AN ACT relating to energy production and byproduct management.

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AN ACT relating to energy production and byproduct management. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
SECTION 1. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 3
READ AS FOLLOWS: 4
The purposes of Sections 1 to 24 of this Act are to: 5
(1) Establish a legal and regulatory framework for the development and approval of 6
underground carbon dioxide sequestration facilities; 7
(2) Designate a government agency responsible for establishing standards and 8
promulgating administrative regulations for the development and approval of 9
underground carbon dioxide sequestration and sequestration facilities; 10
(3) Safeguard and protect the correlative rights of operators, mineral owners, pore 11
space owners, and surface owners and provide for just and reasonable 12
compensation for their respective interests in underground carbon dioxide 13
sequestration facilities; and 14
(4) Ensure that long -term geologic sequestration of carbon dioxide in the 15
Commonwealth is accomplished without unreasonable disturbance of surface, 16
mineral, or water resources or endangering public safety. 17
SECTION 2. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 18
READ AS FOLLOWS: 19
As used in Sections 1 to 24 of this Act: 20
(1) "Administratively complete," with respect to an application means an application 21
for permit approval that the cabinet determines contains: 22
(a) Information addressing each application requirement of the regulatory 23
program; and 24
(b) All information necessary to initiate technical processing and public review; 25
(2) "Cabinet" means the Energy and Environment Cabinet; 26
(3) "Carbon dioxide" means anthropogenic car bon dioxide of sufficient purity and 27
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quality as to not compromise: 1
(a) The safety of geologic sequestration; and 2
(b) Those properties of the sequestration reservoir which allow the reservoir to 3
effectively enclose and contain a stored gas; 4
(4) "Carbon dio xide sequestration" means the injection of carbon dioxide and 5
associated constituents into subsurface geologic reservoirs intended to provide for 6
the long -term containment of a gaseous, liquid, or supercritical carbon dioxide 7
stream in subsurface geologic formations and thereby prevent its release into the 8
atmosphere; 9
(5) "Class II well" has the same meaning as in KRS 353.510; 10
(6) "Class VI injection well" or "Class VI well" means the classification by the US 11
EPA of wells for injection of substances or mate rials into subsurface rock 12
formations and, specifically, to the class of wells that are used to inject carbon 13
dioxide into subsurface rock formations; 14
(7) "Class VI underground injection control permit" or "Class VI permit" means a 15
permit for a specified site authorizing a person or business entity to construct and 16
operate a carbon dioxide sequestration facility issued by the: 17
(a) US EPA prior to granting the cabinet primary enforcement authority; or 18
(b) Cabinet after primary enforcement authority is granted by the US EPA; 19
(8) "Completion certificate" means a Certificate of Underground Carbon Dioxide 20
Sequestration Project Completion; 21
(9) "Control person" has the same meaning as in KRS 353.510; 22
(10) "Drilling permit" means a permit issued by the cabinet to dr ill a well or convert 23
an existing well for the purposes of constructing a Class VI underground 24
injection control facility; 25
(11) "Gas well" has the same meaning as in KRS 353.010; 26
(12) "Monitoring well" means a well authorized under a Class VI underground 27
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injection control permit that is designed and completed in a specified subsurface 1
interval to monitor pressure, fluid chemistry, or other parameters to confirm 2
containment of injected carbon dioxide within the sequestration reservoir and 3
confining system and to demonstrate non -endangerment of underground sources 4
of drinking water; 5
(13) "Oil well" has the same meaning as in KRS 353.010; 6
(14) "Person" has the same meaning as in KRS 353.510; 7
(15) "Pore space" means a cavity or void, whether naturally or artifi cially created, in 8
subsurface stratum beneath individual properties within a reservoir into which 9
injection of carbon dioxide is proposed; 10
(16) "Reservoir" means a subsurface stratum, formation, cavity, or void, whether 11
naturally or artificially created, i ncluding oil and gas reservoirs, saline 12
formation, and coal seams suitable for, or capable of being made suitable for, the 13
injection and storage of carbon dioxide; 14
(17) "Secretary" means the secretary of the Energy and Environment Cabinet; 15
(18) "Sequestration facility" means the reservoir, well, underground equipment, and 16
surface facilities and equipment used or proposed to be used in a carbon dioxide 17
sequestration project, but does not include pipelines used to transport carbon 18
dioxide to the sequestration facility; 19
(19) "Sequestration operator" means a person applying for or holding a Class VI 20
permit until the issuance of a completion certificate for the relevant sequestration 21
facility; 22
(20) "Sequestration reservoir" means a reservoir proposed, authorized, and used for 23
storing carbon dioxide; 24
(21) "Surface waters": 25
(a) Means: 26
1. Those waters having well-defined banks and beds, either constantly or 27
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intermittently flowing; 1
2. Lakes and impounded waters; 2
3. Marshes and wetlands; and 3
4. Any subterranean waters flowing in well-defined channels and having 4
a demonstrable hydrologic connection with the surface; and 5
(b) Does not include lagoons used for waste treatment and effluent ditches that 6
are situated on property owned, leased, or under valid easemen t by a 7
permitted discharger; 8
(22) "Third party" means a party who is independent of the corporate structure of a 9
sequestration operator; 10
(23) "Underground source of drinking water" or "USDW" has the same meaning as 11
in 40 C.F.R. sec. 144.3; 12
(24) "Unknown or missing owner" means a person vested with a present ownership 13
interest in the pore space whose present identity or location cannot be determined 14
from: 15
(a) A reasonable review of county clerk records for the county or counties in 16
which the property is loca ted, and includes unknown heirs, successors, and 17
assigns known to be alive; 18
(b) A reasonable inquiry in the county of the owner's last known place of 19
residence; 20
(c) A diligent inquiry into known interest owners in the same tract; and 21
(d) A reasonable revie w of available internet resources commonly utilized by 22
the industry; and 23
(25) "US EPA" means the United States Environmental Protection Agency. 24
SECTION 3. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 25
READ AS FOLLOWS: 26
(1) A person shall not construct or operate a carbon dioxide sequestration facility 27
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without first securing a: 1
(a) Class VI underground injection control permit from the US EPA or the 2
cabinet; and 3
(b) Drilling permit issued by the cabinet. 4
(2) The injection of carbon dioxide for purposes of enhancing the recovery of oil or 5
natural gas pursuant to a permit approved by the cabinet under KRS 353.592 6
shall not be subject to the provisions of Sections 1 to 24 of this Act. 7
(3) If an oil, natural gas, or coalbed met hane well operator proposes to convert its 8
operations to carbon dioxide sequestration, then the underground carbon dioxide 9
sequestration facility shall be regulated pursuant to Sections 1 to 24 of this Act. 10
SECTION 4. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 11
READ AS FOLLOWS: 12
(1) Every Class VI underground injection control permit application filed under this 13
section shall: 14
(a) Be on a form prescribed by the cabinet; 15
(b) Be certified by the applicant; and 16
(c) Contain all information specified by administrative regulations promulgated 17
by the cabinet in accordance with KRS Chapter 13A. 18
(2) (a) Upon filing an application for a Class VI permit, an applicant shall: 19
1. Pay a fee in an amount set by the cabinet; and 20
2. Submit proof of public notice of the application pursuant to Section 5 21
of this Act. 22
(b) The fee shall be deposited into the carbon dioxide sequestration facility 23
administrative fund established in Section 14 of this Act. 24
(3) In addition to obtaining a Class VI underground injection control permit, the 25
applicant shall secure drilling permits from the cabinet for each well described in 26
the approved Class VI permit. 27
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(4) If, prior to approval of an application, the cabi net determines that the proposed 1
sequestration facility contains commercially valuable minerals, the cabinet shall 2
ensure that the interests of the mineral owners or mineral lessees: 3
(a) Will not be adversely affected; or 4
(b) Have been addressed in a writ ten agreement entered into by the mineral 5
owners, mineral lessees, and the sequestration operator pursuant to Section 6
10 of this Act. 7
(5) To be considered an administratively complete application, a Class VI permit 8
application shall include documentation that: 9
(a) The sequestration operator has the written consent of those persons having 10
ownership interests in at least seventy -five percent (75%) of the proposed 11
sequestration reservoir's pore space acreage; and 12
(b) A pooling order has been requested pursuant to Section 20 of this Act for up 13
to twenty-five percent (25%) of the proposed sequestration reservoir's pore 14
space acreage for nonconsenting, unknown, and missing pore space 15
owners. 16
(6) The cabinet shall not begin technical review of an administratively c omplete 17
application until the sequestration operator has: 18
(a) Demonstrated that it possesses through the requisite consent and the 19
petition for a pooling order in accordance with Section 20 of this Act, the 20
legal right to utilize one hundred percent (100%) of the pore space acreage 21
of the proposed sequestration reservoir; and 22
(b) Provided documentation demonstrating the legal right to enter onto and 23
conduct all surface activities and operations associated with the proposed 24
sequestration facility. 25
(7) If the cabinet determines that a bona fide dispute exists regarding the applicant's 26
legal right, consistent with subsections (5) and (6) of this section, to utilize any of 27
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the pore space acreage of the proposed sequestration reservoir, the cabinet shall: 1
(a) Suspend technical permit review pending resolution of the property dispute 2
by a court of competent jurisdiction or resolution by the parties; or 3
(b) Require the applicant to revise the permit application to exclude the 4
contested pore space acreage. 5
(8) A Class VI permit shall not be issued under this section unless the cabinet finds 6
that: 7
(a) The application and proposed operations comply with all requirements 8
established by the cabinet, including any applicable Class VI underground 9
injection control administrative regulations, and all applicable provisions of 10
state and federal law; 11
(b) The sequestration facility is suitable and feasible for carbon dioxide 12
injection and sequestration; 13
(c) The sequestration operator has made a good -faith effort to obtain the 14
written consent of all persons who own the sequestration reservoir's pore 15
space; 16
(d) The applicant has demonstrated the legal right to utilize one hundred 17
percent (100%) of the sequestration reservoir's pore space acreage; 18
(e) The application contains documen tation sufficient to demonstrate the legal 19
right to enter onto and conduct all surface activities and operations 20
associated with the proposed sequestration facility; 21
(f) The proposed sequestration facility will not endanger surface waters or any 22
USDW; 23
(g) The creation, operation, and maintenance of the sequestration facility will 24
not appreciably endanger human health or the environment; 25
(h) Adequate horizontal and vertical boundaries of the sequestration reservoir 26
are defined, including buffer areas, to ensure that the sequestration facility 27
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is operated safely and prudently; 1
(i) The sequestration operator will establish monitoring facilities and protocols 2
to assess the loca tion and migration of carbon dioxide injected for 3
sequestration and to ensure compliance with all Class VI permit, statutory, 4
and administrative regulation requirements; 5
(j) All nonconsenting pore space owners are or will be justly and reasonably 6
compensated in accordance with the administrative regulations and 7
procedures set forth in and promulgated under this section by the cabinet; 8
and 9
(k) The sequestration operator demonstrates financial responsibility as 10
determined by the cabinet pursuant to subsection s (10) and (11) of this 11
section and applicable administrative regulations. 12
(9) The cabinet shall render a decision on a permit application in accordance with 13
Section 6 of this Act. 14
(10) (a) A permit shall not be issued under this section unless the sequest ration 15
operator posts qualifying financial responsibility sufficient to cover the cost 16
of: 17
1. Corrective action; 18
2. Well plugging of Class VI injection wells and monitoring wells; 19
3. Post-injection site care and facility closure; 20
4. Emergency and remedial response; and 21
5. Addressing endangerment of underground sources of drinking water. 22
(b) The financial responsibility instruments shall contain protective conditions 23
for coverage for cancellation, renewal, and continuation provisions. The 24
sequestration oper ator shall have detailed written estimates, in current 25
dollars, of the cost of performing the activities contained in paragraph (a)1. 26
to 5. of this subsection. The cost estimates shall be separate for each phase 27
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and shall be based on the costs of the cabinet to hire third parties to perform 1
the required activity. 2
(c) For the duration of the permit, the sequestration operator shall annually 3
adjust the cost estimates of each activity and provide the information to the 4
cabinet. Any decrease or increase in the initial cost estimate shall be subject 5
to the cabinet's approval. If at any time the current cost estimate: 6
1. Increases to an amount greater than the face amount of the financial 7
responsibility instruments currently in use, the sequestration operator 8
shall submit to the cabinet within sixty (60) days, written evidence of 9
an increase of the face amount of the existing financial responsibility 10
instruments or substitute another instrument in the increased amount; 11
or 12
2. Decreases to an amount lesser than the face amount of the financial 13
responsibility instruments, those instruments may be reduced to the 14
amount of the current estimate upon receipt of written approval from 15
the cabinet. 16
(d) The cabinet shall perform an annual evaluation of the qualifying financ ial 17
responsibility to determine if the amount of financial responsibility provided 18
by the sequestration operator is sufficient to secure the operator's 19
obligations under state and federal law. A cabinet determination under this 20
subsection is considered fin al. If the cabinet determines the amount of 21
financial responsibility is insufficient, the sequestration operator shall: 22
1. Provide an adjustment of the cost estimate to the cabinet within sixty 23
(60) days of notification by the cabinet; and 24
2. Adjust the f inancial responsibility instruments in accordance with 25
paragraph (c) of this subsection. 26
(e) The initial deposit, use, and length of pay -in periods for trust funds or 27
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escrow accounts are subject to the cabinet's approval. The sequestration 1
operator may m ake periodic deposits into a trust fund or escrow account 2
throughout the operational period to ensure sufficient funds are available to 3
carry out the required activities on the date on which they may occur. The 4
cabinet shall consider project -specific risk assessments, projected timing of 5
activities, and interest accumulation in determining whether sufficient 6
funds are available to conduct the required activities. 7
(11) (a) In demonstrating and maintaining financial responsibility as determined by 8
the cabinet, the sequestration operator shall provide financial responsibility 9
from the following list of qualifying instruments: 10
1. Trust funds; 11
2. Surety or cash bonds; 12
3. Letters of credit; 13
4. Insurance; 14
5. Self-insurance; or 15
6. Any other instrument the cabinet finds satisfactory. 16
(b) The cabinet may promulgate administrative regulations in accordance with 17
KRS Chapter 13A to allow self -insurance as a financial responsibility 18
mechanism for some or all of the costs and obligations o f the sequestration 19
operator under terms and conditions as the cabinet deems necessary to 20
ensure completion of all obligations of the Class VI permit. To account for 21
the risks of default and resulting responsibility obligations incurred by the 22
carbon dioxide sequestration facility trust fund established in Section 16 of 23
this Act, the cabinet's terms and conditions may include: 24
1. Corporate guarantees; 25
2. Securing performance by lien or collateral; and 26
3. Adjustments in assessed contributions by the sequest ration operator to 27
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the carbon dioxide sequestration facility trust fund established in 1
Section 16 of this Act. 2
(c) All qualifying financial instruments are subject to the cabinet's approval. 3
(12) (a) The cabinet shall not issue a permit under this section or approve an 4
application to transfer a sequestration facility to a successor operator 5
pursuant to subsection (13) of this section, and an operator shall not be 6
eligible to receive any permits or become a successor operator under this 7
section if: 8
1. The ap plicant has falsified or otherwise misrepresented any 9
information on or relating to the permit application; 10
2. The applicant has failed to abate or reach an agreement with the 11
cabinet regarding an unappealed violation of Sections 1 to 24 of this 12
Act or the administrative regulations promulgated thereunder; 13
3. A control person of the applicant has a forfeiture of a financial 14
responsibility instrument; 15
4. The applicant is a control person for another operator that has a 16
forfeiture of a financial responsibility instrument; 17
5. A control person for the applicant served as a control person for 18
another operator when an unresolved financial responsibility 19
instrument forfeiture occurred; 20
6. The applicant is or has a control person who controls or is controlled 21
by another operator that has a forfeiture of a bond; or 22
7. The cabinet determines that an activity of the applicant is currently in 23
violation of KRS Chapter 149, 151, 224, 349, 350, 351, 352, or 353 or 24
any administrative regulation promulgated thereunder. 25
(b) The cabinet: 26
1. May restore the eligibility of applicants, operators, and control persons 27
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who are deemed permit -ineligible pursuant to paragraph (a)1. of this 1
subsection upon resubmission of the application correcting the false 2
or misrepresented information; 3
2. Shall restore the eligibility of applicants, operators, or control persons 4
who are deemed permit -ineligible pursuant to paragraph (a)2. of this 5
subsection upon satisfactory abatement of the violation and payment 6
of any civil penalties; 7
3. Shall restore the eligibility of applicants, operators, or control persons 8
who are deemed permit -ineligible pursuant to paragraph (a)3. to 6. of 9
this subsection upon entry of and satisfactory compliance with an 10
agreed order between the operator and the cabinet that re solves all the 11
operator's outstanding violations, requires payment of any civil 12
penalties, and provides restitution to the cabinet for any costs 13
associated with the forfeiture, plugging, and proper abandonment of a 14
well in excess of the financial responsib ility instruments forfeited to 15
the cabinet by the operator; and 16
4. a. Shall provisionally restore the eligibility of applicants who are 17
deemed permit -ineligible pursuant to paragraph (a)7. of this 18
subsection upon either submittal of proof that the violatio n is in 19
the process of being corrected to the satisfaction of the cabinet or 20
a demonstration that the applicant has filed and is pursuing a 21
good-faith administrative or judicial appeal to contest the 22
violation. If the Circuit Court affirms the violation, t hen the 23
applicant shall, within thirty (30) days of the judicial action, 24
submit proof that the violation is in the process of being 25
corrected to the satisfaction of the cabinet. Provisional 26
restoration of permit eligibility related to paragraph (a)7. of th is 27
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subsection may be withdrawn at any time if the cabinet 1
determines that the applicant no longer satisfies the 2
requirements of this section. 3
b. The cabinet shall fully restore the eligibility of applicants who 4
are deemed permit -ineligible pursuant to par agraph (a)7. of this 5
subsection upon either submittal of proof that the violation has 6
been corrected to the satisfaction of the cabinet or that the 7
violations have been ordered vacated in a final decision of the 8
secretary or a reviewing court after all app eals have been 9
exhausted. 10
(13) A permit issued pursuant to this section shall not be transferred by sale, 11
assignment, lease, or otherwise, except upon the written approval by the cabinet 12
of a joint application submitted by both the transferor and the trans feree. The 13
joint application for transfer shall be on a form prescribed by the cabinet and 14
accompanied by a fee in an amount set by the cabinet. Fees under this subsection 15
shall be deposited in the carbon dioxide sequestration facility administrative fund 16
established in Section 14 of this Act. The transferee shall file financial 17
responsibility with the application in an amount and form that the cabinet deems 18
satisfactory to cover the costs of the activities listed in subsection (10)(a) of this 19
section. All rights and liabilities under the permit shall pass to the transferee 20
upon written approval of the transfer by the cabinet. 21
(14) The cabinet shall conduct periodic reviews of each permit issued pursuant to this 22
section. The cabinet shall review each permit at least once every five (5) years 23
from the date of the permit issuance and whenever the cabinet has reason to 24
believe, based on available information, that the permit may no longer be in 25
compliance with Sections 1 to 24 of this Act. During permit review, the cabinet 26
shall review all provisions of the existing permit, including the adequacy of the 27
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financial responsibility required by this section. The cabinet may, by 1
determination issued to the permit holder, require revision or modification of the 2
permit p rovisions, including requiring the posting of additional financial 3
responsibility, in order to ensure compliance with this section. 4
SECTION 5. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 5
READ AS FOLLOWS: 6
(1) Public notice of an application for a Class VI well permit under Sections 1 to 24 7
of this Act shall allow at least thirty (30) days for public comment. 8
(2) The cabinet shall send the public notice to the applicant, who shall be responsible 9
for publication of the notice pursuant to KRS Chapter 424 within thirty (30) days 10
prior to the submission of an application. Upon publication, the applicant shall 11
send the cabinet a copy of the certificate of publication. The cost of publication 12
shall be borne by the applicant. 13
(3) Notice of an application for a Class VI well permit shall be served on each 14
mineral lessee, mineral owner, and pore space owner with a legal interest in the 15
property or properties that involves the sequestration reservoir, and adjoining 16
surface and mineral owners of record. 17
(4) Service of individual notices required by this section shall be through personal 18
service, by registered mail, or by any method of delivery that requires a receipt or 19
signature confirmation. 20
(5) Service of any unknown or mi ssing owners shall be deemed to have occurred, 21
provided that the sequestration operator has complied with this section and 22
Section 20 of this Act. 23
(6) The cabinet may hold a public hearing at its discretion if a hearing may assist in 24
clarifying one (1) or more issues involved in the Class VI well permit decision. If 25
a public hearing is held, notice of the hearing shall be provided in the same 26
manner as set forth in subsection (2) of this section. 27
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SECTION 6. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 1
READ AS FOLLOWS: 2
(1) Within sixty (60) calendar days of receiving an application for a Class VI 3
underground injection control well, the cabinet shall provide written notice to the 4
applicant as to the administrative complete ness of the application. If the 5
application is determined to be administratively: 6
(a) Complete, the cabinet shall notify the applicant in writing that the technical 7
review period provided by subsection (2) of this section has begun; or 8
(b) Incomplete, the cabinet shall notify the applicant of the deficiencies that 9
render it administratively incomplete. The applicant shall have thirty (30) 10
calendar days from receiving the cabinet's notice of deficiency to correct the 11
deficiencies and render the application administratively complete. 12
(2) (a) Technical review of an application shall begin when the cabinet has deemed 13
the application administratively complete and ready for review. The cabinet 14
shall issue a final determination to either approve or deny the applica tion 15
within three hundred sixty -five (365) calendar days from the date an 16
administrative completeness determination has been made by the cabinet. 17
(b) If the application is found deficient during technical review, the cabinet 18
shall notify the applicant in w riting of the deficiencies identified by the 19
cabinet during the review. The applicant shall respond to the deficiencies 20
with information that addresses the identified deficiencies. 21
(3) An application shall be considered temporarily withdrawn when an applic ant is 22
correcting deficiencies noted by the cabinet pursuant to subsection (1)(b) or (2)(b) 23
of this section. Periods of temporary withdrawal shall not be counted against the 24
review period allotted to the cabinet for administrative or technical review. Upon 25
resubmittal the review period allotted to the cabinet shall resume. 26
SECTION 7. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 27
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READ AS FOLLOWS: 1
(1) The cabinet shall include in any Class VI underground injection control permit 2
or order all provisions necessary to: 3
(a) Carry out the objectives of Sections 1 to 24 of this Act; 4
(b) Protect and adjust the respective rights and obligations of persons affected 5
by a carbon dioxide sequestration facility; and 6
(c) Protect public health, safety, and the environment. 7
(2) The cabinet shall require that a copy of any Class VI permit issued and a land 8
survey of the permitted sequestration reservoir indicating impacted surface, pore 9
space and mineral owners and mineral lessees be filed w ith the county clerk in 10
the county or counties where the carbon dioxide sequestration facility is located. 11
Any amendments or modifications to the Class VI permit or land survey shall also 12
be filed. 13
SECTION 8. A NEW SECTI ON OF KRS CHAPTER 353 IS CREATED TO 14
READ AS FOLLOWS: 15
(1) A person shall not drill, deepen, reopen, or convert a well for the purposes of 16
developing a Class VI underground injection control well without first securing 17
drilling permits from the cabinet. 18
(2) To both protect and prevent endangerment of underground sources of drinking 19
water, the cabinet shall promulgate administrative regulations in accordance with 20
KRS Chapter 13A regarding the drilling, casing, and construction of the wells. 21
The cabinet shall prescribe the use of materials that are compatible and can 22
withstand contact with carbon dioxide over the life of the sequestration project, 23
including the project's conversion, maintenance, and abandonment of wells. 24
SECTION 9. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 25
READ AS FOLLOWS: 26
(1) For the purposes of Sections 1 to 24 of this Act and in all other respects, any 27
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carbon dioxide injected and sequestered in accordance with a Class VI 1
underground injection control permit issued by the cabinet and in compliance 2
with Sections 1 to 24 of this Act and the cabinet's administrative regulations shall 3
not be considered a pollutant, and the operation and existence of such a carbon 4
dioxide sequestration facility shall not be considered a public nuisance. 5
(2) The cabinet's authority under Sections 1 to 24 of this Act shall not otherwise limit 6
the authority or jurisdiction of the cabinet in any manner under any other state 7
or federal law. 8
SECTION 10. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 9
READ AS FOLLOWS: 10
The provisions of this section shall apply to activities occurring within or proposed to 11
occur within a sequestration reservoir: 12
(1) Nothing contained in Sections 1 to 24 of this Act prohibits the mineral owner or 13
lessee or the pore space owner or lessee f rom exploring, developing, or producing 14
oil, gas, or other minerals above or below a sequestration reservoir or from using 15
other strata or formations for carbon dioxide sequestration. Wells penetrating 16
sequestration reservoirs shall protect their integrity and prevent carbon dioxide 17
release. Wells penetrating oil and gas formations shall protect their integrity and 18
prevent contamination or damage; 19
(2) Before drilling, deepening, reopening, converting, or plugging wells drilled 20
pursuant to KRS Chapters 349 a nd 353 on any property with a permitted 21
sequestration reservoir, the oil and gas operator shall, at the time of filing with 22
the cabinet, forward a copy of the application to the sequestration operator via 23
registered or certified mail or by personal service; 24
(3) When the cabinet receives a permit application for a well within a sequestration 25
reservoir or buffer zone, the cabinet shall notify both the oil and gas operator and 26
sequestration operator by registered or certified mail or by personal service; 27
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(4) Before drilling, deepening, reopening, converting, or plugging a Class VI 1
injection well or monitoring well on a property where oil, gas, or other minerals 2
are owned by a person other than the sequestration operator, the sequestration 3
operator shall, at the time of filing, forward a copy of the application and plat to 4
the oil, gas, or other mineral owner via registered or certified mail or by personal 5
service; 6
(5) The sequestration operator shall: 7
(a) Notify the oil, gas, or other mineral operator when seque stration rights are 8
acquired on property with: 9
1. An oil or gas lease or oil and gas operations; or 10
2. A coal or noncoal lease, or coal or noncoal operations pursuant to 11
KRS Chapter 350; and 12
(b) Ensure that notice of future applications to drill Class VI injection wells or 13
monitoring wells are sent to the oil, gas, coal, or other mineral lessee and 14
operator, if any; 15
(6) Upon receiving an application to drill, deepen, convert, reopen, complete, or plug 16
an oil or gas well or a Class VI injection or monitorin g well, the cabinet shall 17
hold the application for fifteen (15) days to allow non -applicant operators to file 18
objections. If objections are filed, the objecting non-applicant operator shall serve 19
the objections on the applicant operator. The cabinet shall schedule a hearing, 20
pursuant to subsection (6) of Section 5 of this Act, within ten (10) days of 21
receiving the objection. If, during or before the hearing, the parties reach an 22
agreement regarding the objections, changes to the drilling plan in accordance 23
with the agreement shall be submitted by the applicant operator in an amended 24
application. If an agreement is not reached, the cabinet, after considering the 25
objections and the evidence presented at the hearing, shall enter an order and 26
issue a permit to drill with modifications to protect the rights and resources of the 27
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parties involved; 1
(7) If the oil and gas operator and the sequestration operator disagree on the drilling, 2
deepening, reopening, completing, or plugging of an oil or gas well or a Class VI 3
or monitoring well, the cabinet shall: 4
(a) Determine how the costs above those normally incurred in the drilling, 5
completion, or plugging of the well will be allocated to the applicant 6
operator and non-applicant operator; and 7
(b) Specify the payment terms; 8
(8) Upon receipt of notice of an application to drill, deepen, reopen, complete, or 9
plug an oil or gas well or a Class VI or monitoring well, a non -applicant operator 10
may waive his or her objection and specify whether the waiver applies to one (1) 11
or more wells, a group of wells, or specific areas. The waiver shall be made by 12
letter or by telephone with written confirmation. If the waiver is filed and the 13
cabinet determines that the application is otherwise complete and the public 14
interest is served, the permit shall be issued; and 15
(9) (a) Before plugging and abandoning an oil or gas well that penetrates a 16
sequestration reservoir or a Class VI or monitoring well that penetrates an 17
oil or gas formation: 18
1. The operator proposing to plug and abandon the well shall notify the 19
other non -plugging operator and the cabinet of the operator's 20
intention to plug and abandon the well and shall state the date and 21
time when the plugging will occur; 22
2. Notice shall be sufficient to reasonably allow the non -plugging 23
operator to attend and view the plugging of the well. The operator may 24
proceed with plugging the well if, after notice, the non -plugging 25
operator does not attend; and 26
3. The operator shall: 27
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a. Seek and receive the approval of the cabinet; and 1
b. Allow a cabinet representative to be present at the well plugging. 2
(b) Plugging shall not occur except pursuant to the approval of the cabinet and 3
with a cabinet representative present at the plugging. 4
SECTION 11. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 5
READ AS FOLLOWS: 6
The secretary may enter into cooperative agreements with corresponding officials in 7
other state governments or governmental agencies for the purpose of regulating carbon 8
dioxide sequestration projects that extend beyond state regulatory authority under 9
Sections 1 to 24 of this Act. 10
SECTION 12. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 11
READ AS FOLLOWS: 12
The sequestration operator shall be the owner of the carbon dioxide injected into and 13
stored in a sequestration reservoir approved under Sections 1 to 24 of this Act and shall 14
maintain ownership and control until the cabinet issues a completion certificate . While 15
the sequestration operator has ownership, the sequestration operator is liable for any 16
damage the carbon dioxide may cause, including damage caused by carbon dioxide 17
that escapes from the sequestration facility. 18
SECTION 13. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 19
READ AS FOLLOWS: 20
(1) The cabinet may issue a completion certificate upon application by the 21
sequestration operator demonstrating compliance with Sections 1 to 24 of this Act 22
at one (1) of the following times: 23
(a) Fifty (50) years after carbon dioxide injections into a reservoir end; or 24
(b) At any other time frame established on a site-specific basis by administrative 25
regulations promulgated pursuant to KRS Chapter 13A regarding the time 26
frame for a sequestration operator's post-injection site care and site closure 27
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plan. 1
(2) The completion certificate shall only be issued: 2
(a) After public notice and hearing; and 3
(b) If the sequestration operator demonstrates that: 4
1. The operator is in full complianc e with all laws and other 5
requirements governing the sequestration facility, including without 6
limitation, the requirements of any Class VI underground injection 7
control permit associated with the facility and other applicable 8
requirements; 9
2. All pending claims regarding the sequestration facility's operation 10
have been addressed and resolved; and 11
3. The carbon dioxide injected into the sequestration reservoir has 12
stabilized, and the reservoir is reasonably expected to retain the stored 13
carbon dioxide. 14
(3) As of the effective date of a completion certificate: 15
(a) Ownership of the stored carbon dioxide shall transfer by operation of law, 16
without payment of any compensation, to the Commonwealth; 17
(b) If any claim for damages or injury is made against the pore s pace or 18
surface owner arising from stored carbon dioxide, the Commonwealth shall 19
defend the pore space or surface owner against that claim and indemnify 20
and hold the pore space or surface owner harmless from any damages 21
awarded, except that a pore space ow ner or surface owner may be liable for 22
causing or contributing to migration or release of stored carbon dioxide 23
from the reservoir. The Commonwealth's liability for such claims and its 24
obligation to indemnify a pore space owner or surface owner for any cla im 25
shall not obligate payment of any damages in excess of the balance of the 26
carbon dioxide sequestration facility trust fund established in Section 16 of 27
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this Act; 1
(c) The sequestration operator and all persons who transported or generated 2
any stored carbon dioxide shall be released from all regulatory liability and 3
regulatory requirements associated with the sequestration facility, provided 4
that the sequestration operator shall not be released from regulatory 5
liability for fraud or misrepresentation, nor from any liability existing at 6
common law; and 7
(d) The Commonwealth's responsibility for monitoring and managing the 8
sequestration facility following issuance of the completion certificate and 9
assumption of ownership of the sequestered carbon dioxide shall be funded 10
from the carbon dioxide sequestration facility trust fund established in 11
Section 16 of this Act until and unless the federal government assumes 12
responsibility for the long -term monitoring and management of 13
sequestration facilities. 14
(4) The cabinet shall require that a copy of the completion certificate and a survey of 15
the sequestration field be filed with the county clerk in the county or counties 16
where the carbon dioxide sequestration facility is located. 17
SECTION 14. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 18
READ AS FOLLOWS: 19
(1) There is hereby created in the State Treasury an interest -bearing, restricted, 20
agency account to be known as the carbon dioxide sequestration facility 21
administrative fund. All amou nts required to be deposited into the fund shall not 22
be segregated into separate accounts but may be used by the cabinet as provided 23
in this section for any carbon dioxide sequestration project. Notwithstanding KRS 24
45.229, any balance remaining in the fund at the end of any fiscal year shall not 25
lapse but shall be carried forward for the purposes of the fund until expended. 26
Expenditures from the fund shall be made by the cabinet for the purposes of: 27
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(a) Payment of all expenses of the cabinet in processing C lass VI permits and 1
certificate applications; 2
(b) Regulating sequestration facilities during their construction, operation, and 3
pre-closure phases; and 4
(c) Certifying the sequestration amount determinations under Section 18 of this 5
Act. 6
(2) The secretary may: 7
(a) Enter into a cooperative agreement with another government agency to 8
carry out regulatory responsibilities over a sequestration facility on behalf 9
of the Commonwealth; and 10
(b) Compensate the government agency for its expenses with money from th e 11
fund. 12
SECTION 15. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 13
READ AS FOLLOWS: 14
(1) Class VI permit applicants shall pay an a pplication fee to the cabinet. The 15
application fee established on the fee schedule developed under Section 24 of this 16
Act shall be calculated to ensure sufficient funds are available for the actual or 17
anticipated cost to the cabinet for the review of the application. 18
(2) Sequestration operators shall pay an annual administrative fee to the cabinet. 19
The administrative fee established on the fee schedule developed under Section 20
24 of this Act shall be calculated to ensure sufficient funds are available for t he 21
actual or anticipated cost to the cabinet for the regulation of sequestration 22
facilities. 23
(3) Sequestration operators seeking completion certificates shall pay the cabinet a fee 24
established on the fee schedule developed under Section 24 of this Act. The fee 25
shall be calculated to ensure sufficient funds are available for the actual or 26
anticipated cost to the cabinet for the review of the permit and records relating to 27
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the operation of the sequestration facility to determine eligibility for issuance of 1
the completion certificate. 2
(4) The application and completion certificate fees shall be deposited in the carbon 3
dioxide sequestration facility administrative fund established in Section 14 of this 4
Act. 5
SECTION 16. A NEW S ECTION OF KRS CHAPTER 353 IS CREATED TO 6
READ AS FOLLOWS: 7
(1) There is hereby created in the State Treasury an interest -bearing, restricted, 8
agency account to be known as the carbon dioxide sequestration facility trust 9
fund. Moneys in the fund shall be used for: 10
(a) The long-term monitoring and management of sequestration facilities prior 11
to closure, plugging, and abandonment of all monitoring wells in the event 12
of operator default; 13
(b) Expenses associated with the long -term monitoring and management after 14
issuance of a completion certificate; and 15
(c) Determining the causes and remediating the effects of any releases or 16
environmental emergencies associated with sequestration facilities. 17
(2) All amounts required to be deposited into the fund shall not be segr egated into 18
separate accounts but may be used by the cabinet as provided in this section for 19
any carbon dioxide sequestration project. Notwithstanding KRS 45.229, any 20
balance remaining in the fund at the end of any fiscal year shall not lapse but 21
shall be carried forward to carry out the purposes of the fund until fully 22
expended. 23
(3) The secretary may: 24
(a) Enter into a cooperative agreement with another government agency to 25
carry out regulatory responsibilities over a sequestration facility on behalf 26
of the Commonwealth; and 27
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(b) Compensate the government agency for its expenses with money from the 1
fund. 2
SECTION 17. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 3
READ AS FOLLOWS: 4
(1) Sequestration operators shall pay the ca binet a fee on each ton of carbon dioxide 5
injected for sequestration. The fee shall be paid at the time of injection and 6
deposited into the carbon dioxide sequestration facility trust fund established in 7
Section 16 of this Act. The fee shall be calculated to ensure sufficient funds are 8
available for the actual or anticipated cost of: 9
(a) Long-term monitoring and management of sequestration facilities; and 10
(b) The effects of any releases or environmental emergencies associated with 11
the sequestration facilities. 12
(2) On or before December 31 of the first year in which the cabinet receives its first 13
application for a Class VI underground injection control permit and each 14
December 31 thereafter, the cabinet shall prepare and make publicly available an 15
annual report on the carbon dioxide sequestration facility trust fund established 16
in Section 16 of this Act that includes, at a minimum, information on receipts, 17
disbursements, and projections for meeting the fund's objectives in Section 16 of 18
this Act. The purpose of the report is to determine the sufficiency of fees 19
authorized in Section 24 of this Act. 20
SECTION 18. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 21
READ AS FOLLOWS: 22
(1) The cabinet shall, upon request of an operato r, certify the amount of injected 23
carbon dioxide demonstrated to have been stored in a reservoir that has been or is 24
being used for a Class II well in an enhanced oil or gas recovery project. Upon 25
request of an operator, the cabinet may also certify the am ount of injected carbon 26
dioxide sequestered under Sections 1 to 24 of this Act. 27
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(2) The amounts determined by the cabinet under subsection (1) of this section may 1
be used for such matters as establishing the amounts of carbon credits, 2
allowances, trading, emissions allocations, offsets, and for other similar 3
purposes. 4
(3) A person requesting a certification of a sequestration determination shall pay the 5
cabinet a certification fee as authorized in Section 24 of this Act. The fee shall be 6
calculated to ensur e sufficient funds are available for the actual or anticipated 7
cost to the cabinet to provide the certifications described in subsection (1) of this 8
section. 9
(4) Any fees the cabinet receives to provide the certifications described in subsection 10
(1) of this section shall be deposited into the carbon dioxide sequestration facility 11
administrative fund established in Section 14 of this Act. 12
SECTION 19. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 13
READ AS FOLLOWS: 14
Sections 1 to 24 of this Act shall not be construed as altering the respective legal rights 15
or relationship between the severed mineral estate and a pore space owner as they exist 16
at common law. 17
SECTION 20. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 18
READ AS FOLLOWS: 19
(1) If a sequestration operator is unable, after reasonable effort, to obtain the 20
consent of all pore space owners within a proposed reservoir for an underground 21
carbon dioxide sequestration facility, the cabinet may on petition satisfying the 22
conditions established in this section, issue an order that the identified pore space 23
owned by nonconsenting owners be included in a sequestration facility for the 24
purpose of geologic sequestration of carbon dioxide pursuant to subsection (5) of 25
this section. 26
(2) The Class VI permit applicant shall negotiate in good faith with the pore space 27
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owners and acquire rights needed to access the pore space. 1
(3) Except for temporary access in cases of emergency, the cabinet shall not allow 2
any surface disturbance on any surface tra ct or tracts overlying the pore space of 3
a nonconsenting owner. 4
(4) The sequestration operator shall provide a list to the cabinet of all persons 5
reasonably known to own an interest in pore space proposed to be included in the 6
reservoir. 7
(5) (a) If the app licant or operator cannot reach an agreement with the owners of 8
the pore space acreage in a proposed reservoir, but has secured written 9
consent for at least seventy -five percent (75%) of the pore space acreage in 10
the proposed reservoir, all the pore space in the sequestration reservoir shall 11
be declared to be included within the proposed sequestration facility if the 12
cabinet finds that the requirements of this section have been met. 13
(b) For the purposes of this section, the interests of any unknown or missi ng 14
pore space owners may be declared to be included through the pooling 15
order provided reasonable effort to locate and notify the owners has been 16
made and the sequestration operator has complied with the publication 17
requirements of subsection (7) of this section. A pooling order shall be made 18
only after the cabinet provides notice to all pore space owners proposed to 19
be included within the order. 20
(6) The applicant shall pay to the cabinet all costs associated with the conduct of the 21
administrative hearing a s assessed in the pooling order. The payment shall be 22
made prior to the pooling order becoming effective. These funds shall be 23
deposited into the carbon dioxide sequestration facility administrative fund 24
established in Section 14 of this Act. 25
(7) If the pr oposed pooling order concerns pore space with unknown or missing 26
owners, the sequestration operator shall, after reasonable efforts to locate the 27
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pore space owners, publish one (1) notice in the newspaper of the largest 1
circulation in each county in which the pore space is located. The notice shall 2
appear no more than forty-five (45) days nor less than thirty (30) days prior to the 3
initial application for the pooling order. The applicant shall file proof of notice 4
with the cabinet concurrently with the application. The notice shall: 5
(a) State that an application for a pooling order has been filed with the cabinet; 6
(b) Describe the property under which the pore space proposed to be collectively 7
used is located; 8
(c) In the case of an unknown pore space owner, indicate the name of the last 9
known owner; 10
(d) In the case of a missing pore space owner, identify the owner and the 11
owner's last known address; and 12
(e) State that any person claiming an interest in the pore space proposed to be 13
collectively used shall not ify the cabinet and the Class VI permit applicant 14
at the published address within twenty (20) days of the publication date. 15
(8) A pooling order shall authorize the injection and sequestration of carbon dioxide 16
beneath the tract or portion thereof. The pool ing order shall identify the 17
compensation to be paid to unknown, missing, and nonconsenting pore space 18
owners and the basis for valuation of the collective interest. The cabinet may 19
consider evidence submitted by nonconsenting pore space owners as to the 20
valuation of their interest. 21
(9) Except for temporary access in cases of emergency, the pooling order issued by 22
the cabinet shall not authorize any surface entry or surface disturbance by the 23
permittee on any surface tract or tracts overlying the pore space of a 24
nonconsenting, missing, or unknown owner. 25
(10) A certified copy of any pooling order and a survey of the sequestration field shall 26
be maintained by the cabinet. 27
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(11) If the cabinet or US EPA requires a seismic survey of lands owned by the 1
nonconsenting surface owner and an operator is unable to reasonably obtain by 2
negotiation with a property owner the right to conduct seismic surveys on lands 3
owned by the nonconsenting surface owner, then: 4
(a) The cabinet may issue an order allowing the operator to c onduct a seismic 5
survey of the lands owned by the nonconsenting surface owner from outside 6
the boundaries of the lands owned by the nonconsenting surface owner; 7
(b) The operator shall, prior to conducting the survey, pay the surface owner 8
just and reasonable compensation as established by the cabinet; and 9
(c) Any data obtained by the operator through a seismic survey of the lands 10
owned by a nonconsenting surface owner shall be held as confidential and 11
shall be used only by the permittee, the cabinet, and US EPA for the 12
purpose of satisfying statutory or regulatory requirements. 13
(12) Except for the authorized persons and circumstances in subsection (11) of this 14
section, any person disclosing confidential seismic survey data may be liable to 15
the nonconsenting surface owner as provided under law. 16
(13) The operator shall defend, indemnify, and hold harmless the property owner for 17
all claims arising out of any surface or subsurface entry onto the property by the 18
operator, its contractors, and its agents, except t hose claims arising from the 19
intentional acts of a property owner. 20
SECTION 21. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 21
READ AS FOLLOWS: 22
(1) The sequestration operator shall deposit the funds due to unknown or miss ing 23
pore space owners in an interest-bearing trust account. 24
(2) If the unknown or missing pore space owners remain unknown or missing for a 25
period of seven (7) years from the date of first injection into the sequestration 26
reservoir, the sequestration oper ator shall pay the funds held in trust to the 27
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surface owners of the tract overlying the pore space owned by the unknown or 1
missing pore space owners. 2
(3) If a surface owner remains missing or unknown for a period of seven (7) years 3
from the date of first injection into the sequestration reservoir, the sequestration 4
operator shall deposit the funds held in trust to the carbon dioxide sequestration 5
facility trust fund established in Section 16 of this Act. 6
SECTION 22. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 7
READ AS FOLLOWS: 8
If any provision of Sections 1 to 24 of this Act or its application to any person or 9
circumstances is held invalid, the invalidity does not affect other provisions or 10
applications of Sections 1 to 24 of this Act which can be given effect without the invalid 11
provision or application, and to this end the provisions of Sections 1 to 24 of this Act 12
are severable. 13
SECTION 23. A NEW SECTION OF KRS CHAPTER 353 I S CREATED TO 14
READ AS FOLLOWS: 15
(1) (a) If a person or operator fails to comply with the requirements of Sections 1 16
to 24 of this Act or any administrative regulation or order promulgated or 17
issued thereunder, the cabinet shall issue a notice of noncomplianc e to the 18
person or operator and serve the notice in accordance with subsection (5) of 19
this section. The notice shall specify the nature of the violation, the 20
remedial action required to abate the violation, and the period of time set by 21
the cabinet for abatement of the violation. 22
(b) If a person or operator fails to abate the violation within the time prescribed 23
in the notice, the cabinet shall issue a failure to abate cessation order to the 24
person or operator and serve the notice in accordance with subsec tion (5) of 25
this section. The order shall: 26
1. Require the person or operator to immediately complete remedial 27
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actions to abate the violation described in the notice and to cease any 1
underground injection activity at the sequestration facility or site 2
where the violation is occurring; and 3
2. Remain in effect until the violation has been abated or the order is 4
vacated or terminated in writing by the cabinet. 5
(c) The cabinet shall issue a forfeiture order and order the financial 6
responsibility instruments cov ering the sequestration facility be forfeited to 7
the cabinet if: 8
1. An agreement has not been reached with the cabinet regarding the 9
alleged failure to comply with the notice to abate the violation; and 10
2. The director determines the operator has not compl ied with the 11
requirements set forth in the notice of noncompliance or the failure to 12
abate cessation order. 13
(d) The forfeiture order shall become effective thirty (30) days after the cabinet 14
gives the operator notice of the order, unless a petition has bee n filed 15
pursuant to KRS 353.700, in which case the forfeiture order shall become 16
effective only upon a final determination of the secretary affirming the 17
forfeiture order following the conclusion of the petition process. 18
(2) (a) In addition to a notice of noncompliance or failure to abate cessation order 19
issued pursuant to subsection (1) of this section, the cabinet may issue a 20
closure order to any person or operator where: 21
1. A sequestration facility is in violation of Sections 1 to 24 of this Act or 22
any a dministrative regulation or order promulgated or issued 23
thereunder, and the violation creates an imminent danger to the 24
health or safety of the public or is causing or can be reasonably 25
expected to cause significant imminent environmental harm; or 26
2. A seq uestration facility is in operation by any person without first 27
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posting financial responsibility and obtaining written approval of the 1
cabinet. 2
(b) The closure order shall be affixed by a red tag marker at the conspicuous 3
location at the facility with a le tter of violation and a copy of the closure 4
order mailed to the address of record for the responsible person or operator, 5
if an address is on file with the cabinet. The letter of violation and closure 6
order shall notify the person or operator to immediately: 7
1. Cease operation of the sequestration facility; and 8
2. Abate the violation. 9
(c) Any person operating a sequestration facility under the circumstances 10
described in paragraph (a)2. of this subsection may be ordered to either 11
submit financial responsibil ity and obtain transfer of the facility or 12
complete final reclamation and site closure for the facility, but the order 13
does not relieve any prior obligation owed by the current operator of record. 14
The closure order may be appealed pursuant to KRS 353.700 w ithin thirty 15
(30) days of issuance. Any person or operator that fails to comply with a 16
closure order issued pursuant to this section shall be subject to a civil and 17
criminal penalty under KRS 353.990. 18
(3) (a) A copy of: 19
1. All enforcement documents under t his section shall be served on the 20
surface and pore space owner, if they are different from the property 21
owner, where the violation occurred; and 22
2. The notice, at the time of issuance, shall be delivered to the 23
complaining party if he or she is different from the operator, and if the 24
enforcement document arises out of a citizen complaint. 25
(b) Resolution of the enforcement action issued under this section shall require 26
reimbursement of costs incurred by the cabinet. 27
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(4) When it appears that any person is vi olating or threatening to violate any 1
provision of Sections 1 to 24 of this Act or any rule, administrative regulation, or 2
order promulgated or issued thereunder, the cabinet may bring suit to restrain the 3
person from continuing the violation or from carry ing out the threatened 4
violation. A suit brought under this subsection shall: 5
(a) Be filed in the: 6
1. Franklin Circuit Court; 7
2. Circuit Court of the county in which the violation occurred or is 8
threatened; or 9
3. Circuit Court of the county in which the defendant resides or in which 10
any defendant resides if there is more than one (1) defendant; and 11
(b) Give the court jurisdiction to grant without bond or other undertaking the 12
prohibitory or mandatory injunction, as the facts may warrant, including a 13
temporary restraining order or injunction. 14
(5) (a) Service of any notice or order issued under this section shall be: 15
1. Handed to the person in charge of the sequestration facility; 16
2. Sent by certified mail, return receipt requested, addressed to the 17
permanent address shown on the application for a permit; 18
3. Sent by electronic mail to the address shown on the permit application 19
or to an address provided to the cabinet voluntarily; or 20
4. Sent by certified or electronic mail to the address known to the 21
cabinet, if no address is shown on the application for a permit or the 22
address is no longer valid. 23
(b) Service in accordance with paragrap h (a)3. or 4. of this subsection shall be 24
effective upon delivery of the notice or the order to the recipient's inbox by 25
email and verification sent to the cabinet by an electronic registered receipt. 26
(6) The commencement of a proceeding pursuant to KRS 35 3.700 shall not operate 27
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as a stay of a notice or order, including a notice or order that contains the 1
requirement to complete all remedial measures to abate the cited violation, issued 2
under this section. A party served with a notice or order under this se ction may 3
request a stay of the notice or order by filing a written petition for temporary 4
relief with the cabinet's Office of Administrative Hearings. A hearing on the 5
petition shall occur within ten (10) days of the office's receipt of the petition for 6
temporary relief unless the petitioner waives this requirement. The hearing 7
officer shall render a decision on the petition for temporary relief within three (3) 8
working days of the hearing. A party aggrieved by the decision of the hearing 9
officer may file a written request for review by the secretary. Temporary relief 10
may be granted from a notice or order issued under this section if: 11
(a) The person requesting relief shows that there is substantial likelihood that 12
the findings on the merits in an administra tive hearing conducted by the 13
cabinet will be favorable to the person; and 14
(b) The relief will not adversely affect the public health or safety or cause 15
significant imminent environmental harm to land, air, or water resources. 16
(7) (a) If the cabinet fails to bring suit to enjoin a violation or threatened violation 17
of any provision of Sections 1 to 24 of this Act or any rule, administrative 18
regulation, or order promulgated or issued thereunder within ten (10) days 19
after receipt of a written request to do so by any person who is or will be 20
adversely affected by the violation, the person making the request may bring 21
suit to restrain the violation or threatened violation in any court in which 22
the cabinet might have brought suit. 23
(b) The cabinet shall be made a party defendant in the suit in addition to the 24
person allegedly violating or threatening to violate a provision of Sections 1 25
to 24 of the Act, or any rule, administrative regulation, or order 26
promulgated or issued thereunder. 27
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SECTION 24. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 1
READ AS FOLLOWS: 2
(1) In addition to the powers conferred upon the cabinet in other provisions of 3
Sections 1 to 24 of this Act, the cabinet may develop, promulgate, and submit for 4
approval a regulatory program for the purpose of accepting primary 5
responsibility for the administration of the underground injection control 6
program under 42 U.S.C. sec. 300h et seq. The cabinet shall include in any 7
regulatory program developed in administrative reg ulations promulgated in 8
accordance with KRS Chapter 13A: 9
(a) Regarding the plugging, conversion, maintenance, monitoring, and 10
abandonment of Class VI wells, measures to protect underground sources 11
of drinking water and to prevent their endangerment; 12
(b) A prohibition of underground injection through Class VI wells, except as 13
authorized by a Class VI permit issued pursuant thereto; 14
(c) The details of the requirements for a permit application, including: 15
1. Site characterization; 16
2. Operation of injection wells; 17
3. A permitting process, including detailed time frames and methods to 18
modify and transfer permits; 19
4. Comprehensive monitoring that addresses all aspects of well integrity, 20
carbon dioxide injection and sequestration, and air and groundwater 21
quality during the injection operation and the post -injection site care 22
period; 23
5. Financial responsibility ensuring the availability of funds for the life 24
of a carbon dioxide sequestration project, including post -injection site 25
care and emergency response; and 26
6. Reporting and recordkeeping that provide project -specific information 27
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to evaluate the site operations and ensure environmental protection; 1
(d) The criteria for reviewing compliance with eligibility requirements in 2
subsection (12) of Section 4 of this Act and procedures for restoration of 3
eligibility for a permit; 4
(e) The requisite features of the Class VI underground injection control 5
program including those for the: 6
1. Administration of the carbon dioxide sequestration facility 7
administration fund established in Section 14 of this Act; 8
2. Issuance of determinations that certify the amount of carbon dioxide 9
stored pursuant to individual Class VI u nderground injection control 10
permits issued for that purpose, based upon requests for sequestration 11
determination; 12
3. Issuance of pooling orders as part of the development of a proposed 13
carbon dioxide sequestration project; 14
4. Issuance of completion certificates; and 15
5. Requirement for owners or operators of Class VI underground 16
injection control wells to demonstrate financial responsibility for the 17
cost of closing all Class VI underground injection control wells. The 18
demonstration of financial responsibili ty may include but is not be 19
limited to the qualifying instruments required by Section 4 of this Act; 20
(f) The requirements for reasonable public notice and public participation for: 21
1. Applications for Class VI underground injection control permits; 22
2. Applications for drilling permits; 23
3. Issuance of a completion certificate; and 24
4. Unknown or missing owners; and 25
(g) A schedule of fees to be assessed on applicants and operators. The fees shall 26
cover all costs to the cabinet for administering the undergroun d injection 27
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control program. The schedule of fees shall be reviewed and amended as 1
necessary to ensure that the underground injection control program is fully 2
funded at all times. The cabinet may collect application fees for the drilling 3
of wells for use a s Class VI wells prior to delegation of authority by the US 4
EPA. 5
(2) Administrative regulations promulgated pursuant to this section to allow for 6
assumption of primary responsibility for administration of the underground 7
injection control program under 42 U.S.C. sec. 300h et seq. shall conform to the 8
standards and procedures established by US EPA for Class VI wells. 9
(3) Any administrative regulations promulgated pursuant to Sections 1 to 24 of this 10
Act shall be: 11
(a) Promulgated in accordance with KRS Chapter 13A; and 12
(b) Deemed to be necessary to prevent the loss of federal or state funds for the 13
purposes of KRS 13A.105. 14
(4) (a) Any order or final determination of the cabinet that is issued pursuant to 15
Sections 1 to 24 of this Act shall be subject to review in accordance with 16
KRS 353.700 and any administrative regulation promulgated thereunder. 17
(b) As used in this subsection, "order or final determination" includes but is 18
not limited to the issuance, denial, modification, or revocation of a permit, 19
but does not include the issuance of a letter identifying deficiencies in an 20
application for a permit or other nonfinal determinations. 21
Section 25. KRS 278.704 is amended to read as follows: 22
(1) No person shall commence to constr uct a merchant electric generating facility until 23
that person has applied for and obtained a construction certificate for the facility 24
from the board. The construction certificate shall be valid for a period of three (3) 25
years after the issuance date of th e last permit required to be obtained from the 26
Energy and Environment Cabinet after which the certificate shall be void. The 27
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certificate shall be conditioned upon the applicant obtaining necessary air, water, 1
and waste permits. If an applicant has not obta ined all necessary permits and has 2
not commenced to construct prior to the expiration date of the certificate, the 3
applicant shall be required to obtain a new valid certificate from the board. 4
(2) (a) Except as provided in subsections (3), (4), and (5) of this section, no 5
construction certificate shall be issued to construct a merchant electric 6
generating facility unless: 7
1. The exhaust stack of the proposed facility and any wind turbine is at 8
least one thousand (1,000) feet from the property boundary of an y 9
adjoining property owner;[ and] 10
2. All proposed structures or facilities used in connection with the 11
generation or storage [for generation] of electricity are two thousand 12
(2,000) feet from any residential neighborhood, school, hospital, or 13
nursing home facility; and 14
3. With regard to a wind power facility, the maximum height of the wind 15
turbine, as measured from the natural grade to the top of the hub 16
where the rotor attaches, does not exceed three hundred fifty (350) 17
feet. 18
(b) For purposes of applications for site compatibility certificates pursuant to 19
KRS 278.216:[,] 20
1. Only the exhaust stack of the proposed facility to be actually used for 21
coal or gas -fired generation [ or, beginning with applications for site 22
compatibility certificates filed on or after January 1, 2015, the proposed 23
structure or facility to be actually u sed for solar or wind generation] 24
shall be required to be at least one thousand (1,000) feet from the 25
property boundary of any adjoining property owner and two thousand 26
(2,000) feet from any residential neighborhood, school, hospital, or 27
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nursing home facility; 1
2. Any proposed structure to be actually used for the generation of 2
electricity from solar or wind power shall be at least one thousand 3
(1,000) feet from the property boundary of any adjoining property 4
owner; and 5
3. Any proposed structures or faciliti es used in connection with the 6
generation or storage of electricity from solar or wind power shall be 7
at least two thousand (2,000) feet from any residential neighborhood, 8
school, hospital, or nursing home facility. 9
(3) If the merchant electric generating facility is proposed to be located in a county or a 10
municipality with planning and zoning, then maximum height, decommissioning, 11
and setback requirements from a property boundary, residential neighborhood, 12
school, hospital, or nursing home facility may be established by the planning and 13
zoning commission. Any decommissioning requirement , maximum height 14
limitation, or setback established by a planning and zoning commission for a 15
facility in an area over which it has jurisdiction shall: 16
(a) Except with regard to the minimum decommission bonding amount 17
required in subsection (2)(m)5.a. of Section 26 of this Act, have primacy 18
over the decommissioning requirements in KRS 278.706(2)(m) , the 19
maximum height limitation in subsection (2)(a)3. of this section, and the 20
setback requirement in subsections (2) and (5) of this section; and 21
(b) Not be subject to modification or waiver by the board through a request for 22
deviation by the applicant, as provided in subsection (4) of this section or 23
otherwise. 24
(4) The board may gr ant a deviation from the requirements of subsection (2) of this 25
section on a finding that the proposed facility is designed to and, as located, would 26
meet the goals of KRS 224.10 -280, 278.010, 278.212, 278.214, 278.216, 278.218, 27
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and 278.700 to 278.716 at a distance closer than those provided in subsection (2) of 1
this section. 2
(5) If the merchant electric generating facility is proposed to be located on a site of a 3
former coal processing plant in the Commonwealth where the electric generating 4
facility will utilize on-site waste coal as a fuel source, then the one thousand (1,000) 5
foot property boundary requirement in subsection (2) (a)1. of this section shall not 6
be applicable; however, the applicant shall be required to meet any other setback 7
requirements contained in subsection (2)(a)2. of this section. 8
(6) If requested, a merchant electric generating entity considering construction of a 9
facility for the generation of electricity or a person acting on behalf of such an 10
entity shall hold a public meeting in an y county where acquisition of real estate or 11
any interest in real estate is being considered for the facility. A request for such a 12
meeting may be made by the commission, or by any city or county governmental 13
entity, including a board of commissioners, pla nning and zoning, fiscal court, 14
mayor, or county judge/executive. The meeting shall be held not more than thirty 15
(30) days from the date of the request. 16
(7) The purpose of the meeting under subsection (6) of this section is to fully inform 17
landowners and o ther interested parties of the full extent of the project being 18
considered, including the project time line. One (1) or more representatives of the 19
entity with full knowledge of all aspects of the project shall be present and shall 20
answer questions from the public. 21
(8) Notice of the time, subject, and location of the meeting under subsection (6) of this 22
section shall be posted in both a local newspaper, if any, and a newspaper of 23
general circulation in the county. Notice shall also be placed on the websites of the 24
unregulated entity, and any local governmental unit. Owners of real estate known to 25
be included in the project and any person whose property adjoins at any point any 26
property to be included in the project shall be notified personally by mail. All 27
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notices must be mailed or posted at least two (2) weeks prior to the meeting. 1
(9) The merchant electric generating entity or a person acting on behalf of a merchant 2
electric generating entity shall, on or before the date of the public meeting held 3
under subsection (6) of this section, provide notice of all research, testing, or any 4
other activities being planned or considered to: 5
(a) The Energy and Environment Cabinet; 6
(b) The Public Service Commission; 7
(c) The Transportation Cabinet; 8
(d) The Attorney General; and 9
(e) The Office of the Governor. 10
(10) Subsections (6) to (9) of this section shall not apply to any facility or project that 11
has already received a certificate of construction from the board. 12
Section 26. KRS 278.706 is amended to read as follows: 13
(1) Any person seeking to obtain a construction certificate from the board to construct a 14
merchant electric generating facility shall file an application at the office of the 15
Public Service Commission. 16
(2) A completed application shall include the following: 17
(a) The name, address, and telephone number of the person proposing to 18
construct and own the merchant electric generating facility; 19
(b) A full description of the proposed site, including a map showing the distance 20
of the proposed site from residential neighborhoods, the nearest residential 21
structures, schools, and public and private parks that are located within a two 22
(2) mile radius of the proposed facility; 23
(c) Evidence of public notice that shall include the location o f the proposed site 24
and a general description of the project, state that the proposed construction is 25
subject to approval by the board, and provide the telephone number and 26
address of the Public Service Commission. Public notice shall be given within 27
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thirty (30) days immediately preceding the application filing to: 1
1. Landowners whose property borders the proposed site; and 2
2. The general public in a newspaper of general circulation in the county or 3
municipality in which the facility is proposed to be located; 4
(d) A statement certifying that the proposed plant will be in compliance with all 5
local ordinances and regulations conce rning noise control and with any local 6
planning and zoning ordinances. The statement shall also disclose setback 7
requirements established by the planning and zoning commission as provided 8
under KRS 278.704(3); 9
(e) If the facility is not proposed to be loca ted on a site of a former coal 10
processing plant and the facility will use on -site waste coal as a fuel source or 11
in an area where a planning and zoning commission has established a setback 12
requirement pursuant to KRS 278.704(3), a statement that the exhaust stack of 13
the proposed facility and any wind turbine is at least one thousand (1,000) feet 14
from the property boundary of any adjoining property owner and all proposed 15
structures or facilities used in connection with the generation or storage [for 16
generation] of electricity are two thousand (2,000) feet from any residential 17
neighborhood, school, hospital, or nursing home facility, unless coal or gas -18
fired generating facilities capable of generating ten megawatts (10MW) or 19
more currently exist on the site. If the facility is proposed to be located on a 20
site of a former coal processing plant and the facility will use on -site waste 21
coal as a fuel source, a statement that the proposed site is compatible with the 22
setback requirements provided under KRS 278.704(5). If the facility is 23
proposed to be located in a jurisdiction that has established setback 24
requirements pursuant to KRS 278.704(3), a statement that the proposed site 25
is in compliance with those established setback requirements; 26
(f) A complete report of the applicant's public involvement program activities 27
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undertaken prior to the filing of the application, including: 1
1. The scheduling and conducting of a public meeting in the county or 2
counties in which the proposed facility will be constructed at least 3
ninety (90) days prior to the filing of an application, for the purpose of 4
informing the public of the project being considered and receiving 5
comment on it; 6
2. Evidence that notice of the time, subject, and location of the meeting 7
was published in the newspaper of general circulation in the county, and 8
that individual notice was mailed to all owners of property adjoining the 9
proposed project at least two (2) weeks prior to the meeting; and 10
3. Any use of media coverage, direct mailing, fliers, newsletters, additional 11
public meetings, establishment of a community advisory group, and any 12
other efforts to obtain local involvement in the siting process; 13
(g) A summary of the efforts made by the applicant to locate the proposed facility 14
on a site where existing electric generating facilities are located; 15
(h) Proof of service of a copy of the application upon the chief executive officer 16
of each county and municipal corporation in which the proposed facility is to 17
be located, and upon the chief officer of each public agen cy charged with the 18
duty of planning land use in the jurisdiction in which the facility is proposed 19
to be located; 20
(i) An analysis of the proposed facility's projected effect on the electricity 21
transmission system in Kentucky; 22
(j) An analysis of the propos ed facility's economic impact on the affected region 23
and the state; 24
(k) A detailed listing of all violations by it, or any person with an ownership 25
interest, of federal or state environmental laws, rules, or administrative 26
regulations, whether judicial or administrative, where violations have resulted 27
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in criminal convictions or civil or administrative fines exceeding five 1
thousand dollars ($5,000). The status of any pending action, whether judicial 2
or administrative, shall also be submitted; 3
(l) A site asse ssment report as specified in KRS 278.708. The applicant may 4
submit and the board may accept documentation of compliance with the 5
National Environmental Policy Act (NEPA) rather than a site assessment 6
report;[ and] 7
(m) A decommissioning plan that shall des cribe how the merchant electric 8
generating facility will be decommissioned and dismantled following the end 9
of its useful life. The decommissioning plan shall, at a minimum, include 10
plans to: 11
1. Unless otherwise requested by the current landowner at the ti me of 12
decommissioning, remove all above-ground facilities; 13
2. Unless otherwise requested by the current landowner at the time of 14
decommissioning, remove any underground components and 15
foundations of above -ground facilities. Facilities removed under this 16
subparagraph shall be removed in their entirety [to a depth of three (3) 17
feet below the surface grade of the land in or on which the component 18
was installed], unless the current landowner and the applicant otherwise 19
agree at the time of decommissioning to a different depth; 20
3. Return the land to a substantially similar state with the same or similar 21
soil quality as it was prior to the commencement of construction; 22
4. Unless otherwise requested by the current landowner at the time of 23
decommissioning, leave any interconnection or other facilities in place 24
for future use at the completion of the decommissioning process; 25
5. Secure a bond or other similar security for the project to assure financial 26
performance of the decommissioning obligation, provided that: 27
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a. The amount of the proposed bond or similar security shall be 1
determined by an independent, licensed engineer who is 2
experienced in the decommissioning the type of[ solar] electric 3
generating facility to be decommissioned [facilities] and has no 4
financial interest in either the merchant electric generating facility 5
or any parcel of land upon which the merchant electric generating 6
facility is located. The proposed amount of the bond or similar 7
security shall be the greater of[either]: 8
i. The net present value of the total estimated cost of 9
completing the decommissioning plan [, less the current net 10
salvage value of the merchant electric generating facility's 11
components]; or 12
ii. The bond amount required by a county or municipal 13
government th at has established a decommissioning bond 14
requirement or similar security obligation in the county or 15
municipality where the merchant electric generating facility 16
will be located. If the facility will be located in more than 17
one (1) county or municipality that has established a 18
decommissioning bond or similar security obligation, then 19
the higher amount shall be required for the facility; 20
b. The bond or other similar security names: 21
i. For property that is leased by the applicant, each landowner 22
from whom th e applicant leases land and the Energy and 23
Environment Cabinet as the primary co-beneficiaries; or 24
ii. For property that is owned by the applicant, the Energy and 25
Environment Cabinet as the primary beneficiary; 26
c. If the merchant electric generating facili ty is to be located in a 27
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county or municipality that has not established a decommissioning 1
bond or other similar security obligation, the bond or other similar 2
security shall name the county or municipality as a secondary 3
beneficiary with the county's or municipality's consent; 4
d. The bond or other similar security shall be provided by an 5
insurance company or surety that shall at all times maintain at least 6
an "Excellent" rating as measured by the AM Best rating agency 7
or an investment grade credit rating by any national credit rati ng 8
agency and, if available, shall be noncancelable by the provider or 9
the customer until completion of the decommissioning plan or 10
until a replacement bond is secured; and 11
e. The bond or other similar security shall provide that at least thirty 12
(30) days prior to its cancellation or lapse, the surety shall notify 13
the applicant, its successor or assign, each landowner, the Energy 14
and Environment Cabinet, and each[the] county or city in which 15
the facility is located of the impending cancellation or lapse. Th e 16
notice shall specify the reason for the cancellation or lapse and 17
provide any of the parties, either jointly or separately, the 18
opportunity to cure the cancellation or lapse prior to it becoming 19
effective. The applicant, its successor, or its assign, sha ll be 20
responsible for all costs incurred by all parties to cure the 21
cancellation or lapse of the bond. Each landowner, or the Energy 22
and Environment Cabinet with the prior approval of each 23
landowner, may make a demand on the bond and initiate and 24
complete the decommissioning plan;[.] 25
6. Communicate with each affected landowner at the end of the merchant 26
electric generating facility's useful life so that any requests of the 27
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landowner that are in addition to the minimum requirements set forth in 1
this paragraph and in addition to any other requirements specified in the 2
lease with the landowner may, in the sole discretion of the applicant or 3
its successor or assign, be accommodated; and 4
7. Incorporate the requirements of subparagraphs 1. to 6. of this paragraph 5
into the applicant's leases with landowners; and 6
(n) For applications for the construction of wind power facilities, a statement 7
certifying that: 8
1. Any wind turbine will not be artificially lighted except as required by 9
law; 10
2. Wind power facilities will be sited in a manner that minimizes 11
shadowing or flicker impacts; and 12
3. Any shadowing or flicker impacts will not have a significant adverse 13
impact on neighboring or adjacent property uses through siting or 14
mitigation. 15
(3) (a) The entity causing the decom missioning plan required under subsection 16
(2)(m) of this section to be carried out shall be entitled to the proceeds from 17
the sale of any salvaged materials or components of the merchant electric 18
generating facility recovered during the decommissioning process. 19
(b) Any proceeds that the Energy and Environment Cabinet recovers from the 20
sale of salvaged materials or components in the course of carrying out a 21
decommissioning plan under subsection (2)(m) of this section that, taken 22
with the decommissioning bond amounts that have been drawn upon, 23
exceed the cost of completing the decommissioning plan shall be deposited 24
in the merchant electric generating facility monitoring and enforcement 25
fund established in KRS 224.10-285. 26
(4) Application fees for a constructio n certificate shall be set by the board and 27
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deposited into a trust and agency account to the credit of the commission. 1
(5)[(4)] Replacement of a merchant electric generating facility with a like facility, or 2
the repair, modification, retrofitting, enhancement, or reconfiguration of a merchant 3
electric generating facility shall not, for the purposes of this section and KRS 4
224.10-280, 278.704, 278.708, 278.710, and 278.712, constitute construction of a 5
merchant electric generating facility. 6
(6)[(5)] The board shall promulgate administrative regulations prescribing fees to pay 7
expenses associated with its review of applications filed with it pursuant to KRS 8
278.700 to 278.716. All application fees collected by the board shall be deposited in 9
a trust and agency account to the credit of the Public Service Commission. If a 10
majority of the members of the board find that an applicant's initial fees are 11
insufficient to pay the board's expenses associated with the application, including 12
the board's expenses associated with legal review thereof, the board shall assess a 13
supplemental application fee to cover the additional expenses. An applicant's failure 14
to pay a fee assessed pursuant to this subsection shall be grounds for denial of the 15
application. 16
Section 27. KRS 278.710 is amended to read as follows: 17
(1) Within one hundred twenty (120) days of receipt of an administratively complete 18
application, or within one hundred eighty (180) days of receipt of an 19
administratively complete appl ication if a hearing is requested, the board shall, by 20
majority vote, grant or deny a construction certificate, either in whole or in part, 21
based upon the following criteria: 22
(a) Impact of the facility on scenic surroundings, property values, the pattern a nd 23
type of development of adjacent property, and surrounding roads; 24
(b) Anticipated noise levels expected as a result of construction and operation of 25
the proposed facility; 26
(c) The economic impact of the facility upon the affected region and the state; 27
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(d) Whether the facility is proposed for a site upon which existing generating 1
facilities, capable of generating ten megawatts (10MW) or more of electricity, 2
are currently located; 3
(e) Whether the proposed facility will meet all local planning and zoning 4
requirements that existed on the date the application was filed; 5
(f) Whether the additional load imposed upon the electricity transmission system 6
by use of the merchant electric generating facility will adversely affect the 7
reliability of service for retail c ustomers of electric utilities regulated by the 8
Public Service Commission; 9
(g) Except where the facility is subject to a statewide setback established by a 10
planning and zoning commission as provided in KRS 278.704(3) and except 11
for a facility proposed to be located on a site of a former coal processing plant 12
and the facility will use on -site waste coal as a fuel source, whether the 13
exhaust stack of the proposed merchant electric generating facility and any 14
wind turbine is at least one thousand (1,000) feet from the property boundary 15
of any adjoining property owner and all proposed structures or facilities used 16
in connection with the generation or storage[for generation] of electricity are 17
two thousand (2,000) feet from any residential neighborhood, school, hospital, 18
or nursing home facility, unless a different setback has been requested and 19
approved under KRS 278.704(4). If a planning and zoning commission has 20
established setback requirements that differ from those under KRS 21
278.704(2), the applicant shall pr ovide evidence of compliance. If the facility 22
is proposed to be located on site of a former coal processing plant and the 23
facility will use on-site waste coal as a fuel source, the applicant shall provide 24
evidence of compliance with the setback requirement s provided in KRS 25
278.704(5); 26
(h) The efficacy of any proposed measures to mitigate adverse impacts that are 27
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identified pursuant to paragraph (a), (b), (e), or (f) of this subsection from the 1
construction or operation of the proposed facility; 2
(i) Whether the applicant has a good environmental compliance history;[ and] 3
(j) Whether the decommissioning plan is complete and complies with the 4
requirements of KRS 278.706(2)(m) and any other local requirements that 5
may apply; and 6
(k) Whether, for applications for the construction of wind power facilities, the 7
applicant and facilities will comply with the certifications required in 8
subsection (2)(n) of Section 26 of this Act. 9
(2) When considering an application for a construction certif icate for a merchant 10
electric generating facility, the board may consider the policy of the General 11
Assembly to encourage the use of coal as a principal fuel for electricity generation 12
as set forth in KRS 152.210, provided that any facility, regardless of fuel choice, 13
shall comply fully with KRS 224.10 -280, 278.212, 278.216, and 278.700 to 14
278.716. 15
(3) A person that has received a construction certificate for a merchant electric 16
generating facility shall: 17
(a) File with the Energy and Environment Cabinet the copy of the bond or other 18
similar security that, pursuant to KRS 278.706(2)(m)5., is required by a 19
county or a municipal government or as part of a decommissioning plan, no 20
later than the date upon which the construction of the merchant generating 21
facility commences, and refile an updated copy at least once every five (5) 22
years thereafter; 23
(b) Not transfer rights and obligation under the certificate without having first 24
applied for and received a board determination that: 25
1. The acquirer has a good environmental compliance history; and 26
2. The acquirer has the financial, technical, and managerial capacity to 27
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meet the obligations imposed by the terms of the approval or has the 1
ability to contract to meet these obligations; 2
(c) File with the Energy and Environ ment Cabinet a notice of the date that 3
construction is complete and the merchant electric generating facility begins 4
producing electricity for sale; and 5
(d) Following the date the merchant electric generating facility begins producing 6
electricity for sale, file a notice of any transaction involving the transfer or 7
sale of ownership, control, or the right to control the merchant electric 8
generating facility, with lessors of property where the merchant electric 9
generating facility is located, the Energy and Environment Cabinet, the county 10
judge/executive of a county and, if applicable, the mayor of a municipality in 11
which the merchant electric generating facility is located, within ten (10) days 12
of completing the transaction. The notice shall include the name, street 13
address, telephone number, and e -mail address of the person acquiring 14
ownership, control, or the right to control the merchant electric generating 15
facility. 16
(4) A person that has acquired ownership, control, or the right to control a merchant 17
electric generating facility from the applicant or its successor or assign shall file 18
with the Energy and Environment Cabinet within ten (10) days of completing the 19
acquisition: 20
(a) A written consent to assume the obligations set forth in the decommissioning 21
plan as of the date the acquisition occurred; and 22
(b) A notice of adoption of an existing bond or other similar security previously 23
filed pursuant to subsection (3)(a) of this section or a replacement bond or 24
other similar security that complies with KRS 278 .706(2)(m)5. An existing 25
bond or other similar security shall be adopted, or a replacement bond or other 26
similar security shall be in place, as of the date the acquisition occurs so that 27
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there is no lapse in coverage of the decommissioning bond or other si milar 1
security. A person making a filing pursuant to this subsection shall file an 2
updated bond or other similar security that complies with KRS 3
278.706(2)(m)5. at least once every five (5) years. 4
(5) Any person who transfers or sells ownership, control, o r the right to control a 5
merchant electric generating facility shall remain liable for all existing 6
decommissioning obligations and bond requirements until the person who acquires 7
ownership, control, or the right to control the merchant electric generating facility 8
files with the Energy and Environment Cabinet the documents required by 9
subsection (4) of this section and they are accepted as complete by the secretary. 10
(6) Any application approval condition that requires the approval of the transfer of 11
control of a merchant electric generating facility after construction is complete shall 12
be void and unenforceable, but any transfer of control of a merchant electric 13
generating facility shall be subject to compliance with the requirements of 14
subsections (3)(d), (4), and (5) of this section. 15
(7) Notwithstanding any provision of law to the contrary, including any order issued by 16
the board prior to June 29, 2023, after the board has approved an application for a 17
construction certificate for a merchant electric generating facility under this section, 18
the approved applicant has posted the bond or similar security required under KRS 19
278.706(2)(m)5., and the facility is constructed and begins generating electricity for 20
sale, the board's authority to enforce any condition s of the construction certificate, 21
including bonding and decommissioning requirements, shall end and the secretary 22
of the Energy and Environment Cabinet shall monitor and enforce the construction 23
certificate holder's compliance with the requirements of KRS 278.700 to 278.716 24
and the conditions of its construction certificate application approval. 25
(8) In addition to all compliance monitoring and enforcement performed by the 26
secretary of the Energy and Environment Cabinet, and notwithstanding any 27
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provision of law to the contrary, the secretary shall also review the 1
decommissioning plan required by KRS 278.706(2)(m) or by local ordinance, 2
license, or permit and the bond or similar security amount required by KRS 3
278.706(2)(m)5. or by local ordinance, license, o r permit as needed, including any 4
time a transfer determination is made under subsection (5) of this section, but in any 5
event at least once every five (5) years. Upon review, the secretary of the Energy 6
and Environment Cabinet shall require the decommissioning plan to be updated and 7
the bond amount to be changed to match any significant change in circumstances or 8
change to the estimated cost of effectuating the decommissioning plan [ or to the 9
salvage value of the facility or its components]. 10
(9) After the facility for which an application for a construction certificate has been 11
approved is constructed and begins generating electricity for sale, the secretary of 12
the Energy and Environment Cabinet shall ensure ongoing compliance with the 13
mitigation measures t hat were conditions of the application approval under KRS 14
278.708(6) and any enforcement by the board of the mitigation measures shall 15
cease. 16
(10) During the period that the merchant electric generating facility is operational, if 17
solar panels or wind turb ine components are replaced and discarded, the facility 18
owner-operator shall remove discarded solar panels or wind turbine components 19
from the site within ninety (90) days of completion of the work. Upon request of the 20
facility owner-operator, the secretar y of the Energy and Environment Cabinet may 21
extend the time period under this subsection for removing discarded solar panels or 22
wind turbine components. 23
Section 28. KRS 278.714 is amended to read as follows: 24
(1) No person shall commence to construct a nonregulated electric transmission line or 25
a carbon dioxide transmission pipeline without a construction certificate issued by 26
the board. An application for a construction certificate shall be filed at the offices of 27
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the Pub lic Service Commission along with an application fee as set forth in 1
subsection (6) of this section. The board may hire a consultant to review the 2
transmission line or carbon dioxide pipeline and provide recommendations 3
concerning the adequacy of the appli cation and proposed mitigation measures. The 4
board may direct the consultant to prepare a report recommending changes in the 5
route of the carbon dioxide pipeline or the route of the electric transmission line. 6
Any consultant expenses or fees shall be borne by the applicant. 7
(2) A completed application shall include the following: 8
(a) The name, address, and telephone number of the person proposing 9
construction of the nonregulated electric transmission line or the carbon 10
dioxide transmission pipeline; 11
(b) A full description of the proposed route of the electric transmission line or the 12
carbon dioxide transmission pipeline and its appurtenances. The description 13
shall include a map or maps showing: 14
1. The location of the proposed line or pipeline and all propose d structures 15
that will support it; 16
2. The proposed right-of-way limits; 17
3. Existing property lines and the names of persons who own the property 18
over which the line or pipeline will cross; and 19
4. a. The distance of the proposed electric transmission line from 20
residential neighborhoods, schools, and public and private parks 21
within one (1) mile of the proposed facilities; or 22
b. The distance of the proposed carbon dioxide transmission pipeline 23
from residential neighborhoods, schools, and parks, either private 24
or public, within one thousand (1,000) feet of the proposed 25
facilities; 26
(c) With respect to electric transmission lines, a full description of the proposed 27
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line and appurtenances, including the following: 1
1. Initial and design voltages and capacities; 2
2. Length of line; 3
3. Terminal points; and 4
4. Substation connections; 5
(d) A statement that the proposed electric transmission line and appurtenances 6
will be constructed and maintained in accordance with accepted engineering 7
practices and the National Electric Safety Code; 8
(e) With respect to both electric transmission lines and carbon dioxide 9
transmission pipelines, evidence that public notice has been given by 10
publication in a newspaper of general circul ation in the general area 11
concerned. Public notice shall include the location of the proposed electric 12
transmission line or carbon dioxide pipeline, shall state that the proposed line 13
or pipeline is subject to approval by the board, and shall provide the telephone 14
number and address of the Public Service Commission; and 15
(f) Proof of service of a copy of the application upon the chief executive officer 16
of each county and municipal corporation in which the proposed electric 17
transmission line or carbon dioxide transmission pipeline is to be located, and 18
upon the chief officer of each public agency charged with the duty of planning 19
land use in the general area in which the line or pipeline is proposed to be 20
located. 21
(3) With respect to electric transmission lines, within one hundred twenty (120) days of 22
receipt of the application, or one hundred eighty (180) days if a local public hearing 23
is held, the board shall, by majority vote, grant or deny the construction certificate 24
either in whole or in part. Action to g rant the certificate shall be based on the 25
board's determination that the proposed route of the line will minimize significant 26
adverse impact on the scenic assets of Kentucky and that the applicant will 27
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construct and maintain the line according to all appl icable legal requirements. In 1
addition, the board may consider the interstate benefits expected to be achieved by 2
the proposed construction or modification of electric transmission facilities in the 3
Commonwealth. If the board determines that locating the t ransmission line will 4
result in significant degradation of scenic factors or if the board determines that the 5
construction and maintenance of the line will be in violation of applicable legal 6
requirements, the board may deny the application or condition th e application's 7
approval upon relocation of the route of the line, or changes in design or 8
configuration of the line. 9
(4) A public hearing on an application to construct a nonregulated electric transmission 10
line may be held in accordance with the provisions of KRS 278.712. 11
(5) The board shall convene a local public information meeting upon receipt of a 12
request by not less than three (3) interested persons that reside in the county or 13
counties in which the carbon dioxide pipeline is proposed to be constructe d. If the 14
board convenes the local public information meeting, the meeting will be in the 15
county seat of one (1) of the counties, as determined by the board, in which the 16
proposed carbon dioxide pipeline will be located. The meeting shall provide an 17
opportunity for members of the public to be briefed and ask the party proposing the 18
carbon dioxide pipeline questions about the pipeline. 19
(6) Pursuant to KRS 278.706 (4)[(3)] and (6)[(5)], the board shall promulgate 20
administrative regulations to establish an appl ication fee for a construction 21
certificate for: 22
(a) A nonregulated transmission line; and 23
(b) A carbon dioxide transmission pipeline. 24
(7) With respect to carbon dioxide transmission lines, within one hundred twenty (120) 25
days of receipt of the application or one hundred eighty (180) days if a local public 26
information meeting is held, the board shall, by majority vote, grant or deny the 27
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construction certificate either in whole or in part. Action to grant the certificate 1
shall be based on the board's determin ation that the proposed route of the pipeline 2
will minimize significant adverse impact on the scenic assets of Kentucky and that 3
the applicant will construct and maintain the line according to all applicable legal 4
requirements. In addition, the board may consider the interstate benefits expected to 5
be achieved by the proposed carbon dioxide transmission pipeline in the 6
Commonwealth. If the board determines that locating the transmission line will 7
result in significant degradation of scenic factors or if the board determines that 8
locating the carbon dioxide transmission line will be in violation of applicable legal 9
requirements, the board may deny the application or condition the application's 10
approval upon relocation of the route of the pipeline. 11
Section 29. KRS 278.718 is amended to read as follows: 12
The provisions of KRS 278.700, 278.704, 278.706, 278.708, and 278.710 shall not 13
supplant, any other state or federal law, including the powers available to local 14
governments un der the provisions of home rule under KRS 67.080, 67.083, 67.850, 15
67.922, 67A.060, 67C.101, and 82.082. Except with regard to the minimum 16
decommissioning bond amount required in subsection (2)(m)5.a. of Section 26 of this 17
Act, an ordinance, permit, or lice nse issued by a local government shall have primacy 18
over the provisions and requirements of KRS 278.700, 278.704, 278.706, and 278.708, 19
and any conflict between an order of the board and a local ordinance, permit, or license 20
shall be resolved in favor of the local government's ordinance, permit, or license. 21
Section 30. The following KRS sections are repealed: 22
353.800 Definitions for KRS 353.800 to 353.812. 23
353.802 Legislative findings and declarations relating to geologic storage of carbon 24
dioxide. 25
353.804 Jurisdiction and authority over geologic storage of carbon dioxide -- 26
Application for and approval of demonstration projects -- Cabinet to testify 27
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annually on program's development. 1
353.806 Negotiations between storage operators and pore space owners -- Hearings and 2
findings preceding pooling of pore space -- Carbon dioxide wells exempt -- Review 3
under KRS 353.700. 4
353.808 Pooling orders -- Requirements for contents of order and notice -- Fees -- 5
Recording of pooling orders with county clerks -- Review under KRS 353.700. 6
353.810 Carbon injection wells to be closed and plugged after completion of active 7
injection -- Monitoring for leaking and migration -- Transfer of ownership and 8
liability of storage facilities -- Finance and Administration Cabinet to effect 9
transfer. 10
353.812 Cabinet and bordering states to discuss and develop unified approach to 11
subsurface migration -- Reports to Governor and Legislative Research Commission. 12