SB230INTRODUCED
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SB230
2HF1KKI-1
By Senator Albritton
RFD: Finance and Taxation General Fund
First Read: 19-Mar-24
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5 2HF1KKI-1 03/19/2024 ZAK (L)cr 2024-1193
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First Read: 19-Mar-24
SYNOPSIS:
Under existing law, subsurface minerals may be
separately conveyed from the overlying land and waters.
This bill would provide that the possessory
right to pore space below surface real property is
vested in the surface owners and may be separately
conveyed.
Also under existing law, the State Oil and Gas
Board regulates the underground storage of carbon
oxides, including carbon dioxide.
This bill would further provide the
circumstances under which a proposed carbon dioxide
storage facility may receive the board's approval to
operate.
This bill would provide that the board may
amalgamate storage rights for a carbon dioxide storage
facility under certain circumstances.
This bill would create the Underground Carbon
Dioxide Storage Facility Administrative Fund to be used
by the board in monitoring and regulating active
storage facilities.
This bill would create the Underground Carbon
Dioxide Storage Facility Trust Fund to be used by the
board in long-term monitoring and management of closed
storage facilities.
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storage facilities.
This bill would provide for the issuance of a
certificate of project closure and completion by the
board to a carbon dioxide storage facility operator and
the certificate's implications.
Also under existing law, the Commissioner of
Conservation and Natural Resources may lease certain
state lands for various oil and gas uses.
This bill would authorize the commissioner to
lease pore space of certain state lands for underground
storage of carbon dioxide.
A BILL
TO BE ENTITLED
AN ACT
Relating to geologic storage; to designate Sections
9-17-150, 9-17-151, 9-17-152, 9-17-153, 9-17-154, 9-17-155,
9-17-156, and 9-17-157, Code of Alabama 1975, as Division 1 of
Article 6, Chapter 17, Title 9 of the Code of Alabama 1975;
and to add a Division 2 to Article 6, Chapter 17, Title 9 of
the Code of Alabama 1975, commencing with Section 9-17-160, to
define the term "pore space"; to provide that the possessory
right to pore space below surface real property is vested in
the surface owners and may be separately conveyed; to further
provide the circumstances under which a proposed carbon
dioxide storage facility may receive approval to operate from
the State Oil and Gas Board; to provide that the board may
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the State Oil and Gas Board; to provide that the board may
amalgamate storage rights for a carbon dioxide storage
facility under certain circumstances; to create the
Underground Carbon Dioxide Storage Facility Administrative
Fund to be used by the board in monitoring and regulating
active storage facilities; to create the Underground Carbon
Dioxide Storage Facility Trust Fund to be used by the board in
long-term monitoring and management of closed storage
facilities; to create a certificate of project closure and
completion and provide for its issuance and implications; to
authorize the Commissioner of Conservation and Natural
Resources to lease pore space of certain lands for underground
storage of carbon dioxide; and to further provide for the
board's rulemaking authority.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Sections 9-17-150, 9-17-151, 9-17-152,
9-17-153, 9-17-154, 9-17-155, 9-17-156, and 9-17-157, Code of
Alabama 1975, shall be designated as Division 1 of Article 6,
Chapter 17, Title 9 of the Code of Alabama 1975.
Section 2. Division 2 is added to Article 6 of Chapter
17, Title 9 of the Code of Alabama 1975, commencing with
Section 9-17-160, to read as follows:
Division 2.
§9-17-160
For the purposes of this division, the term "pore
space" means subsurface space that can be used for the
geologic storage or sequestration of carbon dioxide and
incidental substances that are part of the carbon dioxide
capture, transportation, or storage process.
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capture, transportation, or storage process.
§9-17-161
(a) The ownership of pore space in all strata below the
surface lands and waters of this state is vested in the owners
of the surface rights above the underlying strata where the
pore space exists, unless the ownership interest in the pore
space has previously been severed from the surface ownership
or is explicitly excluded or reserved in a conveyance.
(b) A conveyance of the surface ownership of real
property shall be a conveyance of the pore space in all strata
below the surface of the real property unless the ownership
interest in the subsurface pore space has previously been
severed from the surface ownership or is explicitly excluded
or reserved in the conveyance. The ownership of pore space in
strata may be conveyed in the manner provided by law for the
transfer of surface interests in real property.
(c) No previous agreement conveying or reserving oil,
gas, or other mineral interests in real property shall act to
convey or reserve ownership of any pore space or carbon
dioxide storage rights in the stratum unless the agreement
explicitly conveys or reserves subsurface space to be used for
the geologic storage or sequestration or carbon dioxide.
(d) No agreement conveying the right to use or occupy a
storage facility, pore space, and potentially the surface or
subsurface of the land incident thereto shall convey any other
right of real property use, including oil, gas, or other
minerals within the same instrument. Any agreement that
violates this subsection is void; provided, however, this
subsection shall not apply to any agreement executed before
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subsection shall not apply to any agreement executed before
October 1, 2024.
(e) The owner of any pore space right shall have no
right to use the surface estate beyond that set out in a
properly executed instrument nor in any manner that will
adversely affect any existing easement, whether public or
private.
(f) Nothing in this section shall alter, amend,
diminish, or invalidate any right to the use of pore space
that was acquired by contract or lease prior to October 1,
2024.
(g) In considering approving the use of an underground
reservoir as a storage facility for the storage and
sequestration of carbon dioxide pursuant to this division, the
board shall consider any potentially competing rights of
separately owned property interests to be included in the
storage facility, including reasonable accommodation of
competing rights of existing or imminent uses by pore space,
surface, or mineral owners that will be affected by the
storage facility.
§9-17-162
For a storage facility that is used for the storage
and sequestration of carbon dioxide, all of the following
shall apply:
(1) A storage operator shall adhere to all rules
adopted by the board relating to the underground storage of
carbon dioxide.
(2) A storage operator shall make a good faith effort
to obtain the consent of all persons that own a storage
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to obtain the consent of all persons that own a storage
facility's pore space and storage rights for carbon dioxide.
(3) A storage operator shall obtain the consent of
persons that own not less than 60 percent of a storage
facility's pore space and storage rights for carbon dioxide.
(4) Upon a storage operator obtaining the consent of
persons that own not less than 60 percent of a storage
facility's pore space and storage rights for carbon dioxide,
the board, after providing notice and a public hearing, may
enter an order to amalgamate and pool the pore space and
storage rights for carbon dioxide owned by non-consenting
owners into the storage facility on terms that are just and
reasonable as determined by the board.
(5) All non-consenting owners of a storage facility's
pore space and storage rights for carbon dioxide shall be
fairly and equitably compensated.
§9-17-163
(a)(1) The Underground Carbon Dioxide Storage Facility
Administrative Fund is created in the State Treasury. The fund
shall consist of all administrative fees for the geologic
storage of carbon dioxide as determined by the board pursuant
to Section 9-17-151(d).
(2) All monies in the fund shall be used only for the
purpose of defraying expenses incurred by the board in the
performance of its administrative and regulatory duties
relative to the geologic storage of carbon dioxide.
(3) Monies in the fund shall be invested by the State
Treasurer for the sole benefit of the fund and in a manner to
obtain the highest return possible while preserving the
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obtain the highest return possible while preserving the
principal. Any interest earned on the fund shall be deposited
into the fund.
(4) The fund shall be paid out only by warrant of the
Comptroller upon the State Treasury, upon itemized vouchers,
approved by the State Oil and Gas Supervisor; provided, that
no funds shall be withdrawn or expended except as budgeted and
allotted according to the provisions of Sections 41-4-80
through 41-4-96 and Sections 41-19-1 through 41-19-12, and
only in amounts as stipulated in the general appropriation or
other appropriation bills; provided further, that any funds
unspent and unencumbered at the end of any state fiscal year
shall not be transferred into the State General Fund.
(b)(1) The Underground Carbon Dioxide Storage Facility
Trust Fund is created in the State Treasury.
(2) The fund shall consist of any fees levied by the
board pursuant to 9-17-151(d) and all monies received by the
board to measure, monitor, and verify underground carbon
dioxide storage facilities following the plugging and
abandonment of all injection wells in accordance with board
rules, issuance of a certificate of project closure and
completion, and release of all financial assurance instruments
for a storage facility. The board shall adopt rules as
necessary to collect monies for the fund in an amount
reasonably calculated to pay the costs of measuring,
monitoring, and verifying the sites.
(3) Monies in the fund shall only be used for the
following purposes:
a. Testing, monitoring, and long-term inspection of
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a. Testing, monitoring, and long-term inspection of
underground carbon dioxide storage facilities.
b. Remediation of mechanical problems associated with
remaining wells and infrastructure.
c. Plugging and abandoning monitoring wells.
d. All costs associated with the release of carbon
dioxide from underground carbon dioxide storage facilities
following the issuance by the board of a certificate of
project closure and completion and release of financial
assurance instruments.
e. Other operations and activities deemed necessary by
the board or the State Oil and Gas Supervisor to protect
underground sources of drinking water and for public health
and safety following the issuance of a certificate of project
closure and completion by the board and release of all
financial assurance instruments.
(4) Monies in the fund shall be invested by the State
Treasurer for the sole benefit of the fund and in a manner to
obtain the highest return possible while preserving he
principal. Any interest earned on the fund shall be deposited
into the fund.
(5) The fund shall be paid out only by warrant of the
Comptroller upon the State Treasury, upon itemized vouchers,
approved by the State Oil and Gas Supervisor; provided, that
no funds shall be withdrawn or expended except as budgeted and
allotted according to the provisions of Sections 41-4-80
through 41-4-96 and Sections 41-19-1 through 41-19-12, and
only in amounts as stipulated in the general appropriation or
other appropriation bills; provided further, that any funds
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other appropriation bills; provided further, that any funds
unspent and unencumbered at the end of any state fiscal year
shall not be transferred into the State General Fund.
§9-17-164
(a) A storage operator has title to all carbon dioxide
injected and stored in a storage facility. A storage operator
is liable for any damages attributed to its operations while
holding title to the injected carbon dioxide.
(b) Upon all carbon dioxide injections into a storage
facility ending and application by a storage facility
operator, the board may issue a certificate of project closure
and completion for the storage facility.
(c) A certificate of project closure and completion
shall only be issued after all of the following have been
satisfied:
(1) Notice and a public hearing on the issuance of the
certificate are provided pursuant to Section 9-17-152(a).
(2) The board has consulted with the Alabama Department
of Environmental Management regarding issuing the certificate.
(3) Ten or more years have passed from the date carbon
dioxide injection into the storage facility ended.
(4) The storage operator has demonstrated all of the
following to the satisfaction of the board:
a. The storage facility is in full compliance with all
governing laws and rules.
b. The storage facility is reasonably expected to
retain the carbon dioxide.
c. The carbon dioxide in the storage facility is
stable. For purposes of this paragraph, carbon dioxide is
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stable. For purposes of this paragraph, carbon dioxide is
stable if it is essentially stationary or, if it is migrating
or may migrate, migration is unlikely to cross the underground
reservoir boundary and is not expected to endanger any
underground source of drinking water.
d. All wells, equipment, and facilities to be used in
the post-closure period are in good condition and retain
mechanical integrity.
e. All injection wells have been plugged, all related
equipment and facilities used during the pre-closure period
not necessary for long-term monitoring have been removed, and
all reclamation work required by the board has been completed.
(d) Upon the issuance of a certificate of project
closure and completion, all of the following shall occur:
(1) Title to equipment and facilities necessary for
long-term monitoring and all carbon dioxide injected into the
storage facility, without payment of any compensation, shall
transfer to the state. Title acquired by the state includes
all rights and interests in, and all responsibilities and
liabilities associated with, all equipment and facilities used
for long-term monitoring and the stored carbon dioxide within
the storage facility. A storage operator may not transfer to
the state, and the state may not accept, any property
interests or rights that the storage operator does not own or
have the authority to transfer.
(2) The storage operator and all persons that generated
any injected carbon dioxide shall be released from all
regulatory requirements associated with the storage facility.
(3) The storage operator shall be released from all
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(3) The storage operator shall be released from all
bonds and other security posted by the storage operator.
(4) Monitoring and managing the storage facility shall
become the responsibility of the state and be administered by
the board unless an agency of the federal government assumes
responsibility for the long-term monitoring and management of
the storage facility.
§9-17-165
The Commissioner of Conservation and Natural Resources,
on behalf of this state, is authorized to lease pore space for
any lands under the jurisdiction of the Department of
Conservation and Natural Resources for underground storage of
carbon dioxide on, in, and under such lands.
§9-17-166
The board may adopt rules as necessary to implement and
administer this division.
Section 3. This act shall become effective on October
1, 2024.
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