1 STATE OF OKLAHOMA
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2 2nd Session of the 59th Legislature (2024)
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3 SENATE BILL 1389 By: Boren
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6 AS INTRODUCED
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7 An Act relating to the Corporation Commission;
7 creating the Greenhouse Gas Cap and Invest Program;
8 defining terms; directing rule promulgation;
8 establishing terms of the Program; directing air
9 quality study; providing certain exempted emissions;
9 establishing Program requirements to commence by
10 certain date; establishing Program participants;
10 directing maintenance of public roster; providing for
11 auction process; establishing emissions containment
11 reserve; providing for carbon offset credits and
12 projects; creating the Greenhouse Gas Cap and Invest
12 Program Revolving Fund; stating fund purpose;
13 establishing source of funds; providing for
13 codification; and providing an effective date.
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16 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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17 SECTION 1. NEW LAW A new section of law to be codified
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18 in the Oklahoma Statutes as Section 803.1 of Title 17, unless there
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19 is created a duplication in numbering, reads as follows:
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20 A. 1. There is hereby established within the Corporation
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21 Commission the “Greenhouse Gas Cap and Invest Program”.
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22 2. The Commission shall promulgate rules, regulations, and any
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23 other provisions deemed necessary to effectuate the provisions of
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24 this act.
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 1 B. As used in this act:
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2 1. “Allowance” means an authorization to emit up to one metric
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3 ton of carbon dioxide equivalent;
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4 2. “Allowance price containment reserve” means an account
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5 maintained by the Corporation Commission with allowances available
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6 for sale through separate reserve auctions at predefined prices to
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7 assist in containing compliance costs for Greenhouse Gas Cap and
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8 Invest Program participants in the event of unanticipated high costs
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9 for compliance instruments;
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10 3. “Annual allowance budget” means the total number of
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11 greenhouse gas allowances allocated for auction and distribution for
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12 one calendar year by the Commission;
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13 4. “Compliance instrument” means an allowance or offset credit
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14 issued by the Commission. One compliance instrument is equal to one
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15 metric ton of carbon dioxide equivalent;
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16 5. “Compliance obligation” means the requirement to submit to
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17 the department the number of compliance instruments equivalent to a
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18 participant’s covered emissions during the compliance period;
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19 6. “Emissions containment reserve allowance” means a
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20 conditional allowance that is withheld from sale at an auction by
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21 the Commission or its agent to secure additional emissions
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22 reductions in the event prices fall below the emissions containment
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23 reserve trigger price;
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 1 7. “Greenhouse gas emissions” means emissions from any gas
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2 capable of absorbing infrared radiation emitted from Earth’s
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3 surface;
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4 8. “Offset credit” means a tradable compliance instrument that
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5 represents an emissions reduction or emissions removal of one metric
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6 ton of carbon dioxide equivalent;
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7 9. “Offset project” means a project that reduces or removes
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8 greenhouse gases that are not covered emissions under this act; and
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9 10. “Participant” means an entity that is licensed, approved,
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10 or otherwise under the jurisdiction of the Commission that emits
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11 greenhouse gas emissions, or any other company or business in this
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12 state that wishes to participate in the Program.
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13 SECTION 2. NEW LAW A new section of law to be codified
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14 in the Oklahoma Statutes as Section 803.2 of Title 17, unless there
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15 is created a duplication in numbering, reads as follows:
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16 A. 1. The Corporation Commission shall, in coordination with
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17 the Department of Environmental Quality, conduct an air quality
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18 study for each county in this state to identify and quantify
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19 greenhouse gas emissions and subsequently develop a list of high-
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20 priority emissions to be reduced.
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21 2. The Commission, following the completion of the study under
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22 this subsection, shall establish provisions within the Greenhouse
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23 Gas Cap and Invest Program to track, verify, and enforce compliance
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24 of the cap on participants.
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 1 3. The following emissions shall be exempt from the study and
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2 any subsequent emissions reporting requirements:
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3 a. emissions from the combustion of aviation fuels,
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4 b. carbon dioxide emissions from the combustion of
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5 biomass or biofuels,
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6 c. motor vehicle fuel or special fuel that is used
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7 exclusively for agricultural purposes by a farm fuel
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8 user,
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9 d. emissions from facilities with North American Industry
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10 Classification System (NAICS) code 92811, and
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11 e. emissions from municipal solid waste landfills.
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12 B. The Program shall consist of:
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13 1. An annual allowance budget that limits emissions from
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14 participants within the Program;
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15 2. Price containment provisions, such as a floor and ceiling
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16 for allowances auctioned under this Program;
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17 3. Providing for offset credits as a means for meeting
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18 compliance obligations;
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19 4. Auction processes as established pursuant to this act;
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20 5. Creating a climate investment account for the deposit of
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21 receipts from the distribution of emission allowances; and
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22 6. Any other provisions deemed necessary to implement the
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23 Program.
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 1 C. The Commission shall commence the Program by January 1,
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2 2026, by determining an emissions baseline establishing the
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3 proportionate share that the total greenhouse gas emissions of
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4 entities bears to the total anthropogenic greenhouse gas emissions
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5 in the state. The allowance budget shall be set annually not later
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6 than December 1 of the preceding year for the upcoming calendar
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7 year.
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8 D. Program participants shall consist of all entities which are
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9 licensed or under the jurisdiction of the Corporation Commission,
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10 and any other voluntary persons, facilities, or companies that
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11 choose to opt in. Program participants shall disclose any other
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12 entities or opt-in participants that the participant has a legal
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13 affiliation with or financial interest in.
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14 E. The Commission shall use a secure, online electronic
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15 tracking system to register entities into the Program, track
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16 emission allowance usage, and support market oversight.
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17 F. The Commission shall maintain a public roster of all
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18 participants in the Program on a publicly available website.
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19 SECTION 3. NEW LAW A new section of law to be codified
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20 in the Oklahoma Statutes as Section 803.3 of Title 17, unless there
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21 is created a duplication in numbering, reads as follows:
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22 A. The Greenhouse Gas Cap and Invest Program shall include the
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23 provision of the following accounts for each participant:
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 1 1. A compliance account where compliance instruments are
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2 transferred to the Corporation Commission for retirement; and
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3 2. A holding account that is used when a participant is
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4 interested in trading allowances. Allowances in holding accounts
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5 may be bought, sold, transferred, or traded.
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6 B. 1. The Commission shall hold four (4) auctions annually.
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7 Allowances to be included within the auction shall be set by the
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8 Commission. The Department shall engage a qualified independent
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9 contractor to run auctions subject to the competitive bidding
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10 procedures provided by law.
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11 2. Auctions may be open to all participants of the Program that
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12 are in good standing. The Commission shall establish registration
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13 requirements. An entity may only participate in an auction after
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14 receiving notice of approval by the Commission.
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15 3. The Commission may require a bid guarantee in an amount
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16 greater than or equal to the sum of the maximum value of the bids to
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17 be submitted.
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18 4. The Commission may set requirements or limitations on
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19 participant purchases within a given auction.
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20 C. Upon completion and verification of auction results, the
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21 Commission shall notify winning bidders and transfer the auction
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22 proceeds to the Greenhouse Gas Cap and Invest Program Revolving
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23 Fund.
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 1 D. The Commission shall promulgate rules to guard against
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2 bidding collusion and minimize the potential for market
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3 manipulation.
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4 SECTION 4. NEW LAW A new section of law to be codified
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5 in the Oklahoma Statutes as Section 803.4 of Title 17, unless there
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6 is created a duplication in numbering, reads as follows:
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7 To ensure that the price of allowances remains sufficient to
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8 incentivize reductions in greenhouse gas emissions, the Corporation
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9 Commission shall establish an emissions containment reserve and set
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10 an emissions containment reserve trigger price. The price shall be
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11 set at a reasonable amount above the auction floor price. In the
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12 event that the emissions containment reserve trigger price is met
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13 during an auction, the Commission shall automatically withhold
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14 allowances as needed. The Commission shall convert and transfer any
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15 allowances that have been withheld from auction into the emissions
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16 containment reserve account. Emissions containment reserve
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17 allowances may only be withheld from an auction if the demand for
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18 allowances would result in an auction clearing price that is less
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19 than the emissions containment trigger price.
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20 SECTION 5. NEW LAW A new section of law to be codified
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21 in the Oklahoma Statutes as Section 803.5 of Title 17, unless there
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22 is created a duplication in numbering, reads as follows:
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23 The Corporation Commission shall promulgate rules and protocol
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24 for offset projects and securing offset credits that may be used to
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 1 meet a portion of a Greenhouse Gas Cap and Invest Program
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2 participant’s compliance obligation.
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3 SECTION 6. NEW LAW A new section of law to be codified
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4 in the Oklahoma Statutes as Section 803.6 of Title 17, unless there
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5 is created a duplication in numbering, reads as follows:
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6 There is hereby created in the State Treasury a revolving fund
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7 for the Corporation Commission to be designated the “Greenhouse Gas
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8 Cap and Invest Program Revolving Fund”. The fund shall be a
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9 continuing fund, not subject to fiscal year limitations, and shall
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10 consist of all monies received by the Commission from auction sales
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11 provided for in this act. All monies accruing to the credit of the
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12 fund are hereby appropriated and may be budgeted and expended by the
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13 Commission for the purpose provided for in this act. Expenditures
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14 from the fund shall be made upon warrants issued by the State
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15 Treasurer against claims filed as prescribed by law with the
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16 Director of the Office of Management and Enterprise Services for
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17 approval and payment.
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18 SECTION 7. This act shall become effective November 1, 2024.
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20 59-2-3223 RD 12/15/2023 1:53:08 PM
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