5 Colo. Code Regs. § 1001-27-B-II
This Statement of Basis, Specific Statutory Authority, and Purpose complies with the requirements of the State Administrative Procedure Act, § 24-4-103(4), C.R.S., the Colorado Air Pollution Prevention and Control Act, §§ 25-7-110 and 25-7-110.5., C.R.S., and the Air Quality Control Commission's ("Commission") Procedural Rules, 5 Code Colo. Reg. §1001-1.
Basis
In 1999, EPA promulgated the final Regional Haze Rule, which requires each state to submit a state implementation plan (SIP) to address Regional Haze (see 40 CFR Sections 51.300-51.309). Colorado submitted its Regional Haze SIP to EPA in 2008 and 2009. The Commission adopted revisions to the Regional Haze requirements in 2011, 2014, and 2016.
Under Regional Haze, states must continue to make progress toward their reasonable progress goals. The Regional Haze Rule, Section 51.308 , requires states to revise and submit its Regional Haze SIP to EPA by July 31, 2021 (i.e., second implementation period). In December 2020, the Commission adopted a partial update to the SIP to address the phase 1 sources. This action is the second phase ("phase 2") of the SIP adoption to meet the requirements for round 2 progress by 2028.
Specific Statutory Authority
The Colorado Air Pollution Prevention and Control Act, § 25-7-106, C.R.S. provides the Commission the maximum flexibility in establishing an air quality control program and authorizes the Commission to promulgate regulations as necessary or desirable to carry out that program. § 25-7-105 directs the Commission to promulgate such rules and regulations as are consistent with the legislative declaration set forth in § 25-7-102 and are necessary for the proper implementation and administration of Article 7, including a comprehensive SIP which will prevent significant deterioration of air quality. § 25-7-109 authorizes the Commission to adopt emission control regulations pertaining to air pollutants. § 25-7-106(6) further authorizes the Commission to require owners and operators of any air pollution source to monitor, record, and report information.
Pursuant to HB 21-1266, signed into law on July 2, 2021, the Division must enhance to create new ways to gather input from disproportionately impacted communities across the state. The Division shall conduct outreach to and engagement of these communities by (1) giving proper notice of public input opportunities; (2) utilizing a variety of locations and methods to receive public input; (3) creating outreach materials concerning the proposed rule in laypersons' terms; (4) translating the outreach materials into the top two languages spoken in that community; and (5) scheduling variable times of day and days of the week for public input on the proposed rule. The Division continues incorporating these enhanced requirements as effectively as possible.
Purpose
EPA's Regional Haze Rule requires states to reduce emissions of visibility impairing pollutants that negatively impact class I areas. The Commission has previously approved revisions to Regulation Number 3, which were later moved into new Regulation Number 23 in 2020, that included emission reduction requirements for sources subject to Best Available Retrofit Technology (BART) and Reasonable Progress (RP) requirements during the first planning period of the Regional Haze program.
Regulation Number 23 contains the new emissions reductions requirements to meet or exceed the RP goals for the second 10-year planning period (through 2028). The existing emission limits and new requirements placed on identified sources will eliminate significant emissions of nitrogen oxides (NOx), sulfur dioxide (SO2), and particulate matter (PM10) to improve visibility in Colorado's twelve class I areas. These emission reductions, even accounting for emissions reserved for netting or offset purposes, provide for reasonable progress toward national visibility goals, and therefore, meet the Clean Air Act requirements for the second 10-year Regional Haze planning period. Where emission reductions are or may be reserved for offsets, an application for Emission Reduction Credits (ERCs) should be submitted to the division approximately sixty (60) days prior to unit closure.
Specifically, the Commission adopted closure dates in December 2020's phase 1 proceeding for thirteen units at nine facilities. The Commission revised the requirements for sources from the first planning period in accordance with changes made at those facilities, specifically Craig Unit 1, Nucla Station, and Valmont Station. The Commission uses the terms "closure" and "retirement" of the electric units to mean that the burning of coal and/or other fossil fuels for electric generation and the resulting air emissions would cease by the closure dates. It is understood that the decommissioning period following cessation of electric generation is a multi-year process involving significant dedication of resources. These closures achieve reductions and co-benefits beyond other RP recommendations that do not consider closure options.
In HB 19-1261, the General Assembly declared that "climate change adversely affects Colorado's economy, air quality and public health, ecosystems, natural resources, and quality of life[,]" acknowledged that "Colorado is already experiencing harmful climate impacts[,]" and that "many of these impacts disproportionately affect" certain disadvantaged communities. Colorado's statewide GHG reduction goals require the Commission to implement regulations to achieve a 26% reduction of statewide GHG emissions by 2025; 50% reduction by 2030; and 90% reduction by 2050 as compared to 2005 levels. Voluntary closure of the EGUs and additional controls to the other facilities proposed in this second Regional Haze planning period will result in significant reductions of NOx, SO2, and PM10. In addition to meeting the requirements for these units for the second 10-year Regional Haze planning period, voluntary closure of the EGUs have important co-benefits that will contribute to Colorado achieving other important air quality goals. Specifically, the emission reduction requirements from the EGU closures will provide the co-benefit of assisting in the achievement of Colorado GHG emission reduction goals, and reduce ground level ozone. The Division did not propose any unit retirements, fuel switching, or changes to permitted fuel consumption limits as a reasonable progress control strategy. Therefore, no proposed control strategies for this Regional Haze SIP revision can be stated to directly reduce GHG emissions. However, voluntary closures will achieve the additional co-benefit of reducing GHG emissions contingent upon PUC approval of the utility-proposed EGU closure and fuel switching dates.
Phase II of the second round implementation period proposes additional controls, and accounts for voluntary closures and fuel switching of seventeen facilities across the state. The facilities analyzed under the RP four-factor analysis are:
* Utilities Nixon Power Plant Coal Handling;
* Utilities Front Range Power Plant (FRPP) Turbines 1 and 2;
* Utilities Clear Spring Ranch Solids Handling and Disposal Facility, 4 digester gas-fired boilers and 2 flares;
* PSCo Comanche Station Unit 3;
* PSCo Hayden Station Units 1 and 2, coal ash and sorbent handling and disposal, and fugitive dust from unpaved roads;
* PSCo Cherokee Station Turbines 5 and 6;
* PSCo Pawnee Station Unit 1 and the cooling tower;
* Manchief Generating Station Turbines 1 and 2, co-located with PSCo Pawnee Station;
* CEMEX Lyons Portland cement plant Kiln, Quarries, and Raw Materials Grinding;
* Holcim Florence Portland cement plant Kiln, Quarry, and Finish Mills;
* GCC Pueblo Portland cement plant Kiln and Clinker Cooler;
* Molson Coors Boiler Support Facility Boilers 1, 2, 4, and 5;
* EVRAZ Rocky Mountain Steel Mill Points Electric Arc Furnace (EAF), Ladle Metallurgy Station (LMS), Ladle Preheaters, Round Caster, Rotary Furnace, Quench Furnace, Tempering Furnace, Rod/Bar Mill Furnace, Rail Mill Furnace, Vacuum Tank Degasser (VTD) Boiler, Haul Roads;
* Rocky Mountain Bottle Company Furnaces B+ and C;
* Suncor Energy Denver Refinery; Plant 1 and 2 Fluid Catalytic Cracking Units (FCCU), Plant 1 and 2 Sulfur Recovery Complexes (SRCs), Plant 1 Main Plant Flare, Process Heaters H-11, H-17, H-27, H-28/29/30, H-37, H-101, H-401/402, and H-2101, and Boilers 4 and 505;
* Denver International Airport (DIA) Boilers, Cooling Tower, Emergency Generators, and Miscellaneous Engines (smaller generators and fire water pump engines) 4
* Craig Cooling Towers 1, 2, and 3. 5
4 Point sources at DIA were not subject to a full 4-factor analysis based on actual emissions below the 10 TPY threshold.
5 Craig cooling towers were not subject to a full 4-factor analysis based on actual emissions below the 10 TPY threshold.
The Commission recognizes concerns regarding grid reliability and demand needs are substantiated. Electric Utilities have noted publicly in Electric Resource Plans (ERPs) and Electric Integrated Resource Plans (EIRPs) filed with the PUC as required by 4 CCR 723-3 Rules 3600 and 3605 that these issues are key to the closure date announcements. To the extent technically feasible and cost effective, the Commission encourages the utilities and the PUC to further advance closure dates or other operational changes that reduce emissions for these facilities in order to secure cost effective emissions reductions.
Revisions incorporate equipment changes that have occurred at the Molson Coors' Boiler Support Facility (formerly CENC) since the first planning period. Boiler 3 was shutdown on June 30, 2011. Boilers 1, 2, 4 and 5 have been converted from combusting coal to combusting gaseous fuel, with the last conversion completed on April 18, 2016. These changes have been incorporated into the federally enforceable facility operating permit and form the basis for the technical analysis in this rulemaking. Revisions to Regulation Number 23 SO2 CEMS and PM testing requirements reflect the change to gaseous fuel combustion and that compliance with SO2 and PM requirements is demonstrated when the boilers are operating on gaseous fuels.
Regarding the Suncor Energy Denver Refinery's Plant 2 SRC, the Division proposed for the Commission's consideration a requirement for Suncor to optimize the Plant 2 Sulfur Recovery Unit (SRU) to achieve at least the unit design sulfur recovery efficiency by the end of the Regional Haze Round 2 implementation period. The National Parks Conservation Association and Sierra Club, a joint party to the rulemaking hearing, proposed an alternate proposal for the Commission's consideration, to require Suncor to install a SUPERCLAUS 2+1 retrofit on the Plant 2 SRU No. 3 by the end of the Regional Haze Round 2 implementation period. The Commission recognized that Suncor's facility is adjacent to and impacts multiple Disproportionately Impacted Communities and achieving emission reductions from Suncor sooner rather than later is important for addressing environmental justice concerns in Colorado. Taking environmental justice into consideration was a consistent theme raised by the public, parties, and the Environmental Protection Agency. Therefore, the Commission adopted a modified version of each proposal requiring Suncor to either 1) optimize the Plant 2 SRU by December 31, 2023 or 2) install a SUPERCLAUS 2+1 retrofit by the end of the Regional Haze Round 2 implementation period as a backstop. The Commission maintained the 120 tpy SO2 limit associated with the optimization that was proposed by the Division for the SUPERCLAUS 2+1 option. For both options, the 120 tpy limit becomes enforceable 12 months after the project is completed so that there is a full period of data with the control requirement in service to evaluate against the new 12-month rolling limit. For both options, the associated SO2 tpy limit will be re-evaluated using actual emissions data within 18 months of the completion of the project. The revisions made to Regulation Number 23 in phase 2 also correct typographical, grammatical, and formatting errors found in the Regional Haze provisions.
Incorporation by Reference
§ 24-4-103 (12.5) of the State Administrative Procedure Act allows the Commission to incorporate by reference federal regulations. The criteria of § 24-4-103(12.5) are met by including specific information and making the regulations available because repeating the full text of each of the federal regulations incorporated would be unduly cumbersome and inexpedient. To fully comply with these criteria, the Commission includes reference dates to rules and reference methods incorporated in Regulation Number 23.
The Commission also notes that other Air Quality Control Commission regulations reference the Regional Haze provisions, either as Regional Haze or Regulation Number 3 Part F. Specifically, Regional Haze requirements are referenced in Regulation Number 6, Part A, Section VIII.C.3.f.(ii) and the SBAP Section XXV; Regulation Number 7, Part E, Sections I.D.3.a., II.A.2.f., and III.B.4.n. and the SBAP Sections L., O., Q., R., and S., and Regulation Number 9, SBAP Section N. The Commission will update regulatory references as needed as opportunities arrive.
Additional Considerations
These revisions do not exceed or differ from the federal act due to state flexibility in determining what strategies to implement to reduce impacts to visibility under the Regional Haze rule. However, where the proposal may differ from federal rules under the federal act, in accordance with § 25-7-110.5(5)(b), C.R.S., the Commission determines:
The Commission has taken into consideration each of the factors set forth in C.R.S. § 25-7-109(1)(b) when revising Regulation Number 23.
To the extent that C.R.S. § 25-7-110.8 requirements apply to this rulemaking, and after considering all the information in the record, the Commission hereby makes the determination that:
5 CCR 1001-27-B-II