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Sustained The Colorado Chamber Leadership Yields Adoption of Less Burdensome Ozone Regulations

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State Policy News

Sustained CACI Leadership Yields Adoption of Less Burdensome Ozone Regulations

Late last week, the Colorado Air Quality Control Commission (AQCC) convened its November meeting, which included a key rulemaking hearing to consider important changes to Colorado’s Ozone National Ambient Air Quality Standard (NAAQS) State Implementation Plan (SIP).

In 2015, the U.S. Environmental Protection Agency (EPA) took action to increase the severity of the nonattainment designation for the Denver Metro-North Front Range compliance region from “marginal” to “moderate” nonattainment due to the region’s continued nonattainment with the 75 parts per billion 2008 Ozone Standard.

As a result of this more severe “moderate” nonattainment designation, Colorado air quality regulators at the Air Pollution Control Division (APCD) were required to revise Colorado’s Ozone SIP, a comprehensive set of regulations and rules aimed at reducing levels of ozone-causing emissions, to further tighten regulations and reduce ozone levels within the nonattainment area.  The ozone standard is national in nature, and the nonattainment designation is regional, so the regulatory requirements and compliance strategies included in the SIP therefore impacts a long list of activities within a regional economy that contribute to ozone levels, from energy and manufacturing to transportation and much more.

Among CACI’s concerned members operating within the Denver Metro-North Front Range (DM/NFR) nonattainment area were operators in the aerospace, advanced manufacturing, brewing, bottling and canning, high tech, oil and gas, pharmaceutical manufacturing, and fuel refinery sectors.

Soon after the 2015 EPA action to increase the DM/NFR region’s nonattainment designation, the Regional Air Quality Council (RAQC) initiated a stakeholder process including industry, community, environmental advocacy, and local and state governmental stakeholders to begin developing and vetting proposals for regulatory revisions to achieve stricter emissions controls aimed at further reducing ozone levels in the compliance region.

In late May 2016, the RAQC finalized a package of proposed SIP revisions and recommended that the AQCC notice the SIP revisions for a rulemaking in October.  In finalizing the SIP revision package, the RAQC recommended for adoption a number of proposals that were not raised until the final weeks of the stakeholder process and that did not benefit from nearly a year of stakeholder discussion and feedback regarding the regulatory provisions, the costs and benefits of implementation, or potential edits to the proposal to ease implementation or avoid unnecessary costs or unintended consequences.

In late May 2016, CACI increased engagement, proactively voicing concerns in public comments to the RAQC regarding the potentially harmful impacts of problematic SIP revisions added to the proposal package at the eleventh hour.  After several weeks of CACI advocacy, CACI succeeded in persuading Colorado’s air quality regulators at the APCD, the RAQC and the AQCC, that additional time was needed to address important industry concerns regarding numerous elements of the SIP revision package.

Ultimately, the Commission acted to delay the rulemaking hearing by one month, from an October hearing to a November hearing, in order to give regulators more time to conduct stakeholder negotiations aimed at developing regulatory revisions that both achieved the environmental protection goals required by the Clean Air Act, and minimize the risk of harmful impacts or unintended consequences for Colorado industries or the broader state economy.

CACI raised three key concerns based on feedback from a wide range of CACI members across a diversity of leading Colorado industries who worried that the approval and implementation of flawed regulatory revisions would create negative impacts on their operations or decrease the competitiveness of Colorado’s business climate.  The issues included:

1)      Major Source RACT provisions and the incorporation of existing major source permit limits into the SIP.

  1. a.       CACI members were concerned about an initial proposal to essentially cut and paste specific elements of company’s source-specific emissions permits into Colorado’s Ozone SIP, thus incorporating those permit limits into the regulations.  CACI argued that this proposal lacked any legal justification, and that in fact, clear legal precedent exists to contradict the need for such a requirement.

2)      Regulation No. 7, Section XVI.D., Combustion Process Adjustments

  1. a.       CACI members, primarily in the electric utility, oil and gas, and refinery sectors, raised important concerns that the original proposal related to new combustion process adjustments provisions and their associated reporting and recordkeeping requirements were not reflective of operational realities, and would have resulted in a number of harmful impacts that would have made compliance extremely difficult, increasing compliance burdens and costs, and making compliance impossible to achieve in some instances.

3)      Regulation No. 7, Section X.E., Industrial Cleaning Solvent Operations.

  1. a.       CACI members in the aerospace and pharmaceutical manufacturing sectors raised concerns that the initial proposals regarding industrial cleaning solvent operations were inconsistent or conflicting with required practices necessary to their operations.  CACI members voiced concerns that adoption of the originally proposed regulatory revisions would have severely disadvantaged Colorado operators in impacted industries, as the original proposal would have restricted or prohibited continued operations or future efforts to expand operations in Colorado.

To view CACI’s Prehearing Statement that addresses each of these issues in greater detail, please click here.

To view all formal filings entered into the public record for this rulemaking, click here.

CACI’s success in persuading the Air Commission to delay the rulemaking hearing by one month proved vital to industry’s efforts address the identified concerns.  Throughout the final months leading to the November rulemaking hearing, CACI, many individual CACI members, and several other industry partners engaged in consistent negotiations with Colorado’s air regulators at the APCD regarding the provisions of concern and potential alternatives to the initial proposal that would have addressed industry concerns in ways that would still achieve the environmental protection goals required by the Clean Air Act.

Ultimately, CACI collaborated with its membership and other industry partners in persuading the Air Pollution Control Division to adopt and recommend for approval by the Air Quality Control Commission, new SIP revisions that incorporated industry feedback so as to remove harmful impacts or new, unnecessarily costly or burdensome requirements.

While the Commission did not fully accept CACI’s legal argument regarding the lack of legal justification for the newly proposed “Major Source RACT” requirements, CACI was successful in negotiations on this issue and the final approved Colorado Ozone SIP revisions did not incorporate any source-specific permit limits for industries subject to major source RACT requirements.

CACI’s advocacy also created a strong public record on this key legal issue, thus preserving the right of CACI or any impacted CACI member to further challenge the new requirement that some industry operators subject to Major Source RACT Requirements conduct a costly RACT analysis to demonstrate to regulators exactly what types of emissions control technologies and practices are in place at their permitted operations and are reasonably available to them.

CACI’s success in both securing additional time in this rulemaking process and then making productive use of that time to negotiate and gain approval of far less burdensome Ozone SIP revisions than were initially proposed is particularly important because of the looming implementation of the newer and stricter 2015 Ozone Standard.

While this rulemaking process focused uniquely on revisions to Colorado’s Ozone SIP under the 2008 Ozone NAAQS, there is a broad perception that any recent, ongoing, or soon-to-occur efforts to update state ozone SIPs under the 2008 standard will set in place regulatory and policy precedents that will serve as the foundation for future efforts aimed at reducing ozone levels when states work to develop new state implementation plans for achieving compliance with the stricter 2015 Ozone Standard of 70 parts per billion.

CACI would like to communicate its appreciation to Colorado’s Air Pollution Control Division for its willingness to consider CACI’s industry-focused feedback and to collaborate with CACI and other industry stakeholders in working to develop ozone SIP revisions that balance the need to achieve stricter environmental controls with the need to minimize harmful and avoidable impacts on Colorado’s industry operators and economy.

CACI also would like to thank CACI Energy & Environment Chairman John Jacus, Partner, Davis Graham, & Stubbs, who represented CACI throughout this rulemaking process, and CACI Air Quality Committee Chair Adam Berig, Air Compliance Manager, Encana Services Company, who provided much needed support to CACI in this rulemaking, including testimony at the rulemaking hearing.

CACI members with questions or concerns regarding Colorado’s Ozone State Implementation Plan or the SIP revisions that were adopted by the Air Quality Control Commission at last week’s rulemaking hearing should contact Adam Berig, CACI Air Quality Committee Chair, or Dan O’Connell, CACI Director of Governmental Affairs, at 303.866.9622.

CACI 101: Plan to attend!

  • Are you a new CACI member?
  • Are you new to your company and need to know more about your CACI membership?
  • Do you want to discover how to get the most out of your membership investment?

CACI 101 is the place to be on December 13th from 11:30 a.m. to 1 p.m. in the CACI Conference Room, 1600 Broadway, Suite 1000.

The CACI 101 agenda includes the following:

  • A 2017 legislative preview,
  • A policy council primer,
  • An overview of CACI events,
  • Testimonials from current members on how they make the most of their CACI connection, and
  • Networking with other new members.

Click Here to Register

For more information, contact Bonnie Finley at 303.866.9643.