LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 7427 NOTE PREPARED: Jan 8, 2025
BILL NUMBER: HB 1579 BILL AMENDED:
SUBJECT: Carbon Sequestration.
FIRST AUTHOR: Rep. Soliday BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State
XDEDICATED
FEDERAL
Summary of Legislation: The bill amends the Indiana Code chapter governing eminent domain for the
pipeline transportation or underground storage of carbon dioxide as follows:
(1) It defines a "carbon dioxide transmission pipeline company" for purposes of the chapter.
(2) It specifies that a company that seeks to construct, operate, and maintain a carbon dioxide
transmission pipeline in Indiana must apply to the Department of Natural Resources (DNR) for a
carbon dioxide transmission pipeline certificate of authority.
(3) It provides an exemption from the requirement to obtain a certificate under certain circumstances
based on the route of the pipeline and the location of the surface property.
(4) It requires the DNR to deposit filing fees for certificate applications in the Carbon Sequestration
Project Program Administrative Fund (instead of in the Oil and Gas Environmental Fund, under
current law) established by the bill's provisions.
The bill amends the Indiana Code chapter governing the underground storage of carbon dioxide as follows:
(1) It amends the definition of "UIC Class VI permit" to specify that the term means a permit that
allows specified entities to construct or operate (instead of operate, under current law) a carbon
dioxide injection well.
(2) It provides that the DNR may issue an involuntary order requiring two or more pore space owners
to integrate their interests to develop an underground carbon dioxide storage facility if the DNR
finds that a storage operator has filed a complete application for a UIC Class VI permit with the
United States Environmental Protection Agency. (Current law requires the DNR to find that a
storage operator has been issued a UIC Class VI permit.)
(3) It provides that the filing fee for an application for a permit for a carbon sequestration project is
to be:
(A) determined based on the metric tons of carbon dioxide proposed to be injected into the
storage facility during the first 10 years of the project's operation; and
(B) deposited in the Carbon Sequestration Project Program Administrative Fund established
by the bill's provisions. (Current law provides for a flat $1,000 filing fee.)
(4) It makes technical changes to provisions governing:
(A) the DNR's review of submitted applications for projects; and
HB 1579 1 (B) the designation of information as confidential.
(5) It requires a storage operator to pay two fees, not later than March 1 of each year, to the DNR
for the amount of carbon dioxide injected for storage during the immediately preceding calendar
year. (Current law requires a storage operator to pay one annual fee for the amount of carbon dioxide
injected, based on a prior estimate of the amount to be injected that is made at the time of application
for a permit.)
(6) It redesignates the "Carbon Dioxide Storage Facility Trust Fund" as the "Carbon Dioxide Storage
Facility Fund", removes the requirement that the fund must be maintained as a special fund, and
provides that annual appropriations from the fund to the DNR are subject to review by the Budget
Committee.
(7) It establishes the administrative fund for the purpose of defraying the DNR's administrative costs
in managing and operating the carbon sequestration project program and annually appropriates to
the DNR from the fund an amount sufficient to defray costs, subject to review by the Budget
Committee.
(8) It prohibits a person from:
(A) drilling or operating a nonproduction well to investigate the suitability of underground
formations for carbon sequestration; or
(B) converting a well for oil and gas purposes (as defined in the Indiana Code) for use in
carbon dioxide investigations;
without a permit and establishes procedures by which a person may apply for and the DNR may
issue a permit.
(9) It provides that once the DNR has issued a certificate of completion for a project, the DNR may,
with advance notice to the surface property owner, enter property on which an injection well or
monitoring well for the storage facility is located to inspect or maintain the well or storage facility.
(10) It provides that the state may assume ownership and accept transfer of a storage facility for
which an interest in or rights to property are conveyed by a lease only if the lessor and lessee agree
in the lease agreement to transfer the storage facility to the state.
(11) It requires the DNR to report to the Budget Committee not later than:
(A) July 1, 2030; and
(B) July 1, 2035;
the amounts collected and the costs incurred by the DNR in administering the program.
(12) It provides that a person that violates the statutes governing the pipeline transportation or
underground storage of carbon dioxide is subject to specified civil penalties and cessation orders
issued by the DNR.
Effective Date: July 1, 2025.
Explanation of State Expenditures: The Natural Resources Commission (NRC) should be able to adopt
rules, as allowed by the bill, to implement the investigatory carbon storage well permit program using
existing staffing and resources. The bill could increase workload to the DNR to implement the investigatory
carbon storage well permit program; conversely, it could minimally reduce workload and expenditures, as
the DNR would not be required to hold a public meeting regarding a proposed carbon dioxide transmission
pipeline, if the pipeline is exempted by the bill from needing a certificate of authority.
The bill could mitigate an increase in appropriations from the state General Fund to the DNR that may be
needed by creating civil penalties that are to be deposited into a current fund for defraying the costs incurred
for long term monitoring and management for the carbon sequestration project programs and by increasing
and creating fees to be deposited into a new fund for defraying administrative costs incurred.
HB 1579 2 The bill requires the DNR to submit reports to the Budget Committee by July 1, 2030, and another report by
July 1, 2035, regarding amounts collected, costs incurred, and projected amounts and costs. The latter report
is to contain a recommendation as to whether fees should be adjusted.
Additional Information: The bill allows the state to assume ownership and responsibility of or accept transfer
of a carbon storage facility with respect to which an interest in or rights to property are conveyed by a lease
agreement, only if the lessor and lessee agree.
Amending the definition of "UIC Class VI permit" to include a permit that allows specified entities to
construct (not just operate) a carbon dioxide injection well will enable the DNR to integrate the interests of
pore space owners. The current definition (requiring a permit that authorizes operation) prevents this
authority from being implemented because UIC Class VI permits must be approved by the EPA for
construction of a well before later obtaining authorization for injections (operation).
Explanation of State Revenues: The bill adds exemptions for certain pipelines, makes various changes to
carbon sequestration permit fees and annual injection fees, and adds civil penalties. It changes the funds into
which some of these revenues are to be deposited. The table summarizes the changes. Included in the table
is the current (pilot) project approved by the EPA, and the other two currently under review. However, the
changes would apply to all future projects. [See Additional Information.]
Current EPA Class VI Permits Applications: Approved or Under Review
Project Name Estimated Annual
Injections
CSPP Administrative Fund Carbon Dioxide
Storage FacilityFund
Permit Fee [was $1,000]
$0.01/metric ton
First 10-year estimate
Annual Injection
Fee [Added]
$0.05/metric ton
Annual Injection Fee
[Current]
$0.08/metric ton*
Wabash Carbon
Services (Pilot Project)
1,670,000 metric
tons for 12 years
does not apply does not apply does not apply
One Carbon
Partnership, LP
(Hoosier #1 project)
450,000 metric tons
for 12 to 30 years
$45,000 $22,500 $36,000
Vault Alliances CCS,
LP (Linden project)
700,000 metric tons
for 30 years
$70,000 $35,000 $56,000
All Projects: Pipeline, Certificate of Authority Fee, unless exempt by the bill
[changed from the Oil and Gas Environmental Fund]
$1,000
----
All Project: Civil Penalties, violation of law, rule, or no certificate/permit
All Projects: Daily violation after cessation order ----
$1,000 to 10,000
$750/day -
$22,500 cap
Carbon Dioxide Investigation Wells Permit Fee
and Depth Bond Fee
$250
$10/foot ----
*measurement changed from US ton to metric ton
Additional Information:
HB 1579 3 Carbon Dioxide Storage Facility Fund: The bill would reduce revenue (about 10%) and delay the timing of
the revenue for the current carbon dioxide injection fees. These fees are not collected yet, as no project has
been approved by the EPA to begin injections. Current law requires a fee of $0.08 per US ton that is
estimated to be injected in the upcoming year, with adjustments to the following year’s fees for any
discrepancy between estimated and actual injections. The bill requires the fees to be paid by March 1 of each
year after the injections are made, and changes the measurement to metric tons. Metric tons are about 10%
larger than U.S. tons (1.1023 conversion rate). This reduces the fees from $88,184 to $80,000 per MMT. The
bill provides that this fund is subject to review by the Budget Committee.
[Previously: 1,000,000 metric tons x 1.1023 (conversion to U.S. ton) x $0.08 = $88,184]
[Proposed: 1,000,000 metric tons x $0.08 = $80,000]
The bill also establishes civil penalties for violations of a permit, law, or administrative rule. The amount
of the civil penalties are $1,000 (first violation), $2,000 (second violation), and $10,000 (third or subsequent
violation or operating without a required certificate or permit). A person who violates a cessation order
(given after a civil penalty, for not remedying a violation within the time prescribed by the DNR) must pay
a civil penalty of $750 for each day the violation continues, capped at $22,500.
Carbon Sequestration Project Program Administrative Fund (CSPP Administrative Fund): The bill
establishes the new nonreverting fund for defraying administrative costs incurred. This fund is to receive the
$1,000 pipeline application fee, rather than the Oil and Gas Environmental Fund (no pipeline application fees
have been received yet). The new fund is also to receive the project permit application fee, increased from
a flat fee of $1,000 to a fee of $0.01 per metric ton that a project estimates will be injected during the first
10 years of operation. The bill creates a separate additional annual fee of $0.05 per metric ton injected the
prior year. Money in the fund is annually appropriated, subject to review by the Budget Committee.
The bill adds exemptions for certain pipelines (from the requirement to obtain a certificate of authority)
pertaining to the types of public or private parcels that the pipeline and/or the surface property above the
storage facility will contain or cross. Exempt pipelines would not need to pay the $1,000 fee.
The bill establishes a permit application fee ($250) and well depth bond fee ($10 per foot) for carbon dioxide
investigation wells. Well depth bond fees could range between $26,000 and $150,000 per well depending
on the location of the well. (Minimum recommended depth is 2,600 feet and maximum depth in Indiana to
reach pore space is 15,000 feet).
Timing of Revenue Impact: The Class VI permit for the pilot project has been approved by the EPA. It is in
the pre-operational phase and has not received written authorization to begin injections. The other two Class
VI permit applications, for One Carbon Partnership, LP (Hoosier #1 project) and Vault Alliances CCS, LP
(Linden project), are still under review by the EPA. Therefore, the timing of the revenue increase is not
known.
Explanation of Local Expenditures:
Explanation of Local Revenues:
State Agencies Affected: Department of Natural Resources; Natural Resources Commission.
Local Agencies Affected:
HB 1579 4 Information Sources: Wabash Valley Resources;
https://legacy.igws.indiana.edu/Sequestration/CO2Storagee, (Figure 2);
https://udr.epa.gov/ords/uicdr/r/uicdr_ext/uicdr-pub/repository;
https://www.epa.gov/uic/current-class-vi-projects-under-review-epa;
https://udr.epa.gov/ords/uicdr/r/uicdr_ext/uicdr-pub/repository-1-details?p15_project_id=124&clear=15;
https://udr.epa.gov/ords/uicdr/r/uicdr_ext/uicdr-pub/repository-1-details?p15_project_id=145&clear=15;
https://udr.epa.gov/ords/uicdr/r/uicdr_ext/uicdr-pub/repository-1-details?p15_project_id=142&clear=15.
https://www.epa.gov/system/files/documents/2023-07/Wabash_Carbon_Services_FactSheet_Draft_Permit.pdf.
Fiscal Analyst: Heather Puletz, 317-234-9484.
HB 1579 5