Carbon Capture and Storage becomes a reality for Ohio

September will bring a new law that allows for the underground storage of carbon dioxide in Ohio.  H.B. 170 , the Carbon Capture and Storage bill, had a rocky voyage and multiple revisions in its long year-and-a-half run through the Ohio General Assembly.  But in the end it had bipartisan support and only four legislators opposed the measure, now signed by Governor DeWine.  The new law becomes effective on September 23, 2026.  We’ve written several articles about Carbon Capture and Storage (CCS) and Ohio’s legislation, available here as a series.

CCS is a carbon sequestration technology that captures carbon dioxide (CO2) from airborne emissions and injects it into geologic formations known as “pore space” far beneath the land surface through Class VI injection wells. Proponents state that the technology will reduce the amount of CO2 in the atmosphere, permit industries with CO2 emissions to reduce their carbon “footprint” and raise their “carbon index” and allow for innovative future reuses of C02.  Because CCS requires land and can reduce the carbon index of products like ethanol, the technology has implications for Ohio agriculture.

Legislation was necessary to authorize CCS in Ohio, establish a regulatory program to oversee it, and answer important legal issues related to CCS.  H.B. 170 aims to address those needs.  Not surprisingly, the new law hands regulatory responsibilities to the Ohio Department of Natural Resource Division of Oil and Gas Resources Management. Much more surprising was a late amendment in the Senate Energy Committee to create a Host Community Fund for use by communities hosting CCS projects, which proponents state is the first fee of its type in the country.  CCS owner fees will fuel the fund.  Another surprise came in the form of a higher standard for statutory consolidation or “forced pooling” of pore space interests.  The original proposal allowed a CCS operator to apply for statutory consolidation with consent of at least 65% of the pore space interests, but that increased to 75% in the final bill, putting Ohio behind only Wyoming in the higher protection for property owners.

Here’s a summary of other provisions in the new law:

Authorization of CCS and clarification of property interests – ORC 5301.58 and 5301.59

• Authorizes carbon sequestration projects for the purposes of injecting CO2 into pore space through an Underground Injection Control Class VI permit.
• Declares the land surface owner to be the owner of all pore space beneath the land surface and allows the surface owner to sever and transfer the pore space to another party though typical property transfer instruments.  A pore space instrument must contain a specific description of the location of the pore space.
• Clarifies that once severed, the pore space interest is dominant and has priority over a surface interest unless provided otherwise.
• Clarifies that a severed mineral or oil and gas interest is dominant over a pore space interest on the same property.
• States that all CO2 injected into a CCS storage facility is presumed to be owned by the storage operator rather than the surface or pore space owner.
• Clarifies that ownership of pore space or any other surface or subsurface property interest owner does not establish liability for the injection of CO2 and other CCS substances.

Regulatory framework for establishing CCS projects – ORC 1509.71 to 1509.75

• Grants exclusive authority to regulate CCS activities to the Division of Oil and Gas Resources Management in the Ohio Department of Natural Resources (ODNR), except for any activities regulated by federal laws for which the U.S. has not delegated regulatory authority to Ohio.
• Directs ODNR to establish rules to implement the new law.  The rules must include provisions for:
  • Applications for and terms and conditions of UIC Class VI permits;
  • Entry rights for inspection and compliance;
  • Maintenance of information through monitoring, recordkeeping and reporting;
  • Field drainage system review, mitigation, and repairs if ground disturbance is necessary;
  • Statutory consolidation or pooling procedures;
  • Well drilling, operating safety, spacing, and setback requirements;
  • Protection of public and private water supplies;
  • Fencing, screening, and noise mitigation;
  • Containment and disposal of drilling and other wastes;
  • Construction of access roads;
  • Liability insurance from the commencement of construction to closing, including at least $15 million for bodily injury and property damage from construction, drilling or operation of wells and including environmental coverage.
  • Maintenance of a surety bond, letter of credit, insurance, escrow, or self-insurance by the well operator.
• Allows ODNR to require seismicity monitoring prior to carbon injection and periodically throughout operations.
• Allows ODNR to create a program to incentivize innovation for the use and reutilization of captured CO2.
• Requires CCS well operators to design projects to isolate impacts on oil and gas production.

Fees, funds, and host community payments – ORC 1509.78

• Requires CCS operators to pay five cents per metric ton of CO2 injected into the Carbon Dioxide Storage Facility Fund and allows ODNR to use the fund for specified expenses and purposes.
• Allows ODNR to set and charge application fees, annual fees, and other fees necessary to defray administrative costs, to be deposited into the Carbon Capture Administrative Fund (CCAF).
• Establishes a “Host Community Fee” to support the needs of communities in which a CCS project exists. A CCS owner must pay the fee of three cents per metric ton of injected CO2 to be used by the county, township, municipal corporation, school district, or other subdivision for infrastructure; parks, recreation, and trails; education; or public safety.

Statutory consolidation or “pooling” of CCS projects – ORC 1509.76

• Allows a CCS project applicant to submit a request for statutory consolidation of pore space interests to ODNR if, after good-faith negotiation, the applicant has obtained the consent of at least 70 per cent of the pore space needed for the project.
• Lays out provisions for the statutory consolidation process, including a $50,000 application fee; notice requirements to pore space owners; hearing timelines; and allocations of property interests and compensation.
• Requires ODNR to approve the application if “such operation is reasonably necessary to facilitate carbon sequestration.”
• Clarifies that a statutory consolidation order does not result in a transfer of any person’s title to pore space.

Project closure – ORC 1509.77

• Establishes a “certificate of project completion” process to close a well no less than 50 years after injections cease.
• Requires ODNR to issue a certificate of completion only after satisfaction of all conditions, public notice and comment, and if necessary, a public hearing.
• Conditions for completion include proof that:  the operator is in compliance with all law; CO2 is not expected to extend or migrate outside the project area or vertically and not expected to endanger public health, safety, the environment or underground drinking water sources; all equipment is in good condition and will retain mechanical integrity; and the operator has plugged well and completed required reclamation.
• States that upon issuance of a project of completion the operator is released from regulatory requirements, the financial assurance instrument is to be released to the operator, and primary responsibility and liability for the stored CO2 shall be transferred to the State except for potential criminal and contractual liability, violations of duties, provision of deficient or erroneous information, or migration that threatens public health or safety or the environment or underground sources of drinking water or the CO2 storage facility fund is insufficient to cover costs.

Liability and claims – ORC 5301.60

• States that a claim for damages based on CO2 injection or migration is not valid unless there is proof of a direct physical injury to a person, animal, or property, but exempts claims by oil and gas interest or owners of class II disposal wells from this provision.
• Limits recovery under a CCS property injury claim to the reduction in property value  and prohibits punitive damages if the CCS operator acted in compliance with permit requirements.

Appeals and fines – ORC 1509.79 and 1509.99

• Establishes an appeals process for any person adversely affected by an ODNR order regarding the CCS program.
• Aligns fines for violating the CCS program with fines for violating the Oil and Gas program administered by ODNR.

What’s next?

Rulemaking.  Now the ODNR must develop regulations for the CCS program.  After rules are proposed, reviewed, and finalized, we can also expect Ohio to submit its primacy application to the U.S. EPA.  The EPA would determine whether Ohio’s program suffices for the agency to delegate authority over UIC Class VI well permitting in Ohio to the ODNR.  That delegation of authority would purportedly result in faster review of the UIC permits at the state rather than federal level.  With much yet to happen, we’re not quite to the end of the CCS process in Ohio, but we’re closer than we were two years ago when we first learned that CCS could come to the state.  As always, we’ll continue to follow future developments on CCS.

Landowners should still be cautious

A landowner who signs a pore space lease for a CCS project today won’t be subject to or benefit from the provisions of H.B. 170, which puts the landowner at risk of legal uncertainty.  Until the new law is effective on September 23, 2026, and the ODNR establishes final regulations, there are no laws in Ohio that clearly recognize pore space interests, provide for severing or transferring those interests or prioritizing pore space with other property interests, or place requirements on CCS project operators.  Operators would be required only to obtain a UIC Class VI permit from the U.S. EPA and would not be subject to state oversight.  For these reasons, landowners receiving offers to lease pore space for CCS may be wise to wait a few more months for the law to be effective and provide clarity and oversight for CCS development in Ohio.

Read H.B. 170 on the Ohio General Assembly’s website.