Another U.S. Climate Disclosure Bill Introduced – This Time Colorado

Greenhouse gas emissions disclosure legislation has been introduced in Colorado. In this post, we discuss the Colorado bill and compare it to the analogous California Climate Corporate Data Accountability Act. As noted in this post, the bill differs from and is more onerous in some respects than the California Act.

The Colorado bill – House Bill 25-1119 – was introduced on January 28. It was introduced by Manny Rutinel, a second term Democratic member of the Colorado House of Representatives from a district in the Denver metropolitan area. As the initial step in its consideration, the bill is on the House Energy & Environment Committee’s calendar for February 20. 

The Colorado bill is just one of several greenhouse gas emissions disclosure requirements adopted or proposed by Democratic states. In late 2023, California adopted the Climate Corporate Data Accountability Act. The first disclosures under that Act are scheduled to be due next year. The California Act is discussed in this Ropes & Gray post. A greenhouse gas emissions reporting bill also was recently reintroduced in New York. For a discussion of that bill, see this post.  

Reporting Entities

The Colorado bill would require greenhouse gas emissions reporting by entities that do business in Colorado if they have total revenues of more than $1 billion in the preceding calendar year, including revenues received by all of the entity's subsidiaries that do business in Colorado.

Disclosure Requirements and Phase-ins

Scope 1 and 2

Scope 1 and 2 GHG emissions reporting would begin in 2028. More specifically, on or before January 1, 2028, and on or before each January 1 thereafter, a reporting entity would be required to publicly disclose its total scope 1 and 2 emissions during the preceding calendar year. In contrast to California, disclosure would be calendar- rather than fiscal year-based. 

Scope 3

Scope 3 emissions reporting would begin to phase in the following year. The scope 3 phase-in is significantly different than under the California Act. In addition to disclosure being calendar year-based, scope 3 disclosure requirements would be more prescriptive and would phase in over three years. Reporting entities would be required to publicly disclose total scope 3 emissions during the preceding calendar year as follows:

• On or before January 1, 2029 (and each January 1 thereafter), total scope 3 emissions from:
  • Purchased goods and services;
  • Capital goods; and
  • The use of sold products.
• On or before January 1, 2030 (and each January 1 thereafter), total scope 3 emissions from the sources above and from:
  • Fuel and energy activities, to the extent not classified as scope 1 emissions or scope 2 emissions;
  • Waste generated in operations;
  • Processing of sold products; and
  • The end-of-life of sold products.
• On or before January 1, 2031 (and each January 1 thereafter), total scope 3 emissions from the sources above and from:
  • Upstream transportation and distribution;
  • Business travel;
  • Employee commuting;
  • Upstream leased assets;
  • Downstream transportation and distribution;
  • Downstream leased assets; and
  • Franchises.

Reporting Standards

Emissions data would be required to be calculated using the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard and the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard.

Implementing Rules

The Colorado Air Quality Control Commission would be expressly empowered to adopt rules to implement the legislation, including rules adjusting the reporting deadlines described above. Presumably, at a minimum, the reporting deadlines would be adjusted if adopted per the bill, since they are not workable. 

In contrast to the California Act, the bill does not expressly require emissions data to be submitted to a third-party register or payment of an annual fee. However, this might be addressed in subsequent rules.

Other Required Information

With each emissions data disclosure, a reporting entity also would be required to include its legal name and any fictitious names, trade names, assumed names, subsidiaries and logos it uses.

Freedom of Speech Exception

The bill contemplates possible legal challenges if it is adopted, or a successful First Amendment challenge of the California Act (litigation is ongoing in California, although some claims recently were dismissed). The bill provides that, notwithstanding any provision to the contrary, a reporting entity would not be required to disclose any information in violation of its freedom of speech, including any freedom from compelled speech, that may be guaranteed by the First Amendment to the U.S. Constitution or the Colorado State Constitution. 

If a reporting entity declines to disclose information on the foregoing grounds, it would be required to, at least 30 days before the disclosure is required, submit a statement to the Colorado Attorney General describing the general nature of the information to be withheld and the justification for doing so. If the Attorney General is not satisfied by the justification provided, and after further consultations the Department of Public Health and Environment and the reporting entity are not able to reach agreement, the Attorney General could order the reporting entity to disclose the information.

Third-party Assurance

Emissions data disclosures would be required to be independently verified by a third-party auditor. The bill is silent on whether this is to a limited assurance or reasonable assurance standard and whether scope 3 information would be treated differently than scope 1 and 2 information (regarding both the assurance level and phase-in). 

Substituted Compliance

A reporting entity would be deemed to be in compliance with the Colorado disclosure requirements if it is in compliance with the disclosure requirements of another state or country, so long as those requirements are at least as stringent as the Colorado requirements.

Enforcement

A District Attorney or the Colorado Attorney General could bring a civil action against a reporting entity for failing to comply with a GHG emissions disclosure requirement. If a court finds that a District Attorney or the Attorney General has prevailed in the action, the court may require the reporting entity to pay a civil penalty of up to $100,000 for each day of noncompliance. Unlike under the California Act, the penalty is not capped. 

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