Energy & Carbon Management Regulation

The act expands the authority of the energy and carbon management commission (commission) to include the regulation of activities performed for the purpose of engaging in the injection and underground sequestration of injection carbon dioxide in pore space (geologic storage operations).

The commission may:

• Reimpose any regulatory responsibility or financial assurance obligation imposed on a person that exercises the right to control the conduct of geologic storage operations (geologic storage operator) if the geologic storage operator makes a material misrepresentation or omission that causes the commission to approve a site closure; and
• Assess and collect regulatory and permitting fees from geologic storage operators.

Current law requires the commission to promulgate rules that evaluate and address the cumulative impacts of oil and gas operations by April 28, 2024. The act changes current law by extending the deadline for the rule-making to September 30, 2024, and requiring the evaluation of cumulative impacts to address impacts from all operations regulated by the commission. Wells drilled for the exclusive purpose of obtaining subsurface data or information to support operations are not subject to a cumulative impact analysis.

The act also allows the director of the commission to hire and designate employees of the commission as administrative law judges who have the authority to administer proceedings on behalf of the commission.

Current law provides a statute of limitations of one year after the date of an alleged violation of energy and carbon management laws (violation). The act changes this statute of limitations to 3 years after the discovery of the alleged violation and provides that the 3-year statute of limitations period does not apply if information regarding the alleged violation is knowingly or willfully concealed by the alleged violator.

The act also expands the following energy and carbon management law areas to include geologic storage operations:

• Enforcement and civil penalty procedures;
• Use of the energy and carbon management cash fund by the commission;
• Mitigation of adverse environmental impacts by the commission or an operator; and
• State agency and local government authority over oil and gas development.

The act also establishes that:

• Ownership of a portion of a pore space necessary for geologic storage (sequestration estate) is vested in the owner of the overlying surface estate if the sequestration estate has not been separately severed, conveyed, or reserved;
• Any conveyance of the ownership of an overlying surface estate also conveys the grantor's ownership of any sequestration estate except in certain circumstances; and
• A conveyance of the ownership of a mineral estate does not convey the grantor's ownership in the sequestration estate unless the conveyance instrument provides for the conveyance.

Upon application of any interested person, the commission must hold a hearing and enter an order (order) providing for the formation of a unit of one or more geologic storage resources (geologic storage unit) if the commission finds that the geologic storage unit is reasonably necessary to effectuate a geologic storage project. The order must include terms and conditions that are just and reasonable and establish a plan for operations of the geologic storage unit (plan). An order is effective only if the plan has been approved by those persons that collectively own at least 75% of the geologic storage resources included in the geologic storage unit area (required approval) and the commission makes a finding in the order of the required approval.

The act also allows a local government to request that the director of the commission appoint a technical review board to assist the local government in analyzing and answering any technical questions regarding the local government's land use regulations.

The act also requires the department of public health and environment (department) to develop carbon dioxide accounting procedures for geologic storage operations. The commission must compile relevant data to support the carbon dioxide accounting procedures and work collaboratively with the department in implementing the carbon dioxide accounting procedures. The commission and the department must also work collaboratively to address air emissions from geologic storage operations.

APPROVED by Governor May 21, 2024

EFFECTIVE May 21, 2024
(Note: This summary applies to this bill as enacted.)