Alabama 2024 Regular Session

Alabama Senate Bill SB230 Compare Versions

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33 SB230
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55 By Senator Albritton
66 RFD: Finance and Taxation General Fund
77 First Read: 19-Mar-24
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12-5 SB230 Engrossed
12+5 2HF1KKI-1 03/19/2024 ZAK (L)cr 2024-1193
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1414 First Read: 19-Mar-24
15-A BILL
16-TO BE ENTITLED
17-AN ACT
18-Relating to geologic storage; to designate Sections
19-9-17-150, 9-17-151, 9-17-152, 9-17-153, 9-17-154, 9-17-155,
20-9-17-156, and 9-17-157, Code of Alabama 1975, as Division 1 of
21-Article 6, Chapter 17, Title 9 of the Code of Alabama 1975;
22-and to add a Division 2 to Article 6, Chapter 17, Title 9 of
23-the Code of Alabama 1975, commencing with Section 9-17-160, to
24-define the term "pore space"; to provide that the possessory
25-right to pore space below surface real property is vested in
26-the surface owners and may be separately conveyed; to further
27-provide the circumstances under which a proposed carbon
28-dioxide storage facility may receive approval to operate from
29-the State Oil and Gas Board; to provide that the board may
15+SYNOPSIS:
16+Under existing law, subsurface minerals may be
17+separately conveyed from the overlying land and waters.
18+This bill would provide that the possessory
19+right to pore space below surface real property is
20+vested in the surface owners and may be separately
21+conveyed.
22+Also under existing law, the State Oil and Gas
23+Board regulates the underground storage of carbon
24+oxides, including carbon dioxide.
25+This bill would further provide the
26+circumstances under which a proposed carbon dioxide
27+storage facility may receive the board's approval to
28+operate.
29+This bill would provide that the board may
3030 amalgamate storage rights for a carbon dioxide storage
31-facility under certain circumstances; to create the
32-Underground Carbon Dioxide Storage Facility Administrative
33-Fund to be used by the board in monitoring and regulating
34-active storage facilities; to create the Underground Carbon
35-Dioxide Storage Facility Trust Fund to be used by the board in
36-long-term monitoring and management of closed storage
37-facilities; to create a certificate of project closure and
31+facility under certain circumstances.
32+This bill would create the Underground Carbon
33+Dioxide Storage Facility Administrative Fund to be used
34+by the board in monitoring and regulating active
35+storage facilities.
36+This bill would create the Underground Carbon
37+Dioxide Storage Facility Trust Fund to be used by the
38+board in long-term monitoring and management of closed
39+storage facilities.
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67-facilities; to create a certificate of project closure and
68-completion and provide for its issuance and implications; to
69-authorize the Commissioner of Conservation and Natural
70-Resources to lease pore space of certain lands for underground
71-storage of carbon dioxide; and to further provide for the
72-board's rulemaking authority.
73-BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
74-Section 1. Sections 9-17-150, 9-17-151, 9-17-152,
75-9-17-153, 9-17-154, 9-17-155, 9-17-156, and 9-17-157, Code of
76-Alabama 1975, shall be designated as Division 1 of Article 6,
77-Chapter 17, Title 9 of the Code of Alabama 1975.
78-Section 2. Division 2 is added to Article 6 of Chapter
79-17, Title 9 of the Code of Alabama 1975, commencing with
80-Section 9-17-160, to read as follows:
81-Division 2.
82-§9-17-160
83-For the purposes of this division, the term "pore
84-space" means subsurface space that can be used for the
85-geologic storage or sequestration of carbon dioxide and
86-incidental substances that are part of the carbon dioxide
87-capture, transportation, or storage process.
88-§9-17-161
89-(a) The ownership of pore space in all strata below the
90-surface lands and waters of this state is vested in the owners
91-of the surface rights above the underlying strata where the
92-pore space exists, unless the ownership interest in the pore
93-space has previously been severed from the surface ownership
94-or is explicitly excluded or reserved in a conveyance.
95-(b) A conveyance of the surface ownership of real
69+storage facilities.
70+This bill would provide for the issuance of a
71+certificate of project closure and completion by the
72+board to a carbon dioxide storage facility operator and
73+the certificate's implications.
74+Also under existing law, the Commissioner of
75+Conservation and Natural Resources may lease certain
76+state lands for various oil and gas uses.
77+This bill would authorize the commissioner to
78+lease pore space of certain state lands for underground
79+storage of carbon dioxide.
80+A BILL
81+TO BE ENTITLED
82+AN ACT
83+Relating to geologic storage; to designate Sections
84+9-17-150, 9-17-151, 9-17-152, 9-17-153, 9-17-154, 9-17-155,
85+9-17-156, and 9-17-157, Code of Alabama 1975, as Division 1 of
86+Article 6, Chapter 17, Title 9 of the Code of Alabama 1975;
87+and to add a Division 2 to Article 6, Chapter 17, Title 9 of
88+the Code of Alabama 1975, commencing with Section 9-17-160, to
89+define the term "pore space"; to provide that the possessory
90+right to pore space below surface real property is vested in
91+the surface owners and may be separately conveyed; to further
92+provide the circumstances under which a proposed carbon
93+dioxide storage facility may receive approval to operate from
94+the State Oil and Gas Board; to provide that the board may
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125-(b) A conveyance of the surface ownership of real
126-property shall be a conveyance of the pore space in all strata
127-below the surface of the real property unless the ownership
128-interest in the subsurface pore space has previously been
129-severed from the surface ownership or is explicitly excluded
130-or reserved in the conveyance. The ownership of pore space in
131-strata may be conveyed in the manner provided by law for the
132-transfer of surface interests in real property.
133-(c) No previous agreement conveying or reserving oil,
134-gas, or other mineral interests in real property shall act to
135-convey or reserve ownership of any pore space or carbon
136-dioxide storage rights in the stratum unless the agreement
137-explicitly conveys or reserves subsurface space to be used for
138-the geologic storage or sequestration or carbon dioxide.
139-(d) No agreement conveying the right to use or occupy a
140-storage facility, pore space, and potentially the surface or
141-subsurface of the land incident thereto shall convey any other
142-right of real property use, including oil, gas, or other
143-minerals within the same instrument. Any agreement that
144-violates this subsection is void; provided, however, this
145-subsection shall not apply to any agreement executed before
146-October 1, 2024.
147-(e) The owner of any pore space right shall have no
148-right to use the surface estate beyond that set out in a
149-properly executed instrument nor in any manner that will
150-adversely affect any existing easement, whether public or
151-private.
152-(f) Nothing in this section shall alter, amend,
153-diminish, or invalidate any right to the use of pore space
124+the State Oil and Gas Board; to provide that the board may
125+amalgamate storage rights for a carbon dioxide storage
126+facility under certain circumstances; to create the
127+Underground Carbon Dioxide Storage Facility Administrative
128+Fund to be used by the board in monitoring and regulating
129+active storage facilities; to create the Underground Carbon
130+Dioxide Storage Facility Trust Fund to be used by the board in
131+long-term monitoring and management of closed storage
132+facilities; to create a certificate of project closure and
133+completion and provide for its issuance and implications; to
134+authorize the Commissioner of Conservation and Natural
135+Resources to lease pore space of certain lands for underground
136+storage of carbon dioxide; and to further provide for the
137+board's rulemaking authority.
138+BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
139+Section 1. Sections 9-17-150, 9-17-151, 9-17-152,
140+9-17-153, 9-17-154, 9-17-155, 9-17-156, and 9-17-157, Code of
141+Alabama 1975, shall be designated as Division 1 of Article 6,
142+Chapter 17, Title 9 of the Code of Alabama 1975.
143+Section 2. Division 2 is added to Article 6 of Chapter
144+17, Title 9 of the Code of Alabama 1975, commencing with
145+Section 9-17-160, to read as follows:
146+Division 2.
147+§9-17-160
148+For the purposes of this division, the term "pore
149+space" means subsurface space that can be used for the
150+geologic storage or sequestration of carbon dioxide and
151+incidental substances that are part of the carbon dioxide
152+capture, transportation, or storage process.
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183-diminish, or invalidate any right to the use of pore space
184-that was acquired by contract or lease prior to October 1,
185-2024.
186-(g) In considering approving a storage facility to be
187-used for the storage and sequestration of carbon dioxide
188-pursuant to this division, the board shall consider both of
189-the following:
190-(1) Any competing rights of all separately owned
191-estates in lands potentially affected by the storage facility,
192-giving due consideration of competing rights as to existing or
193-future uses by pore space, surface, and mineral owners that
194-may be affected.
195-(2) The distance of the storage facility from any
196-current or future underground mining operation or other
197-underground operation designed and operated for the extraction
198-of minerals and the potential impact on the safety of these
199-operations.
200-(h) Other than as may regard a claim to an ownership
201-interest in pore space, nothing in this division shall be
202-construed to change, alter, diminish, or in any way affect the
203-statutory or common law as of October 1, 2024, as it relates
204-to the rights belonging to surface and mineral estates.
205-§9-17-162
206- For a storage facility that is used for the storage
207-and sequestration of carbon dioxide, all of the following
208-shall apply:
209-(1) A storage operator shall adhere to all rules
210-adopted by the board relating to the underground storage of
211-carbon dioxide.
182+capture, transportation, or storage process.
183+§9-17-161
184+(a) The ownership of pore space in all strata below the
185+surface lands and waters of this state is vested in the owners
186+of the surface rights above the underlying strata where the
187+pore space exists, unless the ownership interest in the pore
188+space has previously been severed from the surface ownership
189+or is explicitly excluded or reserved in a conveyance.
190+(b) A conveyance of the surface ownership of real
191+property shall be a conveyance of the pore space in all strata
192+below the surface of the real property unless the ownership
193+interest in the subsurface pore space has previously been
194+severed from the surface ownership or is explicitly excluded
195+or reserved in the conveyance. The ownership of pore space in
196+strata may be conveyed in the manner provided by law for the
197+transfer of surface interests in real property.
198+(c) No previous agreement conveying or reserving oil,
199+gas, or other mineral interests in real property shall act to
200+convey or reserve ownership of any pore space or carbon
201+dioxide storage rights in the stratum unless the agreement
202+explicitly conveys or reserves subsurface space to be used for
203+the geologic storage or sequestration or carbon dioxide.
204+(d) No agreement conveying the right to use or occupy a
205+storage facility, pore space, and potentially the surface or
206+subsurface of the land incident thereto shall convey any other
207+right of real property use, including oil, gas, or other
208+minerals within the same instrument. Any agreement that
209+violates this subsection is void; provided, however, this
210+subsection shall not apply to any agreement executed before
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240+subsection shall not apply to any agreement executed before
241+October 1, 2024.
242+(e) The owner of any pore space right shall have no
243+right to use the surface estate beyond that set out in a
244+properly executed instrument nor in any manner that will
245+adversely affect any existing easement, whether public or
246+private.
247+(f) Nothing in this section shall alter, amend,
248+diminish, or invalidate any right to the use of pore space
249+that was acquired by contract or lease prior to October 1,
250+2024.
251+(g) In considering approving the use of an underground
252+reservoir as a storage facility for the storage and
253+sequestration of carbon dioxide pursuant to this division, the
254+board shall consider any potentially competing rights of
255+separately owned property interests to be included in the
256+storage facility, including reasonable accommodation of
257+competing rights of existing or imminent uses by pore space,
258+surface, or mineral owners that will be affected by the
259+storage facility.
260+§9-17-162
261+ For a storage facility that is used for the storage
262+and sequestration of carbon dioxide, all of the following
263+shall apply:
264+(1) A storage operator shall adhere to all rules
265+adopted by the board relating to the underground storage of
241266 carbon dioxide.
242267 (2) A storage operator shall make a good faith effort
243268 to obtain the consent of all persons that own a storage
244-facility's pore space and storage rights for carbon dioxide.
245-(3) A storage operator shall obtain the consent of
246-persons that own not less than 66 and two-thirds percent of a
247-storage facility's pore space and storage rights for carbon
248-dioxide.
249-(4) Upon a storage operator obtaining the consent of
250-persons that own not less than 66 and two-thirds percent of a
251-storage facility's pore space and storage rights for carbon
252-dioxide, the board, after providing notice and a public
253-hearing, may enter an order to amalgamate and pool the pore
254-space and storage rights for carbon dioxide owned by
255-non-consenting owners into the storage facility on terms that
256-are just and reasonable as determined by the board.
257-(5) All non-consenting owners of a storage facility's
258-pore space and storage rights for carbon dioxide shall be
259-fairly and equitably compensated.
260-(6) A storage operator shall use commercially
261-reasonable efforts to limit the adverse surface-use impact
262-upon the lands of non-consenting owners of a storage
263-facility's pore space and storage rights.
264-(7) A storage operator seeking approval to operate in
265-the Blue Creek or Mary Lee coal seams in Jefferson,
266-Tuscaloosa, or Walker counties or within a 10-mile radius of
267-any coal mine operation shall obtain the written consent of
268-the coal mine operator and mineral owner with an operation or
269-mineral interest in such seams or within such radius;
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299-mineral interest in such seams or within such radius;
300-provided, however, that such consent shall not be unreasonably
301-withheld or delayed.
298+to obtain the consent of all persons that own a storage
299+facility's pore space and storage rights for carbon dioxide.
300+(3) A storage operator shall obtain the consent of
301+persons that own not less than 60 percent of a storage
302+facility's pore space and storage rights for carbon dioxide.
303+(4) Upon a storage operator obtaining the consent of
304+persons that own not less than 60 percent of a storage
305+facility's pore space and storage rights for carbon dioxide,
306+the board, after providing notice and a public hearing, may
307+enter an order to amalgamate and pool the pore space and
308+storage rights for carbon dioxide owned by non-consenting
309+owners into the storage facility on terms that are just and
310+reasonable as determined by the board.
311+(5) All non-consenting owners of a storage facility's
312+pore space and storage rights for carbon dioxide shall be
313+fairly and equitably compensated.
302314 §9-17-163
303315 (a)(1) The Underground Carbon Dioxide Storage Facility
304316 Administrative Fund is created in the State Treasury. The fund
305317 shall consist of all administrative fees for the geologic
306318 storage of carbon dioxide as determined by the board pursuant
307319 to Section 9-17-151(d).
308320 (2) All monies in the fund shall be used only for the
309321 purpose of defraying expenses incurred by the board in the
310322 performance of its administrative and regulatory duties
311323 relative to the geologic storage of carbon dioxide.
312324 (3) Monies in the fund shall be invested by the State
313325 Treasurer for the sole benefit of the fund and in a manner to
314326 obtain the highest return possible while preserving the
315-principal. Any interest earned on the fund shall be deposited
316-into the fund.
317-(4) The fund shall be paid out only by warrant of the
318-Comptroller upon the State Treasury, upon itemized vouchers,
319-approved by the State Oil and Gas Supervisor; provided, that
320-no funds shall be withdrawn or expended except as budgeted and
321-allotted according to the provisions of Sections 41-4-80
322-through 41-4-96 and Sections 41-19-1 through 41-19-12, and
323-only in amounts as stipulated in the general appropriation or
324-other appropriation bills; provided further, that any funds
325-unspent and unencumbered at the end of any state fiscal year
326-shall not be transferred into the State General Fund.
327-(b)(1) The Underground Carbon Dioxide Storage Facility
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356+obtain the highest return possible while preserving the
357+principal. Any interest earned on the fund shall be deposited
358+into the fund.
359+(4) The fund shall be paid out only by warrant of the
360+Comptroller upon the State Treasury, upon itemized vouchers,
361+approved by the State Oil and Gas Supervisor; provided, that
362+no funds shall be withdrawn or expended except as budgeted and
363+allotted according to the provisions of Sections 41-4-80
364+through 41-4-96 and Sections 41-19-1 through 41-19-12, and
365+only in amounts as stipulated in the general appropriation or
366+other appropriation bills; provided further, that any funds
367+unspent and unencumbered at the end of any state fiscal year
368+shall not be transferred into the State General Fund.
357369 (b)(1) The Underground Carbon Dioxide Storage Facility
358370 Trust Fund is created in the State Treasury.
359371 (2) The fund shall consist of any fees levied by the
360372 board pursuant to 9-17-151(d) and all monies received by the
361373 board to measure, monitor, and verify underground carbon
362374 dioxide storage facilities following the plugging and
363375 abandonment of all injection wells in accordance with board
364376 rules, issuance of a certificate of project closure and
365377 completion, and release of all financial assurance instruments
366378 for a storage facility. The board shall adopt rules as
367379 necessary to collect monies for the fund in an amount
368380 reasonably calculated to pay the costs of measuring,
369381 monitoring, and verifying the sites.
370382 (3) Monies in the fund shall only be used for the
371383 following purposes:
372384 a. Testing, monitoring, and long-term inspection of
373-underground carbon dioxide storage facilities.
374-b. Remediation of mechanical problems associated with
375-remaining wells and infrastructure.
376-c. Plugging and abandoning monitoring wells.
377-d. All costs associated with the release of carbon
378-dioxide from underground carbon dioxide storage facilities
379-following the issuance by the board of a certificate of
380-project closure and completion and release of financial
381-assurance instruments.
382-e. Other operations and activities deemed necessary by
383-the board or the State Oil and Gas Supervisor to protect
384-underground sources of drinking water and for public health
385-and safety following the issuance of a certificate of project
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414+a. Testing, monitoring, and long-term inspection of
415+underground carbon dioxide storage facilities.
416+b. Remediation of mechanical problems associated with
417+remaining wells and infrastructure.
418+c. Plugging and abandoning monitoring wells.
419+d. All costs associated with the release of carbon
420+dioxide from underground carbon dioxide storage facilities
421+following the issuance by the board of a certificate of
422+project closure and completion and release of financial
423+assurance instruments.
424+e. Other operations and activities deemed necessary by
425+the board or the State Oil and Gas Supervisor to protect
426+underground sources of drinking water and for public health
415427 and safety following the issuance of a certificate of project
416428 closure and completion by the board and release of all
417429 financial assurance instruments.
418430 (4) Monies in the fund shall be invested by the State
419431 Treasurer for the sole benefit of the fund and in a manner to
420-obtain the highest return possible while preserving the
432+obtain the highest return possible while preserving he
421433 principal. Any interest earned on the fund shall be deposited
422434 into the fund.
423435 (5) The fund shall be paid out only by warrant of the
424436 Comptroller upon the State Treasury, upon itemized vouchers,
425437 approved by the State Oil and Gas Supervisor; provided, that
426438 no funds shall be withdrawn or expended except as budgeted and
427439 allotted according to the provisions of Sections 41-4-80
428440 through 41-4-96 and Sections 41-19-1 through 41-19-12, and
429441 only in amounts as stipulated in the general appropriation or
430442 other appropriation bills; provided further, that any funds
431-unspent and unencumbered at the end of any state fiscal year
432-shall not be transferred into the State General Fund.
433-§9-17-164
434-(a) A storage operator has title to all carbon dioxide
435-injected and stored in a storage facility. A storage operator
436-is liable for any damages attributed to its operations while
437-holding title to the injected carbon dioxide.
438-(b) Upon all carbon dioxide injections into a storage
439-facility ending and application by a storage facility
440-operator, the board may issue a certificate of project closure
441-and completion for the storage facility.
442-(c) A certificate of project closure and completion
443-shall only be issued after all of the following have been
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472+other appropriation bills; provided further, that any funds
473+unspent and unencumbered at the end of any state fiscal year
474+shall not be transferred into the State General Fund.
475+§9-17-164
476+(a) A storage operator has title to all carbon dioxide
477+injected and stored in a storage facility. A storage operator
478+is liable for any damages attributed to its operations while
479+holding title to the injected carbon dioxide.
480+(b) Upon all carbon dioxide injections into a storage
481+facility ending and application by a storage facility
482+operator, the board may issue a certificate of project closure
483+and completion for the storage facility.
484+(c) A certificate of project closure and completion
473485 shall only be issued after all of the following have been
474486 satisfied:
475487 (1) Notice and a public hearing on the issuance of the
476488 certificate are provided pursuant to Section 9-17-152(a).
477489 (2) The board has consulted with the Alabama Department
478490 of Environmental Management regarding issuing the certificate.
479491 (3) Ten or more years have passed from the date carbon
480492 dioxide injection into the storage facility ended.
481493 (4) The storage operator has demonstrated all of the
482494 following to the satisfaction of the board:
483495 a. The storage facility is in full compliance with all
484496 governing laws and rules.
485497 b. The storage facility is reasonably expected to
486498 retain the carbon dioxide.
487499 c. The carbon dioxide in the storage facility is
488500 stable. For purposes of this paragraph, carbon dioxide is
489-stable if it is essentially stationary or, if it is migrating
490-or may migrate, migration is unlikely to cross the underground
491-reservoir boundary and is not expected to endanger any
492-underground source of drinking water.
493-d. All wells, equipment, and facilities to be used in
494-the post-closure period are in good condition and retain
495-mechanical integrity.
496-e. All injection wells have been plugged, all related
497-equipment and facilities used during the pre-closure period
498-not necessary for long-term monitoring have been removed, and
499-all reclamation work required by the board has been completed.
500-(d) Upon the issuance of a certificate of project
501-closure and completion, all of the following shall occur:
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530+stable. For purposes of this paragraph, carbon dioxide is
531+stable if it is essentially stationary or, if it is migrating
532+or may migrate, migration is unlikely to cross the underground
533+reservoir boundary and is not expected to endanger any
534+underground source of drinking water.
535+d. All wells, equipment, and facilities to be used in
536+the post-closure period are in good condition and retain
537+mechanical integrity.
538+e. All injection wells have been plugged, all related
539+equipment and facilities used during the pre-closure period
540+not necessary for long-term monitoring have been removed, and
541+all reclamation work required by the board has been completed.
542+(d) Upon the issuance of a certificate of project
531543 closure and completion, all of the following shall occur:
532544 (1) Title to equipment and facilities necessary for
533545 long-term monitoring and all carbon dioxide injected into the
534546 storage facility, without payment of any compensation, shall
535547 transfer to the state. Title acquired by the state includes
536548 all rights and interests in, and all responsibilities and
537549 liabilities associated with, all equipment and facilities used
538550 for long-term monitoring and the stored carbon dioxide within
539551 the storage facility. A storage operator may not transfer to
540552 the state, and the state may not accept, any property
541553 interests or rights that the storage operator does not own or
542554 have the authority to transfer.
543555 (2) The storage operator and all persons that generated
544556 any injected carbon dioxide shall be released from all
545557 regulatory requirements associated with the storage facility.
546558 (3) The storage operator shall be released from all
547-bonds and other security posted by the storage operator.
548-(4) Monitoring and managing the storage facility shall
549-become the responsibility of the state and be administered by
550-the board unless an agency of the federal government assumes
551-responsibility for the long-term monitoring and management of
552-the storage facility.
553-§9-17-165
554-The Commissioner of Conservation and Natural Resources,
555-on behalf of this state, is authorized to lease pore space for
556-any lands under the jurisdiction of the Department of
557-Conservation and Natural Resources for underground storage of
558-carbon dioxide on, in, and under such lands.
559-§9-17-166
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588+(3) The storage operator shall be released from all
589+bonds and other security posted by the storage operator.
590+(4) Monitoring and managing the storage facility shall
591+become the responsibility of the state and be administered by
592+the board unless an agency of the federal government assumes
593+responsibility for the long-term monitoring and management of
594+the storage facility.
595+§9-17-165
596+The Commissioner of Conservation and Natural Resources,
597+on behalf of this state, is authorized to lease pore space for
598+any lands under the jurisdiction of the Department of
599+Conservation and Natural Resources for underground storage of
600+carbon dioxide on, in, and under such lands.
589601 §9-17-166
590602 The board may adopt rules as necessary to implement and
591603 administer this division.
592604 Section 3. This act shall become effective on October
593605 1, 2024.
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599-1, 2024.
600-Senate
601-Read for the first time and referred
602-to the Senate committee on Finance
603-and Taxation General Fund
604-................19-Mar-24
605-Read for the second time and placed
606-on the calendar:
607- 1 amendment
608-................04-Apr-24
609-Read for the third time and passed
610-as amended
611-Yeas 28
612-Nays 0
613-Abstains 1
614-................16-Apr-24
615-Patrick Harris,
616-Secretary.
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