Legislative
Updates
Colorado Codifies Pore Space Ownership and Regulation of Carbon Storage Operations
Colorado
In May 2024, Governor Polis signed House Bill 24-1346 (“Act”) into law, which amended several statutes related to Colorado’s Energy and Carbon Management Commission (“Commission”). Among other things, the Act introduced the state’s first legislative authority governing the ownership of pore space and the regulation of subsurface carbon dioxide storage operations.
reserves the sequestration estate, including by broad reservation of the pore space.” 5
The Act also clarifies that ownership of the actual injected CO 2 , and the related facilities and equipment used for storage operations, is held by the geologic storage operator that injects it into a geologic storage resource approved by the Commission, or any other party who later acquires such rights from the original injecting owner. 6 Notably, these title-related provisions in the new C.R.S. § 34-60-140 are not intended to affect interests in pore space beyond the sequestration estate. The Act does not limit or impact the ability of a pore space owner to “(i) broadly convey or reserve all of the owner’s right, title, and interest in and to the pore space, including the owner’s interest in the sequestration estate; or (ii) convey or reserve any right, title, or interest in and to the estates in pore space other than the sequestration estate…”. 7 Further, these new statutes are prospective only and do not impact private or common law interpretations of any subsurface storage rights acquired or reserved before May 25, 2024. 8
The Act Adopts Majority Rule in Allocating Pore Space to Surface Owner
The Centennial State is now aligned with the majority ‘American rule’ in allocating pore space rights to the owner of the overlying surface estate. The Act defines “pore space” as any “cavity or void, whether natural or artificially created, in a subsurface stratum.” 1 The owner of the “sequestration estate,” or the interest(s) in any “geologic storage resource,” is the person who owns the pore space “necessary for geologic storage.” 2 In turn, “geologic storage” is defined as “the injection and underground sequestration of inject[ed] carbon dioxide in a geologic storage resource,” pursuant to a valid Class VI permit issued under the U.S. Safe Drinking Water Act, 42 U.S.C. 300f, et seq. 3 The Act creates a statutory presumption “that ownership of the sequestration estate in the state is vested in the owner of the overlying surface estate,” absent a severance pursuant to C.R.S. § 34-60-140(2)(b), which provides that “ownership of the sequestration estate may be: (i) severed from the overlying surface estate; and (ii) conveyed or reserved in the same manner as ownership of the mineral estate.” 4 In order to sever the sequestration estate from the surface, the parties must state such intent clearly in applicable muniments of title. Any conveyance of the surface of a tract of land will be deemed to include the grantor’s interest in the underlying sequestration estate, unless “the conveyance instrument expressly
The Act Expands Commission Authority to Regulate and Unitize Carbon Storage Operations
The Act broadens the purview of the Commission
to include the regulation of “energy and carbon
[1] C.R.S. § 34-60-103(37). [2] Id . at -103(40), -103(19). [3] See id . at -103(14). [4] See C.R.S. § 34-60-140(2)(a-b). [5] Id. at -140(3)(a-b). [6] See id. at -140(2)(a)(II)(b). [7] C.R.S. § 34-60-140(5)(c). [8] See id. at -140(5)(a-b).
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N at i onal A ssociation of D i v i s i on O rder A nalys t s
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