AN ACT relating to geologic sequestration of carbon dioxide.

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AN ACT relating to geologic sequestration of carbon dioxide. 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 location and migra tion 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 accordan ce 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 subsections (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 sequestration 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 operator shall hav e 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 o f 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 financial 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 final. If the cab inet 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 financial respo nsibility 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 make periodic d eposits 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, p rojected 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 sequestr ation 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 ope rator'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 compliance with all laws a nd 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) The pore space and surface owners shall be held harmless against all 18
claims ar ising from stored carbon dioxide, and the Commonwealth shall 19
defend the pore space and surface owners against all claims, except that a 20
pore space or surface owner may be liable for causing or contributing to 21
migration or release of stored carbon dioxide f rom the reservoir. The 22
liability of the Commonwealth for any claim shall not obligate payment of 23
any damages in excess of the balance of the carbon dioxide sequestration 24
facility trust fund established in Section 16 of this Act; 25
(c) The sequestration opera tor and all persons who transported or generated 26
any stored carbon dioxide shall be released from all regulatory liability and 27
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regulatory requirements associated with the sequestration facility, provided 1
that the sequestration operator shall not be release d from regulatory 2
liability for fraud or misrepresentation, nor from any liability existing at 3
common law; and 4
(d) The Commonwealth's responsibility for monitoring and managing the 5
sequestration facility following issuance of the completion certificate and 6
assumption of ownership of the sequestered carbon dioxide shall be funded 7
from the carbon dioxide sequestration facility trust fund established in 8
Section 16 of this Act until and unless the federal government assumes 9
responsibility for the long -term moni toring and management of 10
sequestration facilities. 11
(4) The cabinet shall require that a copy of the completion certificate and a survey of 12
the sequestration field be filed with the county clerk in the county or counties 13
where the carbon dioxide sequestration facility is located. 14
SECTION 14. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 15
READ AS FOLLOWS: 16
(1) There is hereby created in the State Treasury an interest -bearing, restricted, 17
agency account to be known as the car bon dioxide sequestration facility 18
administrative fund. All amounts required to be deposited into the fund shall not 19
be segregated into separate accounts but may be used by the cabinet as provided 20
in this section for any carbon dioxide sequestration project. Notwithstanding KRS 21
45.229, any balance remaining in the fund at the end of any fiscal year shall not 22
lapse but shall be carried forward for the purposes of the fund until expended. 23
Expenditures from the fund shall be made by the cabinet for the purposes of: 24
(a) Payment of all expenses of the cabinet in processing Class VI permits and 25
certificate applications; 26
(b) Regulating sequestration facilities during their construction, operation, and 27
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pre-closure phases; and 1
(c) Certifying the sequestration amount determinations under Section 18 of this 2
Act. 3
(2) The secretary may: 4
(a) Enter into a cooperative agreement with another government agency to 5
carry out regulatory responsibilities over a sequestration facility on behalf 6
of the Commonwealth; and 7
(b) Compensate the government agency for its expenses with money from the 8
fund. 9
SECTION 15. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 10
READ AS FOLLOWS: 11
(1) Class VI permit applicants shall pay an application fee to the cabinet. The 12
application fee established on the fee schedule developed under Section 24 of this 13
Act shall be calculated to ensure sufficient funds are available for the actual or 14
anticipated cost to the cabinet for the review of the application. 15
(2) Sequestration operators shall pay an annual administrative fee to the cabinet. 16
The administrative fee established on the fee schedule developed under Section 17
24 of this Act shall be calculated to en sure sufficient funds are available for the 18
actual or anticipated cost to the cabinet for the regulation of sequestration 19
facilities. 20
(3) Sequestration operators seeking completion certificates shall pay the cabinet a fee 21
established on the fee schedule de veloped under Section 24 of this Act. The fee 22
shall be calculated to ensure sufficient funds are available for the actual or 23
anticipated cost to the cabinet for the review of the permit and records relating to 24
the operation of the sequestration facility to determine eligibility for issuance of 25
the completion certificate. 26
(4) The application and completion certificate fees shall be deposited in the carbon 27
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dioxide sequestration facility administrative fund established in Section 14 of this 1
Act. 2
SECTION 16. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 3
READ AS FOLLOWS: 4
(1) There is hereby created in the State Treasury an interest -bearing, restricted, 5
agency account to be known as the carbon dioxide sequestration facility tru st 6
fund. Moneys in the fund shall be used for: 7
(a) The long-term monitoring and management of sequestration facilities prior 8
to closure, plugging, and abandonment of all monitoring wells in the event 9
of operator default; 10
(b) Expenses associated with the l ong-term monitoring and management after 11
issuance of a completion certificate; and 12
(c) Determining the causes and remediating the effects of any releases or 13
environmental emergencies associated with sequestration facilities. 14
(2) All amounts required to be deposited into the fund shall not be segregated into 15
separate accounts but may be used by the cabinet as provided in this section for 16
any carbon dioxide sequestration project. Notwithstanding KRS 45.229, any 17
balance remaining in the fund at the end of any fiscal year shall not lapse but 18
shall be carried forward to carry out the purposes of the fund until fully 19
expended. 20
(3) The secretary may: 21
(a) Enter into a cooperative agreement with another government agency to 22
carry out regulatory responsibilities over a sequestration facility on behalf 23
of the Commonwealth; and 24
(b) Compensate the government agency for its expenses with money from the 25
fund. 26
SECTION 17. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 27
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READ AS FOLLOWS: 1
(1) Sequestration operators shall pay the cabinet a fee on each ton of carbon dioxide 2
injected for sequestration. The fee shall be paid at the time of injection and 3
deposited into the carbon dioxide sequestration facility trust fund established in 4
Section 16 of this Act. The fee shall be calculated to ensure sufficient funds are 5
available for the actual or anticipated cost of: 6
(a) Long-term monitoring and management of sequestration facilities; and 7
(b) The effects of any releases or environmental emergencies associated with 8
the sequestration facilities. 9
(2) On or before December 31 of the first year in which the cabinet receives its first 10
application for a Class VI underground injection control permit and each 11
December 31 thereafter, the cabinet shall prepare and make publicly available an 12
annual report on the carbon dioxide sequestration facility trust fund established 13
in Section 16 of this Act that includes, at a minimum, information on receipts, 14
disbursements, and projections for meeting the fund's objectiv es in Section 16 of 15
this Act. The purpose of the report is to determine the sufficiency of fees 16
authorized in Section 24 of this Act. 17
SECTION 18. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 18
READ AS FOLLOWS: 19
(1) The cabinet shall, upon request of an operator, certify the amount of injected 20
carbon dioxide demonstrated to have been stored in a reservoir that has been or is 21
being used for a Class II well in an enhanced oil or gas recovery project. Upon 22
request of an operator, the cabinet may also certify the amount of injected carbon 23
dioxide sequestered under Sections 1 to 24 of this Act. 24
(2) The amounts determined by the cabinet under subsection (1) of this section may 25
be used for such matters as establishing the amounts of carbon credits, 26
allowances, trading, emissions allocations, offsets, and for other similar 27
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purposes. 1
(3) A person requesting a certification of a sequestration determination shall pay the 2
cabinet a certification fee as authorized in Section 24 of this Act. The fee shall be 3
calculated to ensure sufficient funds are available for the actual or anticipated 4
cost to the cabinet to provide the certifications described in subsection (1) of this 5
section. 6
(4) Any fees the cabinet receives to provide the certific ations described in subsection 7
(1) of this section shall be deposited into the carbon dioxide sequestration facility 8
administrative fund established in Section 14 of this Act. 9
SECTION 19. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 10
READ AS FOLLOWS: 11
Sections 1 to 24 of this Act shall not be construed as altering the respective legal rights 12
or relationship between the severed mineral estate and a pore space owner as they exist 13
at common law. 14
SECTION 20. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 15
READ AS FOLLOWS: 16
(1) If a sequestration operator is unable, after reasonable effort, to obtain the 17
consent of all pore space owners within a proposed reservoir for an underground 18
carbon dioxide sequestration facility, the cabinet may on petition satisfying the 19
conditions established in this section, issue an order that the identified pore space 20
owned by nonconsenting owners be included in a sequestration facility for the 21
purpose of geologic sequestration of carbon dioxide pursuant to subsection (5) of 22
this section. 23
(2) The Class VI permit applicant shall negotiate in good faith with the pore space 24
owners and acquire rights needed to access the pore space. 25
(3) Except for temporary access in cases of emergency, the cabinet shall not allow 26
any surface disturbance on any surface tra ct or tracts overlying the pore space of 27
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a nonconsenting owner. 1
(4) The sequestration operator shall provide a list to the cabinet of all persons 2
reasonably known to own an interest in pore space proposed to be included in the 3
reservoir. 4
(5) (a) If the app licant or operator cannot reach an agreement with the owners of 5
the pore space acreage in a proposed reservoir, but has secured written 6
consent for at least seventy -five percent (75%) of the pore space acreage in 7
the proposed reservoir, all the pore space in the sequestration reservoir shall 8
be declared to be included within the proposed sequestration facility if the 9
cabinet finds that the requirements of this section have been met. 10
(b) For the purposes of this section, the interests of any unknown or missi ng 11
pore space owners may be declared to be included through the pooling 12
order provided reasonable effort to locate and notify the owners has been 13
made and the sequestration operator has complied with the publication 14
requirements of subsection (7) of this section. A pooling order shall be made 15
only after the cabinet provides notice to all pore space owners proposed to 16
be included within the order. 17
(6) The applicant shall pay to the cabinet all costs associated with the conduct of the 18
administrative hearing a s assessed in the pooling order. The payment shall be 19
made prior to the pooling order becoming effective. These funds shall be 20
deposited into the carbon dioxide sequestration facility administrative fund 21
established in Section 14 of this Act. 22
(7) If the pr oposed pooling order concerns pore space with unknown or missing 23
owners, the sequestration operator shall, after reasonable efforts to locate the 24
pore space owners, publish one (1) notice in the newspaper of the largest 25
circulation in each county in which the pore space is located. The notice shall 26
appear no more than forty-five (45) days nor less than thirty (30) days prior to the 27
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initial application for the pooling order. The applicant shall file proof of notice 1
with the cabinet concurrently with the application. The notice shall: 2
(a) State that an application for a pooling order has been filed with the cabinet; 3
(b) Describe the property under which the pore space proposed to be collectively 4
used is located; 5
(c) In the case of an unknown pore space owner, indicate the name of the last 6
known owner; 7
(d) In the case of a missing pore space owner, identify the owner and the 8
owner's last known address; and 9
(e) State that any person claiming an interest in the pore space proposed to be 10
collectively used shall not ify the cabinet and the Class VI permit applicant 11
at the published address within twenty (20) days of the publication date. 12
(8) A pooling order shall authorize the injection and sequestration of carbon dioxide 13
beneath the tract or portion thereof. The pool ing order shall identify the 14
compensation to be paid to unknown, missing, and nonconsenting pore space 15
owners and the basis for valuation of the collective interest. The cabinet may 16
consider evidence submitted by nonconsenting pore space owners as to the 17
valuation of their interest. 18
(9) Except for temporary access in cases of emergency, the pooling order issued by 19
the cabinet shall not authorize any surface entry or surface disturbance by the 20
permittee on any surface tract or tracts overlying the pore space of a 21
nonconsenting, missing, or unknown owner. 22
(10) A certified copy of any pooling order and a survey of the sequestration field shall 23
be maintained by the cabinet. 24
(11) If the cabinet or US EPA requires a seismic survey of lands owned by the 25
nonconsenting surface owner and an operator is unable to reasonably obtain by 26
negotiation with a property owner the right to conduct seismic surveys on lands 27
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owned by the nonconsenting surface owner, then: 1
(a) The cabinet may issue an order allowing the operator to c onduct a seismic 2
survey of the lands owned by the nonconsenting surface owner from outside 3
the boundaries of the lands owned by the nonconsenting surface owner; 4
(b) The operator shall, prior to conducting the survey, pay the surface owner 5
just and reasonable compensation as established by the cabinet; and 6
(c) Any data obtained by the operator through a seismic survey of the lands 7
owned by a nonconsenting surface owner shall be held as confidential and 8
shall be used only by the permittee, the cabinet, and US EPA for the 9
purpose of satisfying statutory or regulatory requirements. 10
(12) Except for the authorized persons and circumstances in subsection (11) of this 11
section, any person disclosing confidential seismic survey data may be liable to 12
the nonconsenting surface owner as provided under law. 13
(13) The operator shall defend, indemnify, and hold harmless the property owner for 14
all claims arising out of any surface or subsurface entry onto the property by the 15
operator, its contractors, and its agents, except t hose claims arising from the 16
intentional acts of a property owner. 17
SECTION 21. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 18
READ AS FOLLOWS: 19
(1) The sequestration operator shall deposit the funds due to unknown or miss ing 20
pore space owners in an interest-bearing trust account. 21
(2) If the unknown or missing pore space owners remain unknown or missing for a 22
period of seven (7) years from the date of first injection into the sequestration 23
reservoir, the sequestration oper ator shall pay the funds held in trust to the 24
surface owners of the tract overlying the pore space owned by the unknown or 25
missing pore space owners. 26
(3) If a surface owner remains missing or unknown for a period of seven (7) years 27
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from the date of first injection into the sequestration reservoir, the sequestration 1
operator shall deposit the funds held in trust to the carbon dioxide sequestration 2
facility trust fund established in Section 16 of this Act. 3
SECTION 22. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 4
READ AS FOLLOWS: 5
If any provision of Sections 1 to 24 of this Act or its application to any person or 6
circumstances is held invalid, the invalidity does not affect other provisions or 7
applications of Sections 1 to 24 of this Act which can be given effect without the invalid 8
provision or application, and to this end the provisions of Sections 1 to 24 of this Act 9
are severable. 10
SECTION 23. A NEW SECTION OF KRS CHAPTER 353 I S CREATED TO 11
READ AS FOLLOWS: 12
(1) (a) If a person or operator fails to comply with the requirements of Sections 1 13
to 24 of this Act or any administrative regulation or order promulgated or 14
issued thereunder, the cabinet shall issue a notice of noncomplianc e to the 15
person or operator and serve the notice in accordance with subsection (5) of 16
this section. The notice shall specify the nature of the violation, the 17
remedial action required to abate the violation, and the period of time set by 18
the cabinet for abatement of the violation. 19
(b) If a person or operator fails to abate the violation within the time prescribed 20
in the notice, the cabinet shall issue a failure to abate cessation order to the 21
person or operator and serve the notice in accordance with subsec tion (5) of 22
this section. The order shall: 23
1. Require the person or operator to immediately complete remedial 24
actions to abate the violation described in the notice and to cease any 25
underground injection activity at the sequestration facility or site 26
where the violation is occurring; and 27
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2. Remain in effect until the violation has been abated or the order is 1
vacated or terminated in writing by the cabinet. 2
(c) The cabinet shall issue a forfeiture order and order the financial 3
responsibility instruments cov ering the sequestration facility be forfeited to 4
the cabinet if: 5
1. An agreement has not been reached with the cabinet regarding the 6
alleged failure to comply with the notice to abate the violation; and 7
2. The director determines the operator has not compl ied with the 8
requirements set forth in the notice of noncompliance or the failure to 9
abate cessation order. 10
(d) The forfeiture order shall become effective thirty (30) days after the cabinet 11
gives the operator notice of the order, unless a petition has bee n filed 12
pursuant to KRS 353.700, in which case the forfeiture order shall become 13
effective only upon a final determination of the secretary affirming the 14
forfeiture order following the conclusion of the petition process. 15
(2) (a) In addition to a notice of noncompliance or failure to abate cessation order 16
issued pursuant to subsection (1) of this section, the cabinet may issue a 17
closure order to any person or operator where: 18
1. A sequestration facility is in violation of Sections 1 to 24 of this Act or 19
any a dministrative regulation or order promulgated or issued 20
thereunder, and the violation creates an imminent danger to the 21
health or safety of the public or is causing or can be reasonably 22
expected to cause significant imminent environmental harm; or 23
2. A seq uestration facility is in operation by any person without first 24
posting financial responsibility and obtaining written approval of the 25
cabinet. 26
(b) The closure order shall be affixed by a red tag marker at the conspicuous 27
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location at the facility with a le tter of violation and a copy of the closure 1
order mailed to the address of record for the responsible person or operator, 2
if an address is on file with the cabinet. The letter of violation and closure 3
order shall notify the person or operator to immediately: 4
1. Cease operation of the sequestration facility; and 5
2. Abate the violation. 6
(c) Any person operating a sequestration facility under the circumstances 7
described in paragraph (a)2. of this subsection may be ordered to either 8
submit financial responsibil ity and obtain transfer of the facility or 9
complete final reclamation and site closure for the facility, but the order 10
does not relieve any prior obligation owed by the current operator of record. 11
The closure order may be appealed pursuant to KRS 353.700 w ithin thirty 12
(30) days of issuance. Any person or operator that fails to comply with a 13
closure order issued pursuant to this section shall be subject to a civil and 14
criminal penalty under KRS 353.990. 15
(3) (a) A copy of: 16
1. All enforcement documents under t his section shall be served on the 17
surface and pore space owner, if they are different from the property 18
owner, where the violation occurred; and 19
2. The notice, at the time of issuance, shall be delivered to the 20
complaining party if he or she is different from the operator, and if the 21
enforcement document arises out of a citizen complaint. 22
(b) Resolution of the enforcement action issued under this section shall require 23
reimbursement of costs incurred by the cabinet. 24
(4) When it appears that any person is vi olating or threatening to violate any 25
provision of Sections 1 to 24 of this Act or any rule, administrative regulation, or 26
order promulgated or issued thereunder, the cabinet may bring suit to restrain the 27
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person from continuing the violation or from carry ing out the threatened 1
violation. A suit brought under this subsection shall: 2
(a) Be filed in the: 3
1. Franklin Circuit Court; 4
2. Circuit Court of the county in which the violation occurred or is 5
threatened; or 6
3. Circuit Court of the county in which the defendant resides or in which 7
any defendant resides if there is more than one (1) defendant; and 8
(b) Give the court jurisdiction to grant without bond or other undertaking the 9
prohibitory or mandatory injunction, as the facts may warrant, including a 10
temporary restraining order or injunction. 11
(5) (a) Service of any notice or order issued under this section shall be: 12
1. Handed to the person in charge of the sequestration facility; 13
2. Sent by certified mail, return receipt requested, addressed to the 14
permanent address shown on the application for a permit; 15
3. Sent by electronic mail to the address shown on the permit application 16
or to an address provided to the cabinet voluntarily; or 17
4. Sent by certified or electronic mail to the address known to the 18
cabinet, if no address is shown on the application for a permit or the 19
address is no longer valid. 20
(b) Service in accordance with paragrap h (a)3. or 4. of this subsection shall be 21
effective upon delivery of the notice or the order to the recipient's inbox by 22
email and verification sent to the cabinet by an electronic registered receipt. 23
(6) The commencement of a proceeding pursuant to KRS 35 3.700 shall not operate 24
as a stay of a notice or order, including a notice or order that contains the 25
requirement to complete all remedial measures to abate the cited violation, issued 26
under this section. A party served with a notice or order under this se ction may 27
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request a stay of the notice or order by filing a written petition for temporary 1
relief with the cabinet's Office of Administrative Hearings. A hearing on the 2
petition shall occur within ten (10) days of the office's receipt of the petition for 3
temporary relief unless the petitioner waives this requirement. The hearing 4
officer shall render a decision on the petition for temporary relief within three (3) 5
working days of the hearing. A party aggrieved by the decision of the hearing 6
officer may file a written request for review by the secretary. Temporary relief 7
may be granted from a notice or order issued under this section if: 8
(a) The person requesting relief shows that there is substantial likelihood that 9
the findings on the merits in an administra tive hearing conducted by the 10
cabinet will be favorable to the person; and 11
(b) The relief will not adversely affect the public health or safety or cause 12
significant imminent environmental harm to land, air, or water resources. 13
(7) (a) If the cabinet fails to bring suit to enjoin a violation or threatened violation 14
of any provision of Sections 1 to 24 of this Act or any rule, administrative 15
regulation, or order promulgated or issued thereunder within ten (10) days 16
after receipt of a written request to do so by any person who is or will be 17
adversely affected by the violation, the person making the request may bring 18
suit to restrain the violation or threatened violation in any court in which 19
the cabinet might have brought suit. 20
(b) The cabinet shall be made a party defendant in the suit in addition to the 21
person allegedly violating or threatening to violate a provision of Sections 1 22
to 24 of the Act, or any rule, administrative regulation, or order 23
promulgated or issued thereunder. 24
SECTION 24. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO 25
READ AS FOLLOWS: 26
(1) In addition to the powers conferred upon the cabinet in other provisions of 27
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Sections 1 to 24 of this Act, the cabinet may develop, promulgate, and submit for 1
approval a regulatory program for the purpose of accepting primary 2
responsibility for the administration of the underground injection control 3
program under 42 U.S.C. sec. 300h et seq. The cabinet shall include in any 4
regulatory program developed in administrative reg ulations promulgated in 5
accordance with KRS Chapter 13A: 6
(a) Regarding the plugging, conversion, maintenance, monitoring, and 7
abandonment of Class VI wells, measures to protect underground sources 8
of drinking water and to prevent their endangerment; 9
(b) A prohibition of underground injection through Class VI wells, except as 10
authorized by a Class VI permit issued pursuant thereto; 11
(c) The details of the requirements for a permit application, including: 12
1. Site characterization; 13
2. Operation of injection wells; 14
3. A permitting process, including detailed time frames and methods to 15
modify and transfer permits; 16
4. Comprehensive monitoring that addresses all aspects of well integrity, 17
carbon dioxide injection and sequestration, and air and groundwater 18
quality during the injection operation and the post -injection site care 19
period; 20
5. Financial responsibility ensuring the availability of funds for the life 21
of a carbon dioxide sequestration project, including post -injection site 22
care and emergency response; and 23
6. Reporting and recordkeeping that provide project -specific information 24
to evaluate the site operations and ensure environmental protection; 25
(d) The criteria for reviewing compliance with eligibility requirements in 26
subsection (12) of Section 4 of this Act and procedures for restoration of 27
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eligibility for a permit; 1
(e) The requisite features of the Class VI underground injection control 2
program including those for the: 3
1. Administration of the carbon dioxide sequestration facility 4
administration fund established in Section 14 of this Act; 5
2. Issuance of determinations that certify the amount of carbon dioxide 6
stored pursuant to individual Class VI u nderground injection control 7
permits issued for that purpose, based upon requests for sequestration 8
determination; 9
3. Issuance of pooling orders as part of the development of a proposed 10
carbon dioxide sequestration project; 11
4. Issuance of completion certificates; and 12
5. Requirement for owners or operators of Class VI underground 13
injection control wells to demonstrate financial responsibility for the 14
cost of closing all Class VI underground injection control wells. The 15
demonstration of financial responsibili ty may include but is not be 16
limited to the qualifying instruments required by Section 4 of this Act; 17
(f) The requirements for reasonable public notice and public participation for: 18
1. Applications for Class VI underground injection control permits; 19
2. Applications for drilling permits; 20
3. Issuance of a completion certificate; and 21
4. Unknown or missing owners; and 22
(g) A schedule of fees to be assessed on applicants and operators. The fees shall 23
cover all costs to the cabinet for administering the undergroun d injection 24
control program. The schedule of fees shall be reviewed and amended as 25
necessary to ensure that the underground injection control program is fully 26
funded at all times. The cabinet may collect application fees for the drilling 27
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of wells for use a s Class VI wells prior to delegation of authority by the US 1
EPA. 2
(2) Administrative regulations promulgated pursuant to this section to allow for 3
assumption of primary responsibility for administration of the underground 4
injection control program under 42 U.S.C. sec. 300h et seq. shall conform to the 5
standards and procedures established by US EPA for Class VI wells. 6
(3) Any administrative regulations promulgated pursuant to Sections 1 to 24 of this 7
Act shall be: 8
(a) Promulgated in accordance with KRS Chapter 13A; and 9
(b) Deemed to be necessary to prevent the loss of federal or state funds for the 10
purposes of KRS 13A.105. 11
(4) (a) Any order or final determination of the cabinet that is issued pursuant to 12
Sections 1 to 24 of this Act shall be subject to review in accordance with 13
KRS 353.700 and any administrative regulation promulgated thereunder. 14
(b) As used in this subsection, "order or final determination" includes but is 15
not limited to the issuance, denial, modification, or revocation of a permit, 16
but does not include the issuance of a letter identifying deficiencies in an 17
application for a permit or other nonfinal determinations. 18
Section 25. The following KRS sections are repealed: 19
353.800 Definitions for KRS 353.800 to 353.812. 20
353.802 Legislative findings and declarations relating to geologic storage of carbon 21
dioxide. 22
353.804 Jurisdiction and authority over geologic storage of carbon dioxide -- 23
Application for and approval of demonstration projects -- Cabinet to t estify 24
annually on program's development. 25
353.806 Negotiations between storage operators and pore space owners -- Hearings and 26
findings preceding pooling of pore space -- Carbon dioxide wells exempt -- Review 27
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under KRS 353.700. 1
353.808 Pooling or ders -- Requirements for contents of order and notice -- Fees -- 2
Recording of pooling orders with county clerks -- Review under KRS 353.700. 3
353.810 Carbon injection wells to be closed and plugged after completion of active 4
injection -- Monitoring for leaking and migration -- Transfer of ownership and 5
liability of storage facilities -- Finance and Administration Cabinet to effect 6
transfer. 7
353.812 Cabinet and bordering states to discuss and develop unified approach to 8
subsurface migration -- Reports to Governor and Legislative Research Commission. 9