August 19, 2009, Introduced by Rep. Haveman and referred to the Committee on Energy and Technology.
A bill to amend 1994 PA 451, entitled
"Natural resources and environmental protection act,"
(MCL 324.101 to 324.90106) by adding part 67.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
PART 67
CARBON DIOXIDE STORAGE
Sec. 6701. As used in this part:
(a) "Administrative fund" means the carbon dioxide
administrative fund created in section 6705.
(b) "Carbon dioxide" means anthropogenically generated carbon
dioxide and other chemical constituents of sufficient purity and
quality when injected into a reservoir so as not to compromise the
safety, efficiency, and integrity of the reservoir.
(c) "Clean energy project" means a steam-powered electric
generation facility that produces between 30 and 100 megawatts of
electric power through the use of fossil fuels and is designed and
operated to capture, sequester, and store at least 90% of gross
carbon dioxide emissions in a storage facility.
(d) "Credit" or "credits" means the economic value attributed
by federal law or regulation to each 2,000 pounds of carbon dioxide
that is permanently stored in a storage facility.
(e) "Department" means the department of environmental
quality.
(f) "Geologic storage" means permanent underground storage of
carbon dioxide in a reservoir.
(g) "Notice of completion" means a notification by the
department that a storage operator has permanently ceased injecting
carbon dioxide into a storage facility and has taken the actions
determined necessary by the department to terminate active
operation of the storage facility.
(h) "Oil or gas" means oil, natural gas, or gas condensate.
(i) "Permit" means a permit to drill and operate a well for
the injection and storage of carbon dioxide, as provided for in
this part.
(j) "Reservoir" means any of the following that are suitable
for or capable of being made suitable for the injection and storage
of carbon dioxide:
(i) A subsurface sedimentary stratum, formation, structure,
aquifer, cavity, or void, whether natural or artificially created.
(ii) A saline formation.
(iii) A coal seam.
(k) "Storage facility" means a reservoir, underground
equipment, surface buildings, facilities, and equipment utilized in
the storage of carbon dioxide, excluding pipelines used to
transport the carbon dioxide from 1 or more capture facilities to
the injection and storage site. A storage facility includes any
necessary and reasonable buffer and subsurface monitoring zones
designated by the department for the purpose of protecting against
pollution or invasion, and the escape, release, or migration of
carbon dioxide stored in the storage facility.
(l) "Storage operator" means a person that operates a storage
facility pursuant to a permit issued by the department to drill and
operate an injection well and storage facility.
(m) "Trust fund" means the carbon dioxide storage facility
trust fund created in section 6704.
Sec. 6702. (1) A person shall not inject into and use a
reservoir for the geologic disposal or storage of carbon dioxide
unless the person is issued a permit under this part. Upon
application, the department may issue a permit to drill and operate
a well for the injection and storage of carbon dioxide in a storage
facility. The issuance of a permit shall be in accordance with this
part and part 615 and rules implementing this part and part 615. A
permit shall be issued if the department finds all of the
following:
(a) The horizontal and vertical boundaries of the storage
facility are appropriate for the storage facility.
(b) The storage facility is suitable for the injection and
storage of carbon dioxide.
(c) The use of the storage facility will not contaminate other
formations containing fresh water, oil, gas, coal, or other
commercially valuable mineral deposits.
(d) The proposed storage of carbon dioxide in a storage
facility is in the public interest and will not endanger human
health or the environment.
(e) The applicant, as the proposed storage operator, has made
a good-faith effort to obtain the consent of a majority of the
owners of the land or of rights or interests in the land composing
the storage facility and that the applicant intends to acquire any
remaining interests necessary for the purpose of drilling the
injection well and operating the storage facility.
(2) The department may require a storage operator to provide
adequate surety, security, or cash performance bonds as a condition
of the issuance of a permit.
Sec. 6703. (1) A local unit of government may take private
property situated within or outside of its corporate limits under
1911 PA 149, MCL 213.21 to 213.25, for use as a storage facility,
to be owned or operated, in whole or in part, by the local unit of
government, another local unit of government, or the state.
(2) Rights or interests in a storage facility held by a party
who has obtained a permit from the department under this part are
not subject to condemnation otherwise authorized by this section.
(3) The exercise of the right of condemnation authorized by
this section does not preclude the right of the owner of the land
or of rights or interests in the land to drill through the storage
facility reservoir, if the drilling complies with this act and the
rules promulgated under this act. The right of condemnation
authorized by this section does not prejudice, impair, or diminish
the rights of the owner of the land or of rights or interests in
the land to the enjoyment of all other uses not acquired for the
storage facility.
Sec. 6704. (1) The carbon dioxide storage facility trust fund
is created within the state treasury.
(2) The state treasurer may receive money or other assets from
any source for deposit into the trust fund. The state treasurer
shall direct the investment of the trust fund. The state treasurer
shall credit to the trust fund interest and earnings from trust
fund investments.
(3) Money in the trust fund at the close of the fiscal year
shall remain in the trust fund and shall not lapse to the general
fund.
(4) The department shall be the administrator of the trust
fund for auditing purposes.
(5) Money in the trust fund shall be used by the department,
upon appropriation, for 1 or more of the following:
(a) Long-term monitoring of storage facilities, including
surface facilities, equipment, and wells.
(b) Remediation of mechanical problems associated with wells
and surface infrastructure at storage facilities.
(c) Repairing mechanical leaks at storage facilities.
(d) Plugging and abandoning wells under the jurisdiction of
the department for use as observation wells.
(e) Paying claims associated with storage facilities.
(6) There is levied on each storage operator a 1-time fee of
$1.00 for each ton of carbon dioxide injected into a storage
facility. The department shall collect fees levied under this
section and shall forward those fees to the state treasurer for
deposit in the trust fund.
Sec. 6705. (1) The carbon dioxide administrative fund is
created within the state treasury.
(2) The state treasurer may receive money or other assets from
any source for deposit into the administrative fund. The state
treasurer shall direct the investment of the administrative fund.
The state treasurer shall credit to the administrative fund
interest and earnings from administrative fund investments.
(3) Money in the administrative fund at the close of the
fiscal year shall remain in the administrative fund and shall not
lapse to the general fund.
(4) The department shall be the administrator of the
administrative fund for auditing purposes.
(5) Money in the administrative fund shall be used by the
department to administer and enforce this part during the
operational phase of a storage facility, including inspecting,
testing, and monitoring the storage facility.
(6) During the period prior to issuance of a notice of
completion, there is levied on each storage operator an annual
charge in an amount equal to 15 cents per ton of carbon dioxide
stored in a storage facility. The department shall collect fees
levied under this section and forward them to the state treasurer
for deposit into the administrative fund.
Sec. 6706. (1) A storage operator may submit a request to the
department for a notice of completion. The department shall issue a
notice of completion if it determines that a reservoir is
reasonably expected to retain its mechanical integrity and contain
the carbon dioxide stored in it.
(2) Ten years after a notice of completion is issued, all of
the following shall occur:
(a) Ownership of the storage facility, including the stored
carbon dioxide, transfers by operation of law to this state.
(b) The storage operator, all generators of any injected and
stored carbon dioxide, and the owners of the land or of rights or
interests in the land composing the storage facility are released
by operation of law from civil, administrative, or criminal
liability associated with the storage facility.
(c) Any performance bonds posted by the storage operator shall
be released, and the continued monitoring of the storage facility,
including remediation of any well leakage, become the
responsibility of the department.
(3) Notwithstanding subsection (2), for all clean energy
projects initially funded, in whole or in part, by this state or
the federal government in an amount exceeding $80,000,000.00, for
the purpose of conducting research and development and the
demonstration of permanent carbon dioxide sequestration and
storage, all of the following shall apply:
(a) After carbon dioxide has been injected into the well and
has passed into the reservoir for storage, all right, title, and
interest in and to, and any liabilities associated with, the carbon
dioxide injected and stored in the storage facility transfer by
operation of law to this state, at which time the storage operator,
all generators of any injected carbon dioxide, and the owners of
the lands or rights or interests in the lands composing the storage
facility shall be immune from any civil, administrative, and
criminal liability arising out of, in connection with, or resulting
from the storage, escape, release, or migration of the carbon
dioxide injected by the storage operator. This subsection is in
addition to and not in lieu of any immunity from or limitation of
liability otherwise provided by statute or common law. The immunity
from liability provided by this subsection does not extend to
claims arising from activities occurring before carbon dioxide has
been injected into a well and has passed into a reservoir.
(b) If state or federal law creates or confirms the existence
of a commercial market relating to credits or other economic value
attributable to carbon dioxide that has been permanently stored, a
storage operator that is operating under this subsection is
responsible for the preparation, filing, and registration of all
applications and related documentation and fund transactions in
connection with carbon dioxide permanently stored in a storage
facility operated under this subsection. Upon receipt of any funds,
payments, credits, or other items of economic value attributable to
such permanently stored carbon dioxide, the storage operator shall
transfer to this state a payment in an amount equal to the market
value of the credit or other items of economic value issued less an
amount sufficient to cover the storage operator's capital and
operating costs for the same period for which the credit or other
items of economic value are issued which were incurred by reason of
the storage. These funds shall be deposited by this state into the
trust fund. If state or federal law creates or provides for any
bonus credit or credits for early adoption of a carbon dioxide
storage program, the value of the bonus credit or credits shall be
the property of the storage operator.
(c) A storage operator that is operating under this subsection
may irrevocably elect to disclaim the applicability of this
subsection and to be subject to subsection (1), effective as of the
date designated by the storage operator in a written statement
filed with the department.
(d) Notwithstanding any law to the contrary, including 1964 PA
170, MCL 691.1401 to 691.1419, after the transfer of title to
carbon dioxide to the state, this state has sole civil,
administrative, and criminal liability, in connection with, arising
out of, or resulting from the storage, escape, release, or
migration of the carbon dioxide.
(e) Notwithstanding any law to the contrary, this state shall
indemnify, hold harmless, defend, and release the storage operator
from and against any liability, whether civil, administrative, or
criminal, asserted against the storage operator in connection with
carbon dioxide stored in a storage facility, including payment to
the storage operator of reasonable attorney fees and all other
costs of litigation incurred by it. However, the obligation of this
state to indemnify the storage operator shall not extend to any
liability arising out of or relating to any of the following:
(i) The intentional or willful misconduct of the storage
operator in its operation of the storage facility.
(ii) The failure of the storage operator to comply with state
or federal law.
(iii) The preinjection operation of the storage facility.
(f) The operation of a storage facility or the injection or
storage of carbon dioxide in a storage facility by the storage
operator does not constitute a public or private nuisance or a
trespass. A court of this state does not have jurisdiction to
enjoin or restrain the operation of a storage facility or the
injection or storage of carbon dioxide in a storage facility under
any other law. Rules of any state department or agency, to the
extent that they conflict with this part, do not apply to the
operation of a storage facility or the injection or storage of
carbon dioxide in a storage facility.
Sec. 6707. The department shall have continuing jurisdiction
and authority over all persons and property necessary to administer
and enforce this part. The department's jurisdiction shall include
all periods after the cessation of operations by the storage
operator.
Sec. 6708. The department and local units of government may
enter into agreements with each other and with the federal
government or other states for the purpose of regulating carbon
dioxide storage projects or owning or operating storage facilities.
Sec. 6709. This part preempts any conflicting resolution,
ordinance, charter, zoning, land use, or other provision adopted by
a local unit of government.
Sec. 6710. The department may promulgate rules pursuant to the
administrative procedures act, 1969 PA 306, MCL 24.201 to 24.328,
to implement this part.