Representative Stephen G. Handy proposes the following substitute bill:




Chief Sponsor: Stephen G. Handy

Senate Sponsor: David P. Hinkins


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

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 the mineral estate.
164          [(23)] (24) "Producer" means the owner or operator of a well capable of producing oil
165     and gas.
166          [(24)] (25) "Product" means any commodity made from oil and gas.
167          [(25)] (26) "Surface land" means privately owned land:
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          [(26)] (27) (a) "Surface land owner" means a person who owns, in fee simple absolute,
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          [(27)] (28) "Surface land owner's property" means a surface land owner's:
177          (a) surface land;
178          (b) crops on the surface land; and
179          (c) existing improvements on the surface land.
180          [(28)] (29) "Surface use agreement" means an agreement between an owner or operator

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          [(29)] (30) "Waste" means:
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; [and]
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:

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.