81R21118 SMH-F
By: Crownover H.B. No. 2669
Substitute the following for H.B. No. 2669:
By: Hancock C.S.H.B. No. 2669
A BILL TO BE ENTITLED
AN ACT
relating to the implementation of projects involving the capture,
injection, sequestration, or geologic storage of carbon dioxide.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 27.002, Water Code, is amended by adding
Subdivisions (19), (20), (21), (22), (23), (24), and (25) to read as
follows:
(19) "Anthropogenic carbon dioxide":
(A) means:
(i) carbon dioxide that would otherwise
have been released into the atmosphere that has been:
(a) stripped, segregated, or divided
from any other fluid stream; or
(b) captured from an emissions
source, including:
(1) an advanced clean energy
project as defined by Section 382.003, Health and Safety Code, or
another type of electric generation facility; or
(2) an industrial source of
emissions;
(ii) any incidental associated substance
derived from the source material for, or from the process of
capturing, carbon dioxide described by Subparagraph (i); and
(iii) any substance added to carbon dioxide
described by Subparagraph (i) to enable or improve the process of
injecting the carbon dioxide; and
(B) does not include naturally occurring carbon
dioxide that is recaptured, recycled, and reinjected as part of
enhanced recovery operations.
(20) "Anthropogenic carbon dioxide injection well"
means an injection well used to inject or transmit anthropogenic
carbon dioxide into a reservoir.
(21) "Enhanced recovery operation" means the use of
any process for the displacement of hydrocarbons from a reservoir
other than primary recovery and includes the use of any physical,
chemical, thermal, or biological process and any co-production
project.
(22) "Geologic storage" means the underground storage
of anthropogenic carbon dioxide in a reservoir.
(23) "Geologic storage facility" means the
underground reservoir, underground equipment, injection wells, and
surface buildings and equipment used or to be used for the geologic
storage of anthropogenic carbon dioxide and all surface and
subsurface rights and appurtenances necessary to the operation of a
facility for the geologic storage of anthropogenic carbon dioxide.
The term includes any reasonable and necessary areal buffer and
subsurface monitoring zones, pressure fronts, and other areas as
may be necessary for this state to receive delegation of any federal
underground injection control program relating to the storage of
carbon dioxide. The term does not include a pipeline used to
transport carbon dioxide from the facility at which the carbon
dioxide is captured to the geologic storage facility. The storage
of carbon dioxide incidental to or as part of enhanced recovery
operations does not in itself automatically render a facility a
geologic storage facility.
(24) "Oil or gas" means oil, natural gas, or gas
condensate.
(25) "Reservoir" means a natural or artificially
created subsurface sedimentary stratum, formation, aquifer,
cavity, void, or coal seam.
SECTION 2. Chapter 27, Water Code, is amended by adding
Subchapter C-1 to read as follows:
SUBCHAPTER C-1. GEOLOGIC STORAGE AND ASSOCIATED INJECTION OF
ANTHROPOGENIC CARBON DIOXIDE
Sec. 27.041. JURISDICTION. (a) Except as provided by
Subsection (b), the railroad commission has jurisdiction over the
geologic storage of carbon dioxide in, and the injection of carbon
dioxide into, a reservoir that is initially or may be productive of
oil, gas, or geothermal resources or a saline formation directly
above or below that reservoir.
(b) The jurisdiction of the railroad commission over the
geologic storage of carbon dioxide in, and the injection of carbon
dioxide into, a saline formation described by Subsection (a) of
this section is subject to the review of the legislature based on
the recommendations made in the preliminary report described by
Section 10 of the Act enacting this section.
(c) Except as provided by Subsection (b), the railroad
commission has jurisdiction over a well used for the purpose
provided by Subsection (a) regardless of whether the well was
initially completed for that purpose or was initially completed for
another purpose and is converted to the purpose provided by
Subsection (a).
Sec. 27.042. APPLICABILITY. This subchapter does not apply
to the injection of fluid through the use of a Class II injection
well as defined by 40 C.F.R. Section 144.6(b) for the primary
purpose of enhanced recovery operations.
Sec. 27.043. PERMIT FROM RAILROAD COMMISSION. A person may
not begin drilling or operating an anthropogenic carbon dioxide
injection well for geologic storage or constructing or operating a
geologic storage facility regulated under this subchapter without
first obtaining the necessary permits from the railroad commission.
Sec. 27.044. INFORMATION REQUIRED OF APPLICANT. The
railroad commission shall require an applicant to provide any
information the railroad commission considers necessary to
discharge its duties under this subchapter.
Sec. 27.045. FEES. (a) The railroad commission may impose
fees to cover the cost of:
(1) permitting, monitoring, and inspecting
anthropogenic carbon dioxide injection wells for geologic storage
and geologic storage facilities; and
(2) enforcing and implementing this subchapter and
rules adopted by the railroad commission under this subchapter.
(b) Fees collected by the railroad commission under this
section shall be deposited to the credit of the anthropogenic
carbon dioxide storage trust fund established under Section
120.003, Natural Resources Code.
Sec. 27.046. LETTER FROM EXECUTIVE DIRECTOR. (a) An
application to the railroad commission for a permit under rules
adopted under this subchapter must include a letter from the
executive director stating that drilling and operating the
anthropogenic carbon dioxide injection well for geologic storage or
operating the geologic storage facility will not injure any
freshwater strata in that area and that the formation or stratum to
be used for the geologic storage facility is not freshwater sand.
(b) To make the determination required by Subsection (a),
the executive director shall review:
(1) the area of review and corrective action plans;
(2) any subsurface monitoring plans required during
injection or post injection;
(3) any post-injection site care plans; and
(4) any other elements of the application reasonably
required in order for the executive director to make the
determination required by Subsection (a).
(c) The commission shall adopt rules to implement and
administer this section.
Sec. 27.047. RULES. The railroad commission shall adopt
rules and procedures reasonably required for the performance of its
powers, duties, and functions under this subchapter, including
rules for:
(1) the geologic storage and associated injection of
anthropogenic carbon dioxide, including:
(A) geologic site characterization;
(B) area of review and corrective action;
(C) well construction;
(D) operation;
(E) mechanical integrity testing;
(F) monitoring;
(G) well plugging;
(H) post-injection site care;
(I) site closure; and
(J) long-term stewardship;
(2) the enforcement of this subchapter and rules
adopted by the railroad commission under this subchapter; and
(3) the collection and administration of:
(A) fees imposed under Section 27.045; and
(B) penalties imposed for a violation of this
subchapter or rules adopted by the railroad commission under this
subchapter.
Sec. 27.048. CONSISTENCY WITH AND IMPLEMENTATION OF FEDERAL
REQUIREMENTS. (a) Rules adopted by the commission or the railroad
commission under this subchapter must be consistent with applicable
rules or regulations adopted by the United States Environmental
Protection Agency or another federal agency governing the injection
and geologic storage of anthropogenic carbon dioxide.
(b) If rules or regulations adopted to govern the geologic
storage and associated injection of anthropogenic carbon dioxide
under the federal Safe Drinking Water Act (42 U.S.C. Section 300f et
seq.) or another federal statute allow this state to seek primary
enforcement authority under the underground injection control
program:
(1) the commission and the railroad commission shall
seek primacy to administer and enforce the program subject to the
jurisdiction granted under this subchapter; and
(2) this state shall seek primacy to administer and
enforce the program for the geologic storage of carbon dioxide in,
and the injection of carbon dioxide into, a saline formation.
Sec. 27.049. MEMORANDUM OF UNDERSTANDING. The commission
and the railroad commission, as necessary to comply with this
subchapter, by rule shall:
(1) amend the memorandum of understanding recorded in
16 T.A.C. Section 3.30; or
(2) enter into a new memorandum of understanding.
Sec. 27.050. FINANCIAL RESPONSIBILITY. (a) A person to
whom a permit is issued under this subchapter must provide to the
railroad commission annually evidence of financial responsibility
that is satisfactory to the railroad commission.
(b) In determining whether the person is financially
responsible, the railroad commission shall rely on:
(1) the person's most recent quarterly report filed
with the United States Securities and Exchange Commission under
Section 13 or 15(d), Securities Exchange Act of 1934 (15 U.S.C.
Section 78m or 78o(d)); or
(2) if the person is not required to file with the
United States Securities and Exchange Commission a report described
by Subdivision (1) of this subsection, the person's most recent
audited financial statement.
SECTION 3. Section 27.051, Water Code, is amended by
amending Subsection (b) and adding Subsection (b-1) to read as
follows:
(b) The railroad commission may grant an application for a
permit under Subchapter C in whole or part and may issue the permit
if it finds:
(1) that the use or installation of the injection well
is in the public interest;
(2) that the use or installation of the injection well
will not endanger or injure any oil, gas, or other mineral
formation;
(3) that, with proper safeguards, both ground and
surface fresh water can be adequately protected from pollution; and
(4) that the applicant has made a satisfactory showing
of financial responsibility if required by Section 27.073 [of this
code].
(b-1) The railroad commission may issue a permit under
Subchapter C-1 if it finds:
(1) that the injection and geologic storage of
anthropogenic carbon dioxide will not endanger or injure any oil,
gas, or other mineral formation;
(2) that, with proper safeguards, both ground and
surface freshwater can be adequately protected from carbon dioxide
migration or displaced formation fluids;
(3) that the injection of anthropogenic carbon dioxide
will not endanger or injure human health and safety;
(4) that the reservoir into which the anthropogenic
carbon dioxide is injected is suitable for or capable of being made
suitable for protecting against the escape or migration of
anthropogenic carbon dioxide from the reservoir; and
(5) that the applicant for the permit meets all of the
other statutory and regulatory requirements for the issuance of the
permit.
SECTION 4. Sections 27.071 and 27.072, Water Code, are
amended to read as follows:
Sec. 27.071. POWER TO ENTER PROPERTY. Members of the
commission and the railroad commission and employees of the
commission and the railroad commission may enter public or private
property to inspect and investigate conditions relating to
injection well, monitoring well, disposal well, [or] production
well, or geologic storage activities within their respective
jurisdictions or to monitor compliance with a rule, permit, or
other order of the commission or railroad commission. Members or
employees acting under the authority of this section who enter an
establishment on public or private property shall observe the
establishment's safety, internal security, and fire protection
rules.
Sec. 27.072. POWER TO EXAMINE RECORDS. Members of the
commission and the railroad commission and employees of the
commission and railroad commission may examine and copy those
records or memoranda of a business they are investigating as
provided by Section 27.071 [of this code] that relate to the
operation of an injection well, monitoring well, disposal well,
[or] production well, or geologic storage facility, or any other
records required to be maintained by law.
SECTION 5. Section 27.073, Water Code, is amended by
amending Subsection (a) and adding Subsection (b-1) to read as
follows:
(a) A person to whom an injection well permit is issued may
be required by the commission or railroad commission to maintain a
performance bond or other form of financial security to ensure
that:
(1) an abandoned injection well is properly plugged;
or
(2) funds are available for plugging, post-injection
site care, and closure of an anthropogenic carbon dioxide injection
well subject to Subchapter C-1.
(b-1) The railroad commission is authorized to receive
funds as the beneficiary of a financial responsibility mechanism
established under this chapter for the proper management of an
anthropogenic carbon dioxide injection well or geologic storage
facility.
SECTION 6. Chapter 91, Natural Resources Code, is amended
by adding Subchapter R to read as follows:
SUBCHAPTER R. AUTHORIZATION FOR MULTIPLE OR ALTERNATIVE USES OF
WELLS
Sec. 91.801. RULES AUTHORIZING MULTIPLE OR ALTERNATIVE USES
OF WELLS. The commission shall adopt rules allowing:
(1) a person to obtain a permit for a well from the
commission that authorizes the well to be used for multiple
purposes; and
(2) an operator of a well authorized by a permit issued
by the commission to convert the well from its authorized purpose to
a new or additional purpose.
Sec. 91.802. LAW APPLICABLE TO GEOLOGIC STORAGE FACILITIES
AND ASSOCIATED INJECTION WELLS. (a) In this section,
"anthropogenic carbon dioxide injection well" has the meaning
assigned by Section 27.002, Water Code.
(b) If a well is authorized as or converted to an
anthropogenic carbon dioxide injection well for geologic storage,
Subchapter C-1, Chapter 27, Water Code, applies to the well.
(c) A conversion of an anthropogenic carbon dioxide
injection well from use for enhanced recovery operations to use for
geologic storage is not considered to be a change in the purpose of
the well.
SECTION 7. Subtitle D, Title 3, Natural Resources Code, is
amended by adding Chapter 120 to read as follows:
CHAPTER 120. OWNERSHIP AND STEWARDSHIP OF ANTHROPOGENIC CARBON
DIOXIDE
Sec. 120.001. DEFINITIONS. In this chapter:
(1) "Anthropogenic carbon dioxide," "anthropogenic
carbon dioxide injection well," and "geologic storage facility"
have the meanings assigned by Section 27.002, Water Code.
(2) "Commission" means the Railroad Commission of
Texas.
(3) "Storage operator" means a person authorized by
the commission to operate a geologic storage facility.
Sec. 120.002. OWNERSHIP OF ANTHROPOGENIC CARBON DIOXIDE.
(a) This section does not apply to anthropogenic carbon dioxide
injected for the primary purpose of enhanced recovery operations.
(b) Unless otherwise expressly provided by a contract, bill
of sale, deed, mortgage, deed of trust, or other legally binding
document or by other law, anthropogenic carbon dioxide stored in a
geologic storage facility is considered to be the property of the
storage operator or the storage operator's heirs, successors, or
assigns.
(c) Absent a final judgment of wilful abandonment rendered
by a court or a regulatory determination of closure or abandonment,
anthropogenic carbon dioxide stored in a geologic storage facility
is not considered to be the property of the owner of the surface or
mineral estate in the land in which the anthropogenic carbon
dioxide is stored or of a person claiming under the owner of the
surface or mineral estate.
(d) The owner, as designated by Subsection (b) or (c), of
the anthropogenic carbon dioxide stored in a geologic storage
facility, or the owner's heirs, successors, or assigns, may
produce, take, extract, or otherwise possess anthropogenic carbon
dioxide stored in the facility.
Sec. 120.003. ANTHROPOGENIC CARBON DIOXIDE STORAGE TRUST
FUND. (a) The anthropogenic carbon dioxide storage trust fund is
created as a special fund in the state treasury.
(b) The anthropogenic carbon dioxide storage trust fund is
an interest-bearing fund. Interest earned on money in the fund
shall be deposited to the credit of the fund.
(c) Fees collected by the commission under Subchapter C-1,
Chapter 27, Water Code, and penalties imposed for violations of
that subchapter or rules adopted under that subchapter shall be
deposited to the credit of the anthropogenic carbon dioxide storage
trust fund.
(d) The anthropogenic carbon dioxide storage trust fund may
be used by the commission only for:
(1) inspecting, monitoring, investigating, recording,
and reporting on geologic storage facilities and associated
anthropogenic carbon dioxide injection wells;
(2) long-term monitoring of geologic storage
facilities and associated anthropogenic carbon dioxide injection
wells;
(3) remediation of mechanical problems associated
with geologic storage facilities and associated anthropogenic
carbon dioxide injection wells;
(4) repairing mechanical leaks at geologic storage
facilities;
(5) plugging abandoned anthropogenic carbon dioxide
injection wells used for geologic storage;
(6) training and technology transfer related to
anthropogenic carbon dioxide injection and geologic storage; and
(7) compliance and enforcement activities related to
geologic storage and associated anthropogenic carbon dioxide
injection wells.
Sec. 120.004. EXTRACTION OF STORED ANTHROPOGENIC CARBON
DIOXIDE. (a) The commission shall adopt rules allowing
anthropogenic carbon dioxide stored in a geologic storage facility
to be extracted for a commercial or industrial use.
(b) The commission has jurisdiction over the extraction of
anthropogenic carbon dioxide stored in a geologic storage facility.
SECTION 8. Section 27.038, Water Code, is repealed.
SECTION 9. (a) In this section:
(1) "Anthropogenic carbon dioxide," "geologic
storage," and "geologic storage facility" have the meanings
assigned by Section 27.002, Water Code, as amended by this Act.
(2) "State-owned land" includes state-owned submerged
land.
(b) Not later than December 1, 2010, the commissioner of the
General Land Office shall prepare and file with the legislature a
preliminary report on a recommended framework for managing
activities related to geologic storage on state-owned land. The
report shall include:
(1) recommended criteria for identifying candidate
geologic storage sites in each of the following types of onshore and
offshore geological settings:
(A) operating oil and gas fields;
(B) depleted oil and gas fields;
(C) unmineable coal seams;
(D) saline formations;
(E) geological systems that may be used as
engineered reservoirs to extract economical quantities of heat from
geothermal resources of low permeability or porosity;
(F) geological systems containing igneous
formations; and
(G) coalbeds being used for methane recovery;
(2) a proposed regulatory framework for leasing
state-owned land for geologic storage, including an assessment of
options to ensure that the state receives fair market value for
using state-owned property for geologic storage;
(3) a proposed procedure for:
(A) providing an opportunity for public review
of, and the presentation of comments by interested persons
regarding, any activities related to geologic storage on
state-owned land; and
(B) ensuring that the quality of the natural and
cultural resources of state-owned land overlying the site of a
geologic storage facility are protected from any geologic storage
activities at the site;
(4) a description of the status of leasehold or
mineral estate liability issues related to the geological
subsurface trespass of, or caused by, anthropogenic carbon dioxide
stored in state-owned land, including any relevant experience from
enhanced oil recovery using carbon dioxide on state-owned land;
(5) recommendations for additional legislation that
may be required to ensure that public land management and leasing
laws are adequate to accommodate geologic storage;
(6) an identification of the legal and regulatory
issues specific to geologic storage in cases in which title to the
mineral estate is held by the state but title to the surface estate
is not held by the state; and
(7) recommendations for additional legislation that
may be required to clarify the appropriate framework for issuing
rights-of-way for anthropogenic carbon dioxide pipelines on
state-owned land.
(c) In preparing the preliminary report under Subsection
(b) of this section, the commissioner of the General Land Office
shall coordinate with:
(1) the Bureau of Economic Geology of The University
of Texas at Austin;
(2) the Railroad Commission of Texas;
(3) the Texas Commission on Environmental Quality; and
(4) the heads of other appropriate agencies.
(d) This section expires December 31, 2010.
SECTION 10. (a) In this section, "anthropogenic carbon
dioxide," "geologic storage," and "geologic storage facility" have
the meanings assigned by Section 27.002, Water Code, as amended by
this Act.
(b) Not later than December 1, 2010, the Texas Commission on
Environmental Quality and the Railroad Commission of Texas, in
consultation with the Bureau of Economic Geology of The University
of Texas at Austin, shall prepare and file with the legislature a
joint preliminary report that:
(1) analyzes the requirements for the injection and
geologic storage of anthropogenic carbon dioxide into saline
formations that are not productive of oil, gas, or geothermal
resources;
(2) recommends a permitting process for anthropogenic
carbon dioxide injection wells and geologic storage facilities that
are used for the injection and storage of anthropogenic carbon
dioxide in saline formations not productive of oil, gas, or
geothermal resources;
(3) recommends the agency or agencies that should have
jurisdiction over permitting described by Subdivision (2) of this
subsection or any other permitting of geologic storage facilities
not subject to Subchapter C-1, Chapter 27, Water Code; and
(4) assesses the status of compliance with any federal
rules regulating the geologic storage and associated injection of
anthropogenic carbon dioxide.
(c) The preliminary report shall include:
(1) recommended criteria for identifying candidate
geologic storage sites in each of the following types of geological
settings:
(A) operating oil and gas fields;
(B) depleted oil and gas fields;
(C) unmineable coal seams;
(D) saline formations;
(E) geological systems that may be used as
engineered reservoirs to extract economical quantities of heat from
geothermal resources of low permeability or porosity;
(F) geological systems containing igneous
formations; and
(G) coalbeds being used for methane recovery;
(2) a proposed procedure for:
(A) providing an opportunity for public review
of, and the presentation of comments by interested persons
regarding, any activities related to geologic storage; and
(B) ensuring that the quality of the natural and
cultural resources of land overlying the site of a geologic storage
facility are protected from any geologic storage activities at the
site;
(3) a description of the status of leasehold or
mineral estate liability issues related to the geological
subsurface trespass of, or caused by, anthropogenic carbon dioxide
stored in private or state-owned land, including any relevant
experience from enhanced recovery operations using carbon dioxide;
(4) an analysis of and recommendations to address:
(A) the attributes of the subsurface area of
operations for geologic storage facilities; and
(B) the methods of financial assurance and the
allocation of long-term liability for the post-operational phases
of geologic storage projects;
(5) the status of any applications for permits that
have been received before the report is prepared;
(6) an update on the exchange of information between
the Texas Commission on Environmental Quality and the Railroad
Commission of Texas as required by the memorandum of understanding
described by Section 27.049, Water Code, as added by this Act, and
as required by Section 27.046, Water Code, as added by this Act;
(7) the status of any request for primary enforcement
authority for the underground injection and geologic storage of
anthropogenic carbon dioxide under the underground injection
control program; and
(8) any recommendations for additional legislation,
modifications to the memorandum of understanding, or new rules for
regulating geologic storage facilities and associated
anthropogenic carbon dioxide injection wells.
(d) This section expires December 31, 2010.
SECTION 11. (a) The Texas Commission on Environmental
Quality shall adopt rules under Section 27.046, Water Code, as
added by this Act, as soon as practicable after the effective date
of this Act.
(b) Not later than March 1, 2010, the Railroad Commission of
Texas shall adopt rules under Section 27.047, Water Code, as added
by this Act, for the geologic storage and associated injection of
carbon dioxide in connection with enhanced recovery operations,
excluding enhanced recovery operations for which:
(1) there is a reasonable expectation of more than
insignificant future production volumes or rates as a result of the
injection of anthropogenic carbon dioxide; and
(2) operating pressures are not higher than reasonably
necessary to produce the production volumes or rates described by
Subdivision (1) of this subsection.
(c) Not later than September 1, 2010, the Railroad
Commission of Texas shall adopt rules under Section 27.047, Water
Code, as added by this Act, for the geologic storage of carbon
dioxide in, and the injection of carbon dioxide into, a reservoir
that is initially or may be productive of oil, gas, or geothermal
resources.
(d) The Texas Commission on Environmental Quality and the
Railroad Commission of Texas shall adopt rules under Section
27.049, Water Code, as added by this Act, as soon as practicable
after the effective date of this Act.
(e) The Railroad Commission of Texas shall adopt rules under
Sections 91.801 and 120.004, Natural Resources Code, as added by
this Act, as soon as practicable after the effective date of this
Act.
SECTION 12. This Act takes effect September 1, 2009.