CARBON SEQUESTRATION; GOVERN S.B. 1131 (S-1), 1132, & 1133:
SUMMARY OF BILL
REPORTED FROM COMMITTEE
Senate Bill 1131 (Substitute S-1 as reported)
Senate Bills 1132 and 1133 (as reported without amendment)
Sponsor: Senator Sean McCann (S.B. 1131)
Senator Joseph Bellino Jr. (S.B. 1132)
Senator John Cherry (S.B. 1133)
Committee: Energy and Environment
CONTENT
The bills would establish a regulatory framework and permitting process for carbon
sequestration in the State. To operate a carbon sequestration project, a person would have
to apply to the Department of Environment, Great Lakes, and Energy (EGLE) for a permit and
provide notice of the proposed project to all surface owners of land overlying the portion of
the storage reservoir underlying the area covered by the proposed project. The bills prescribe
duties of EGLE's Oil, Gas, and Minerals Division in the regulation of carbon sequestration
projects. Application fees, annual carbon sequestration fees, and fines for regulatory
violations would have to be deposited in the Carbon Sequestration Fund created by the bills.
The bills would prescribe how EGLE could sell carbon offset credits if certain criteria were met.
The bills also would provide for pooling of interests in pore space used for carbon
sequestration.
BRIEF RATIONALE
According to testimony, there is currently a lot of demand for carbon capture, a service that
removes carbon from the environment and injects it into deep geological repositories. Carbon
capture services could help the State reach its 100% clean energy standard by 2040. This is
a complicated, multi-step process, and the State lacks a regulatory framework for private
sector development of carbon capture facilities. Some have argued that the State should have
management power over carbon sequestration instead of ceding this power to the EPA,
ensuring rights and compensation for landowners. Accordingly, enacting a regulatory
framework has been suggested.
MCL 324.1301 (S.B. 1131) Legislative Analyst: Nathan Leaman
483.1 (S.B. 1132)
FISCAL IMPACT
Senate Bill 1131 (S-1)
This bill would have an indeterminate but limited fiscal impact on EGLE. Permit application
fees could not exceed actual reasonable costs of processing applications and would be used
to offset those administrative costs. Additional annual fees would be assessed against carbon
sequestration project operators; these fees would need to be based on the department’s
anticipated expenses associated with long-term monitoring of the project, though not to
exceed 8 cents per ton of CO2. These fees would be collected and deposited into the newly
created Carbon Sequestration Fund. There would be additional administrative costs associated
with holding and issuing notices for public hearings that would be held within 60 days of
completed application. Further time and labor costs would be associated with processing
Page 1 of 2 sb1131-1133/2324
application fees for a certificate of project completion, and when such a certificate was issued,
the State would assume responsibilities related to the carbon sequestration project and
carbon dioxide injected into the storage reservoir. Generally, the fees outlined within the bill
are not explicitly defined but rather dependent on the cost incurred by the EGLE to process
them.
The bill would permit the Department of Natural Resources (DNR) to enter carbon
sequestration contracts and sell carbon offset credits that it owned, thus resulting in a positive
fiscal impact for the DNR. This practice, previously allowed for coal, oil, gas, and other mineral
products from State lands, would be expanded under the bill to include carbon capture
projects. Instructions for the allocation of funds received by the DNR from carbon
sequestration-related projects on State-owned land are provided in the bill. This would include
bonuses, rentals, delayed rentals, and royalties collected under its provisions. Funds sourced
from contracts on land managed by the Forest Resources Division of the DNR would be
deposited into the Forest Development Fund; funds sourced from land managed by the
Wildlife or Fisheries Divisions would be deposited into the Game and Fish Protection Account.
For other State land, proceeds would go toward the fund with which the land was purchased.
Revenue generated under the bill on tax-reverted land would be split equally between the
Forest Development Trust Account and the Game and Fish Protection Trust Fund. The bill
could have a positive fiscal impact on the State and local government. Revenue from new
misdemeanor and civil fines under the bill would go to local libraries. Additionally, $10 of each
civil fine would be deposited into the State Justice System Fund, which supports justice-
related activities across State government in the Departments of Corrections, Health and
Human Services, State Police, and Treasury. The Fund also supports justice-related issues in
the Legislative Retirement System and the Judiciary. The amount of revenue to the State or
for local libraries is indeterminate and dependent on the actual number of violations.
Some increased litigation expenses for the Department of Attorney General are possible under
the bill, as it includes language that would allow the Attorney General to commence civil
actions in Circuit Court for violations of Part 13 of the (Natural Resources and Environmental
Protection) Act, the permit, issued orders, or state promulgated rule. It is probable the
Department of Attorney General will be able to absorb these expenses. Additional FTEs and/or
attorneys may be required with more litigation costs.
Any impact on circuit courts would depend on the volume of violations prosecuted.
Senate Bill 1132
There is no anticipated fiscal impact to state or local governments.
Senate Bill 1133
The bill would have no fiscal impact on State or local government.
Date Completed: 12-17-24 Fiscal Analyst: Bobby Canell
Joe Carrasco, Jr.
Elizabeth Raczkowski
Michael Siracuse
Jonah Houtz
SAS\Floors2324\sb1131
This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official
statement of legislative intent.
Page 2 of 2 Bill Analysis @ www.senate.michigan.gov/sfa sb1131-1133/2324


Statutes affected:
Senate Introduced Bill: 483.1