTICES PERIODICALLY TO ACCOUNT FOR13 EVOLVING DESIGN, OPERATIONAL PROCEDURES , AND TECHNOLOGIES TO14 REDUCE OZONE PRECURSORS .15 (20.5) T HE COMMISSION SHALL ADMINISTER THIS ARTICLE 60 IN A16 MANNER TO MINIMIZE ADVERSE IMPACTS TO DISPROPORTIONATELY17 IMPACTED COMMUNITIES THAT ARE NEGATIVELY AFFECTED BY OIL AND18 GAS OPERATIONS.19 SECTION 11. In Colorado Revised Statutes, amend 34-60-11120 as follows:21 34-60-111. Judicial review. (1) E XCEPT AS PROVIDED IN22 SUBSECTION (2) OF THIS SECTION, any rule, regulation, or final order of the23 commission shall be IS subject to judicial review in accordance with the24 provisions of section 24-4-106. C.R.S. The commission shall IS not be25 required to post bond in any proceeding for judicial review.26 (2) N OTWITHSTANDING SECTION 24-4-106 (5), A COURT OF27 229 -18- COMPETENT JURISDICTION MAY POSTPONE THE EFFECTIVE DATE OF A1 COMMISSION ORDER SUSPENDING OR REVOKING AN OPERATOR 'S LICENSE2 TO CONDUCT OIL AND GAS OPERATIONS OR A CERTIFICATE OF CLEARANCE3 AND SUBJECT TO REVIEW AS A FINAL AGENCY ACTION PURSUANT TO4 SECTION 24-4-106 ONLY UPON A DEMONSTRATION BY THE MOVING PARTY5 THAT:6 (a) T HE MOVING PARTY HAS A REASONABLE PROBABILITY OF7 SUCCESS ON THE MERITS IN THE UNDERLYING JUDICIAL PROCEEDING ;8 (b) R EAL, IMMEDIATE, AND IRREPARABLE INJURY TO THE MOVING9 PARTY WOULD OTHERWISE RESULT ;10 (c) P OSTPONING THE EFFECTIVE DATE OF THE COMMISSION ORDER11 WILL NOT DISSERVE THE PUBLIC INTEREST; AND12 (d) I N CONSIDERATION OF THE BALANCE OF EQUITIES , INCLUDING13 CONSIDERATION OF POTENTIAL ADVERSE IMPACTS ON PUBLIC HEALTH ,14 SAFETY, AND WELFARE AND THE PROTECTION OF THE ENVIRONMENT AND15 WILDLIFE RESOURCES, THE BALANCE FAVORS THE POSTPONEMENT .16 SECTION 12. In Colorado Revised Statutes, 34-60-121, amend17 (5)(a), (6), and (7) as follows:18 34-60-121. Violations - investigations - penalties - rules -19 definition - legislative declaration. (5) (a) If an operator fails to take20 corrective action required pursuant to subsection (4) of this section, or21 whenever the commission or the director has evidence that a violation of22 any provision of this article ARTICLE 60, or of any rule, regulation, or23 order of the commission, or of any permit has occurred, under24 circumstances deemed to constitute an emergency situation OR UNDER25 CIRCUMSTANCES THAT CAUSE OR THREATEN TO CAUSE A SIGNIFICANT26 ADVERSE IMPACT TO PUBLIC HEALTH , SAFETY, WELFARE, THE27 229 -19- ENVIRONMENT, OR WILDLIFE RESOURCES THAT REQUIRE IMMEDIATE1 ACTION, the commission or the director may issue a cease-and-desist2 order to the operator whose act or omission allegedly resulted in such THE3 violation. Such THE cease-and-desist order shall MUST require such action4 by the operator as the commission or director deems appropriate. The5 order shall be served personally or by certified mail, return receipt6 requested, to the operator or the operator's agent for service of process7 and shall MUST state the provision alleged to have been violated, the facts8 alleged to constitute the violation, the time by which the acts or practices9 cited are required to cease, and any corrective action the commission or10 the director elects to require of the operator.11 (6) If the commission determines, after a hearing conducted in12 accordance with section 34-60-108, that an operator has failed to perform13 any corrective action imposed under subsection (4) of this section or14 failed to comply with a cease-and-desist order issued under subsection (5)15 of this section, with regard to a violation of a permit provision, the16 commission may issue an order suspending, modifying, or revoking such17 THE OPERATOR'S permit OR PERMITS OR SUSPENDING OR REVOKING THE18 OPERATOR'S LICENSE TO CONDUCT OIL AND GAS OPERATIONS or may take19 other appropriate action. An operator subject to an order that suspends,20 modifies, or revokes a permit OR THAT SUSPENDS OR REVOKES THE21 OPERATOR'S LICENSE TO CONDUCT OIL AND GAS OPERATIONS shall22 continue the affected operations only for the purpose of bringing them23 into compliance with the permit or modified permit and shall do so under24 the supervision of the commission. Once the affected operations are in25 compliance to the satisfaction of the commission and any penalty not26 subject to judicial review or appeal has been paid, the commission shall 27 229 -20- MAY reinstate the permit OR THE LICENSE TO CONDUCT OIL AND GAS1 OPERATIONS.2 (7) (a) The commission or the director shall issue an order to an3 operator to appear for a hearing before the commission in accordance4 with section 34-60-108 whenever the commission or the director has5 evidence that an operator is responsible for:6 (I) Gross negligence or knowing and willful misconduct that7 results in an egregious violation; or8 (II) A pattern of violation of this article ARTICLE 60, any rule or9 order of the commission, or any permit;10 (III) A VIOLATION OF THIS ARTICLE 60, ANY RULE OR ORDER OF11 THE COMMISSION, OR ANY PERMIT, IF SUCH VIOLATION RESULTS IN A12 COMMISSION ORDER IMPOSING A PENALTY OF ONE MILLION DOLLARS OR13 MORE;14 (IV) A VIOLATION THAT CAUSED A MAJOR ADVERSE IMPACT , AS15 DEFINED IN THE COMMISSION 'S RULES, TO PUBLIC HEALTH, SAFETY,16 WELFARE, THE ENVIRONMENT , OR WILDLIFE RESOURCES AND THE17 VIOLATION IS THE THIRD VIOLATION IN THE STATE IN ONE YEAR THAT18 CAUSED A MAJOR ADVERSE IMPACT , AS DEFINED IN THE COMMISSION'S19 RULES, TO PUBLIC HEALTH, SAFETY, WELFARE, THE ENVIRONMENT, OR20 WILDLIFE RESOURCES; OR21 (V) A VIOLATION THAT CAUSED DEATH OR SERIOUS BODILY INJURY22 TO AN INDIVIDUAL.23 (b) If the commission finds, after such THE hearing CONDUCTED24 PURSUANT TO SUBSECTION (7)(a) OF THIS SECTION, that the operator is25 responsible under the legal standards specified in paragraph (a) of this26 subsection (7), it SUBSECTION (7)(a) OF THIS SECTION, THE COMMISSION27 229 -21- may issue an order that prohibits the issuance of any new permits to the1 operator, suspends any or all of the operator's certificates of clearance,2 SUSPENDS THE OPERATOR 'S LICENSE TO CONDUCT OIL AND GAS3 OPERATIONS, or both. When ANY COMBINATION OF THE THREE . IF the4 operator demonstrates to the satisfaction of the commission that it THE5 OPERATOR has brought each of the violations into compliance and that6 any penalty not subject to judicial review or appeal has been paid, the7 commission may vacate the order.8 (c) I N A HEARING CONDUCTED PURSUANT TO THIS SUBSECTION (7),9 THE COMMISSION MAY CONSIDER AS EVIDENCE VIOLATIONS FOR WHICH10 ENFORCEMENT WAS COMMENCED PRIOR TO THE EFFECTIVE DATE OF THIS11 SUBSECTION (7), AS AMENDED, IN DETERMINING WHETHER TO PROHIBIT12 THE ISSUANCE OF ANY NEW PERMITS TO THE OPERATOR , SUSPEND ANY OR13 ALL OF THE OPERATOR'S CERTIFICATES OF CLEARANCE , SUSPEND THE14 OPERATOR'S LICENSE TO CONDUCT OIL AND GAS OPERATIONS , OR ANY15 COMBINATION OF THE THREE.16 SECTION 13. In Colorado Revised Statutes, 34-60-124, amend17 (4)(e)(II) and (4)(f); and add (4)(g) as follows:18 34-60-124. Energy and carbon management cash fund -19 definitions - repeal. (4) The fund may be expended:20 (e) (II) This subsection (4)(e) is repealed, effective July 1, 2025.21 and22 (f) To create and maintain the website described in section23 34-60-106 (22); AND24 (g) B Y THE COMMISSION TO FUND THE COMMUNITY LIAISON25 POSITIONS APPOINTED PURSUANT TO SECTION 34-60-104.5 (2)(d)(III).26 SECTION 14. In Colorado Revised Statutes, 34-60-133, amend27 229 -22- (1)(a)(II) and (1)(a)(III); and add (1.5), (2)(e.5), (6)(d)(I.5), and (8)(d.5)1 as follows:2 34-60-133. Orphaned wells mitigation enterprise - creation -3 powers and duties - enterprise board created - mitigation fees - cash4 fund created - rules - definitions - legislative declaration.5 (1) Enterprise created. (a) The orphaned wells mitigation enterprise is6 created in the department for the purpose of:7 (II) Funding the plugging, reclaiming, and remediating of8 orphaned wells AND MARGINAL WELLS in the state;9 (III) Ensuring that the costs associated with plugging, reclaiming,10 and remediating orphaned wells AND MARGINAL WELLS are borne by11 operators in the form of mitigation fees; and12 (1.5) Legislative declaration. T HE GENERAL ASSEMBLY FINDS13 AND DECLARES THAT:14 (a) O RPHANED WELLS AND MARGINAL WELLS PRESENT RISKS TO15 PUBLIC HEALTH, SAFETY, AND WELFARE, INCLUDING RISKS TO THE16 ENVIRONMENT AND WILDLIFE RESOURCES ;17 (b) E NVIRONMENTAL JUSTICE IS A PRIORITY FOR THE STATE , AND18 THE ENTERPRISE BOARD SHOULD ADMINISTER THIS SECTION IN A MANNER19 THAT REDUCES BURDENS ON OVERBURDENED COMMUNITIES ;20 (c) T HE ENTERPRISE HELPS MITIGATE RISKS BY PLUGGING ,21 RECLAIMING, AND REMEDIATING ORPHANED WELLS AND THOSE MARGINAL22 WELLS THAT ARE AT THE HIGHEST RISK OF BECOMING ORPHANED ;23 (d) A LL OIL AND GAS WELLS WILL REQUIRE PLUGGING AND24 RECLAIMING AT THE END OF THEIR USEFUL LIFE;25 (e) M ANY OIL AND GAS WELLS WILL REQUIRE REMEDIATION AT THE26 END OF THEIR USEFUL LIFE;27 229 -23- (f) PURSUANT TO SECTION 34-60-106, ALL OPERATORS ARE1 REQUIRED TO PROVIDE FINANCIAL ASSURANCE DEMONSTRATING THAT THE2 OPERATORS ARE FINANCIALLY CAPABLE OF FULFILLING EVERY OBLIGATION3 IMPOSED ON THE OPERATOR PURSUANT TO THIS ARTICLE 60, INCLUDING AN4 OPERATOR'S PLUGGING, RECLAMATION, AND REMEDIATION OBLIGATIONS;5 AND6 (g) T HE SERVICES THAT THE ENTERPRISE PROVIDES BENEFIT ALL7 OPERATORS IN THE STATE BY:8 (I) M ITIGATING THE RISKS OF AN OPERATOR'S OIL AND GAS WELL9 BECOMING AN ORPHANED WELL ; AND10 (II) P LUGGING, RECLAIMING, AND REMEDIATING QUALIFYING11 MARGINAL WELLS AND ELIMINATING THE RISK OF SUCH QUALIFYING12 MARGINAL WELLS BECOMING ORPHANED WELLS .13 (2) Powers and duties. In addition to any other powers and duties14 specified in this section, the enterprise board has the following general15 powers and duties on behalf of the enterprise:16 (e.5) T O ISSUE GUIDANCE ESTABLISHING STANDARDS FOR17 MARGINAL WELLS TO QUALIFY FOR FUNDING PURSUANT TO SUBSECTION18 (1)(a)(II) OF THIS SECTION. IN ESTABLISHING THESE STANDARDS , THE19 ENTERPRISE BOARD SHALL CONSIDER :20 (I) A N OIL AND GAS WELL 'S LOCATION IN OR NEAR A21 DISPROPORTIONATELY IMPACTED COMMUNITY OR A HIGHLY POPULATED22 AREA; AND23 (II) A N OIL AND GAS WELL'S RISK OF ADVERSE IMPACTS ON PUBLIC24 HEALTH, SAFETY, WELFARE, THE ENVIRONMENT , AND WILDLIFE25 RESOURCES; AND26 (6) Cash fund. (d) Money credited to the fund is continuously27 229 -24- appropriated to the fund for use by the enterprise and shall be expended1 to:2 (I.5) P LUG, RECLAIM, AND REMEDIATE QUALIFYING MARGINAL3 WELLS, AS DETERMINED BASED ON FACTORS THAT INCLUDE :4 (A) T HE OIL AND GAS WELL 'S LOCATION IN OR NEAR A5 DISPROPORTIONATELY IMPACTED COMMUNITY OR A HIGHLY POPULATED6 AREA; AND7 (B) T HE OIL AND GAS WELL'S RISK OF ADVERSE IMPACTS ON PUBLIC8 HEALTH, SAFETY, WELFARE, THE ENVIRONMENT , AND WILDLIFE9 RESOURCES;10 (8) Definitions. As used in this section, unless the context11 otherwise requires:12 (d.5) "M ARGINAL WELL" MEANS AN OIL AND GAS WELL THAT13 PRESENTS A HIGH RISK OF BECOMING ORPHANED .14 SECTION 15. Appropriation. (1) For the 2024-25 state fiscal15 year, $753,157 is appropriated to the department of public health and16 environment. This appropriation is from the general fund. To implement17 this act, the department may use this appropriation as follows:18 (a) $312,865 for use by the air pollution control division for19 personal services related to stationary sources, which amount is based on20 an assumption that the division will require an additional 3.3 FTE;21 (b) $325,074 for use by the air pollution control division for22 operating expenses related to stationary sources; and23 (c) $115,218 for the purchase of legal services.24 (2) For the 2024-25 state fiscal year, $115,218 is appropriated to25 the department of law. This appropriation is from reappropriated funds26 received from the department of public health and environment under27 229 -25- subsection (1)(c) of this section and is based on an assumption that the1 department of law will require an additional 0.5 FTE. To implement this2 act, the department of law may use this appropriation to provide legal3 services for the department of public health and environment.4 (3) For the 2024-25 state fiscal year, $179,127 is appropriated to5 the department of natural resources for use by the energy and carbon6 management commission. This appropriation is from the energy and7 carbon management cash fund created in section 34-60-122 (5)(a),8 C.R.S., and is based on an assumption that the commission will require9 an additional 2.0 FTE. To implement this act, the commission may use10 this appropriation for program costs.11 SECTION 16. Effective date - applicability. (1) (a) Except as12 otherwise provided in this subsection (1), this act takes effect upon13 passage.14 (b) Section 6 of this act takes effect only if House Bill 24-133815 becomes law, in which case section 6 of this act takes effect upon16 passage.17 (c) Section 5 of this act takes effect only if House Bill 24-133818 does not become law, in which case section 5 of this act takes effect upon19 passage.20 (2) This act applies to enforcement actions commenced by the21 division of administration in the department of public health and22 environment and the energy and carbon management commission on or23 after the effective date of this act.24 SECTION 17. Safety clause. The general assembly finds,25 determines, and declares that this act is necessary for the immediate26 229 -26- preservation of the public peace, health, or safety or for appropriations for1 the support and maintenance of the departments of the state and state2 institutions.3 229 -27-