On June 2, 2026, Colorado Governor Jared Polis signed SB26-002 into law. The legislation includes a very important provision that would exclude propane water heaters from strict water heater NOx emissions restrictions that were passed into law by the state in 2023.

In 2023, the Colorado government enacted HB23-1161 into law. This legislation, among other things, restricted the amount of NOx emissions that water heaters in the state would be permitted to emit by adopting the stringent standards that were originally put into place by California’s South Coast Air Quality Management District (SCAQMD) more than a decade earlier. However, this law did not harmonize completely with the rule in SCAQMD in two major ways. In Colorado, ENERGY STAR^®-certified products, even if they exceeded the NOx limitations set by the state, would still be permitted. Additionally, Colorado made clear that the NOx limitations did apply to propane water heaters, despite these products being exempt from SCAQMD regulations, which are focused exclusively on natural gas-fired water heaters.

This was a very important distinction from the state. Propane’s unique characteristics make compliance with the stringent NOx limitations put into place by the state impossible. No propane water heater products on the market today can achieve these requirements. Additionally, while the ENERGY STAR exemption in the law allowed products to be made available to homeowners wishing to utilize or continue utilizing propane water heaters, this came with a few important caveats.

ENERGY STAR-certified propane water heaters exist mostly as tankless water heaters, while most propane water heaters installed in Colorado homes today are storage water heaters. Making a switch from a propane storage product to a tankless product is often very burdensome and can include changes to the homes venting system and possibly gas supply lines. A second option would be for a consumer to install a less common ENERGY STAR-certified propane storage water heater. However, this option is also often problematic because of the same venting concerns mentioned above. Finally, a third option would be for homeowners to replace their propane water heater with an electric water heater. This too can come with significant costs that may include electrical panel upgrades and/or running new electrical wiring to the water heater’s install location in the home.

Because of these problems, a coalition of product manufacturers, homeowner advocates, and propane providers asked the Colorado General Assembly to revisit the law and provide Colorado’s 100,000 propane homeowners with relief from these potentially burdensome requirements. The general assembly and Governor Polis answered that call with a temporary fix in SB26-002. Specifically, the bill exempts propane water heaters and water heaters specifically designed for installation in mobile homes from the state’s NOx emissions requirements until January 1, 2031. While not a permanent solution to this problem, the new law will give manufacturers and other stakeholders an opportunity to with state leaders to find a more permanent solution to this issue. The law will take effect on August 12, 2026. After that date, manufacturers and distributors will once again be able to ship propane products into state and contractors will once again be able to install them.

As this matter continues to be discussed, BWC Government and Regulatory Affairs staff will be carefully watching all developments and will certainly keep you informed of the latest information you need to help you plan for your business and your customers. If you have any questions about this situation, or any others pertaining to government and regulatory affairs in our industry, please to do not hesitate to contact us directly at BWCGovReg@bradfordwhite.com.