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Kentucky General Assembly· HB 677became law without Governor's Signature (Acts Ch. 152)

An act relating to energy production and byproduct management., the official text

Shown verbatim: the complete text as captured from the official PDF posted by the Kentucky General Assembly, fetched 2026-09-25. Page and line markers are part of the official record; nothing is edited or removed. This is the current version. The official bill page.
UNOFFICIAL COPY                                                 26 RS HB 677/EN

1   AN ACT relating to energy production and byproduct management.

2 Be it enacted by the General Assembly of the Commonwealth of Kentucky:

3   SECTION 1. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO

4 READ AS FOLLOWS:

5 The purposes of Sections 1 to 24 of this Act are to:

6 (1) Establish a legal and regulatory framework for the development and approval of

7   underground carbon dioxide sequestration facilities;

8 (2) Designate a government agency responsible for establishing standards and

9   promulgating administrative regulations for the development and approval of

10  underground carbon dioxide sequestration and sequestration facilities;

11 (3) Safeguard and protect the correlative rights of operators, mineral owners, pore

12  space owners, and surface owners and provide for just and reasonable

13  compensation for their respective interests in underground carbon dioxide

14  sequestration facilities; and

15 (4) Ensure that long-term geologic sequestration of carbon dioxide in the

16  Commonwealth is accomplished without unreasonable disturbance of surface,

17  mineral, or water resources or endangering public safety.

18  SECTION 2. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO

19 READ AS FOLLOWS:

20 As used in Sections 1 to 24 of this Act:

21 (1) "Administratively complete," with respect to an application means an application

22  for permit approval that the cabinet determines contains:

23  (a) Information addressing each application requirement of the regulatory

24  program; and

25  (b) All information necessary to initiate technical processing and public review;

26 (2) "Cabinet" means the Energy and Environment Cabinet;

27 (3) "Carbon dioxide" means anthropogenic carbon dioxide of sufficient purity and

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1   quality as to not compromise:

2   (a) The safety of geologic sequestration; and

3   (b) Those properties of the sequestration reservoir which allow the reservoir to

4   effectively enclose and contain a stored gas;

5 (4) "Carbon dioxide sequestration" means the injection of carbon dioxide and

6   associated constituents into subsurface geologic reservoirs intended to provide for

7   the long-term containment of a gaseous, liquid, or supercritical carbon dioxide

8   stream in subsurface geologic formations and thereby prevent its release into the

9   atmosphere;

10 (5) "Class II well" has the same meaning as in KRS 353.510;

11 (6) "Class VI injection well" or "Class VI well" means the classification by the US

12  EPA of wells for injection of substances or materials into subsurface rock

13  formations and, specifically, to the class of wells that are used to inject carbon

14  dioxide into subsurface rock formations;

15 (7) "Class VI underground injection control permit" or "Class VI permit" means a

16  permit for a specified site authorizing a person or business entity to construct and

17  operate a carbon dioxide sequestration facility issued by the:

18  (a) US EPA prior to granting the cabinet primary enforcement authority; or

19  (b) Cabinet after primary enforcement authority is granted by the US EPA;

20 (8) "Completion certificate" means a Certificate of Underground Carbon Dioxide

21  Sequestration Project Completion;

22 (9) "Control person" has the same meaning as in KRS 353.510;

23 (10) "Drilling permit" means a permit issued by the cabinet to drill a well or convert

24  an existing well for the purposes of constructing a Class VI underground

25  injection control facility;

26 (11) "Gas well" has the same meaning as in KRS 353.010;

27 (12) "Monitoring well" means a well authorized under a Class VI underground

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    UNOFFICIAL COPY                                             26 RS HB 677/EN

1   injection control permit that is designed and completed in a specified subsurface

2   interval to monitor pressure, fluid chemistry, or other parameters to confirm

3   containment of injected carbon dioxide within the sequestration reservoir and

4   confining system and to demonstrate non-endangerment of underground sources

5   of drinking water;

6 (13) "Oil well" has the same meaning as in KRS 353.010;

7 (14) "Person" has the same meaning as in KRS 353.510;

8 (15) "Pore space" means a cavity or void, whether naturally or artificially created, in

9   subsurface stratum beneath individual properties within a reservoir into which

10  injection of carbon dioxide is proposed;

11 (16) "Reservoir" means a subsurface stratum, formation, cavity, or void, whether

12  naturally or artificially created, including oil and gas reservoirs, saline

13  formation, and coal seams suitable for, or capable of being made suitable for, the

14  injection and storage of carbon dioxide;

15 (17) "Secretary" means the secretary of the Energy and Environment Cabinet;

16 (18) "Sequestration facility" means the reservoir, well, underground equipment, and

17  surface facilities and equipment used or proposed to be used in a carbon dioxide

18  sequestration project, but does not include pipelines used to transport carbon

19  dioxide to the sequestration facility;

20 (19) "Sequestration operator" means a person applying for or holding a Class VI

21  permit until the issuance of a completion certificate for the relevant sequestration

22  facility;

23 (20) "Sequestration reservoir" means a reservoir proposed, authorized, and used for

24  storing carbon dioxide;

25 (21) "Surface waters":

26  (a) Means:

27  1. Those waters having well-defined banks and beds, either constantly or

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    UNOFFICIAL COPY                                             26 RS HB 677/EN

1          intermittently flowing;

2   2. Lakes and impounded waters;

3   3. Marshes and wetlands; and

4   4. Any subterranean waters flowing in well-defined channels and having

5          a demonstrable hydrologic connection with the surface; and

6   (b) Does not include lagoons used for waste treatment and effluent ditches that

7   are situated on property owned, leased, or under valid easement by a

8   permitted discharger;

9 (22) "Third party" means a party who is independent of the corporate structure of a

10  sequestration operator;

11 (23) "Underground source of drinking water" or "USDW" has the same meaning as

12  in 40 C.F.R. sec. 144.3;

13 (24) "Unknown or missing owner" means a person vested with a present ownership

14  interest in the pore space whose present identity or location cannot be determined

15  from:

16  (a) A reasonable review of county clerk records for the county or counties in

17  which the property is located, and includes unknown heirs, successors, and

18  assigns known to be alive;

19  (b) A reasonable inquiry in the county of the owner's last known place of

20  residence;

21  (c) A diligent inquiry into known interest owners in the same tract; and

22  (d) A reasonable review of available internet resources commonly utilized by

23  the industry; and

24 (25) "US EPA" means the United States Environmental Protection Agency.

25  SECTION 3. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO

26 READ AS FOLLOWS:

27 (1) A person shall not construct or operate a carbon dioxide sequestration facility

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    UNOFFICIAL COPY                                                          26 RS HB 677/EN

1   without first securing a:

2   (a) Class VI underground injection control permit from the US EPA or the

3   cabinet; and

4   (b) Drilling permit issued by the cabinet.

5 (2) The injection of carbon dioxide for purposes of enhancing the recovery of oil or

6   natural gas pursuant to a permit approved by the cabinet under KRS 353.592

7   shall not be subject to the provisions of Sections 1 to 24 of this Act.

8 (3) If an oil, natural gas, or coalbed methane well operator proposes to convert its

9   operations to carbon dioxide sequestration, then the underground carbon dioxide

10  sequestration facility shall be regulated pursuant to Sections 1 to 24 of this Act.

11  SECTION 4. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO

12 READ AS FOLLOWS:

13 (1) Every Class VI underground injection control permit application filed under this

14  section shall:

15  (a) Be on a form prescribed by the cabinet;

16  (b) Be certified by the applicant; and

17  (c) Contain all information specified by administrative regulations promulgated

18  by the cabinet in accordance with KRS Chapter 13A.

19 (2) (a) Upon filing an application for a Class VI permit, an applicant shall:

20  1. Pay a fee in an amount set by the cabinet; and

21  2. Submit proof of public notice of the application pursuant to Section 5

22  of this Act.

23  (b) The fee shall be deposited into the carbon dioxide sequestration facility

24  administrative fund established in Section 14 of this Act.

25 (3) In addition to obtaining a Class VI underground injection control permit, the

26  applicant shall secure drilling permits from the cabinet for each well described in

27  the approved Class VI permit.

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    UNOFFICIAL COPY                                                      26 RS HB 677/EN

1 (4) If, prior to approval of an application, the cabinet determines that the proposed

2   sequestration facility contains commercially valuable minerals, the cabinet shall

3   ensure that the interests of the mineral owners or mineral lessees:

4   (a) Will not be adversely affected; or

5   (b) Have been addressed in a written agreement entered into by the mineral

6   owners, mineral lessees, and the sequestration operator pursuant to Section

7   10 of this Act.

8 (5) To be considered an administratively complete application, a Class VI permit

9   application shall include documentation that:

10  (a) The sequestration operator has the written consent of those persons having

11  ownership interests in at least seventy-five percent (75%) of the proposed

12  sequestration reservoir's pore space acreage; and

13  (b) A pooling order has been requested pursuant to Section 20 of this Act for up

14  to twenty-five percent (25%) of the proposed sequestration reservoir's pore

15  space acreage for nonconsenting, unknown, and missing pore space

16  owners.

17 (6) The cabinet shall not begin technical review of an administratively complete

18  application until the sequestration operator has:

19  (a) Demonstrated that it possesses through the requisite consent and the

20  petition for a pooling order in accordance with Section 20 of this Act, the

21  legal right to utilize one hundred percent (100%) of the pore space acreage

22  of the proposed sequestration reservoir; and

23  (b) Provided documentation demonstrating the legal right to enter onto and

24  conduct all surface activities and operations associated with the proposed

25  sequestration facility.

26 (7) If the cabinet determines that a bona fide dispute exists regarding the applicant's

27  legal right, consistent with subsections (5) and (6) of this section, to utilize any of

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    UNOFFICIAL COPY                                                   26 RS HB 677/EN

1   the pore space acreage of the proposed sequestration reservoir, the cabinet shall:

2   (a) Suspend technical permit review pending resolution of the property dispute

3          by a court of competent jurisdiction or resolution by the parties; or

4   (b) Require the applicant to revise the permit application to exclude the

5          contested pore space acreage.

6 (8) A Class VI permit shall not be issued under this section unless the cabinet finds

7   that:

8   (a) The application and proposed operations comply with all requirements

9          established by the cabinet, including any applicable Class VI underground

10         injection control administrative regulations, and all applicable provisions of

11         state and federal law;

12  (b) The sequestration facility is suitable and feasible for carbon dioxide

13         injection and sequestration;

14  (c) The sequestration operator has made a good-faith effort to obtain the

15         written consent of all persons who own the sequestration reservoir's pore

16         space;

17  (d) The applicant has demonstrated the legal right to utilize one hundred

18         percent (100%) of the sequestration reservoir's pore space acreage;

19  (e) The application contains documentation sufficient to demonstrate the legal

20         right to enter onto and conduct all surface activities and operations

21         associated with the proposed sequestration facility;

22  (f) The proposed sequestration facility will not endanger surface waters or any

23         USDW;

24  (g) The creation, operation, and maintenance of the sequestration facility will

25         not appreciably endanger human health or the environment;

26  (h) Adequate horizontal and vertical boundaries of the sequestration reservoir

27         are defined, including buffer areas, to ensure that the sequestration facility

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    UNOFFICIAL COPY                                             26 RS HB 677/EN

1   is operated safely and prudently;

2   (i) The sequestration operator will establish monitoring facilities and protocols

3   to assess the location and migration of carbon dioxide injected for

4   sequestration and to ensure compliance with all Class VI permit, statutory,

5   and administrative regulation requirements;

6   (j) All nonconsenting pore space owners are or will be justly and reasonably

7   compensated in accordance with the administrative regulations and

8   procedures set forth in and promulgated under this section by the cabinet;

9   and

10  (k) The sequestration operator demonstrates financial responsibility as

11  determined by the cabinet pursuant to subsections (10) and (11) of this

12  section and applicable administrative regulations.

13 (9) The cabinet shall render a decision on a permit application in accordance with

14  Section 6 of this Act.

15 (10) (a) A permit shall not be issued under this section unless the sequestration

16  operator posts qualifying financial responsibility sufficient to cover the cost

17  of:

18  1. Corrective action;

19  2. Well plugging of Class VI injection wells and monitoring wells;

20  3. Post-injection site care and facility closure;

21  4. Emergency and remedial response; and

22  5. Addressing endangerment of underground sources of drinking water.

23  (b) The financial responsibility instruments shall contain protective conditions

24  for coverage for cancellation, renewal, and continuation provisions. The

25  sequestration operator shall have detailed written estimates, in current

26  dollars, of the cost of performing the activities contained in paragraph (a)1.

27  to 5. of this subsection. The cost estimates shall be separate for each phase

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    UNOFFICIAL COPY                                             26 RS HB 677/EN

1   and shall be based on the costs of the cabinet to hire third parties to perform

2   the required activity.

3   (c) For the duration of the permit, the sequestration operator shall annually

4   adjust the cost estimates of each activity and provide the information to the

5   cabinet. Any decrease or increase in the initial cost estimate shall be subject

6   to the cabinet's approval. If at any time the current cost estimate:

7   1. Increases to an amount greater than the face amount of the financial

8   responsibility instruments currently in use, the sequestration operator

9   shall submit to the cabinet within sixty (60) days, written evidence of

10  an increase of the face amount of the existing financial responsibility

11  instruments or substitute another instrument in the increased amount;

12  or

13  2. Decreases to an amount lesser than the face amount of the financial

14  responsibility instruments, those instruments may be reduced to the

15  amount of the current estimate upon receipt of written approval from

16  the cabinet.

17  (d) The cabinet shall perform an annual evaluation of the qualifying financial

18  responsibility to determine if the amount of financial responsibility provided

19  by the sequestration operator is sufficient to secure the operator's

20  obligations under state and federal law. A cabinet determination under this

21  subsection is considered final. If the cabinet determines the amount of

22  financial responsibility is insufficient, the sequestration operator shall:

23  1. Provide an adjustment of the cost estimate to the cabinet within sixty

24  (60) days of notification by the cabinet; and

25  2. Adjust the financial responsibility instruments in accordance with

26  paragraph (c) of this subsection.

27  (e) The initial deposit, use, and length of pay-in periods for trust funds or

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    UNOFFICIAL COPY                                              26 RS HB 677/EN

1   escrow accounts are subject to the cabinet's approval. The sequestration

2   operator may make periodic deposits into a trust fund or escrow account

3   throughout the operational period to ensure sufficient funds are available to

4   carry out the required activities on the date on which they may occur. The

5   cabinet shall consider project-specific risk assessments, projected timing of

6   activities, and interest accumulation in determining whether sufficient

7   funds are available to conduct the required activities.

8 (11) (a) In demonstrating and maintaining financial responsibility as determined by

9   the cabinet, the sequestration operator shall provide financial responsibility

10  from the following list of qualifying instruments:

11  1. Trust funds;

12  2. Surety or cash bonds;

13  3. Letters of credit;

14  4. Insurance;

15  5. Self-insurance; or

16  6. Any other instrument the cabinet finds satisfactory.

17  (b) The cabinet may promulgate administrative regulations in accordance with

18  KRS Chapter 13A to allow self-insurance as a financial responsibility

19  mechanism for some or all of the costs and obligations of the sequestration

20  operator under terms and conditions as the cabinet deems necessary to

21  ensure completion of all obligations of the Class VI permit. To account for

22  the risks of default and resulting responsibility obligations incurred by the

23  carbon dioxide sequestration facility trust fund established in Section 16 of

24  this Act, the cabinet's terms and conditions may include:

25  1. Corporate guarantees;

26  2. Securing performance by lien or collateral; and

27  3. Adjustments in assessed contributions by the sequestration operator to

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    UNOFFICIAL COPY                                              26 RS HB 677/EN

1   the carbon dioxide sequestration facility trust fund established in

2   Section 16 of this Act.

3   (c) All qualifying financial instruments are subject to the cabinet's approval.

4 (12) (a) The cabinet shall not issue a permit under this section or approve an

5   application to transfer a sequestration facility to a successor operator

6   pursuant to subsection (13) of this section, and an operator shall not be

7   eligible to receive any permits or become a successor operator under this

8   section if:

9   1. The applicant has falsified or otherwise misrepresented any

10  information on or relating to the permit application;

11  2. The applicant has failed to abate or reach an agreement with the

12  cabinet regarding an unappealed violation of Sections 1 to 24 of this

13  Act or the administrative regulations promulgated thereunder;

14  3. A control person of the applicant has a forfeiture of a financial

15  responsibility instrument;

16  4. The applicant is a control person for another operator that has a

17  forfeiture of a financial responsibility instrument;

18  5. A control person for the applicant served as a control person for

19  another operator when an unresolved financial responsibility

20  instrument forfeiture occurred;

21  6. The applicant is or has a control person who controls or is controlled

22  by another operator that has a forfeiture of a bond; or

23  7. The cabinet determines that an activity of the applicant is currently in

24  violation of KRS Chapter 149, 151, 224, 349, 350, 351, 352, or 353 or

25  any administrative regulation promulgated thereunder.

26  (b) The cabinet:

27  1. May restore the eligibility of applicants, operators, and control persons

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    UNOFFICIAL COPY                                              26 RS HB 677/EN

1   who are deemed permit-ineligible pursuant to paragraph (a)1. of this

2   subsection upon resubmission of the application correcting the false

3   or misrepresented information;

4   2. Shall restore the eligibility of applicants, operators, or control persons

5   who are deemed permit-ineligible pursuant to paragraph (a)2. of this

6   subsection upon satisfactory abatement of the violation and payment

7   of any civil penalties;

8   3. Shall restore the eligibility of applicants, operators, or control persons

9   who are deemed permit-ineligible pursuant to paragraph (a)3. to 6. of

10  this subsection upon entry of and satisfactory compliance with an

11  agreed order between the operator and the cabinet that resolves all the

12  operator's outstanding violations, requires payment of any civil

13  penalties, and provides restitution to the cabinet for any costs

14  associated with the forfeiture, plugging, and proper abandonment of a

15  well in excess of the financial responsibility instruments forfeited to

16  the cabinet by the operator; and

17  4. a. Shall provisionally restore the eligibility of applicants who are

18                   deemed permit-ineligible pursuant to paragraph (a)7. of this

19                   subsection upon either submittal of proof that the violation is in

20                   the process of being corrected to the satisfaction of the cabinet or

21                   a demonstration that the applicant has filed and is pursuing a

22                   good-faith administrative or judicial appeal to contest the

23                   violation. If the Circuit Court affirms the violation, then the

24                   applicant shall, within thirty (30) days of the judicial action,

25                   submit proof that the violation is in the process of being

26                   corrected to the satisfaction of the cabinet. Provisional

27                   restoration of permit eligibility related to paragraph (a)7. of this

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    UNOFFICIAL COPY                                              26 RS HB 677/EN

1                    subsection may be withdrawn at any time if the cabinet

2                    determines that the applicant no longer satisfies the

3                    requirements of this section.

4   b. The cabinet shall fully restore the eligibility of applicants who

5                    are deemed permit-ineligible pursuant to paragraph (a)7. of this

6                    subsection upon either submittal of proof that the violation has

7                    been corrected to the satisfaction of the cabinet or that the

8                    violations have been ordered vacated in a final decision of the

9                    secretary or a reviewing court after all appeals have been

10                   exhausted.

11 (13) A permit issued pursuant to this section shall not be transferred by sale,

12  assignment, lease, or otherwise, except upon the written approval by the cabinet

13  of a joint application submitted by both the transferor and the transferee. The

14  joint application for transfer shall be on a form prescribed by the cabinet and

15  accompanied by a fee in an amount set by the cabinet. Fees under this subsection

16  shall be deposited in the carbon dioxide sequestration facility administrative fund

17  established in Section 14 of this Act. The transferee shall file financial

18  responsibility with the application in an amount and form that the cabinet deems

19  satisfactory to cover the costs of the activities listed in subsection (10)(a) of this

20  section. All rights and liabilities under the permit shall pass to the transferee

21  upon written approval of the transfer by the cabinet.

22 (14) The cabinet shall conduct periodic reviews of each permit issued pursuant to this

23  section. The cabinet shall review each permit at least once every five (5) years

24  from the date of the permit issuance and whenever the cabinet has reason to

25  believe, based on available information, that the permit may no longer be in

26  compliance with Sections 1 to 24 of this Act. During permit review, the cabinet

27  shall review all provisions of the existing permit, including the adequacy of the

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    UNOFFICIAL COPY                                                        26 RS HB 677/EN

1   financial responsibility required by this section. The cabinet may, by

2   determination issued to the permit holder, require revision or modification of the

3   permit provisions, including requiring the posting of additional financial

4   responsibility, in order to ensure compliance with this section.

5   SECTION 5. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO

6 READ AS FOLLOWS:

7 (1) Public notice of an application for a Class VI well permit under Sections 1 to 24

8   of this Act shall allow at least thirty (30) days for public comment.

9 (2) The cabinet shall send the public notice to the applicant, who shall be responsible

10  for publication of the notice pursuant to KRS Chapter 424 within thirty (30) days

11  prior to the submission of an application. Upon publication, the applicant shall

12  send the cabinet a copy of the certificate of publication. The cost of publication

13  shall be borne by the applicant.

14 (3) Notice of an application for a Class VI well permit shall be served on each

15  mineral lessee, mineral owner, and pore space owner with a legal interest in the

16  property or properties that involves the sequestration reservoir, and adjoining

17  surface and mineral owners of record.

18 (4) Service of individual notices required by this section shall be through personal

19  service, by registered mail, or by any method of delivery that requires a receipt or

20  signature confirmation.

21 (5) Service of any unknown or missing owners shall be deemed to have occurred,

22  provided that the sequestration operator has complied with this section and

23  Section 20 of this Act.

24 (6) The cabinet may hold a public hearing at its discretion if a hearing may assist in

25  clarifying one (1) or more issues involved in the Class VI well permit decision. If

26  a public hearing is held, notice of the hearing shall be provided in the same

27  manner as set forth in subsection (2) of this section.

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    UNOFFICIAL COPY                                                      26 RS HB 677/EN

1   SECTION 6. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO

2 READ AS FOLLOWS:

3 (1) Within sixty (60) calendar days of receiving an application for a Class VI

4   underground injection control well, the cabinet shall provide written notice to the

5   applicant as to the administrative completeness of the application. If the

6   application is determined to be administratively:

7   (a) Complete, the cabinet shall notify the applicant in writing that the technical

8   review period provided by subsection (2) of this section has begun; or

9   (b) Incomplete, the cabinet shall notify the applicant of the deficiencies that

10  render it administratively incomplete. The applicant shall have thirty (30)

11  calendar days from receiving the cabinet's notice of deficiency to correct the

12  deficiencies and render the application administratively complete.

13 (2) (a) Technical review of an application shall begin when the cabinet has deemed

14  the application administratively complete and ready for review. The cabinet

15  shall issue a final determination to either approve or deny the application

16  within three hundred sixty-five (365) calendar days from the date an

17  administrative completeness determination has been made by the cabinet.

18  (b) If the application is found deficient during technical review, the cabinet

19  shall notify the applicant in writing of the deficiencies identified by the

20  cabinet during the review. The applicant shall respond to the deficiencies

21  with information that addresses the identified deficiencies.

22 (3) An application shall be considered temporarily withdrawn when an applicant is

23  correcting deficiencies noted by the cabinet pursuant to subsection (1)(b) or (2)(b)

24  of this section. Periods of temporary withdrawal shall not be counted against the

25  review period allotted to the cabinet for administrative or technical review. Upon

26  resubmittal the review period allotted to the cabinet shall resume.

27  SECTION 7. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO

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    UNOFFICIAL COPY                                                26 RS HB 677/EN

1 READ AS FOLLOWS:

2 (1) The cabinet shall include in any Class VI underground injection control permit

3   or order all provisions necessary to:

4   (a) Carry out the objectives of Sections 1 to 24 of this Act;

5   (b) Protect and adjust the respective rights and obligations of persons affected

6   by a carbon dioxide sequestration facility; and

7   (c) Protect public health, safety, and the environment.

8 (2) The cabinet shall require that a copy of any Class VI permit issued and a land

9   survey of the permitted sequestration reservoir indicating impacted surface, pore

10  space and mineral owners and mineral lessees be filed with the county clerk in

11  the county or counties where the carbon dioxide sequestration facility is located.

12  Any amendments or modifications to the Class VI permit or land survey shall also

13  be filed.

14  SECTION 8. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO

15 READ AS FOLLOWS:

16 (1) A person shall not drill, deepen, reopen, or convert a well for the purposes of

17  developing a Class VI underground injection control well without first securing

18  drilling permits from the cabinet.

19 (2) To both protect and prevent endangerment of underground sources of drinking

20  water, the cabinet shall promulgate administrative regulations in accordance with

21  KRS Chapter 13A regarding the drilling, casing, and construction of the wells.

22  The cabinet shall prescribe the use of materials that are compatible and can

23  withstand contact with carbon dioxide over the life of the sequestration project,

24  including the project's conversion, maintenance, and abandonment of wells.

25  SECTION 9. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO

26 READ AS FOLLOWS:

27 (1) For the purposes of Sections 1 to 24 of this Act and in all other respects, any

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1   carbon dioxide injected and sequestered in accordance with a Class VI

2   underground injection control permit issued by the cabinet and in compliance

3   with Sections 1 to 24 of this Act and the cabinet's administrative regulations shall

4   not be considered a pollutant, and the operation and existence of such a carbon

5   dioxide sequestration facility shall not be considered a public nuisance.

6 (2) The cabinet's authority under Sections 1 to 24 of this Act shall not otherwise limit

7   the authority or jurisdiction of the cabinet in any manner under any other state

8   or federal law.

9   SECTION 10. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO

10 READ AS FOLLOWS:

11 The provisions of this section shall apply to activities occurring within or proposed to

12 occur within a sequestration reservoir:

13 (1) Nothing contained in Sections 1 to 24 of this Act prohibits the mineral owner or

14  lessee or the pore space owner or lessee from exploring, developing, or producing

15  oil, gas, or other minerals above or below a sequestration reservoir or from using

16  other strata or formations for carbon dioxide sequestration. Wells penetrating

17  sequestration reservoirs shall protect their integrity and prevent carbon dioxide

18  release. Wells penetrating oil and gas formations shall protect their integrity and

19  prevent contamination or damage;

20 (2) Before drilling, deepening, reopening, converting, or plugging wells drilled

21  pursuant to KRS Chapters 349 and 353 on any property with a permitted

22  sequestration reservoir, the oil and gas operator shall, at the time of filing with

23  the cabinet, forward a copy of the application to the sequestration operator via

24  registered or certified mail or by personal service;

25 (3) When the cabinet receives a permit application for a well within a sequestration

26  reservoir or buffer zone, the cabinet shall notify both the oil and gas operator and

27  sequestration operator by registered or certified mail or by personal service;

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1 (4) Before drilling, deepening, reopening, converting, or plugging a Class VI

2   injection well or monitoring well on a property where oil, gas, or other minerals

3   are owned by a person other than the sequestration operator, the sequestration

4   operator shall, at the time of filing, forward a copy of the application and plat to

5   the oil, gas, or other mineral owner via registered or certified mail or by personal

6   service;

7 (5) The sequestration operator shall:

8   (a) Notify the oil, gas, or other mineral operator when sequestration rights are

9   acquired on property with:

10  1. An oil or gas lease or oil and gas operations; or

11  2. A coal or noncoal lease, or coal or noncoal operations pursuant to

12            KRS Chapter 350; and

13  (b) Ensure that notice of future applications to drill Class VI injection wells or

14  monitoring wells are sent to the oil, gas, coal, or other mineral lessee and

15  operator, if any;

16 (6) Upon receiving an application to drill, deepen, convert, reopen, complete, or plug

17  an oil or gas well or a Class VI injection or monitoring well, the cabinet shall

18  hold the application for fifteen (15) days to allow non-applicant operators to file

19  objections. If objections are filed, the objecting non-applicant operator shall serve

20  the objections on the applicant operator. The cabinet shall schedule a hearing,

21  pursuant to subsection (6) of Section 5 of this Act, within ten (10) days of

22  receiving the objection. If, during or before the hearing, the parties reach an

23  agreement regarding the objections, changes to the drilling plan in accordance

24  with the agreement shall be submitted by the applicant operator in an amended

25  application. If an agreement is not reached, the cabinet, after considering the

26  objections and the evidence presented at the hearing, shall enter an order and

27  issue a permit to drill with modifications to protect the rights and resources of the

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1   parties involved;

2 (7) If the oil and gas operator and the sequestration operator disagree on the drilling,

3   deepening, reopening, completing, or plugging of an oil or gas well or a Class VI

4   or monitoring well, the cabinet shall:

5   (a) Determine how the costs above those normally incurred in the drilling,

6   completion, or plugging of the well will be allocated to the applicant

7   operator and non-applicant operator; and

8   (b) Specify the payment terms;

9 (8) Upon receipt of notice of an application to drill, deepen, reopen, complete, or

10  plug an oil or gas well or a Class VI or monitoring well, a non-applicant operator

11  may waive his or her objection and specify whether the waiver applies to one (1)

12  or more wells, a group of wells, or specific areas. The waiver shall be made by

13  letter or by telephone with written confirmation. If the waiver is filed and the

14  cabinet determines that the application is otherwise complete and the public

15  interest is served, the permit shall be issued; and

16 (9) (a) Before plugging and abandoning an oil or gas well that penetrates a

17  sequestration reservoir or a Class VI or monitoring well that penetrates an

18  oil or gas formation:

19  1. The operator proposing to plug and abandon the well shall notify the

20  other non-plugging operator and the cabinet of the operator's

21  intention to plug and abandon the well and shall state the date and

22  time when the plugging will occur;

23  2. Notice shall be sufficient to reasonably allow the non-plugging

24  operator to attend and view the plugging of the well. The operator may

25  proceed with plugging the well if, after notice, the non-plugging

26  operator does not attend; and

27  3. The operator shall:

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1   a. Seek and receive the approval of the cabinet; and

2   b. Allow a cabinet representative to be present at the well plugging.

3   (b) Plugging shall not occur except pursuant to the approval of the cabinet and

4   with a cabinet representative present at the plugging.

5   SECTION 11. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO

6 READ AS FOLLOWS:

7 The secretary may enter into cooperative agreements with corresponding officials in

8 other state governments or governmental agencies for the purpose of regulating carbon

9 dioxide sequestration projects that extend beyond state regulatory authority under

10 Sections 1 to 24 of this Act.

11  SECTION 12. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO

12 READ AS FOLLOWS:

13 The sequestration operator shall be the owner of the carbon dioxide injected into and

14 stored in a sequestration reservoir approved under Sections 1 to 24 of this Act and shall

15 maintain ownership and control until the cabinet issues a completion certificate. While

16 the sequestration operator has ownership, the sequestration operator is liable for any

17 damage the carbon dioxide may cause, including damage caused by carbon dioxide

18 that escapes from the sequestration facility.

19  SECTION 13. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO

20 READ AS FOLLOWS:

21 (1) The cabinet may issue a completion certificate upon application by the

22  sequestration operator demonstrating compliance with Sections 1 to 24 of this Act

23  at one (1) of the following times:

24  (a) Fifty (50) years after carbon dioxide injections into a reservoir end; or

25  (b) At any other time frame established on a site-specific basis by administrative

26  regulations promulgated pursuant to KRS Chapter 13A regarding the time

27  frame for a sequestration operator's post-injection site care and site closure

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1   plan.

2 (2) The completion certificate shall only be issued:

3   (a) After public notice and hearing; and

4   (b) If the sequestration operator demonstrates that:

5   1. The operator is in full compliance with all laws and other

6          requirements governing the sequestration facility, including without

7          limitation, the requirements of any Class VI underground injection

8          control permit associated with the facility and other applicable

9          requirements;

10  2. All pending claims regarding the sequestration facility's operation

11         have been addressed and resolved; and

12  3. The carbon dioxide injected into the sequestration reservoir has

13         stabilized, and the reservoir is reasonably expected to retain the stored

14         carbon dioxide.

15 (3) As of the effective date of a completion certificate:

16  (a) Ownership of the stored carbon dioxide shall transfer by operation of law,

17  without payment of any compensation, to the Commonwealth;

18  (b) If any claim for damages or injury is made against the pore space or

19  surface owner arising from stored carbon dioxide, the Commonwealth shall

20  defend the pore space or surface owner against that claim and indemnify

21  and hold the pore space or surface owner harmless from any damages

22  awarded, except that a pore space owner or surface owner may be liable for

23  causing or contributing to migration or release of stored carbon dioxide

24  from the reservoir. The Commonwealth's liability for such claims and its

25  obligation to indemnify a pore space owner or surface owner for any claim

26  shall not obligate payment of any damages in excess of the balance of the

27  carbon dioxide sequestration facility trust fund established in Section 16 of

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1   this Act;

2   (c) The sequestration operator and all persons who transported or generated

3   any stored carbon dioxide shall be released from all regulatory liability and

4   regulatory requirements associated with the sequestration facility, provided

5   that the sequestration operator shall not be released from regulatory

6   liability for fraud or misrepresentation, nor from any liability existing at

7   common law; and

8   (d) The Commonwealth's responsibility for monitoring and managing the

9   sequestration facility following issuance of the completion certificate and

10  assumption of ownership of the sequestered carbon dioxide shall be funded

11  from the carbon dioxide sequestration facility trust fund established in

12  Section 16 of this Act until and unless the federal government assumes

13  responsibility for the long-term monitoring and management of

14  sequestration facilities.

15 (4) The cabinet shall require that a copy of the completion certificate and a survey of

16  the sequestration field be filed with the county clerk in the county or counties

17  where the carbon dioxide sequestration facility is located.

18  SECTION 14. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO

19 READ AS FOLLOWS:

20 (1) There is hereby created in the State Treasury an interest-bearing, restricted,

21  agency account to be known as the carbon dioxide sequestration facility

22  administrative fund. All amounts required to be deposited into the fund shall not

23  be segregated into separate accounts but may be used by the cabinet as provided

24  in this section for any carbon dioxide sequestration project. Notwithstanding KRS

25  45.229, any balance remaining in the fund at the end of any fiscal year shall not

26  lapse but shall be carried forward for the purposes of the fund until expended.

27  Expenditures from the fund shall be made by the cabinet for the purposes of:

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1   (a) Payment of all expenses of the cabinet in processing Class VI permits and

2   certificate applications;

3   (b) Regulating sequestration facilities during their construction, operation, and

4   pre-closure phases; and

5   (c) Certifying the sequestration amount determinations under Section 18 of this

6   Act.

7 (2) The secretary may:

8   (a) Enter into a cooperative agreement with another government agency to

9   carry out regulatory responsibilities over a sequestration facility on behalf

10  of the Commonwealth; and

11  (b) Compensate the government agency for its expenses with money from the

12  fund.

13  SECTION 15. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO

14 READ AS FOLLOWS:

15 (1) Class VI permit applicants shall pay an application fee to the cabinet. The

16  application fee established on the fee schedule developed under Section 24 of this

17  Act shall be calculated to ensure sufficient funds are available for the actual or

18  anticipated cost to the cabinet for the review of the application.

19 (2) Sequestration operators shall pay an annual administrative fee to the cabinet.

20  The administrative fee established on the fee schedule developed under Section

21  24 of this Act shall be calculated to ensure sufficient funds are available for the

22  actual or anticipated cost to the cabinet for the regulation of sequestration

23  facilities.

24 (3) Sequestration operators seeking completion certificates shall pay the cabinet a fee

25  established on the fee schedule developed under Section 24 of this Act. The fee

26  shall be calculated to ensure sufficient funds are available for the actual or

27  anticipated cost to the cabinet for the review of the permit and records relating to

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1   the operation of the sequestration facility to determine eligibility for issuance of

2   the completion certificate.

3 (4) The application and completion certificate fees shall be deposited in the carbon

4   dioxide sequestration facility administrative fund established in Section 14 of this

5   Act.

6   SECTION 16. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO

7 READ AS FOLLOWS:

8 (1) There is hereby created in the State Treasury an interest-bearing, restricted,

9   agency account to be known as the carbon dioxide sequestration facility trust

10  fund. Moneys in the fund shall be used for:

11  (a) The long-term monitoring and management of sequestration facilities prior

12        to closure, plugging, and abandonment of all monitoring wells in the event

13        of operator default;

14  (b) Expenses associated with the long-term monitoring and management after

15        issuance of a completion certificate; and

16  (c) Determining the causes and remediating the effects of any releases or

17        environmental emergencies associated with sequestration facilities.

18 (2) All amounts required to be deposited into the fund shall not be segregated into

19  separate accounts but may be used by the cabinet as provided in this section for

20  any carbon dioxide sequestration project. Notwithstanding KRS 45.229, any

21  balance remaining in the fund at the end of any fiscal year shall not lapse but

22  shall be carried forward to carry out the purposes of the fund until fully

23  expended.

24 (3) The secretary may:

25  (a) Enter into a cooperative agreement with another government agency to

26        carry out regulatory responsibilities over a sequestration facility on behalf

27        of the Commonwealth; and

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1   (b) Compensate the government agency for its expenses with money from the

2   fund.

3   SECTION 17. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO

4 READ AS FOLLOWS:

5 (1) Sequestration operators shall pay the cabinet a fee on each ton of carbon dioxide

6   injected for sequestration. The fee shall be paid at the time of injection and

7   deposited into the carbon dioxide sequestration facility trust fund established in

8   Section 16 of this Act. The fee shall be calculated to ensure sufficient funds are

9   available for the actual or anticipated cost of:

10  (a) Long-term monitoring and management of sequestration facilities; and

11  (b) The effects of any releases or environmental emergencies associated with

12  the sequestration facilities.

13 (2) On or before December 31 of the first year in which the cabinet receives its first

14  application for a Class VI underground injection control permit and each

15  December 31 thereafter, the cabinet shall prepare and make publicly available an

16  annual report on the carbon dioxide sequestration facility trust fund established

17  in Section 16 of this Act that includes, at a minimum, information on receipts,

18  disbursements, and projections for meeting the fund's objectives in Section 16 of

19  this Act. The purpose of the report is to determine the sufficiency of fees

20  authorized in Section 24 of this Act.

21  SECTION 18. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO

22 READ AS FOLLOWS:

23 (1) The cabinet shall, upon request of an operator, certify the amount of injected

24  carbon dioxide demonstrated to have been stored in a reservoir that has been or is

25  being used for a Class II well in an enhanced oil or gas recovery project. Upon

26  request of an operator, the cabinet may also certify the amount of injected carbon

27  dioxide sequestered under Sections 1 to 24 of this Act.

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1 (2) The amounts determined by the cabinet under subsection (1) of this section may

2   be used for such matters as establishing the amounts of carbon credits,

3   allowances, trading, emissions allocations, offsets, and for other similar

4   purposes.

5 (3) A person requesting a certification of a sequestration determination shall pay the

6   cabinet a certification fee as authorized in Section 24 of this Act. The fee shall be

7   calculated to ensure sufficient funds are available for the actual or anticipated

8   cost to the cabinet to provide the certifications described in subsection (1) of this

9   section.

10 (4) Any fees the cabinet receives to provide the certifications described in subsection

11  (1) of this section shall be deposited into the carbon dioxide sequestration facility

12  administrative fund established in Section 14 of this Act.

13  SECTION 19. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO

14 READ AS FOLLOWS:

15 Sections 1 to 24 of this Act shall not be construed as altering the respective legal rights

16 or relationship between the severed mineral estate and a pore space owner as they exist

17 at common law.

18  SECTION 20. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO

19 READ AS FOLLOWS:

20 (1) If a sequestration operator is unable, after reasonable effort, to obtain the

21  consent of all pore space owners within a proposed reservoir for an underground

22  carbon dioxide sequestration facility, the cabinet may on petition satisfying the

23  conditions established in this section, issue an order that the identified pore space

24  owned by nonconsenting owners be included in a sequestration facility for the

25  purpose of geologic sequestration of carbon dioxide pursuant to subsection (5) of

26  this section.

27 (2) The Class VI permit applicant shall negotiate in good faith with the pore space

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1   owners and acquire rights needed to access the pore space.

2 (3) Except for temporary access in cases of emergency, the cabinet shall not allow

3   any surface disturbance on any surface tract or tracts overlying the pore space of

4   a nonconsenting owner.

5 (4) The sequestration operator shall provide a list to the cabinet of all persons

6   reasonably known to own an interest in pore space proposed to be included in the

7   reservoir.

8 (5) (a) If the applicant or operator cannot reach an agreement with the owners of

9   the pore space acreage in a proposed reservoir, but has secured written

10  consent for at least seventy-five percent (75%) of the pore space acreage in

11  the proposed reservoir, all the pore space in the sequestration reservoir shall

12  be declared to be included within the proposed sequestration facility if the

13  cabinet finds that the requirements of this section have been met.

14  (b) For the purposes of this section, the interests of any unknown or missing

15  pore space owners may be declared to be included through the pooling

16  order provided reasonable effort to locate and notify the owners has been

17  made and the sequestration operator has complied with the publication

18  requirements of subsection (7) of this section. A pooling order shall be made

19  only after the cabinet provides notice to all pore space owners proposed to

20  be included within the order.

21 (6) The applicant shall pay to the cabinet all costs associated with the conduct of the

22  administrative hearing as assessed in the pooling order. The payment shall be

23  made prior to the pooling order becoming effective. These funds shall be

24  deposited into the carbon dioxide sequestration facility administrative fund

25  established in Section 14 of this Act.

26 (7) If the proposed pooling order concerns pore space with unknown or missing

27  owners, the sequestration operator shall, after reasonable efforts to locate the

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1   pore space owners, publish one (1) notice in the newspaper of the largest

2   circulation in each county in which the pore space is located. The notice shall

3   appear no more than forty-five (45) days nor less than thirty (30) days prior to the

4   initial application for the pooling order. The applicant shall file proof of notice

5   with the cabinet concurrently with the application. The notice shall:

6   (a) State that an application for a pooling order has been filed with the cabinet;

7   (b) Describe the property under which the pore space proposed to be collectively

8   used is located;

9   (c) In the case of an unknown pore space owner, indicate the name of the last

10  known owner;

11  (d) In the case of a missing pore space owner, identify the owner and the

12  owner's last known address; and

13  (e) State that any person claiming an interest in the pore space proposed to be

14  collectively used shall notify the cabinet and the Class VI permit applicant

15  at the published address within twenty (20) days of the publication date.

16 (8) A pooling order shall authorize the injection and sequestration of carbon dioxide

17  beneath the tract or portion thereof. The pooling order shall identify the

18  compensation to be paid to unknown, missing, and nonconsenting pore space

19  owners and the basis for valuation of the collective interest. The cabinet may

20  consider evidence submitted by nonconsenting pore space owners as to the

21  valuation of their interest.

22 (9) Except for temporary access in cases of emergency, the pooling order issued by

23  the cabinet shall not authorize any surface entry or surface disturbance by the

24  permittee on any surface tract or tracts overlying the pore space of a

25  nonconsenting, missing, or unknown owner.

26 (10) A certified copy of any pooling order and a survey of the sequestration field shall

27  be maintained by the cabinet.

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1 (11) If the cabinet or US EPA requires a seismic survey of lands owned by the

2   nonconsenting surface owner and an operator is unable to reasonably obtain by

3   negotiation with a property owner the right to conduct seismic surveys on lands

4   owned by the nonconsenting surface owner, then:

5   (a) The cabinet may issue an order allowing the operator to conduct a seismic

6   survey of the lands owned by the nonconsenting surface owner from outside

7   the boundaries of the lands owned by the nonconsenting surface owner;

8   (b) The operator shall, prior to conducting the survey, pay the surface owner

9   just and reasonable compensation as established by the cabinet; and

10  (c) Any data obtained by the operator through a seismic survey of the lands

11  owned by a nonconsenting surface owner shall be held as confidential and

12  shall be used only by the permittee, the cabinet, and US EPA for the

13  purpose of satisfying statutory or regulatory requirements.

14 (12) Except for the authorized persons and circumstances in subsection (11) of this

15  section, any person disclosing confidential seismic survey data may be liable to

16  the nonconsenting surface owner as provided under law.

17 (13) The operator shall defend, indemnify, and hold harmless the property owner for

18  all claims arising out of any surface or subsurface entry onto the property by the

19  operator, its contractors, and its agents, except those claims arising from the

20  intentional acts of a property owner.

21  SECTION 21. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO

22 READ AS FOLLOWS:

23 (1) The sequestration operator shall deposit the funds due to unknown or missing

24  pore space owners in an interest-bearing trust account.

25 (2) If the unknown or missing pore space owners remain unknown or missing for a

26  period of seven (7) years from the date of first injection into the sequestration

27  reservoir, the sequestration operator shall pay the funds held in trust to the

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1   surface owners of the tract overlying the pore space owned by the unknown or

2   missing pore space owners.

3 (3) If a surface owner remains missing or unknown for a period of seven (7) years

4   from the date of first injection into the sequestration reservoir, the sequestration

5   operator shall deposit the funds held in trust to the carbon dioxide sequestration

6   facility trust fund established in Section 16 of this Act.

7   SECTION 22. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO

8 READ AS FOLLOWS:

9 If any provision of Sections 1 to 24 of this Act or its application to any person or

10 circumstances is held invalid, the invalidity does not affect other provisions or

11 applications of Sections 1 to 24 of this Act which can be given effect without the invalid

12 provision or application, and to this end the provisions of Sections 1 to 24 of this Act

13 are severable.

14  SECTION 23. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO

15 READ AS FOLLOWS:

16 (1) (a) If a person or operator fails to comply with the requirements of Sections 1

17  to 24 of this Act or any administrative regulation or order promulgated or

18  issued thereunder, the cabinet shall issue a notice of noncompliance to the

19  person or operator and serve the notice in accordance with subsection (5) of

20  this section. The notice shall specify the nature of the violation, the

21  remedial action required to abate the violation, and the period of time set by

22  the cabinet for abatement of the violation.

23  (b) If a person or operator fails to abate the violation within the time prescribed

24  in the notice, the cabinet shall issue a failure to abate cessation order to the

25  person or operator and serve the notice in accordance with subsection (5) of

26  this section. The order shall:

27  1. Require the person or operator to immediately complete remedial

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1   actions to abate the violation described in the notice and to cease any

2   underground injection activity at the sequestration facility or site

3   where the violation is occurring; and

4   2. Remain in effect until the violation has been abated or the order is

5   vacated or terminated in writing by the cabinet.

6   (c) The cabinet shall issue a forfeiture order and order the financial

7   responsibility instruments covering the sequestration facility be forfeited to

8   the cabinet if:

9   1. An agreement has not been reached with the cabinet regarding the

10  alleged failure to comply with the notice to abate the violation; and

11  2. The director determines the operator has not complied with the

12  requirements set forth in the notice of noncompliance or the failure to

13  abate cessation order.

14  (d) The forfeiture order shall become effective thirty (30) days after the cabinet

15  gives the operator notice of the order, unless a petition has been filed

16  pursuant to KRS 353.700, in which case the forfeiture order shall become

17  effective only upon a final determination of the secretary affirming the

18  forfeiture order following the conclusion of the petition process.

19 (2) (a) In addition to a notice of noncompliance or failure to abate cessation order

20  issued pursuant to subsection (1) of this section, the cabinet may issue a

21  closure order to any person or operator where:

22  1. A sequestration facility is in violation of Sections 1 to 24 of this Act or

23  any administrative regulation or order promulgated or issued

24  thereunder, and the violation creates an imminent danger to the

25  health or safety of the public or is causing or can be reasonably

26  expected to cause significant imminent environmental harm; or

27  2. A sequestration facility is in operation by any person without first

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1   posting financial responsibility and obtaining written approval of the

2   cabinet.

3   (b) The closure order shall be affixed by a red tag marker at the conspicuous

4   location at the facility with a letter of violation and a copy of the closure

5   order mailed to the address of record for the responsible person or operator,

6   if an address is on file with the cabinet. The letter of violation and closure

7   order shall notify the person or operator to immediately:

8   1. Cease operation of the sequestration facility; and

9   2. Abate the violation.

10  (c) Any person operating a sequestration facility under the circumstances

11  described in paragraph (a)2. of this subsection may be ordered to either

12  submit financial responsibility and obtain transfer of the facility or

13  complete final reclamation and site closure for the facility, but the order

14  does not relieve any prior obligation owed by the current operator of record.

15  The closure order may be appealed pursuant to KRS 353.700 within thirty

16  (30) days of issuance. Any person or operator that fails to comply with a

17  closure order issued pursuant to this section shall be subject to a civil and

18  criminal penalty under KRS 353.990.

19 (3) (a) A copy of:

20  1. All enforcement documents under this section shall be served on the

21  surface and pore space owner, if they are different from the property

22  owner, where the violation occurred; and

23  2. The notice, at the time of issuance, shall be delivered to the

24  complaining party if he or she is different from the operator, and if the

25  enforcement document arises out of a citizen complaint.

26  (b) Resolution of the enforcement action issued under this section shall require

27  reimbursement of costs incurred by the cabinet.

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1 (4) When it appears that any person is violating or threatening to violate any

2   provision of Sections 1 to 24 of this Act or any rule, administrative regulation, or

3   order promulgated or issued thereunder, the cabinet may bring suit to restrain the

4   person from continuing the violation or from carrying out the threatened

5   violation. A suit brought under this subsection shall:

6   (a) Be filed in the:

7   1. Franklin Circuit Court;

8   2. Circuit Court of the county in which the violation occurred or is

9   threatened; or

10  3. Circuit Court of the county in which the defendant resides or in which

11  any defendant resides if there is more than one (1) defendant; and

12  (b) Give the court jurisdiction to grant without bond or other undertaking the

13  prohibitory or mandatory injunction, as the facts may warrant, including a

14  temporary restraining order or injunction.

15 (5) (a) Service of any notice or order issued under this section shall be:

16  1. Handed to the person in charge of the sequestration facility;

17  2. Sent by certified mail, return receipt requested, addressed to the

18  permanent address shown on the application for a permit;

19  3. Sent by electronic mail to the address shown on the permit application

20  or to an address provided to the cabinet voluntarily; or

21  4. Sent by certified or electronic mail to the address known to the

22  cabinet, if no address is shown on the application for a permit or the

23  address is no longer valid.

24  (b) Service in accordance with paragraph (a)3. or 4. of this subsection shall be

25  effective upon delivery of the notice or the order to the recipient's inbox by

26  email and verification sent to the cabinet by an electronic registered receipt.

27 (6) The commencement of a proceeding pursuant to KRS 353.700 shall not operate

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1   as a stay of a notice or order, including a notice or order that contains the

2   requirement to complete all remedial measures to abate the cited violation, issued

3   under this section. A party served with a notice or order under this section may

4   request a stay of the notice or order by filing a written petition for temporary

5   relief with the cabinet's Office of Administrative Hearings. A hearing on the

6   petition shall occur within ten (10) days of the office's receipt of the petition for

7   temporary relief unless the petitioner waives this requirement. The hearing

8   officer shall render a decision on the petition for temporary relief within three (3)

9   working days of the hearing. A party aggrieved by the decision of the hearing

10  officer may file a written request for review by the secretary. Temporary relief

11  may be granted from a notice or order issued under this section if:

12  (a) The person requesting relief shows that there is substantial likelihood that

13  the findings on the merits in an administrative hearing conducted by the

14  cabinet will be favorable to the person; and

15  (b) The relief will not adversely affect the public health or safety or cause

16  significant imminent environmental harm to land, air, or water resources.

17 (7) (a) If the cabinet fails to bring suit to enjoin a violation or threatened violation

18  of any provision of Sections 1 to 24 of this Act or any rule, administrative

19  regulation, or order promulgated or issued thereunder within ten (10) days

20  after receipt of a written request to do so by any person who is or will be

21  adversely affected by the violation, the person making the request may bring

22  suit to restrain the violation or threatened violation in any court in which

23  the cabinet might have brought suit.

24  (b) The cabinet shall be made a party defendant in the suit in addition to the

25  person allegedly violating or threatening to violate a provision of Sections 1

26  to 24 of the Act, or any rule, administrative regulation, or order

27  promulgated or issued thereunder.

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1   SECTION 24. A NEW SECTION OF KRS CHAPTER 353 IS CREATED TO

2 READ AS FOLLOWS:

3 (1) In addition to the powers conferred upon the cabinet in other provisions of

4   Sections 1 to 24 of this Act, the cabinet may develop, promulgate, and submit for

5   approval a regulatory program for the purpose of accepting primary

6   responsibility for the administration of the underground injection control

7   program under 42 U.S.C. sec. 300h et seq. The cabinet shall include in any

8   regulatory program developed in administrative regulations promulgated in

9   accordance with KRS Chapter 13A:

10  (a) Regarding the plugging, conversion, maintenance, monitoring, and

11  abandonment of Class VI wells, measures to protect underground sources

12  of drinking water and to prevent their endangerment;

13  (b) A prohibition of underground injection through Class VI wells, except as

14  authorized by a Class VI permit issued pursuant thereto;

15  (c) The details of the requirements for a permit application, including:

16  1. Site characterization;

17  2. Operation of injection wells;

18  3. A permitting process, including detailed time frames and methods to

19  modify and transfer permits;

20  4. Comprehensive monitoring that addresses all aspects of well integrity,

21  carbon dioxide injection and sequestration, and air and groundwater

22  quality during the injection operation and the post-injection site care

23  period;

24  5. Financial responsibility ensuring the availability of funds for the life

25  of a carbon dioxide sequestration project, including post-injection site

26  care and emergency response; and

27  6. Reporting and recordkeeping that provide project-specific information

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1   to evaluate the site operations and ensure environmental protection;

2   (d) The criteria for reviewing compliance with eligibility requirements in

3   subsection (12) of Section 4 of this Act and procedures for restoration of

4   eligibility for a permit;

5   (e) The requisite features of the Class VI underground injection control

6   program including those for the:

7   1. Administration of the carbon dioxide sequestration facility

8   administration fund established in Section 14 of this Act;

9   2. Issuance of determinations that certify the amount of carbon dioxide

10  stored pursuant to individual Class VI underground injection control

11  permits issued for that purpose, based upon requests for sequestration

12  determination;

13  3. Issuance of pooling orders as part of the development of a proposed

14  carbon dioxide sequestration project;

15  4. Issuance of completion certificates; and

16  5. Requirement for owners or operators of Class VI underground

17  injection control wells to demonstrate financial responsibility for the

18  cost of closing all Class VI underground injection control wells. The

19  demonstration of financial responsibility may include but is not be

20  limited to the qualifying instruments required by Section 4 of this Act;

21  (f) The requirements for reasonable public notice and public participation for:

22  1. Applications for Class VI underground injection control permits;

23  2. Applications for drilling permits;

24  3. Issuance of a completion certificate; and

25  4. Unknown or missing owners; and

26  (g) A schedule of fees to be assessed on applicants and operators. The fees shall

27  cover all costs to the cabinet for administering the underground injection

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1   control program. The schedule of fees shall be reviewed and amended as

2   necessary to ensure that the underground injection control program is fully

3   funded at all times. The cabinet may collect application fees for the drilling

4   of wells for use as Class VI wells prior to delegation of authority by the US

5   EPA.

6 (2) Administrative regulations promulgated pursuant to this section to allow for

7   assumption of primary responsibility for administration of the underground

8   injection control program under 42 U.S.C. sec. 300h et seq. shall conform to the

9   standards and procedures established by US EPA for Class VI wells.

10 (3) Any administrative regulations promulgated pursuant to Sections 1 to 24 of this

11  Act shall be:

12  (a) Promulgated in accordance with KRS Chapter 13A; and

13  (b) Deemed to be necessary to prevent the loss of federal or state funds for the

14  purposes of KRS 13A.105.

15 (4) (a) Any order or final determination of the cabinet that is issued pursuant to

16  Sections 1 to 24 of this Act shall be subject to review in accordance with

17  KRS 353.700 and any administrative regulation promulgated thereunder.

18  (b) As used in this subsection, "order or final determination" includes but is

19  not limited to the issuance, denial, modification, or revocation of a permit,

20  but does not include the issuance of a letter identifying deficiencies in an

21  application for a permit or other nonfinal determinations.

22  Section 25. KRS 278.704 is amended to read as follows:

23 (1) No person shall commence to construct a merchant electric generating facility until

24  that person has applied for and obtained a construction certificate for the facility

25  from the board. The construction certificate shall be valid for a period of three (3)

26  years after the issuance date of the last permit required to be obtained from the

27  Energy and Environment Cabinet after which the certificate shall be void. The

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1   certificate shall be conditioned upon the applicant obtaining necessary air, water,

2   and waste permits. If an applicant has not obtained all necessary permits and has

3   not commenced to construct prior to the expiration date of the certificate, the

4   applicant shall be required to obtain a new valid certificate from the board.

5 (2) (a) Except as provided in subsections (3), (4), and (5) of this section, no

6   construction certificate shall be issued to construct a merchant electric

7   generating facility unless:

8   1. The exhaust stack of the proposed facility and any wind turbine is at

9   least one thousand (1,000) feet from the property boundary of any

10  adjoining property owner;[ and]

11  2. All proposed structures or facilities used in connection with the

12  generation or storage[for generation] of electricity are two thousand

13  (2,000) feet from any residential neighborhood, school, hospital, or

14  nursing home facility; and

15  3. With regard to a wind power facility, the maximum height of the wind

16  turbine, as measured from the natural grade to the top of the hub

17  where the rotor attaches, does not exceed three hundred fifty (350)

18  feet.

19  (b) For purposes of applications for site compatibility certificates pursuant to

20  KRS 278.216:[,]

21  1. Only the exhaust stack of the proposed facility to be actually used for

22  coal or gas-fired generation[ or, beginning with applications for site

23  compatibility certificates filed on or after January 1, 2015, the proposed

24  structure or facility to be actually used for solar or wind generation]

25  shall be required to be at least one thousand (1,000) feet from the

26  property boundary of any adjoining property owner and two thousand

27  (2,000) feet from any residential neighborhood, school, hospital, or

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1   nursing home facility;

2   2. Any proposed structure to be actually used for the generation of

3   electricity from solar or wind power shall be at least one thousand

4   (1,000) feet from the property boundary of any adjoining property

5   owner; and

6   3. Any proposed structures or facilities used in connection with the

7   generation or storage of electricity from solar or wind power shall be

8   at least two thousand (2,000) feet from any residential neighborhood,

9   school, hospital, or nursing home facility.

10 (3) If the merchant electric generating facility is proposed to be located in a county or a

11  municipality with planning and zoning, then maximum height, decommissioning,

12  and setback requirements from a property boundary, residential neighborhood,

13  school, hospital, or nursing home facility may be established by the planning and

14  zoning commission. Any decommissioning requirement, maximum height

15  limitation, or setback established by a planning and zoning commission for a

16  facility in an area over which it has jurisdiction shall:

17  (a) Except with regard to the minimum decommission bonding amount

18  required in subsection (2)(m)5.a. of Section 26 of this Act, have primacy

19  over the decommissioning requirements in KRS 278.706(2)(m), the

20  maximum height limitation in subsection (2)(a)3. of this section, and the

21  setback requirement in subsections (2) and (5) of this section; and

22  (b) Not be subject to modification or waiver by the board through a request for

23  deviation by the applicant, as provided in subsection (4) of this section or

24  otherwise.

25 (4) The board may grant a deviation from the requirements of subsection (2) of this

26  section on a finding that the proposed facility is designed to and, as located, would

27  meet the goals of KRS 224.10-280, 278.010, 278.212, 278.214, 278.216, 278.218,

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1   and 278.700 to 278.716 at a distance closer than those provided in subsection (2) of

2   this section.

3 (5) If the merchant electric generating facility is proposed to be located on a site of a

4   former coal processing plant in the Commonwealth where the electric generating

5   facility will utilize on-site waste coal as a fuel source, then the one thousand (1,000)

6   foot property boundary requirement in subsection (2)(a)1. of this section shall not

7   be applicable; however, the applicant shall be required to meet any other setback

8   requirements contained in subsection (2)(a)2. of this section.

9 (6) If requested, a merchant electric generating entity considering construction of a

10  facility for the generation of electricity or a person acting on behalf of such an

11  entity shall hold a public meeting in any county where acquisition of real estate or

12  any interest in real estate is being considered for the facility. A request for such a

13  meeting may be made by the commission, or by any city or county governmental

14  entity, including a board of commissioners, planning and zoning, fiscal court,

15  mayor, or county judge/executive. The meeting shall be held not more than thirty

16  (30) days from the date of the request.

17 (7) The purpose of the meeting under subsection (6) of this section is to fully inform

18  landowners and other interested parties of the full extent of the project being

19  considered, including the project time line. One (1) or more representatives of the

20  entity with full knowledge of all aspects of the project shall be present and shall

21  answer questions from the public.

22 (8) Notice of the time, subject, and location of the meeting under subsection (6) of this

23  section shall be posted in both a local newspaper, if any, and a newspaper of

24  general circulation in the county. Notice shall also be placed on the websites of the

25  unregulated entity, and any local governmental unit. Owners of real estate known to

26  be included in the project and any person whose property adjoins at any point any

27  property to be included in the project shall be notified personally by mail. All

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1   notices must be mailed or posted at least two (2) weeks prior to the meeting.

2 (9) The merchant electric generating entity or a person acting on behalf of a merchant

3   electric generating entity shall, on or before the date of the public meeting held

4   under subsection (6) of this section, provide notice of all research, testing, or any

5   other activities being planned or considered to:

6   (a) The Energy and Environment Cabinet;

7   (b) The Public Service Commission;

8   (c) The Transportation Cabinet;

9   (d) The Attorney General; and

10  (e) The Office of the Governor.

11 (10) Subsections (6) to (9) of this section shall not apply to any facility or project that

12  has already received a certificate of construction from the board.

13  Section 26. KRS 278.706 is amended to read as follows:

14 (1) Any person seeking to obtain a construction certificate from the board to construct a

15  merchant electric generating facility shall file an application at the office of the

16  Public Service Commission.

17 (2) A completed application shall include the following:

18  (a) The name, address, and telephone number of the person proposing to

19  construct and own the merchant electric generating facility;

20  (b) A full description of the proposed site, including a map showing the distance

21  of the proposed site from residential neighborhoods, the nearest residential

22  structures, schools, and public and private parks that are located within a two

23  (2) mile radius of the proposed facility;

24  (c) Evidence of public notice that shall include the location of the proposed site

25  and a general description of the project, state that the proposed construction is

26  subject to approval by the board, and provide the telephone number and

27  address of the Public Service Commission. Public notice shall be given within

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1   thirty (30) days immediately preceding the application filing to:

2   1. Landowners whose property borders the proposed site; and

3   2. The general public in a newspaper of general circulation in the county or

4   municipality in which the facility is proposed to be located;

5   (d) A statement certifying that the proposed plant will be in compliance with all

6   local ordinances and regulations concerning noise control and with any local

7   planning and zoning ordinances. The statement shall also disclose setback

8   requirements established by the planning and zoning commission as provided

9   under KRS 278.704(3);

10  (e) If the facility is not proposed to be located on a site of a former coal

11  processing plant and the facility will use on-site waste coal as a fuel source or

12  in an area where a planning and zoning commission has established a setback

13  requirement pursuant to KRS 278.704(3), a statement that the exhaust stack of

14  the proposed facility and any wind turbine is at least one thousand (1,000) feet

15  from the property boundary of any adjoining property owner and all proposed

16  structures or facilities used in connection with the generation or storage[for

17  generation] of electricity are two thousand (2,000) feet from any residential

18  neighborhood, school, hospital, or nursing home facility, unless coal or gas-

19  fired generating facilities capable of generating ten megawatts (10MW) or

20  more currently exist on the site. If the facility is proposed to be located on a

21  site of a former coal processing plant and the facility will use on-site waste

22  coal as a fuel source, a statement that the proposed site is compatible with the

23  setback requirements provided under KRS 278.704(5). If the facility is

24  proposed to be located in a jurisdiction that has established setback

25  requirements pursuant to KRS 278.704(3), a statement that the proposed site

26  is in compliance with those established setback requirements;

27  (f) A complete report of the applicant's public involvement program activities

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1   undertaken prior to the filing of the application, including:

2   1. The scheduling and conducting of a public meeting in the county or

3   counties in which the proposed facility will be constructed at least

4   ninety (90) days prior to the filing of an application, for the purpose of

5   informing the public of the project being considered and receiving

6   comment on it;

7   2. Evidence that notice of the time, subject, and location of the meeting

8   was published in the newspaper of general circulation in the county, and

9   that individual notice was mailed to all owners of property adjoining the

10  proposed project at least two (2) weeks prior to the meeting; and

11  3. Any use of media coverage, direct mailing, fliers, newsletters, additional

12  public meetings, establishment of a community advisory group, and any

13  other efforts to obtain local involvement in the siting process;

14  (g) A summary of the efforts made by the applicant to locate the proposed facility

15  on a site where existing electric generating facilities are located;

16  (h) Proof of service of a copy of the application upon the chief executive officer

17  of each county and municipal corporation in which the proposed facility is to

18  be located, and upon the chief officer of each public agency charged with the

19  duty of planning land use in the jurisdiction in which the facility is proposed

20  to be located;

21  (i) An analysis of the proposed facility's projected effect on the electricity

22  transmission system in Kentucky;

23  (j) An analysis of the proposed facility's economic impact on the affected region

24  and the state;

25  (k) A detailed listing of all violations by it, or any person with an ownership

26  interest, of federal or state environmental laws, rules, or administrative

27  regulations, whether judicial or administrative, where violations have resulted

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1   in criminal convictions or civil or administrative fines exceeding five

2   thousand dollars ($5,000). The status of any pending action, whether judicial

3   or administrative, shall also be submitted;

4   (l) A site assessment report as specified in KRS 278.708. The applicant may

5   submit and the board may accept documentation of compliance with the

6   National Environmental Policy Act (NEPA) rather than a site assessment

7   report;[ and]

8   (m) A decommissioning plan that shall describe how the merchant electric

9   generating facility will be decommissioned and dismantled following the end

10  of its useful life. The decommissioning plan shall, at a minimum, include

11  plans to:

12  1. Unless otherwise requested by the current landowner at the time of

13  decommissioning, remove all above-ground facilities;

14  2. Unless otherwise requested by the current landowner at the time of

15  decommissioning, remove any underground components and

16  foundations of above-ground facilities. Facilities removed under this

17  subparagraph shall be removed in their entirety[to a depth of three (3)

18  feet below the surface grade of the land in or on which the component

19  was installed], unless the current landowner and the applicant otherwise

20  agree at the time of decommissioning to a different depth;

21  3. Return the land to a substantially similar state with the same or similar

22  soil quality as it was prior to the commencement of construction;

23  4. Unless otherwise requested by the current landowner at the time of

24  decommissioning, leave any interconnection or other facilities in place

25  for future use at the completion of the decommissioning process;

26  5. Secure a bond or other similar security for the project to assure financial

27  performance of the decommissioning obligation, provided that:

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1   a. The amount of the proposed bond or similar security shall be

2                    determined by an independent, licensed engineer who is

3                    experienced in the decommissioning the type of[ solar] electric

4                    generating facility to be decommissioned[facilities] and has no

5                    financial interest in either the merchant electric generating facility

6                    or any parcel of land upon which the merchant electric generating

7                    facility is located. The proposed amount of the bond or similar

8                    security shall be the greater of[either]:

9                    i. The net present value of the total estimated cost of

10                   completing the decommissioning plan[, less the current net

11                   salvage value of the merchant electric generating facility's

12                   components]; or

13                   ii. The bond amount required by a county or municipal

14                   government that has established a decommissioning bond

15                   requirement or similar security obligation in the county or

16                   municipality where the merchant electric generating facility

17                   will be located. If the facility will be located in more than

18                   one (1) county or municipality that has established a

19                   decommissioning bond or similar security obligation, then

20                   the higher amount shall be required for the facility;

21  b. The bond or other similar security names:

22                   i. For property that is leased by the applicant, each landowner

23                   from whom the applicant leases land and the Energy and

24                   Environment Cabinet as the primary co-beneficiaries; or

25                   ii. For property that is owned by the applicant, the Energy and

26                   Environment Cabinet as the primary beneficiary;

27  c. If the merchant electric generating facility is to be located in a

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1                    county or municipality that has not established a decommissioning

2                    bond or other similar security obligation, the bond or other similar

3                    security shall name the county or municipality as a secondary

4                    beneficiary with the county's or municipality's consent;

5   d. The bond or other similar security shall be provided by an

6                    insurance company or surety that shall at all times maintain at least

7                    an "Excellent" rating as measured by the AM Best rating agency

8                    or an investment grade credit rating by any national credit rating

9                    agency and, if available, shall be noncancelable by the provider or

10                   the customer until completion of the decommissioning plan or

11                   until a replacement bond is secured; and

12  e. The bond or other similar security shall provide that at least thirty

13                   (30) days prior to its cancellation or lapse, the surety shall notify

14                   the applicant, its successor or assign, each landowner, the Energy

15                   and Environment Cabinet, and each[the] county or city in which

16                   the facility is located of the impending cancellation or lapse. The

17                   notice shall specify the reason for the cancellation or lapse and

18                   provide any of the parties, either jointly or separately, the

19                   opportunity to cure the cancellation or lapse prior to it becoming

20                   effective. The applicant, its successor, or its assign, shall be

21                   responsible for all costs incurred by all parties to cure the

22                   cancellation or lapse of the bond. Each landowner, or the Energy

23                   and Environment Cabinet with the prior approval of each

24                   landowner, may make a demand on the bond and initiate and

25                   complete the decommissioning plan;[.]

26  6. Communicate with each affected landowner at the end of the merchant

27  electric generating facility's useful life so that any requests of the

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1   landowner that are in addition to the minimum requirements set forth in

2   this paragraph and in addition to any other requirements specified in the

3   lease with the landowner may, in the sole discretion of the applicant or

4   its successor or assign, be accommodated; and

5   7. Incorporate the requirements of subparagraphs 1. to 6. of this paragraph

6   into the applicant's leases with landowners; and

7   (n) For applications for the construction of wind power facilities, a statement

8   certifying that:

9   1. Any wind turbine will not be artificially lighted except as required by

10  law;

11  2. Wind power facilities will be sited in a manner that minimizes

12  shadowing or flicker impacts; and

13  3. Any shadowing or flicker impacts will not have a significant adverse

14  impact on neighboring or adjacent property uses through siting or

15  mitigation.

16 (3) (a) The entity causing the decommissioning plan required under subsection

17  (2)(m) of this section to be carried out shall be entitled to the proceeds from

18  the sale of any salvaged materials or components of the merchant electric

19  generating facility recovered during the decommissioning process.

20  (b) Any proceeds that the Energy and Environment Cabinet recovers from the

21  sale of salvaged materials or components in the course of carrying out a

22  decommissioning plan under subsection (2)(m) of this section that, taken

23  with the decommissioning bond amounts that have been drawn upon,

24  exceed the cost of completing the decommissioning plan shall be deposited

25  in the merchant electric generating facility monitoring and enforcement

26  fund established in KRS 224.10-285.

27 (4) Application fees for a construction certificate shall be set by the board and

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1   deposited into a trust and agency account to the credit of the commission.

2 (5)[(4)] Replacement of a merchant electric generating facility with a like facility, or

3   the repair, modification, retrofitting, enhancement, or reconfiguration of a merchant

4   electric generating facility shall not, for the purposes of this section and KRS

5   224.10-280, 278.704, 278.708, 278.710, and 278.712, constitute construction of a

6   merchant electric generating facility.

7 (6)[(5)] The board shall promulgate administrative regulations prescribing fees to pay

8   expenses associated with its review of applications filed with it pursuant to KRS

9   278.700 to 278.716. All application fees collected by the board shall be deposited in

10  a trust and agency account to the credit of the Public Service Commission. If a

11  majority of the members of the board find that an applicant's initial fees are

12  insufficient to pay the board's expenses associated with the application, including

13  the board's expenses associated with legal review thereof, the board shall assess a

14  supplemental application fee to cover the additional expenses. An applicant's failure

15  to pay a fee assessed pursuant to this subsection shall be grounds for denial of the

16  application.

17  Section 27. KRS 278.710 is amended to read as follows:

18 (1) Within one hundred twenty (120) days of receipt of an administratively complete

19  application, or within one hundred eighty (180) days of receipt of an

20  administratively complete application if a hearing is requested, the board shall, by

21  majority vote, grant or deny a construction certificate, either in whole or in part,

22  based upon the following criteria:

23  (a) Impact of the facility on scenic surroundings, property values, the pattern and

24  type of development of adjacent property, and surrounding roads;

25  (b) Anticipated noise levels expected as a result of construction and operation of

26  the proposed facility;

27  (c) The economic impact of the facility upon the affected region and the state;

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1   (d) Whether the facility is proposed for a site upon which existing generating

2   facilities, capable of generating ten megawatts (10MW) or more of electricity,

3   are currently located;

4   (e) Whether the proposed facility will meet all local planning and zoning

5   requirements that existed on the date the application was filed;

6   (f) Whether the additional load imposed upon the electricity transmission system

7   by use of the merchant electric generating facility will adversely affect the

8   reliability of service for retail customers of electric utilities regulated by the

9   Public Service Commission;

10  (g) Except where the facility is subject to a statewide setback established by a

11  planning and zoning commission as provided in KRS 278.704(3) and except

12  for a facility proposed to be located on a site of a former coal processing plant

13  and the facility will use on-site waste coal as a fuel source, whether the

14  exhaust stack of the proposed merchant electric generating facility and any

15  wind turbine is at least one thousand (1,000) feet from the property boundary

16  of any adjoining property owner and all proposed structures or facilities used

17  in connection with the generation or storage[for generation] of electricity are

18  two thousand (2,000) feet from any residential neighborhood, school, hospital,

19  or nursing home facility, unless a different setback has been requested and

20  approved under KRS 278.704(4). If a planning and zoning commission has

21  established setback requirements that differ from those under KRS

22  278.704(2), the applicant shall provide evidence of compliance. If the facility

23  is proposed to be located on site of a former coal processing plant and the

24  facility will use on-site waste coal as a fuel source, the applicant shall provide

25  evidence of compliance with the setback requirements provided in KRS

26  278.704(5);

27  (h) The efficacy of any proposed measures to mitigate adverse impacts that are

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1   identified pursuant to paragraph (a), (b), (e), or (f) of this subsection from the

2   construction or operation of the proposed facility;

3   (i) Whether the applicant has a good environmental compliance history;[ and]

4   (j) Whether the decommissioning plan is complete and complies with the

5   requirements of KRS 278.706(2)(m) and any other local requirements that

6   may apply; and

7   (k) Whether, for applications for the construction of wind power facilities, the

8   applicant and facilities will comply with the certifications required in

9   subsection (2)(n) of Section 26 of this Act.

10 (2) When considering an application for a construction certificate for a merchant

11  electric generating facility, the board may consider the policy of the General

12  Assembly to encourage the use of coal as a principal fuel for electricity generation

13  as set forth in KRS 152.210, provided that any facility, regardless of fuel choice,

14  shall comply fully with KRS 224.10-280, 278.212, 278.216, and 278.700 to

15  278.716.

16 (3) A person that has received a construction certificate for a merchant electric

17  generating facility shall:

18  (a) File with the Energy and Environment Cabinet the copy of the bond or other

19  similar security that, pursuant to KRS 278.706(2)(m)5., is required by a

20  county or a municipal government or as part of a decommissioning plan, no

21  later than the date upon which the construction of the merchant generating

22  facility commences, and refile an updated copy at least once every five (5)

23  years thereafter;

24  (b) Not transfer rights and obligation under the certificate without having first

25  applied for and received a board determination that:

26  1. The acquirer has a good environmental compliance history; and

27  2. The acquirer has the financial, technical, and managerial capacity to

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1   meet the obligations imposed by the terms of the approval or has the

2   ability to contract to meet these obligations;

3   (c) File with the Energy and Environment Cabinet a notice of the date that

4   construction is complete and the merchant electric generating facility begins

5   producing electricity for sale; and

6   (d) Following the date the merchant electric generating facility begins producing

7   electricity for sale, file a notice of any transaction involving the transfer or

8   sale of ownership, control, or the right to control the merchant electric

9   generating facility, with lessors of property where the merchant electric

10  generating facility is located, the Energy and Environment Cabinet, the county

11  judge/executive of a county and, if applicable, the mayor of a municipality in

12  which the merchant electric generating facility is located, within ten (10) days

13  of completing the transaction. The notice shall include the name, street

14  address, telephone number, and e-mail address of the person acquiring

15  ownership, control, or the right to control the merchant electric generating

16  facility.

17 (4) A person that has acquired ownership, control, or the right to control a merchant

18  electric generating facility from the applicant or its successor or assign shall file

19  with the Energy and Environment Cabinet within ten (10) days of completing the

20  acquisition:

21  (a) A written consent to assume the obligations set forth in the decommissioning

22  plan as of the date the acquisition occurred; and

23  (b) A notice of adoption of an existing bond or other similar security previously

24  filed pursuant to subsection (3)(a) of this section or a replacement bond or

25  other similar security that complies with KRS 278.706(2)(m)5. An existing

26  bond or other similar security shall be adopted, or a replacement bond or other

27  similar security shall be in place, as of the date the acquisition occurs so that

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1   there is no lapse in coverage of the decommissioning bond or other similar

2   security. A person making a filing pursuant to this subsection shall file an

3   updated bond or other similar security that complies with KRS

4   278.706(2)(m)5. at least once every five (5) years.

5 (5) Any person who transfers or sells ownership, control, or the right to control a

6   merchant electric generating facility shall remain liable for all existing

7   decommissioning obligations and bond requirements until the person who acquires

8   ownership, control, or the right to control the merchant electric generating facility

9   files with the Energy and Environment Cabinet the documents required by

10  subsection (4) of this section and they are accepted as complete by the secretary.

11 (6) Any application approval condition that requires the approval of the transfer of

12  control of a merchant electric generating facility after construction is complete shall

13  be void and unenforceable, but any transfer of control of a merchant electric

14  generating facility shall be subject to compliance with the requirements of

15  subsections (3)(d), (4), and (5) of this section.

16 (7) Notwithstanding any provision of law to the contrary, including any order issued by

17  the board prior to June 29, 2023, after the board has approved an application for a

18  construction certificate for a merchant electric generating facility under this section,

19  the approved applicant has posted the bond or similar security required under KRS

20  278.706(2)(m)5., and the facility is constructed and begins generating electricity for

21  sale, the board's authority to enforce any conditions of the construction certificate,

22  including bonding and decommissioning requirements, shall end and the secretary

23  of the Energy and Environment Cabinet shall monitor and enforce the construction

24  certificate holder's compliance with the requirements of KRS 278.700 to 278.716

25  and the conditions of its construction certificate application approval.

26 (8) In addition to all compliance monitoring and enforcement performed by the

27  secretary of the Energy and Environment Cabinet, and notwithstanding any

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1   provision of law to the contrary, the secretary shall also review the

2   decommissioning plan required by KRS 278.706(2)(m) or by local ordinance,

3   license, or permit and the bond or similar security amount required by KRS

4   278.706(2)(m)5. or by local ordinance, license, or permit as needed, including any

5   time a transfer determination is made under subsection (5) of this section, but in any

6   event at least once every five (5) years. Upon review, the secretary of the Energy

7   and Environment Cabinet shall require the decommissioning plan to be updated and

8   the bond amount to be changed to match any significant change in circumstances or

9   change to the estimated cost of effectuating the decommissioning plan[ or to the

10  salvage value of the facility or its components].

11 (9) After the facility for which an application for a construction certificate has been

12  approved is constructed and begins generating electricity for sale, the secretary of

13  the Energy and Environment Cabinet shall ensure ongoing compliance with the

14  mitigation measures that were conditions of the application approval under KRS

15  278.708(6) and any enforcement by the board of the mitigation measures shall

16  cease.

17 (10) During the period that the merchant electric generating facility is operational, if

18  solar panels or wind turbine components are replaced and discarded, the facility

19  owner-operator shall remove discarded solar panels or wind turbine components

20  from the site within ninety (90) days of completion of the work. Upon request of the

21  facility owner-operator, the secretary of the Energy and Environment Cabinet may

22  extend the time period under this subsection for removing discarded solar panels or

23  wind turbine components.

24  Section 28. KRS 278.714 is amended to read as follows:

25 (1) No person shall commence to construct a nonregulated electric transmission line or

26  a carbon dioxide transmission pipeline without a construction certificate issued by

27  the board. An application for a construction certificate shall be filed at the offices of

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1   the Public Service Commission along with an application fee as set forth in

2   subsection (6) of this section. The board may hire a consultant to review the

3   transmission line or carbon dioxide pipeline and provide recommendations

4   concerning the adequacy of the application and proposed mitigation measures. The

5   board may direct the consultant to prepare a report recommending changes in the

6   route of the carbon dioxide pipeline or the route of the electric transmission line.

7   Any consultant expenses or fees shall be borne by the applicant.

8 (2) A completed application shall include the following:

9   (a) The name, address, and telephone number of the person proposing

10  construction of the nonregulated electric transmission line or the carbon

11  dioxide transmission pipeline;

12  (b) A full description of the proposed route of the electric transmission line or the

13  carbon dioxide transmission pipeline and its appurtenances. The description

14  shall include a map or maps showing:

15  1. The location of the proposed line or pipeline and all proposed structures

16  that will support it;

17  2. The proposed right-of-way limits;

18  3. Existing property lines and the names of persons who own the property

19  over which the line or pipeline will cross; and

20  4. a. The distance of the proposed electric transmission line from

21                   residential neighborhoods, schools, and public and private parks

22                   within one (1) mile of the proposed facilities; or

23  b. The distance of the proposed carbon dioxide transmission pipeline

24                   from residential neighborhoods, schools, and parks, either private

25                   or public, within one thousand (1,000) feet of the proposed

26                   facilities;

27  (c) With respect to electric transmission lines, a full description of the proposed

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1   line and appurtenances, including the following:

2   1. Initial and design voltages and capacities;

3   2. Length of line;

4   3. Terminal points; and

5   4. Substation connections;

6   (d) A statement that the proposed electric transmission line and appurtenances

7   will be constructed and maintained in accordance with accepted engineering

8   practices and the National Electric Safety Code;

9   (e) With respect to both electric transmission lines and carbon dioxide

10  transmission pipelines, evidence that public notice has been given by

11  publication in a newspaper of general circulation in the general area

12  concerned. Public notice shall include the location of the proposed electric

13  transmission line or carbon dioxide pipeline, shall state that the proposed line

14  or pipeline is subject to approval by the board, and shall provide the telephone

15  number and address of the Public Service Commission; and

16  (f) Proof of service of a copy of the application upon the chief executive officer

17  of each county and municipal corporation in which the proposed electric

18  transmission line or carbon dioxide transmission pipeline is to be located, and

19  upon the chief officer of each public agency charged with the duty of planning

20  land use in the general area in which the line or pipeline is proposed to be

21  located.

22 (3) With respect to electric transmission lines, within one hundred twenty (120) days of

23  receipt of the application, or one hundred eighty (180) days if a local public hearing

24  is held, the board shall, by majority vote, grant or deny the construction certificate

25  either in whole or in part. Action to grant the certificate shall be based on the

26  board's determination that the proposed route of the line will minimize significant

27  adverse impact on the scenic assets of Kentucky and that the applicant will

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1   construct and maintain the line according to all applicable legal requirements. In

2   addition, the board may consider the interstate benefits expected to be achieved by

3   the proposed construction or modification of electric transmission facilities in the

4   Commonwealth. If the board determines that locating the transmission line will

5   result in significant degradation of scenic factors or if the board determines that the

6   construction and maintenance of the line will be in violation of applicable legal

7   requirements, the board may deny the application or condition the application's

8   approval upon relocation of the route of the line, or changes in design or

9   configuration of the line.

10 (4) A public hearing on an application to construct a nonregulated electric transmission

11  line may be held in accordance with the provisions of KRS 278.712.

12 (5) The board shall convene a local public information meeting upon receipt of a

13  request by not less than three (3) interested persons that reside in the county or

14  counties in which the carbon dioxide pipeline is proposed to be constructed. If the

15  board convenes the local public information meeting, the meeting will be in the

16  county seat of one (1) of the counties, as determined by the board, in which the

17  proposed carbon dioxide pipeline will be located. The meeting shall provide an

18  opportunity for members of the public to be briefed and ask the party proposing the

19  carbon dioxide pipeline questions about the pipeline.

20 (6) Pursuant to KRS 278.706(4)[(3)] and (6)[(5)], the board shall promulgate

21  administrative regulations to establish an application fee for a construction

22  certificate for:

23  (a) A nonregulated transmission line; and

24  (b) A carbon dioxide transmission pipeline.

25 (7) With respect to carbon dioxide transmission lines, within one hundred twenty (120)

26  days of receipt of the application or one hundred eighty (180) days if a local public

27  information meeting is held, the board shall, by majority vote, grant or deny the

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1   construction certificate either in whole or in part. Action to grant the certificate

2   shall be based on the board's determination that the proposed route of the pipeline

3   will minimize significant adverse impact on the scenic assets of Kentucky and that

4   the applicant will construct and maintain the line according to all applicable legal

5   requirements. In addition, the board may consider the interstate benefits expected to

6   be achieved by the proposed carbon dioxide transmission pipeline in the

7   Commonwealth. If the board determines that locating the transmission line will

8   result in significant degradation of scenic factors or if the board determines that

9   locating the carbon dioxide transmission line will be in violation of applicable legal

10  requirements, the board may deny the application or condition the application's

11  approval upon relocation of the route of the pipeline.

12  Section 29. KRS 278.718 is amended to read as follows:

13 The provisions of KRS 278.700, 278.704, 278.706, 278.708, and 278.710 shall not

14 supplant, any other state or federal law, including the powers available to local

15 governments under the provisions of home rule under KRS 67.080, 67.083, 67.850,

16 67.922, 67A.060, 67C.101, and 82.082. Except with regard to the minimum

17 decommissioning bond amount required in subsection (2)(m)5.a. of Section 26 of this

18 Act, an ordinance, permit, or license issued by a local government shall have primacy

19 over the provisions and requirements of KRS 278.700, 278.704, 278.706, and 278.708,

20 and any conflict between an order of the board and a local ordinance, permit, or license

21 shall be resolved in favor of the local government's ordinance, permit, or license.

22  Section 30. The following KRS sections are repealed:

23 353.800 Definitions for KRS 353.800 to 353.812.

24 353.802 Legislative findings and declarations relating to geologic storage of carbon

25  dioxide.

26 353.804 Jurisdiction and authority over geologic storage of carbon dioxide --

27  Application for and approval of demonstration projects -- Cabinet to testify

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1   annually on program's development.

2 353.806 Negotiations between storage operators and pore space owners -- Hearings and

3   findings preceding pooling of pore space -- Carbon dioxide wells exempt -- Review

4   under KRS 353.700.

5 353.808 Pooling orders -- Requirements for contents of order and notice -- Fees --

6   Recording of pooling orders with county clerks -- Review under KRS 353.700.

7 353.810 Carbon injection wells to be closed and plugged after completion of active

8   injection -- Monitoring for leaking and migration -- Transfer of ownership and

9   liability of storage facilities -- Finance and Administration Cabinet to effect

10  transfer.

11 353.812 Cabinet and bordering states to discuss and develop unified approach to

12  subsurface migration -- Reports to Governor and Legislative Research Commission.

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