Enrolled Copy H.B. 452 1 CARBON CAPTURE AMENDMENTS 2024 GENERAL SESSION STATE OF UTAH Chief Sponsor: Scott H. Chew Senate Sponsor: David P. Hinkins 2 3 LONG TITLE 4 General Description: 5 This bill address regulation of carbon capture. 6 Highlighted Provisions: 7 This bill: 8 ▸ modifies definitions; 9 ▸ repeals two existing funds and replaces the repealed funds with the Carbon Dioxide 10 Storage Fund (fund); 11 ▸ addresses the Board of Oil, Gas, and Mining's (board) authority to impose fees and 12 deposit money into the fund; 13 ▸ addresses the holding of title by the state of storage facilities including oversight of 14 facilities used to store carbon dioxide after the board issues a certificate of project completion; 15 ▸ clarifies fee provisions; and 16 ▸ makes technical and conforming changes. 17 Money Appropriated in this Bill: 18 None 19 Other Special Clauses: 20 None 21 Utah Code Sections Affected: 22 AMENDS: 23 40-11-1, as enacted by Laws of Utah 2022, Chapter 62 24 40-11-3, as enacted by Laws of Utah 2022, Chapter 62 25 40-11-4, as enacted by Laws of Utah 2022, Chapter 62 26 40-11-6, as enacted by Laws of Utah 2022, Chapter 62 27 40-11-15, as enacted by Laws of Utah 2022, Chapter 62 H.B. 452 Enrolled Copy 28 40-11-16, as enacted by Laws of Utah 2022, Chapter 62 29 40-11-20, as enacted by Laws of Utah 2022, Chapter 62 30 40-11-21, as enacted by Laws of Utah 2022, Chapter 62 31 ENACTS: 32 40-11-23, Utah Code Annotated 1953 33 REPEALS: 34 40-11-22, as enacted by Laws of Utah 2022, Chapter 62 35 36 Be it enacted by the Legislature of the state of Utah: 37 Section 1. Section 40-11-1 is amended to read: 38 40-11-1 . Definitions. 39 As used in this chapter: 40 (1) "Board" means the Board of Oil, Gas, and Mining. 41 (2) (a) "Carbon dioxide" means carbon dioxide (CO2) that has been captured from an 42 emission source or direct air capture, plus incidental associated substances derived 43 from the source materials and the capture process, and any substances added to the 44 carbon dioxide to enable or improve the injection process. 45 (b) "Carbon dioxide" does not include hazardous waste as that term is defined in Section 46 19-6-102. 47 (3) "Class VI injection well" means the same as that term is defined in 40 C.F.R. 146.5(f). 48 (4) "Division" means the Division of Oil, Gas, and Mining. 49 (5) "Fund" means the Carbon Dioxide Storage Fund created under Section 40-11-23. 50 [(5)] (6) "Geologic carbon storage" means the permanent or short-term underground storage 51 of carbon dioxide in a storage reservoir. 52 [(6)] (7) "Geologic carbon storage activity" means activity associated with the development, 53 production, processing, and storage of carbon dioxide as set forth in Title 40, Chapter 54 11, Geologic Carbon Storage, and includes: 55 (a) drilling; 56 (b) development of storage facilities; 57 (c) completion, maintenance, reworking, recompletion, disposal, plugging, and 58 abandonment of storage facilities; 59 (d) construction activities; 60 (e) recovery techniques; 61 (f) remediation activities; and -2- Enrolled Copy H.B. 452 62 (g) any other activity related to geologic carbon storage that the board identifies. 63 [(7)] (8) "Permit" means a permit issued by the division and approved by the board allowing 64 a person to operate a storage facility. 65 [(8)] (9) "Reservoir" means a subsurface sedimentary stratum, formation, aquifer, cavity, or 66 void, whether natural or artificially created, including oil and gas reservoirs, saline 67 formations, and coal seams suitable for or capable of being made suitable for geologic 68 carbon storage. 69 [(9)] (10) (a) "Storage facility" means the reservoir, underground equipment, and surface 70 facilities and equipment used or proposed to be used in a geologic carbon storage 71 operation. 72 (b) "Storage facility" does not include pipelines used to transport carbon dioxide to a 73 storage facility. 74 [(10)] (11) "Storage operator" means a person holding or applying for a permit. 75 Section 2. Section 40-11-3 is amended to read: 76 40-11-3 . Board authority -- Rulemaking authority. 77 (1) The board and the division have jurisdiction over all persons and property necessary to 78 enforce this chapter. 79 (2) To enforce this chapter, the board shall make rules in accordance with Title 63G, 80 Chapter 3, Utah Administrative Rulemaking Act, including rules establishing penalties 81 for a violation of this chapter. 82 (3) Subject to the granting of primacy by the Environmental Protection Agency under the 83 process required in 40 C.F.R. Section 145 and successful application for primacy 84 approval under Section 1425 of the Safe Drinking Water Act, the board and the division 85 have: 86 (a) exclusive jurisdiction in the state over Class VI injection wells located in the state on 87 nonfederal lands; and 88 (b) cooperative jurisdiction in the state over Class VI injection wells located in the state 89 on federal lands. 90 (4) The board shall establish fees in accordance with Section 63J-1-504, in an amount to 91 pay the costs to the board and division of: 92 (a) the permitting process; 93 (b) the regulation of the construction, operation, and pre-closure activities of the storage 94 facility; [and] 95 (c) the monitoring and management of closed storage facilities[.] ; and -3- H.B. 452 Enrolled Copy 96 (d) administering the fund. 97 (5) In addition to a fee imposed under Subsection (4), the board, in accordance with Section 98 63J-1-504: 99 (a) may impose fees under Section 40-11-20; and 100 (b) shall impose a fee under Section 40-11-21. 101 Section 3. Section 40-11-4 is amended to read: 102 40-11-4 . Board and division permit authority. 103 To the extent required to authorize and issue permits and to regulate geologic 104 carbon sequestration, the board and the division shall have authority: 105 (1) over all persons and property necessary to administer and enforce this chapter and this 106 chapter's objectives; 107 (2) to regulate activities relating to a storage facility, including construction, operation, and 108 closure; 109 (3) to enter, at a reasonable time and manner, a storage facility to: 110 (a) inspect equipment and surface storage facilities; 111 (b) observe, monitor, and investigate operations; or 112 (c) inspect records the board requires the operators maintain at the storage facility; 113 (4) to require that storage operators provide assurance, including bonds, that money is 114 available to fulfill the storage operator's duties; 115 (5) to exercise continuing jurisdiction over storage operators and storage facilities, 116 including the authority, after notice and hearing, to amend provisions in a permit and to 117 revoke a permit; [and] 118 (6) to dissolve or change the boundaries of any unit that is within or near a storage 119 reservoir's boundaries[.] ; and 120 (7) to oversee the expenditure of money from the fund to accomplish the purposes of this 121 chapter. 122 Section 4. Section 40-11-6 is amended to read: 123 40-11-6 . Permit application requirements. 124 (1) A person applying for a permit shall: 125 (2) (a) comply with: 126 (i) the application requirements the board establishes through rule; and 127 (ii) the application requirements described in this section; and 128 (b) pay a fee, as established by the board in accordance with Subsections 40-11-3(4) and 129 (5), to cover the administrative costs of considering an application for a permit and to -4- Enrolled Copy H.B. 452 130 pay the expenditures of money from the fund to accomplish the purposes of this 131 chapter. 132 [(2)] (3) The board shall give priority to storage operators who apply for a permit to store 133 carbon dioxide produced in Utah. 134 [(3)] (4) A permit application shall demonstrate: 135 (a) that the storage operator has complied with all requirements established by the board 136 in rule and in this chapter; 137 (b) that the storage facility is suitable for carbon dioxide injection and storage; 138 (c) that the carbon dioxide the storage operator will store is of a quality that allows the 139 carbon dioxide to be safely and efficiently stored in the reservoir; 140 (d) that the storage operator has made a good-faith effort to get the consent of all persons 141 who own the storage reservoir's pore space; 142 (e) that owners who own no less than 70% of the reservoir's pore space have provided 143 written consent to the use of the owners' pore space for a storage facility; 144 (f) whether the storage facility contains commercially valuable minerals; 145 (g) if the storage facility contains commercially valuable minerals: 146 (i) a plan for addressing the ownership interests of the mineral owners or mineral 147 lessees; and 148 (ii) a demonstration that the storage facility will not negatively impact the 149 commercially valuable minerals; 150 (h) that the storage reservoir meets the integrity requirements described in Section 151 40-11-13; 152 (i) that the operator has taken reasonable steps to ensure that: 153 (i) the storage facility will not endanger human health; 154 (ii) the storage facility will not endanger the environment; 155 (iii) the storage facility is in the public interest; 156 (iv) the storage facility will not adversely affect surface water or formation 157 containing fresh water; 158 (v) carbon dioxide will not escape from the storage reservoir at a rate exceeding the 159 lower of 1% or the standard recommended by the Environmental Protection 160 Agency; and 161 (vi) that substances that compromise the objectives of this chapter or the integrity of 162 a reservoir will not enter the reservoir; 163 (j) that the storage reservoir has defined horizontal and vertical boundaries; -5- H.B. 452 Enrolled Copy 164 (k) that the boundaries of the storage reservoir include buffer areas to ensure the safe 165 operation of the storage facility; 166 (l) plans for monitoring the storage facility and procedures to assess the location and 167 migration of carbon dioxide injected for storage; 168 (m) plans to ensure compliance with geologic carbon storage statutes and rules; and 169 (n) assurance that all nonconsenting pore space owners are or will be equitably 170 compensated for the use of the pore space of the nonconsenting pore space owners in 171 the storage facility. 172 Section 5. Section 40-11-15 is amended to read: 173 40-11-15 . Title to injected carbon dioxide. 174 (1) The storage operator has title to the carbon dioxide injected into and stored in a storage 175 reservoir and holds title until the board issues a certificate of project completion. 176 (2) The storage operator is liable for any damage the stored carbon dioxide may cause, 177 including damage caused by escaping stored carbon dioxide until the board issues a 178 certificate of project completion. 179 (3) An owner of pore space does not incur liability for geologic carbon storage activity by 180 virtue of ownership of or of leasing out the pore space. 181 Section 6. Section 40-11-16 is amended to read: 182 40-11-16 . Certificate of project completion. 183 (1) To request a certificate of project completion, a storage operator shall submit: 184 (a) a demonstration that the last carbon dioxide injection was no fewer than 10 years 185 preceding the filing; 186 (b) a statement of compliance with all statutes and rules regulating the storage facility; 187 (c) a demonstration of the resolution of all pending claims regarding the storage facility; 188 (d) a demonstration of the present and future physical integrity of the storage reservoir; 189 (e) a demonstration that any carbon dioxide in the storage reservoir: 190 (i) is essentially stationary; or 191 (ii) if the carbon dioxide migrates or will migrate, is highly unlikely to cross the 192 storage reservoir boundary; 193 (f) a demonstration that all wells, equipment, and facilities necessary for maintaining the 194 continued integrity of the storage reservoir are currently in good condition and will 195 maintain that good condition; 196 (g) a demonstration that the operator has: 197 (i) plugged wells; -6- Enrolled Copy H.B. 452 198 (ii) removed equipment and facilities not necessary to maintaining the integrity of the 199 reservoir; and 200 (iii) completed any other reclamation work the board requires. 201 (2) Immediately after the board issues a certificate of project completion: 202 (a) title to the storage facility and the stored carbon dioxide, including oversight of a 203 facility used to store the stored carbon dioxide, transfers to the state; 204 (b) liability with respect to the storage facility and the stored carbon dioxide transfers to 205 the state; 206 (c) the storage operator and any person who is not the state who has property rights in 207 the storage facility is released from any obligation to comply with regulatory 208 requirements associated with the storage facility; 209 (d) the board shall release any bonds the storage operator has posted; and 210 (e) the division shall oversee the monitoring and managing of the storage facility. 211 Section 7. Section 40-11-20 is amended to read: 212 40-11-20 . Adoption of procedure. 213 (1) The board may adopt procedures and criteria to determine the amount of injected carbon 214 dioxide: 215 (a) stored in a reservoir that has been or is being used for an enhanced oil or gas 216 recovery project; or 217 (b) stored in a reservoir that is a part of a storage facility. 218 (2) The board may charge a fee to cover the costs of making a determination described in 219 Subsection (1). 220 (3) The division shall deposit a fee collected in accordance with Subsection (2) into the [ 221 Geologic Carbon Storage Facility Administrative Fund created in Section 40-11-21] fund. 222 Section 8. Section 40-11-21 is amended to read: 223 40-11-21 . Fees related to reservoir or storage facility. 224 (1) There is levied a fee per ton of carbon dioxide injected into a reservoir or storage facility. 225 (2) The board shall establish the fee described in Subsection (1) in accordance with Section 226 63J-1-504[, in] to equal the sum of: 227 (a) an amount to pay the anticipated costs to the division of the regulation of storage 228 facility: 229 [(a)] (i) construction; 230 [(b)] (ii) operation; and 231 [(c)] (iii) pre-closure activities[.] ; and -7- H.B. 452 Enrolled Copy 232 (b) an amount to pay the anticipated costs to the division of the long-term monitoring 233 and management of a closed storage facility. 234 [(3) Money the board collects in accordance with this section shall be deposited into the 235 Geologic Carbon Storage Facility Administrative Fund created in Subsection (4).] 236 [(4) There is created an expendable special revenue fund known as the "Geologic Carbon 237 Storage Facility Administrative Fund."] 238 [(5) The fund shall consist of the money specified in Subsections (1) through (3), Section 239 40-11-20, and interest earned on the fund.] 240 [(6) The division shall only use the money deposited into the Geologic Carbon Storage 241 Facility Administrative Fund to:] 242 [(a) defray the division's regulatory expenses incurred during the regulation of storage 243 facility:] 244 [(i) construction;] 245 [(ii) operation; and] 246 [(iii) pre-closure activities;] 247 [(b) make determinations in accordance with Section 40-11-20; and]