This document includes House Floor Amendments incorporated into the bill on Thu, Feb 17, 2022 at 3:19 PM by pflowers.
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7 LONG TITLE
8 General Description:
9 This bill authorizes the Division of Oil, Gas, and Mining and the Board of Oil, Gas, and
10 Mining to establish regulations for the geologic storage of carbon.
11 Highlighted Provisions:
12 This bill:
13 ▸ defines terms;
14 ▸ establishes who has title to pore space with respect to the surface estate;
15 ▸ describes the circumstances under which the board and the division will gain
16 jurisdiction over class VI injection wells;
17 ▸ authorizes the board to make rules regarding the oversight of class VI injection
18 wells;
19 ▸ authorizes the board to establish and collect fees to reimburse the board and
20 division for the costs associated with the regulation of class VI injection wells;
21 ▸ describes the permitting process with which an operator must comply in order to
22 operate a class VI injection well;
23 ▸ describes the factors a permit must demonstrate for the board to approve the
24 division to issue a permit;
25 ▸ requires the board to hold a public hearing before issuing a permit;
26 ▸ authorizes the board to order amalgamation of a tract of land for a storage facility if:
27 • nonconsenting owners are fairly compensated for the use of the nonconsenting
28 owners' pore space;
29 • 70% of owners of included tracts have consented to the process; and
30 • the board finds it is in the best interest of all owners;
31 ▸ requires operators to record the permit;
32 ▸ provides for:
33 • rights of property owners whose pore space becomes part of a storage facility;
34 and
35 • the persons who hold title to carbon dioxide injected into and stored within a
36 storage facility;
37 ▸ requires an operator to follow certain procedures in order to receive a certificate of
38 project completion;
39 ▸ describes the relation of this chapter to enhanced oil and gas recovery projects;
40 ▸ authorizes the board to enter into cooperative agreements with other agencies to
41 carry out the objectives of this chapter;
42 ▸ authorizes controlling state interests and political subdivisions to participate in
43 geologic carbon storage;
44 ▸ authorizes the board to adopt a procedure to determine the amount of injected
45 carbon dioxide;
46 ▸ establishes funds in which the board and division shall deposit fees collected under
47 this chapter; and
48 ▸ makes technical and conforming changes.
49 Money Appropriated in this Bill:
50 None
51 Other Special Clauses:
52 None
53 Utah Code Sections Affected:
54 AMENDS:
55 40-6-2, as last amended by Laws of Utah 2020, Chapter 375
56 40-6-5, as last amended by Laws of Utah 2020, Chapter 375
57 ENACTS:
58 40-6-20.5, Utah Code Annotated 1953
59 40-11-1, Utah Code Annotated 1953
60 40-11-2, Utah Code Annotated 1953
61 40-11-3, Utah Code Annotated 1953
62 40-11-4, Utah Code Annotated 1953
63 40-11-5, Utah Code Annotated 1953
64 40-11-6, Utah Code Annotated 1953
65 40-11-7, Utah Code Annotated 1953
66 40-11-8, Utah Code Annotated 1953
67 40-11-9, Utah Code Annotated 1953
68 40-11-10, Utah Code Annotated 1953
69 40-11-11, Utah Code Annotated 1953
70 40-11-12, Utah Code Annotated 1953
71 40-11-13, Utah Code Annotated 1953
72 40-11-14, Utah Code Annotated 1953
73 40-11-15, Utah Code Annotated 1953
74 40-11-16, Utah Code Annotated 1953
75 40-11-17, Utah Code Annotated 1953
76 40-11-18, Utah Code Annotated 1953
77 40-11-19, Utah Code Annotated 1953
78 40-11-20, Utah Code Annotated 1953
79 40-11-21, Utah Code Annotated 1953
80 40-11-22, Utah Code Annotated 1953
81
82 Be it enacted by the Legislature of the state of Utah:
83 Section 1. Section 40-6-2 is amended to read:
84 40-6-2. Definitions.
85 For the purpose of this chapter:
86 (1) "Board" means the Board of Oil, Gas, and Mining.
87 (2) "Correlative rights" means the opportunity of each owner in a pool to produce the
88 owner's just and equitable share of the oil and gas in the pool without waste.
89 (3) "Condensate" means hydrocarbons, regardless of gravity, that:
90 (a) occur naturally in the gaseous phase in the reservoir; and
91 (b) are separated from the natural gas as liquids through the process of condensation
92 either in the reservoir, in the wellbore, or at the surface in field separators.
93 (4) "Consenting owner" means an owner who, in the manner and within the time frame
94 established by the board in rule, consents to the drilling and operation of a well and agrees to
95 bear the owner's proportionate share of the costs of the drilling and operation of the well.
96 (5) "Crude oil" means hydrocarbons, regardless of gravity, that:
97 (a) occur naturally in the liquid phase in the reservoir; and
98 (b) are produced and recovered at the wellhead in liquid form.
99 (6) "Division" means the Division of Oil, Gas, and Mining.
100 (7) (a) "Gas" means natural gas, as defined in Subsection (10), natural gas liquids, as
101 defined in Subsection (11), other gas, as defined in Subsection (17), or any mixture of them.
102 (b) "Gas" does not include any gaseous or liquid substance processed from coal, oil
103 shale, or tar sands.
104 (8) "Illegal oil" or "illegal gas" means oil or gas that has been produced from any well
105 within the state in violation of this chapter or any rule or order of the board.
106 (9) "Illegal product" means any product derived in whole or in part from illegal oil or
107 illegal gas.
108 (10) (a) "Natural gas" means hydrocarbons that occur naturally in the gaseous phase in
109 the reservoir and are produced and recovered at the wellhead in gaseous form, except natural
110 gas liquids as defined in Subsection (11) and condensate as defined in Subsection (3).
111 (b) "Natural gas" includes coalbed methane gas.
112 (11) "Natural gas liquids" means hydrocarbons, regardless of gravity, that are separated
113 from natural gas as liquids in gas processing plants through the process of condensation,
114 absorption, adsorption, or other methods.
115 (12) "Nonconsenting owner" means an owner who does not, after written notice and in
116 the manner and within the time frame established by the board in rule, consent to the drilling
117 and operation of a well or agree to bear the owner's proportionate share of the costs.
118 (13) (a) "Oil" means crude oil, as defined in Subsection (5), condensate, as defined in
119 Subsection (3), or any mixture of them.
120 (b) "Oil" does not include any gaseous or liquid substance processed from coal, oil
121 shale, or tar sands.
122 (14) "Oil and gas operations" means to explore for, develop, or produce oil and gas.
123 (15) (a) "Oil and gas proceeds" means any payment that:
124 (i) derives from oil and gas production from any well located in the state;
125 (ii) is expressed as a right to a specified interest in the:
126 (A) cash proceeds received from the sale of the oil and gas; or
127 (B) the cash value of the oil and gas; and
128 (iii) is subject to any tax withheld from the payment pursuant to law.
129 (b) "Oil and gas proceeds" includes a royalty interest, overriding royalty interest,
130 production payment interest, or working interest.
131 (c) "Oil and gas proceeds" does not include a net profits interest or other interest the
132 extent of which cannot be determined with reference to a specified share of:
133 (i) the cash proceeds received from the sale of the oil and gas; or
134 (ii) the cash value of the oil and gas.
135 (16) "Operator" means a person who has been designated by the owners or the board to
136 operate a well or unit.
137 (17) (a) "Other gas" means nonhydrocarbon gases that:
138 (i) occur naturally in the gaseous phase in the reservoir; or
139 (ii) are injected into the reservoir in connection with pressure maintenance, gas cycling,
140 or other secondary or enhanced recovery projects.
141 (b) "Other gas" includes hydrogen sulfide, carbon dioxide, helium, and nitrogen.
142 (18) "Owner" means a person who has the right:
143 (a) to drill into and produce from a reservoir; and
144 (b) to appropriate the oil and gas produced for that person or for that person and others.
145 (19) "Payor" means the person who undertakes to distribute oil and gas proceeds to the
146 persons entitled to them, whether as the first purchaser of that production, as operator of the
147 well from which the production was obtained, or as lessee under the lease on which royalty is
148 due.
149 (20) "Person" means the same as that term is defined in Section 68-3-12.5 and includes
150 an operator or owner as used in this chapter.
151 (21) "Pool" means an underground reservoir containing a common accumulation of oil
152 or gas or both. Each zone of a general structure that is completely separated from any other
153 zone in the structure is a separate pool. "Common source of supply" and "reservoir" are
154 synonymous with "pool."
155 (22) "Pooling" means the bringing together of separately owned interests for the
156 common development and operation of a drilling unit.
157 (23) (a) "Pore space" means subsurface porous material possessing free space, naturally
158 or artificially created, between the mineral grains.
159 (b) "Pore space":
160 (i) is expressed as a percentage; and
161 (ii) depends on the size and sorting of the subsurface material's particles as a cubic or
162 hexagonic package.
163 (c) "Pore space" does not include Ĥ→ [
163a the removal of minerals in the course of solution mining or other mining operations. ←Ĥ
164 [
165 and gas.
166 [
167 [
168 (a) overlying privately owned oil and gas resources;
169 (b) upon which oil and gas operations are conducted; and
170 (c) owned by a surface land owner.
171 [
172 all or part of the surface land as shown by the records of the county where the surface land is
173 located.
174 (b) "Surface land owner" does not include the surface land owner's lessee, renter,
175 tenant, or other contractually related person.
176 [
177 (a) surface land;
178 (b) crops on the surface land; and
179 (c) existing improvements on the surface land.
180 [
181 and a surface land owner addressing:
182 (a) the use and reclamation of surface land owned by the surface land owner; and
183 (b) compensation for damage to the surface land caused by oil and gas operations that
184 result in:
185 (i) loss of the surface land owner's crops on the surface land;
186 (ii) loss of value of existing improvements owned by the surface land owner on the
187 surface land; and
188 (iii) permanent damage to the surface land.
189 [
190 (a) the inefficient, excessive, or improper use or the unnecessary dissipation of oil or
191 gas or reservoir energy;
192 (b) the inefficient storing of oil or gas;
193 (c) the locating, drilling, equipping, operating, or producing of any oil or gas well in a
194 manner that causes:
195 (i) a reduction in the quantity of oil or gas ultimately recoverable from a reservoir
196 under prudent and economical operations;
197 (ii) unnecessary wells to be drilled; or
198 (iii) the loss or destruction of oil or gas either at the surface or subsurface; or
199 (d) the production of oil or gas in excess of:
200 (i) transportation or storage facilities; or
201 (ii) the amount reasonably required to be produced as a result of the proper drilling,
202 completing, testing, or operating of a well or otherwise utilized on the lease from which it is
203 produced.
204 Section 2. Section 40-6-5 is amended to read:
205 40-6-5. Jurisdiction of board -- Rules.
206 (1) The board has jurisdiction over all persons and property necessary to enforce this
207 chapter. The board shall make rules in accordance with Title 63G, Chapter 3, Utah
208 Administrative Rulemaking Act.
209 (2) The board shall make rules and orders as necessary to administer the following
210 provisions:
211 (a) Ownership of all facilities for the production, storage, treatment, transportation,
212 refining, or processing of oil and gas shall be identified.
213 (b) Well logs, directional surveys, and reports on well location, drilling, and production
214 shall be made and filed with the division. Logs of wells marked "confidential" shall be kept
215 confidential for one year after the date on which the log is required to be filed, unless the
216 operator gives written permission to release the log at an earlier date. Production reports shall
217 be:
218 (i) filed monthly;
219 (ii) accurate; and
220 (iii) in a form that reasonably serves the needs of state agencies and private fee owners.
221 (c) Monthly reports from gas processing plants shall be filed with the division.
222 (d) Wells shall be drilled, cased, cemented, operated, and plugged in such manner as to
223 prevent:
224 (i) the escape of oil, gas, or water out of the reservoir in which they are found into
225 another formation;
226 (ii) the detrimental intrusion of water into an oil or gas reservoir;
227 (iii) the pollution of fresh water supplies by oil, gas, or salt water;
228 (iv) blowouts;
229 (v) cavings;
230 (vi) seepages;
231 (vii) fires; and
232 (viii) unreasonable:
233 (A) loss of a surface land owner's crops on surface land;
234 (B) loss of value of existing improvements owned by a surface land owner on surface
235 land; and
236 (C) permanent damage to surface land.
237 (e) The drilling of wells may not commence without an adequate and approved supply
238 of water as required by Title 73, Chapter 3, Appropriation. This Subsection (2)(e) is not
239 intended to impose additional legal requirements, but to assure that existing legal requirements
240 concerning the use of water have been met before the commencement of drilling.
241 (f) Subject to Subsection (9), an operator shall furnish a reasonable performance bond
242 or other good and sufficient surety, conditioned for the performance of the duty to:
243 (i) plug each dry or abandoned well;
244 (ii) repair each well causing waste or pollution;
245 (iii) maintain and restore the well site; and
246 (iv) except as provided in Subsection (8), protect a surface land owner against
247 unreasonable:
248 (A) loss of a surface land owner's crops on surface land;
249 (B) loss of value of existing improvements owned by a surface land owner on surface
250 land; and
251 (C) permanent damage to surface land.
252 (g) Production from wells shall be separated into oil and gas and measured by means
253 and upon standards that are prescribed by the board and reflect current industry standards.
254 (h) Crude oil obtained from any reserve pit, disposal pond or pit, or similar facility, and
255 any accumulation of nonmerchantable waste crude oil shall be treated and processed, as
256 prescribed by the board.
257 (i) Any person who produces, sells, purchases, acquires, stores, transports, refines, or
258 processes oil or gas or injects fluids for cycling, pressure maintenance, secondary or enhanced
259 recovery, or salt water disposal in this state shall maintain complete and accurate records of the
260 quantities produced, sold, purchased, acquired, stored, transported, refined, processed, or
261 injected for a period of at least six years. The records shall be available for examination by the
262 board or the board's agents at any reasonable time. Rules enacted to administer this Subsection
263 (2)(i) shall be consistent with applicable federal requirements.
264 (j) Any person with an interest in a lease shall be notified when all or part of that
265 interest in the lease is sold or transferred.
266 (k) The assessment and collection of administrative penalties is consistent with Section
267 40-6-11.
268 (3) The board has the authority to regulate:
269 (a) all operations for and related to the production of oil or gas including:
270 (i) drilling, testing, equipping, completing, operating, producing, and plugging of
271 wells; and
272 (ii) reclamation of sites;
273 (b) the spacing and location of wells;
274 (c) operations to increase ultimate recovery, such as:
275 (i) cycling of gas;
276 (ii) the maintenance of pressure; and
277 (iii) the introduction of gas, water, or other substances into a reservoir;
278 (d) the disposal of salt water and oil-field wastes;
279 (e) the underground and surface storage of oil, gas, or products; and
280 (f) the flaring of gas from an oil well.
281 (4) For the purposes of administering this chapter, the board may designate:
282 (a) wells as:
283 (i) oil wells; or
284 (ii) gas wells; and
285 (b) pools as:
286 (i) oil pools; or
287 (ii) gas pools.
288 (5) The board has exclusive jurisdiction over:
289 (a) class II injection wells, as defined by the federal Environmental Protection Agency
290 or a successor agency; [
291 (b) pits and ponds in relation to these injection wells[
292 (c) when granted primacy by the Environmental Protection Agency, class VI injection
293 wells, as defined by the Environmental Protection Agency or a successor agency; and
294 (d) storage facilities, as that term is defined in Section 40-11-1.
295 (6) The board has jurisdiction:
296 (a) to hear questions regarding multiple mineral development conflicts with oil and gas
297 operations if there:
298 (i) is potential injury to other mineral deposits on the same lands; or
299 (ii) are simultaneous or concurrent operations conducted by other mineral owners or
300 lessees affecting the same lands; and
301 (b) to enter the board's order or rule with respect to those questions.
302 (7) The board has enforcement powers with respect to operators of minerals other than
303 oil and gas as are set forth in Section 40-6-11, for the sole purpose of enforcing multiple
304 mineral development issues.
305 (8) Subsection (2)(f)(iv) does not apply if the surface land owner is a party to, or a
306 successor of a party to:
307 (a) a lease of the underlying privately owned oil and gas;
308 (b) a surface use agreement applicable to the surface land owner's surface land; or
309 (c) a contract, waiver, or release addressing an owner's or operator's use of the surface
310 land owner's surface land.
311 (9) (a) The board shall review rules made under Subsection (2)(f) to determine whether
312 the rules provide adequate fiscal security for the fiscal risks to the state related to oil and gas
313 operations.
314 (b) During the board's review under this Subsection (9), the board may consider the
315 bonding schemes of other states.
316 Section 3. Section 40-6-20.5 is enacted to read:
317 40-6-20.5. Title to pore space.
318 (1) Title to pore space underlying the surface estate is vested in the owner of the
319 surface estate.
320 (2) Nothing in this section shall be interpreted to increase or diminish any property
321 right established under the laws of the state.
322 Section 4. Section 40-11-1 is enacted to read:
323
324 40-11-1. Definitions.
325 As used in this chapter:
326 (1) "Board" means the Board of Oil, Gas, and Mining.
327 (2) (a) "Carbon dioxide" means carbon dioxide (CO2) that has been captured from an
328 emission source or direct air capture, plus incidental associated substances derived from the
329 source materials and the capture process, and any substances added to the carbon dioxide to
330 enable or improve the injection process.
331 (b) "Carbon dioxide" does not include hazardous waste as that term is defined in
332 Section 19-6-102.
333 (3) "Class VI injection well" means the same as that term is defined in 40 C.F.R.
334 146.5(f).
335 (4) "Division" means the Division of Oil, Gas, and Mining.
336 (5) "Geologic carbon storage" means the permanent or short-term underground storage
337 of carbon dioxide in a storage reservoir.
338 (6) "Geologic carbon storage activity" means activity associated with the development,
339 production, processing, and storage of carbon dioxide as set forth in Title 40, Chapter 11, Utah
340 Geologic Carbon Sequestration Act, and includes:
341 (a) drilling;
342 (b) development of storage facilities;
343 (c) completion, maintenance, reworking, recompletion, disposal, plugging, and
344 abandonment of storage facilities;
345 (d) construction activities;
346 (e) recovery techniques;
347 (f) remediation activities; and
348 (g) any other activity related to geologic carbon storage that the board identifies.
349 (7) "Permit" means a permit issued by the division and approved by the board allowing
350 a person to operate a storage facility.
351 (8) "Reservoir" means a subsurface sedimentary stratum, formation, aquifer, cavity, or
352 void, whether natural or artificially created, including oil and gas reservoirs, saline formations,
353 and coal seams suitable for or capable of being made suitable for geologic carbon storage.
354 (9) (a) "Storage facility" means the reservoir, underground equipment, and surface
355 facilities and equipment used or proposed to be used in a geologic carbon storage operation.
356 (b) "Storage facility" does not include pipelines used to transport carbon dioxide to a
357 storage facility.
358 (10) "Storage operator" means a person holding or applying for a permit.
359 Section 5. Section 40-11-2 is enacted to read:
360 40-11-2. Preemption.
361 (1) Regulation of geologic carbon storage is of statewide concern and the state
362 regulation of geologic carbon storage activity occupies the whole field of geologic carbon
363 storage subject to:
364 (a) the granting of primacy over Class VI geologic sequestration wells; and
365 (b) relevant federal law.
366 (2) The legislative body of a political subdivision may enact, amend, or enforce a local
367 ordinance, resolution, or rule consistent with the political subdivision's general land use
368 authority that:
369 (a) regulates only surface activity that is incidental to geologic carbon storage activity;
370 (b) does not effectively or unduly limit, ban, or prohibit geologic carbon storage
371 activity; and
372 (c) is not otherwise preempted by state or federal law.
373 Section 6. Section 40-11-3 is enacted to read:
374 40-11-3. Board authority -- Rulemaking authority.
375 (1) The board and the division have jurisdiction over all persons and property
376 necessary to enforce this chapter.
377 (2) To enforce this chapter, the board shall make rules in accordance with Title 63G,
378 Chapter 3, Utah Administrative Rulemaking Act.
379 (3) Subject to the granting of primacy by the Environmental Protection Agency under
380 the process required in 40 C.F.R. Section 145 and successful application for primacy approval
381 under Section 1425 of the Safe Drinking Water Act, the board and the division have:
382 (a) exclusive jurisdiction in the state over Class VI injection wells located in the state
383 on nonfederal lands; and
384 (b) cooperative jurisdiction in the state over Class VI injection wells located in the
385 state on federal lands.
386 (4) The board shall establish fees in accordance with Section 63J-1-504, in an amount
387 to pay the costs to the board and division of:
388 (a) the permitting process;
389 (b) the regulation of the construction, operation, and pre-closure activities of the
390 storage facility; and
391 (c) the monitoring of closed storage facilities.
392 Section 7. Section 40-11-4 is enacted to read:
393 40-11-4. Board and division permit authority.
394 To the extent required to authorize and issue permits and to regulate geologic carbon
395 sequestration, the board and the division shall have authority:
396 (1) over all persons and property necessary to administer and enforce this chapter and
397 this chapter's objectives;
398 (2) to regulate activities relating to a storage facility, including construction, operation,
399 and closure;
400 (3) to enter, at a reasonable time and manner, a storage facility to:
401 (a) inspect equipment and surface storage facilities;
402 (b) observe, monitor, and investigate operations; or
403 (c) inspect records the board requires the operators maintain at the storage facility;
404 (4) to require that storage operators provide assurance, including bonds, that money is
405 available to fulfill the storage operator's duties;
406 (5) to exercise continuing jurisdiction over storage operators and storage facilities,
407 including the authority, after notice and hearing, to amend provisions in a permit and to revoke
408 a permit; and
409 (6) to dissolve or change the boundaries of any unit that is within or near a storage
410 reservoir's boundaries.
411 Section 8. Section 40-11-5 is enacted to read:
412 40-11-5. Permits.
413 (1) Subject to the granting of primacy as described in Section 40-11-3, the board may
414 authorize the division to issue a permit.
415 (2) A person may only transfer a permit to another person with permission of the
416 board.
417 (3) A person may not engage in geologic carbon storage in the state without a permit.
418 Section 9. Section 40-11-6 is enacted to read:
419 40-11-6. Permit application requirements.
420 (1) A person applying for a permit shall:
421 (a) comply with:
422 (i) the application requirements the board establishes through rule; and
423 (ii) the application requirements described in this section; and
424 (b) pay a fee, as established by the board, to cover the administrative costs of
425 considering an application for a permit.
426 (2) The board shall give priority to storage operators who apply for a permit to store
427 carbon dioxide produced in Utah.
428 (3) A permit application shall demonstrate:
429 (a) that the storage operator has complied with all requirements established by the
430 board in rule and in this chapter;
431 (b) that the storage facility is suitable for carbon dioxide injection and storage;
432 (c) that the carbon dioxide the storage operator will store is of a quality that allows the
433 carbon dioxide to be safely and efficiently stored in the reservoir;
434 (d) that the storage operator has made a good-faith effort to get the consent of all
435 persons who own the storage reservoir's pore space;
436 (e) that owners who own no less than 70% of the reservoir's pore space have provided
437 written consent to the use of the owners' pore space for a storage facility;
438 (f) whether the storage facility contains commercially valuable minerals;
439 (g) if the storage facility contains commercially valuable minerals:
440 (i) a plan for addressing the ownership interests of the mineral owners or mineral
441 lessees; and
442 (ii) a demonstration that the storage facility will not negatively impact the
443 commercially valuable minerals;
444 (h) that the storage reservoir meets the integrity requirements described in Section
445 40-11-13;
446 (i) that the operator has taken reasonable steps to ensure that:
447 (i) the storage facility will not endanger human health;
448 (ii) the storage facility will not endanger the environment;
449 (iii) the storage facility is in the public interest;
450 (iv) the storage facility will not adversely affect surface water or formation containing
451 fresh water;
452 (v) carbon dioxide will not escape from the storage reservoir at a rate exceeding the
453 lower of 1% or the standard recommended by the Environmental Protection Agency; and
454 (vi) that substances that compromise the objectives of this chapter or the integrity of a
455 reservoir will not enter the reservoir;
456 (j) that the storage reservoir has defined horizontal and vertical boundaries;
457 (k) that the boundaries of the storage reservoir include buffer areas to ensure the safe
458 operation of the storage facility;
459 (l) plans for monitoring the storage facility and procedures to assess the location and
460 migration of carbon dioxide injected for storage;
461 (m) plans to ensure compliance with geologic carbon storage statutes and rules; and
462 (n) assurance that all nonconsenting pore space owners are or will be equitably
463 compensated for the use of the pore space of the nonconsenting pore space owners in the
464 storage facility.
465 Section 10. Section 40-11-7 is enacted to read:
466 40-11-7. Permit hearing.
467 (1) The board shall hold a public hearing before authorizing the division to issue a
468 permit.
469 (2) The board shall conduct the hearing in accordance with Title 63G, Chapter 4,
470 Administrative Procedures Act.
471 (3) The board shall give notice no fewer than 30 days prior to the hearing by:
472 (a) one publication in a daily newspaper of general circulation in Salt Lake City, Utah;
473 (b) in all newspapers of general circulation published in the county or counties in
474 which the land affected is situated; and
475 (c) by publication in accordance with Section 45-1-101.
476 (4) In addition to the notice required in Subsection (3), an applicant shall provide
477 notice of the hearing and a copy of the permit application, no fewer than 30 days before the
478 hearing to:
479 (a) each mineral lessee within one-half mile of the storage reservoir's boundaries;
480 (b) each mineral owner within one-half mile of the storage reservoir's boundaries;
481 (c) each pore space owner within one-half mile of the storage reservoir's boundaries;
482 (d) each surface owner of land within one-half mile of the storage reservoir's
483 boundaries; and
484 (e) any additional person the board identifies.
485 (5) An applicant shall serve the notice described in Subsection (4) through personal
486 service.
487 (6) The board may, in accordance with the requirements of Section 63G-6a-116,
488 procure the services of an administrative law judge to conduct the hearing described in
489 Subsection (1).
490 (7) If the board procures the services of an administrative law judge, the board may
491 rely on the decision of the administrative law judge when deciding whether to issue a permit.
492 Section 11. Section 40-11-8 is enacted to read:
493 40-11-8. Findings to issue a permit.
494 Before issuing a permit, the board shall find that:
495 (1) the application meets all of the requirements described in Section 40-11-6; and
496 (2) the interested parties described in Subsection 40-11-7(4) all received proper notice.
497 Section 12. Section 40-11-9 is enacted to read:
498 40-11-9. Permit provisions.
499 (1) A permit shall require that:
500 (a) an operator remain in compliance with all of the permit requirements described in
501 Subsection 40-11-6(3); and
502 (b) an operator comply with any additional provisions the board imposes.
503 (2) The board may make a permit contingent upon:
504 (a) the payment of fair compensation to pore space owners who do not consent to the
505 use of the owners' pore space for geologic carbon storage;
506 (b) the recording of the permit as described in Section 40-11-12; and
507 (c) additional provisions to protect the environment and the property interests of the
508 parties described in Subsection 40-11-(4).
509 Section 13. Section 40-11-10 is enacted to read:
510 40-11-10. Amalgamation of interests -- Board may order amalgamation --
511 Payment of costs and interests -- Accounting.
512 (1) Two or more owners of contiguous pore space may bring together the owners'
513 interests for the development of a storage facility.
514 (2) (a) In the absence of a written agreement for amalgamation, including a joint
515 operating agreement, the board may enter an order combining all interests in the contiguous
516 pore space for the development of a storage facility.
517 (b) The order shall be made upon terms and conditions that are just and reasonable.
518 (c) The board may adopt terms appearing in a joint operating agreement:
519 (i) for the storage facility that is in effect between the consenting owners;
520 (ii) submitted by any party to the proceeding; or
521 (iii) submitted by the board on the board's own motion.
522 (3) Operations incident to the construction or operation of a storage facility upon any
523 portion of an area included in an amalgamation order shall be deemed for all purposes to be the
524 conduct of the operations upon each separately owned tract in the area by the several orders.
525 (4) (a) (i) Each amalgamation order shall provide for the payment of just and
526 reasonable costs incurred in the construction and operation of the storage facility, including:
527 (A) the costs of constructing, marketing, completing, and operating the storage facility;
528 (B) reasonable charges for the administration and supervision of operations; and
529 (C) other costs customarily incurred in the industry.
530 (ii) An owner is not liable under an amalgamation order for costs or losses resulting
531 from the gross negligence or willful misconduct of the operator.
532 (b) Each amalgamation order shall provide for reimbursement to the consenting owners
533 for any nonconsenting owner's share of the costs of operation of the storage facility attributable
534 to the nonconsenting owner's tract.
535 (c) Each amalgamation order shall provide that each consenting owner shall own and
536 be entitled to receive, subject to taxes, fees, fines, and other obligations:
537 (i) the share of the profits of the storage facility applicable to the consenting owner's
538 interest in the storage facility; and
539 (ii) unless the consenting owner has agreed otherwise, the consenting owner's
540 proportionate part of the nonconsenting owner's share of the profits until the recovery of costs
541 provided for in Subsection (4)(d).
542 (d) (i) Each amalgamation order shall provide that each nonconsenting owner shall be
543 entitled to receive, subject to obligations, the share of the profits from the storage facility
544 applicable to the nonconsenting owner's interest in the storage facility after the consenting
545 owners have recovered from the nonconsenting owner's share of the profits the following
546 amounts less any cash contributions the nonconsenting owner has made:
547 (A) 100% of the nonconsenting owner's share of the cost of storage facility
548 construction and maintenance;
549 (B) 100% of the nonconsenting owner's share of the estimated cost to close the storage
550 facility as the board determines;
551 (C) 100% of the nonconsenting owner's share of the cost of operation of the storage
552 facility commencing with the first injection of carbon dioxide and continuing until the
553 consenting owners have recovered all costs; and
554 (D) 100% of the nonconsenting owner's share of the costs of preparing the storage
555 facility, rights-of-way, and equipment.
556 (ii) The nonconsenting owner's share of the costs specified in Subsection (4)(d)(i) is
557 that interest which would have been chargeable to the nonconsenting owner had the
558 nonconsenting owner initially agreed to pay the nonconsenting owner's share of the costs of the
559 storage facility from commencement of the operation.
560 (iii) The board may include a reasonable interest charge if the board finds it
561 appropriate.
562 (e) The board shall determine the proper costs to resolve any dispute about costs.
563 (5) The operator of a storage facility under an amalgamation order in which there is a
564 nonconsenting owner shall furnish the nonconsenting owner with monthly statements
565 specifying:
566 (a) costs incurred; and
567 (b) profit realized.
568 (6) Each amalgamation order shall provide that when the consenting owners recover
569 from a nonconsenting owner's relinquished interest the amounts provided for in Subsection
570 (4)(d):
571 (a) the relinquished interest of the nonconsenting owner shall automatically revert to
572 the nonconsenting owner;
573 (b) the nonconsenting owner shall from that time:
574 (i) own the same interest in the storage facility; and
575 (ii) be liable for the further costs of the operation as if the nonconsenting owner had
576 participated in the initial drilling and operations; and
577 (iii) costs are payable out of profits unless otherwise agreed between the nonconsenting
578 owner and the operator.
579 (7) Each amalgamation order shall provide that in any circumstance where the
580 nonconsenting owner has relinquished the nonconsenting owner's share of profits to consenting
581 owners or at any time fails to take the nonconsenting owner's share of benefits when the
582 nonconsenting owner is entitled to do so, the nonconsenting owner is entitled to:
583 (a) an accounting of the profits applicable to the nonconsenting owner's relinquished
584 share of the storage facility; and
585 (b) payment of the profits applicable to that share of the profits not taken in-kind, net
586 of costs.
587 (8) A nonconsenting owner who does not take the nonconsenting owner's share of the
588 profits is not liable for the costs described in Subsection (4)(d) and is not liable for any actions
589 the operator takes with respect to the storage facility.
590 Section 14. Section 40-11-11 is enacted to read:
591 40-11-11. Geologic carbon storage amalgamation unit -- Procedure for
592 establishment -- Operation.
593 (1) The board may hold a hearing to consider the need for the amalgamation of a tract
594 for geologic carbon storage.
595 (2) The board shall make an order providing for the amalgamation of a tract for
596 geologic carbon storage, if the board finds that:
597 (a) amalgamation is reasonably necessary for the purposes of this chapter; and
598 (b) the value of amalgamation justifies proceeding against the nonconsenting owner's
599 wishes.
600 (3) The amalgamation order shall include:
601 (a) a description of the lands and of the reservoir to become a storage facility;
602 (b) a statement of the nature of the operations contemplated;
603 (c) an allocation to the separately owned tracts in the amalgamation unit of the profits
604 the storage facility receives, considering:
605 (i) agreements among interested parties; and
606 (ii) the relative value of the separately owned tracts within the amalgamation area;
607 (d) a provision for adjustment among the owners of the amalgamation area for
608 investments made prior to the amalgamation order;
609 (e) a provision determining the allocation of costs among owners, and how the owners
610 shall pay those costs;
611 (f) any necessary provision for:
612 (i) financing an owner; or
613 (ii) carrying an owner;
614 (g) a provision for the supervision and conduct of the storage facility operations,
615 including a percentage vote for each owner;
616 (h) additional provisions that are necessary and appropriate for carrying on the
617 operation of the amalgamation unit; and
618 (i) the designation of an operator of the amalgamation unit.
619 (4) An amalgamation order described in Subsection (3) shall only be effective after the
620 plan for operating the storage facility is approved in writing by:
621 (a) owners whose obligations under the amalgamation order require them to pay not
622 less than 70% of the costs for operating and constructing the facility; and
623 (b) owners whose combined interest under the amalgamation order is not less than 70%
624 of the profits from the operation of the storage facility.
625 Section 15. Section 40-11-12 is enacted to read:
626 40-11-12. Requirement to record.
627 An operator shall file a record of the permit and a description of the impacted land with
628 the recorder's office in each county where the storage facility is located.
629 Section 16. Section 40-11-13 is enacted to read:
630 40-11-13. Reservoir integrity.
631 (1) Carbon dioxide injected into and stored in a reservoir in compliance with the
632 requirements of this section is not:
633 (a) pollution, as that term is defined in Section 4-18-103; or
634 (b) a nuisance, as that term is defined in Section 4-44-102.
635 (2) A reservoir is only appropriate for geologic carbon storage if the board determines
636 and the operator demonstrates that:
637 (a) carbon dioxide cannot escape the reservoir at a rate exceeding the lower of 1% or
638 the standard recommended by the Environmental Protection Agency;
639 (b) no additional substances will be introduced into the storage facility that could
640 compromise the integrity of the storage reservoir; and
641 (c) the operator has a plan to maintain the integrity of the reservoir.
642 (3) When making a determination described in Subsection (2), the board may rely
643 upon:
644 (a) a finding from the Utah Geological Survey, created in Section 79-3-201 that the
645 reservoir is appropriate for the storage of carbon dioxide; and
646 (b) reports and findings from the Department of Environmental Quality, created in
647 Section 19-1-104.
648 (4) The board shall take action to enforce the provisions of this section.
649 Section 17. Section 40-11-14 is enacted to read:
650 40-11-14. Preservation of rights.
651 Nothing in this chapter or in a permit may be interpreted to:
652 (1) prejudice the rights of property owners who own property that hosts a storage
653 facility to the extent that those property rights are not committed to the storage facility;
654 (2) prevent a mineral owner or mineral lessee from drilling through or near a storage
655 reservoir to explore or develop mineral resources to the extent that the exploration and
656 development:
657 (a) preserves the integrity of the storage facility; and
658 (b) complies with requirements described in this chapter.
659 Section 18. Section 40-11-15 is enacted to read:
660 40-11-15. Title to injected carbon dioxide.
661 (1) The storage operator has title to the carbon dioxide injected into and stored in a
662 storage reservoir and holds title until the board issues a certificate of project completion.
663 (2) The storage operator is liable for any damage the stored carbon dioxide may cause,
664 including damage caused by escaping stored carbon dioxide until the board issues a certificate
665 of completion.
666 (3) An owner of pore space does not incur liability for geologic carbon storage activity
667 by virtue of ownership of or of leasing out the pore space.
668 Section 19. Section 40-11-16 is enacted to read:
669 40-11-16. Certificate of project completion.
670 (1) To request a certificate of project completion, a storage operator shall submit:
671 (a) a demonstration that the last carbon dioxide injection was no fewer than 10 years
672 preceding the filing;
673 (b) a statement of compliance with all statutes and rules regulating the storage facility;
674 (c) a demonstration of the resolution of all pending claims regarding the storage
675 facility;
676 (d) a demonstration of the present and future physical integrity of the storage reservoir;
677 (e) a demonstration that any carbon dioxide in the storage reservoir:
678 (i) is essentially stationary; or
679 (ii) if the carbon dioxide migrates or will migrate, is highly unlikely to cross the
680 storage reservoir boundary;
681 (f) a demonstration that all wells, equipment, and facilities necessary for maintaining
682 the continued integrity of the storage reservoir are currently in good condition and will
683 maintain that good condition;
684 (g) a demonstration that the operator has:
685 (i) plugged wells;
686 (ii) removed equipment and facilities not necessary to maintaining the integrity of the
687 reservoir; and
688 (iii) completed any other reclamation work the board requires.
689 (2) Immediately after the board issues a certificate of completion:
690 (a) title to the storage facility and the stored carbon dioxide transfers to the state;
691 (b) liability with respect to the storage facility and the stored carbon dioxide transfers
692 to the state;
693 (c) the storage operator and any person who is not the state who has property rights in
694 the storage facility is released from any obligation to comply with regulatory requirements
695 associated with the storage facility;
696 (d) the board shall release any bonds the storage operator has posted; and
697 (e) the division shall oversee the monitoring and managing of the storage facility.
698 Section 20. Section 40-11-17 is enacted to read:
699 40-11-17. Application of this chapter to enhanced recovery projects.
700 (1) This chapter does not apply to the injection of carbon dioxide for an enhanced oil or
701 gas recovery project.
702 (2) (a) This chapter does apply to the conversion of an enhanced oil or gas recovery
703 project to a storage facility.
704 (b) To accommodate the conversion described in Subsection (2)(a), the board may
705 make additional rules to allow for circumstances unique to the conversion of an enhanced oil
706 and gas recovery project to a storage facility and not otherwise anticipated under this chapter.
707 Section 21. Section 40-11-18 is enacted to read:
708 40-11-18. Cooperative agreements and contracts.
709 (1) The board may enter into an agreement with another government, government
710 entity, or state agency for the purpose of carrying out the objectives described in this chapter.
711 (2) The board may enter into a contract with a private person in order for the board to
712 carry out the board's objectives.
713 (3) The board shall follow Title 63G, Chapter 6a, Utah Procurement Code, when
714 entering into an agreement or contract described in Subsection (1) or (2).
715 Section 22. Section 40-11-19 is enacted to read:
716 40-11-19. Participation of public interests.
717 The governing body of a controlling state interest or interest of a political subdivision is
718 authorized to consent to and participate in a geologic carbon storage project.
719 Section 23. Section 40-11-20 is enacted to read:
720 40-11-20. Adoption of procedure.
721 (1) The board may adopt procedures and criteria to determine the amount of injected
722 carbon dioxide:
723 (a) stored in a reservoir that has been or is being used for an enhanced oil or gas
724 recovery project; or
725 (b) stored in a reservoir that is a part of a storage facility.
726 (2) The board may charge a fee to cover the costs of making a determination described
727 in Subsection (1).
728 (3) The division shall deposit a fee collected in accordance with Subsection (2) into the
729 Geologic Carbon Storage Facility Administrative Fund created in Section 40-11-21.
730 Section 24. Section 40-11-21 is enacted to read:
731 40-11-21. Fees -- Geologic Carbon Storage Facility Administrative Fund.
732 (1) There is levied a fee per ton of carbon dioxide injected into a reservoir.
733 (2) The board shall establish the fee described in Subsection (1) in accordance with
734 Section 63J-1-504, in an amount to pay the costs to the division of the regulation of storage
735 facility:
736 (a) construction;
737 (b) operation; and
738 (c) pre-closure activities.
739 (3) Money the board collects in accordance with this section shall be deposited into the
740 Geologic Carbon Storage Facility Administrative Fund created in Subsection (4).
741 (4) There is created an expendable special revenue fund known as the "Geologic
742 Carbon Storage Facility Administrative Fund."
743 (5) The fund shall consist of the money specified in Subsections (1) through (3),
744 Section 40-11-20, and interest earned on the fund.
745 (6) The division shall only use the money deposited into the Geologic Carbon Storage
746 Facility Administrative Fund to:
747 (a) defray the division's regulatory expenses incurred during the regulation of storage
748 facility:
749 (i) construction;
750 (ii) operation; and
751 (iii) pre-closure activities;
752 (b) make determinations in accordance with Section 40-11-20; and
753 (c) reimburse a regulatory agency with whom the board has entered into a cooperate
754 agreement described in Section 40-11-18 for expenses the cooperating agency incurs in
755 conducting the activities described in Subsections (6)(a) and (6)(b).
756 Section 25. Section 40-11-22 is enacted to read:
757 40-11-22. Fees -- Geologic Carbon Storage Facility Trust Fund.
758 (1) There is levied a fee per ton of carbon dioxide injected into a storage facility.
759 (2) The board shall establish the fee described in Subsection (1) in accordance with
760 Section 63J-1-504, in an amount to pay the costs to the division of the long-term monitoring
761 and management of a closed storage facility.
762 (3) Money the division collects as a result of the fee described in Subsection (1) shall
763 be deposited in the Geologic Carbon Storage Facility Trust Fund created in Subsection (4).
764 (4) There is created an expendable special revenue fund known as the "Geologic
765 Carbon Storage Facility Trust Fund."
766 (5) The fund shall consist of the money specified in Subsections (1) through (3) and
767 interest earned on the fund.
768 (6) The division shall only use the money deposited into the Geologic Carbon Storage
769 Facility Trust Fund to:
770 (a) defray the expenses the division incurs in the long-term monitoring and
771 management of a closed storage facility; or
772 (b) to reimburse a regulatory agency with whom the board has entered into a
773 cooperative agreement described in Section 40-11-18 for expenses the cooperating agency
774 incurs in the long-term monitoring and management of a closed storage facility.