Carbon Sequestration Certification Program: Emergency Rules

Emergency Rules

TITLE 155. OKLAHOMA CONSERVATION COMMISSION
CHAPTER 30. CARBON SEQUESTRATION CERTIFICATION PROGRAM

RULEMAKING ACTION:

EMERGENCY adoption

RULES:

Subchapter 1. General Provisions [NEW]
155:25-1-1 through 155:30-1-9 [NEW]

Subchapter 3. Soil Carbon Sequestration [NEW]
155:30-3-1 through 155:30-3-7 [NEW]

Subchapter 5. Forest Carbon Sequestration [NEW]
155:30-5-1 through 155:30-5-7 [NEW]

Subchapter 7. Geologic Sequestration (Injection and Storage) [NEW]
155:30-7-1 through 155:30-7-4 [NEW]

AUTHORITY:

Oklahoma Conservation Commission and the Conservation District Act contained in 27A O.S. 2001 §§ 3-1-101 et seq.; fee language contained in Senate Bill 1766 effective as of May 2, 2008 to be contained in the 2008 Oklahoma Statutes Supplement at 27A O.S. § 3-1-106 (33); and the Oklahoma Carbon Sequestration Enhancement Act contained in 27A O.S. (Supp 2007) §§ 3-4-101 et seq.

DATES:

Adoption:

June 2, 2008

Effective:

Immediately upon Governor’s approval

Expiration:

Effective through July 14, 2009, unless superseded by another rule or disapproved by the Legislature

SUPERSEDED EMERGENCY ACTIONS:

N/A

INCORPORATIONS BY REFERENCE:

N/A

FINDING OF EMERGENCY:

These rules serve a compelling public interest due to greenhouse gas emitters from within and outside of Oklahoma who are actively seeking to offset their emissions within Oklahoma for high quality offset projects. There are entities already conducting greenhouse gas offset trading transactions in the State but there is currently no State guidance in place to assure the credibility of these transactions in order to protect the interest of those engaged in carbon trading in Oklahoma and the interests of the State itself in ensuring that carbon trading within the state conforms to some standard.

ANALYSIS:

These rules are necessary to implement the provisions of the Oklahoma Carbon Sequestration Act. The purpose of the proposed rules is to provide the structure of the Carbon Certification Program and outline the requirements for voluntary participation in this program. Specifically, the rules define a state verified carbon offset and the rules governing the interaction between offset buyers, verifiers, project owners, and the state carbon registry. Accurate project monitoring and review are necessary to ensure that each tradable offset is a true representation of the quantity of stored carbon that it claims to represent. Obtaining assurance is fundamental in a trading program where carbon offsets are tradable commodities with monetary value.

CONTACT PERSON:

Stacy Hansen, (405) 522-4739

PURSUANT TO THE ACTIONS DESCRIBED HEREIN, THE FOLLOWING EMERGENCY RULES ARE CONSIDERED PROMULGATED AND EFFECTIVE UPON APPROVAL BY THE GOVERNOR AS SET FORTH IN 75 O.S., SECTION 303(D):

CHAPTER 30. CARBON SEQUESTRATION CERTIFICATION PROGRAM

SUBCHAPTER 1. GENERAL PROVISIONS

155:30-1-1. Purpose and Authority

The rules in this Chapter are promulgated for the purpose of establishing and administrating the Oklahoma Carbon Sequestration Certification Program, pursuant to the Oklahoma Carbon Sequestration Enhancement Act. These rules describe and establish the requirements for voluntary participation in the Program. The rules define carbon dioxide and state verified carbon offset, and describe the interaction between Offset buyers, offset aggregators, offset verifiers, project owners, and the state carbon offset registry. Additionally, the rules describe the process to become recognized as an approved project aggregator or verifier. These rules are to ensure that each tradable state verified offset is a true representation of the quantity of stored greenhouse gas that it is claimed to represent. Such assurance is fundamental in a program where greenhouse gas offsets are tradable commodities with monetary value.

155:30-1-2. Definitions

The following words or terms when used in this chapter shall have the following meaning unless the context clearly indicates otherwise:
"Act" means the Oklahoma Carbon Sequestration Enhancement Act, 27A O.S. § 3-4-101 et seq.

"Additionality" means that the quantity of carbon dioxide sequestered as a result of a project shall be beyond the quantity that would have otherwise occurred.

"Aggregator" means an intermediary that serves as the administrative representative for offset-generating projects on behalf of multiple and single landowners. Under these rules aggregators are authorized by the landowner to enter into a contract for the lands, vegetation, or geologic formations that will provide the greenhouse gas offset. Authorized aggregators may be government agencies, non-profits, tribes, or other bondable entities with expertise and experience with agricultural, forestry, or downhole injection or geologic sequestration, and should not have large emissions of greenhouse gases associated with their business or projects.

"Anthropogenic carbon dioxide" or "Man-Made CO2" means carbon dioxide occurring as a result of actions performed by a person. "APA" means the Oklahoma Administrative Procedures Act, 75 O.S. § 300 et seq.

"Applicant" means a person making an application.

"Application" means a petition or any written request for authority, approval, determination, permission, or other Commission action or relief pursuant to these rules. An application also includes the standard state forms for applying for an offset, including any supplemental materials, additions, revisions, or modifications to the forms.

"Carbon dioxide (CO2)" means an inorganic compound containing one carbon atom and two oxygen atoms. Carbon dioxide is an inert, stable, colorless, odorless, non-toxic, incombustible, inorganic gas. It is dissolvable in water and naturally present in underground locations and in the atmosphere as a trace gas. Carbon dioxide is formed during respiration and exhaled by humans and animals, and is utilized by plants during photosynthesis. Carbon dioxide can be liquefied by compression and cooling, and can be solidified into dry ice. Carbon dioxide is a gas produced when carbon is oxidized by any process. It can be produced anthropogenically or through various natural processes. For the purposes of these rules, only carbon dioxide produced anthropogenically or carbon dioxide of natural origin that through action of human activities is caused to be released from permanently sequestered storage is considered to be carbon dioxide. Under standard conditions, one short ton (2,000 pounds) of carbon dioxide equals 17.483 mcf (thousand cubic feet) or 0.91 metric tonnes.

"Carbon dioxide equivalent (CO2e)" means a term used to refer to gases other than carbon dioxide that have been converted into the equivalent of carbon dioxide based on their global warming potential. As defined by the U.S. Environmental Protection Agency, Global Warming Potential (GWP) is defined as the cumulative radiative forcing effects of a gas over a specified time horizon resulting from the emission of a unit mass of gas relative to a reference gas. The GWP-weighted emissions of direct greenhouse gases in the U.S. Inventory are presented in terms of equivalent emissions of carbon dioxide (CO2), using units of teragrams of carbon dioxide equivalents (Tg CO2 Eq.).

"Carbon market" means a public, legally binding trading system for greenhouse gas offsets upon which the value of carbon dioxide and its equivalents are determined.

"Carbon offset registry" means the records of offsets and offset projects maintained by the Commission and made public through an online website where greenhouse gas trading projects are reported to reduce the potential for carbon offsets to be claimed more than once as an emission reduction.

"Carbon sequestration" means the process of increasing the amount of carbon held in soil, plants, underground, in waterbodies, or in other types of long term storage.

"Carbon sink" means a geographical area that could be developed with forestation through reforestation or afforestation, managed forests, growing agricultural crops, or any existing vegetated area or marginally producing and or abandoned oil and or gas well area or other geological formation in which carbon is or could be sequestered or injected for long-term storage.

"Certificate" means a certificate, issued by the Commission pursuant to these rules, granted in response to an application and subsequent verification, and associated with a specified carbon sequestration enhancement practice determined by the Commission to qualify as a state verified offset. Any Certificate shall specify the vintage and numerical volume of offsets awarded to the applicant.

"Certification" means the approval of an application for a carbon sink pursuant to these rules.

"Document" means any kind of printed, recorded, written, graphic, photographic or electronic matter or material, however printed, produced, reproduced, coded or stored.

"EOR" means enhanced oil recovery or enhanced gas recovery.

"EOR reservoir" means any reservoir that is a common source of supply or pool.

"Geologic storage" means long-term or short-term underground storage or sequestration of carbon dioxide in a reservoir.

"Greenhouse gas" means any gas that absorbs infrared radiation in the atmosphere. Greenhouse gases include, but are not limited to, water vapor, carbon dioxide (CO2), methane(CH4), nitrous oxide(N2O), chlorofluorocarbons(CFCs), hydrochlorofluorocarbons (HCFCs), ozone (O3), hydrofluorocarbons(HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6).

"Governmental entity" means any department, commission, authority, council, board, bureau, committee, legislative body, agency, beneficial public trust, municipality, institution, political subdivision, tribe, or other establishment of the executive, legislative or judicial branch of the United States, the State of Oklahoma, any other state in the United States, the District of Columbia, the Territories of the United States, and any similar entity of any foreign country.

"Landowner" means the deed holding person or authorized lessee authorized to enter into contract for the lands, vegetation, or geologic formations that will provide the carbon offset. If deep underground storage is involved, the landowner owns the sub-surface pore space rights unless case law establishes otherwise. "Non-EOR reservoir" is also known as empty subsurface pore space and means any reservoir that is a subsurface sedimentary stratum, formation, aquifer, or cavity or void, whether natural or artificially created, including oil and gas reservoirs, saline formations, and coal seams.

"Offset" means the emissions reduction earned by projects that negate greenhouse gas emissions. Offsets may be expressed in standard cubic feet, metric tonnes, tons of CO2, or tons of CO2e."Operator" means the person permitted by the UIC agency to perform injection of carbon dioxide into a subsurface reservoir for the purpose of extracting oil or gas.

"Person" means any institution, individual, public or private corporation, partnership, proprietorship, association, firm, company, limited partnership, limited liability company, joint venture, public trust, joint-stock company, syndicate, trust, organization, estate, governmental entity, or any other legal entity or an agent, employee, representative, assignee or successor.

"Pooled Project" means a project created by the grouping of more than one project.

"Project" means the separate and distinct project for which the applicant is seeking offsets. In the case of an injection-related application, the project shall not be larger than a defined Unit (if injection is for EOR purposes), or larger than one or a small number of injection wells operated together as a group (if injection is not for EOR purposes).

"Reservoir" means any EOR reservoir or non-EOR reservoir that is suitable for, or capable of being made suitable for, the injection and storage of carbon dioxide, and includes any necessary and reasonable areal buffer and subsurface monitoring zones designated by the Corporation Commission or Department of Environmental Quality for the purpose of ensuring the safe and efficient operation of the storage facility.

"Resource Management Plan (RMP)" means a plan detailing practices that will sequester carbon dioxide or its equivalent on a specified area of land or in a specified geological formation or reservoir. These plans shall be written using specifications approved by the Commission. In regards to forest carbon sequestration the Commission shall accept Forest Stewardship Plans that are written using specifications approved by the Director of Forestry Services, Oklahoma Department of Agriculture, Food, and Forestry.

"Reserve" means a fund or qualifying carbon sink set aside to compensate for the reversal or loss of carbon sequestered by a project.

"Reversal" means the potential for some or all of the carbon sequestered by an offset project to be partially or completely released back to the atmosphere due to natural or human activities.

"State certified carbon sink" means a sink that has been reviewed and certified by the Commission as compliant with all criteria as required by this program.

"State verified offset" means an offset that has been reviewed and verified by the Commission or other authorized verifier as compliant with all criteria as required by this program.

"Storage facility" means the reservoir, and all underground equipment and surface buildings and equipment, utilized in the carbon dioxide storage operation, excluding all pipelines used to transport carbon dioxide.

"Storage operator" means any person authorized by the Corporation Commission or Department of Environmental Quality to operate a storage facility.

"UIC" means the Underground Injection Control program of the U.S. Environmental Protection Agency pursuant to the Safe Drinking Water Act.

"UIC agency" means the state governmental entity(s) having jurisdiction over UIC in Oklahoma.

"UIC permit" means the document issued by the UIC Agency authorizing the operator to engage in CO2 injection.

"Unit" means a unit consisting of a portion of a lease, a lease, or more than one lease or portions of a lease that covers contiguous lands containing one or more common sources of supply that has been approved by the Corporation Commission order as a unit for the purpose of unitized management, after notice and hearing.

"Verification" means the process of determining that the sequestration of carbon dioxide or its equivalent is occurring or has occurred according to criteria established by this program and that projects registered for offsets meet guidelines sufficient to qualify for compensation under an offset trade or purchase.

"Verifier" means a person, approved by the Commission that confirms the accuracy of reported data. This includes confirmation visually or through direct measurement, and by review of applicable records, that the expected sequestration of carbon dioxide or its equivalent has occurred as a result of a certified offset project. Verifiers shall have expertise and experience in the specifications and methods used to develop and assess carbon sinks associated with agriculture, forestry, downhole injection, or geological sequestration.

“Vintage” means the first calendar year that an offset is eligible to be traded, sold, or claimed to mitigate greenhouse gas emissions.

155:30-1-3. Applicability

These rules apply to persons seeking certification and verification of offsets that meet standards of quality as established by this program, as well as to persons buying or selling offsets. The Commission makes no warrantee as to the marketability or market value of a state verified offset.

155:30-1-4. Approval process

The process for approval of applications pursuant to this program is as follows:

An applicant shall submit an application for the project to the Commission. The application shall comply with both general requirements of this subchapter and any additional specific requirements contained in subsequent subchapters regarding the different types of carbon sinks.
The carbon sink associated with the project and identified in the application shall be certified by the Commission.
The certified carbon sink associated with the project shall undergo verification according to the schedule in the relevant subchapter of these rules.
The Commission will issue a certificate of state verified offset only after the offset has occurred and been verified.
The Commission will not approve applications for certification of carbon sinks or projects that will cause environmental degradation.

155:30-1-5. Applications

Obtaining an application. The applicant may obtain an application from an aggregator or the Commission.
Contents. Applications shall be submitted on a form provided or in a format designated by the Commission. The application shall contain, at a minimum, the following information
1. The name, address, and phone number of the applicant.
2. The legal description of the project.
3. A brief statement of the project that shall include the name of the project and type of carbon sink for which the applicant is applying for certification. Applicant shall not unreasonably define the project so as to include unrelated projects into a single application.
4. The application shall be signed by the applicant, or an authorized agent of the applicant, or by the attorney for the applicant, and shall set out the address, telephone number, and email address of the person signing it. The person signing the application shall be deemed, upon signing, to be attesting that:
  1. They have read the application, and
  2. After reasonable inquiry, the facts and statements contained in the application are true and correct to the best of their knowledge, information, and belief.
5. Attached to the application shall be the following exhibits:
  1. Any document (other than an application submitted to or a certificate issued by the Commission) evidencing any offset or certificate previously applied for or obtained in connection with any aspect or portion of the project.
  2. Other exhibits as required by the rules for each type of specified carbon sink.
Application fee. The application shall be accompanied by payment of the application fee. The application fee shall be paid by check, certified check, or United States Postal Money Order.
Time to file application. An application may be filed with the Commission at any time.
Guidance and review. The Commission shall provide applicants with guidance (including copies of any additional policies, procedures, and necessary forms) for the efficient administration of the program, and shall process applications in a timely manner.

155:30-1-6. Commission action on applications

Certification. The Commission shall certify a carbon sink upon approval of any application that meets Commission requirements for certification as contained in these rules.
Additionality. When applicable, the additionality of a carbon sink will be determined as part of the application process.
Denial of application. Any denial of an application shall be in writing and provided to the applicant, along with the reasons that the application was denied. A denial shall also advise the applicant of their right of appeal and of the procedures necessary to exercise those appeal rights.
Withdrawal of applications. Any application may be withdrawn by the applicant at any time prior to issuance of certification or denial in response to an application. An applicant may withdraw an application at anytime by submitting a written request to the Commission. The applicant’s application will be automatically withdrawn upon receipt of the request by the Commission. Any fees paid in connection with any application that is later withdrawn under this section shall not be refunded to the applicant.

155:30-1-7. Verification

Carbon dioxide sequestered by projects shall be verified to a reasonable level of assurance by the Commission.
A person shall qualify as a third party verifier if:
1. They have the necessary expertise;
2. They have no financial or pecuniary interest in the project; and
3. They have been approved by and contracted with the Commission.
Third party verifiers shall:
1. Only perform work on project scopes and geographies that they are qualified for and authorized to conduct by the Commission.
2. Maintain sufficiently transparent records on the methods and assumptions used to develop, calculate, and conduct verification of projects to the degree that the methods and assumptions are independently verifiable to other interested persons.
3. Provide copies of all required verification reports and supporting documentation or materials in accordance with Commission established and approved verification criteria.
4. Provide information that demonstrates they are qualified and capable of conducting verification of projects in accordance with Commission established and approved verification criteria.
5. Certify on forms prescribed by the Commission that contracted carbon sequestration practices are in place and functioning as planned.
6. Evaluate from individual projects within pooled projects the required project reports, documentation, and summary reports.
7. Establish and implement protocols acceptable to the Commission for carrying out the required evaluations and reporting the results.
Offset tonnage of sequestered carbon dioxide will be calculated by the Commission or other authorized verifier using visual confirmation paired with values from carbon accumulation tables, standard values for each type of carbon sink, and or direct measurement or other verification documents required under the relevant subchapter.
State verified offsets will be issued after final verification of a carbon sink associated with a project is conducted, the Commission shall issue a denial or certificate of state verified offsets to the applicant. The market dollar value of the offset will not be determined by the Commission.

155:30-1-8. Carbon offset registry

A repository of records of carbon offsets and carbon sequestration projects. The registry shall be maintained and made publicly available via a website updated by the Commission for the purposes of public disclosure.
Each project’s offsets shall be unique, meaning offsets shall not be claimed more than once on a regulatory, voluntary, or off market venue for the purposes of mitigating greenhouse gas emissions.
Aggregators shall track and report contracted offsets according to criteria established by the Commission for the purposes of verification and reporting to the state carbon offset registry.

155:30-1-9. Informal complaint process

(a) Any person may complain to the Commission about any matter regarding this program under the Commission’s authority. A complaint shall be in writing, and it shall include the following information.
1. The name, address, and telephone number of the person making the complaint;
2. The name, address, and telephone number of the organization the person represents, if applicable;
3. The name, address, telephone number, and title of any representative of the person filing the complaint;
4. A brief, clear description of each charge, problem, or issue that is the basis for the complaint including names, dates, places, and actions;
5. The numbers and headings of the laws and rules that may apply;
6. The remedy, if any, the person making the complaint seeks;
7. The signature of the person making the complaint; and
8. The date.
If the complaint is repetitive, concerns a matter that has already been resolved, or is a matter outside the Commission's authority, the Executive Director or the Executive Director’s designee may reject the complaint.
The Executive Director or the Executive Director’s designee may provide others with written notice of the complaint and give them an opportunity to respond in writing within 15 days. The response shall contain all of the following information.
1. The name, address, and telephone number of the person responding;
2. The name, address, and telephone number of the organization the person represents, if applicable;
3. The name, address, telephone number, and title of any representative of the person responding;
4. A specific admission, denial, or explanation of each charge;
5. A brief, clear description of the facts including names, dates, places, and actions;
6. A brief, clear explanation of the reasons for the action (or inaction) that is the basis for the complaint if the person admits to any charge;
7. The numbers and headings of the laws and rules that may apply;
8. The signature of the person responding; and
9. The date.
The Executive Director or the Executive Director’s designee may refer complaints to informal procedures, including but not limited to telephone calls, letters, meetings, mediation, investigations, or other appropriate procedures.
The Executive Director or the Executive Director’s designee shall make a decision about a complaint within 60 days after its receipt, unless more time is required. In that case, the Commission shall notify the person filing the complaint and persons filing any responses to the complaint.

SUBCHAPTER 3. SOIL CARBON SEQUESTRATION

155:30-3-1. Soil carbon sequestration application requirements

In addition to the requirements in Subchapter 1 for any application, a soil carbon sequestration application shall include the following:

Proof of ownership of the carbon sink or notarized consent of the landowner allowing the applicant to enter into contract for the carbon sink associated with the project.
The name, address, and phone number of the aggregator.
A permission form that allows the Commission or its authorized agents to enter the property and conduct a visual assessment of the sink described in the application.
Soil carbon sink certification packet.

155:30-3-2. Commission action on soil carbon applications

The Commission shall either approve or deny a soil carbon application and shall notify the applicant in writing of the Commission’s determination.

155:30-3-3. Carbon sink certification

The purpose of a soil carbon sequestration application is to obtain state certification of a potential carbon sink.
A landowner applying for certification of a carbon sink shall:
1. obtain and complete the certification packet as prescribed by the Commission;
2. obtain a Resource Management Plan; and
3. obtain a state approved aggregator that shall submit the completed certification packet to the Commission.
After receipt of the completed certification packet, the Commission shall:
1. evaluate and review the completed application based on criteria established by the Commission;
2. estimate the offsets achievable by each carbon sink; and
3. grant or deny in writing the certification of the potential carbon sink.
Only after a carbon sink is recognized as a state certified carbon sink may a state approved aggregator market it as an offset.

155:30-3-4. Soil carbon sinks eligible for certification

For each application submitted to the Commission a determination will be made as to whether a potential carbon sink is eligible to become a state certified carbon sink. Only soil carbon sinks with default or standard sequestration rates determined by research acceptable to the Commission to capture and hold carbon dioxide or its equivalent for a determined or estimated or measurable rate or span of time shall be considered for state certification. Soil carbon sinks listed below may be considered if they meet standards set by the Commission. Types of eligible soil carbon sinks:

Conservation Tillage,
Grassland or Pastureland Establishment, and
Rangeland Management.
Other sinks may be considered on a case by case basis.

155:30-3-5. Resource Management Plan (RMP)

Prior to the submission of a certification packet each landowner shall obtain or develop a resource management plan.
The RMP shall provide details and explanations on the activities that will increase, or maintain existing, trapped carbon including but not limited to growing of designated crops or use of designated cropping systems.
For soil carbon projects, the RMP shall, at a minimum, include the following:
1. Description of the conservation practice that is to be certified as a carbon sink;
2. Legal location of individual areas containing the conservation practices to be certified as a carbon sink;
3. Number of acres under conservation management that are to be certified as a carbon sink;
4. Start date of the conservation practices; and
5. Aerial photo obtained from the local conservation district office, or other provider, clearly showing the area of land that is to be certified as a carbon sink.

155:30-3-6. Aggregator

Aggregators shall provide the following information to the Commission to become an approved state aggregator:
1. Proof of a bond or other financial instrument that is not less than Ten Thousand Dollars ($10,000.00).
2. Written documentation that an office is maintained at a specific location in Oklahoma that is accessible to the public.
3. Information about past experience and available resources that demonstrates the ability to manage the marketing and tracking of an offset portfolio and of the capability to be an aggregator of carbon sequestration projects.
All projects carry a risk of an unexpected future reversal of achieved greenhouse gas reductions; therefore, aggregators applying to become state approved should also provide the following information to the Commission:
1. Description of safeguards to ensure that the risk of reversal is minimized and that, should reversal occur, a mechanism is in place that guarantees that the reductions or removals will be replaced or compensated.
2. Documentation of insurance or approved reserves of emission reductions, or some other guarantee to replace any unexpected reversals.
3. A monitoring plan that describes how potential reversals will be discovered, measured, or estimated and compensated in the event they occur.
Aggregators shall do the following:
1. Contract with landowners to market a certified carbon sink as an offset;
2. Gather the needed information for each project from participating landowners and compile the information into summary reports as required;
3. Submit summary reports of projects they represent to the Commission;
4. Maintain a monetary reserve to cover offset buyer losses due to reversal;
5. Utilize safeguards to ensure that the risk of reversal is minimized and that, should any reversal occur, a mechanism is in place that guarantees that the reductions or removals will be replaced or compensated;
6. Establish and implement acceptable protocols for landowner contract non-compliance;
7. Track project information as required;
8. Report project information to the state carbon offset registry as required;
9. Disseminate to the public reliable information about carbon sequestration opportunities in Oklahoma; and
10. Encourage landowners to maintain contracted practices that sequester carbon and that result in the sequestered carbon remaining in place at least through the duration of the contract.

155:30-3-7. Contracts between aggregators and landowners

Once a carbon sink is certified the aggregator and landowner may enter into a contract that allows the aggregator to market the sink as an offset.
If a contract is entered into between the aggregator and landowner the following information should be included in the contract:
1. Length of time the carbon sink shall be maintained.
2. Verification requirements.
3. Compensation protocol.
4. Reserve stipulations.
5. Landowner non-compliance stipulations.
6. Clear definition of state verified offset ownership.
At least annually through the contract period, the Commission shall by verification determine that the carbon sink is maintained according to the contract.
A final verification shall be conducted.
Once the state certified carbon sink has undergone annual and final verification, the compensation arrangements in the contract between the landowner and aggregator should be honored.

SUBCHAPTER 5. FOREST CARBON SEQUESTRATION

155:30-5-1. Forest carbon sequestration application requirements

In addition to the general requirements in Subchapter 1 for any application, a forest carbon sequestration application shall include the following:
(1) Proof of ownership or notarized authorization of the landowner to enter into contract for the carbon sink associated with the project.
(2) The name, address, and phone number of the aggregator.
(3) Permission form that allows the Commission or its authorized agents to enter the property and conduct a visual assessment of the lands described in the application.
(4) Forest carbon sequestration certification packet.

155:30-5-2. Commission action on forest carbon applications

The Commission shall either approve or deny a forest carbon application and shall notify the applicant in writing of the Commission’s determination.

155:30-5-3. Carbon sink certification

The purpose of a forest carbon sequestration application is to obtain state certification of a potential carbon sink.
A landowner applying for certification of a carbon sink shall:
1. obtain and complete the certification packet as prescribed by the Commission;
2. obtain a Resource Management Plan;
3. obtain a state approved aggregator that shall submit the completed certification packet to the Commission.
After receipt of the completed certification packet, the Commission shall:
1. evaluate and review the completed application based on established criteria;
2. estimate the offsets achievable by each carbon sink; and
3. grant or deny in writing the certification of the potential carbon sink.
Only after a carbon sink is recognized as a state certified carbon sink may a state approved aggregator market it as an offset.

155:30-5-4. Forest carbon sinks eligible for certification

For each certification packet submitted to the Commission a determination will be made as to whether a potential carbon sink is eligible to become a state certified carbon sink. Only forest carbon sinks with default or standard sequestration rates determined by research acceptable to the Commission to capture and hold carbon dioxide or its equivalent for a determined or estimated or measurable rate or span of time shall be considered for state certification.
Types of eligible forestry carbon sinks are as follows:
1. Afforestation. The establishment of trees on lands previously used for non-forestry activities that are also part of a long-term approved Resource Management Plan.
2. Managed Forests. The use and management of sustainable silvicultural practices of forests that are also part of a long-term approved Resource Management Plan.
3. Reforestation. The establishment of trees on lands previously forested that are also part of a long-term approved Resource Management Plan.
Forestry sinks not specifically listed above may be considered by the Commission on a case by case basis.

155:30-5-5. Resource Management Plan (RMP)

Prior to the submission of a certification packet each landowner or aggregator shall develop a Resource Management Plan.
The RMP shall provide details and explanations on the activities that will increase, or maintain existing, trapped carbon.
For forestry carbon projects, the RMP shall, at a minimum, include the following:
1. Legal location of the individual areas containing the forest management practices to be certified as a carbon sink;
2. Aerial photo clearly showing the area of land that is to be certified as a carbon sink;
3. Number of acres under forest management practice(s) that are to be certified as a carbon sink;
4. Clearly stated landowner objectives for the forest management practices that include the sequestration of carbon;
5. Description and evaluation of the natural resources present on the area;
6. Defined desired future forest condition;
7. Description of the forest management practices and activities aimed at reaching the desired forest condition or condition class including those that are to be certified as a carbon sink;
8. Documentation of a timeline for RMP implementation that includes the start date of the forest management activities.

155:30-5-6. Aggregator

Aggregators shall provide the following information to the Commission to become an approved state aggregator:
1. Proof of a bond or other financial instrument that is not less than Ten Thousand Dollars ($10,000.00).
2. Written documentation that an office is maintained at a specific location in Oklahoma that is accessible to the public.
3. Information about past experience and available resources that demonstrates the ability to manage the marketing and tracking of an offset portfolio and of the capability to be an aggregator of carbon sequestration projects.
All projects carry a risk of an unexpected future reversal of achieved greenhouse gas reductions; therefore, aggregators applying to become state approved should also provide the following information to the Commission:
1. Description of safeguards to ensure that the risk of reversal is minimized and that, should reversal occur, a mechanism is in place that guarantees that the reductions or removals will be replaced or compensated.
2. Documentation of insurance or approved reserves of emission reductions, or some other guarantee to replace any unexpected reversals.
3. A monitoring plan that describes how potential reversals will be discovered, measured, or estimated and compensated in the event they occur.
Aggregators shall do the following:
1. Contract with landowners to market a certified carbon sink as an offset;
2. Gather the needed information for each project from participating landowners and compile the information into summary reports as required;
3. Submit summary reports of projects they represent to the Commission;
4. Maintain a monetary reserve to cover offset buyer losses due to reversal;
5. Utilize safeguards to ensure that the risk of reversal is minimized and that, should any reversal occur, a mechanism is in place that guarantees that the reductions or removals will be replaced or compensated;
6. Establish and implement acceptable protocols for landowner contract non-compliance;
7. Track project information as required;
8. Report project information to the state carbon offset registry as required.
9. Disseminate to the public reliable information about carbon sequestration opportunities in Oklahoma; and
10. Encourage landowners to maintain contracted practices that result in carbon sequestration and that result in the sequestered carbon remaining in place at least through the duration of the contract.

155:30-5-7. Contracts between aggregators and landowners

Once a carbon sink is certified the aggregator and landowner may enter into a contract that allows the aggregator to market the sink as an offset.
If a contract is entered into between the aggregator and landowner the following information should be included in the contract:
1. Length of time the carbon sink shall be maintained.
2. Verification requirements.
3. Compensation protocol.
4. Reserve stipulations.
5. Landowner non-compliance stipulations.
6. Clear definition of state verified offset ownership.
At least annually through the contract period, the Commission shall by verification determine that the carbon sink is maintained according to the contract.
For forestry sequestration projects with a timeline longer than five years, the Commission or other authorized verifier shall verify at year one of the project and at least every five years through the contract period, that the sink is maintained according to the contract.
A final verification shall be conducted.
Once the state certified carbon sink has undergone annual and final verification, the compensation arrangements in the contract between the landowner and aggregator should be honored.

SUBCHAPTER 7. GEOLOGIC SEQUESTRATION (INJECTION AND STORAGE)

155:30-7-1. Geologic sequestration application requirements

In addition to the requirements in Subchapter 1 for applications, a geologic sequestration application shall include the following:

UIC permit documents. These documents shall include a copy of the following:
1. Any permit, approval, or other authorization issued by any governmental entity having jurisdiction over the injection of carbon dioxide related to the project for which the application is submitted, including any UIC Permit;
2. Any request or application for the permit; and
3. A list of any documents submitted in support of the permit.
4. For applications other than the initial application with respect to a project, the application shall reference all prior applications with respect to the project and only include documents not already contained in prior applications.
List of prior certificates. A listing of each application or application number and each certificate or certificate number associated with any prior application related to the Project.
Resource Management Plan. Prior to the submission of an application, the applicant shall develop a Resource Management Plan in a format approved by the Commission. The RMP shall provide details and explanations on the activities that will increase sequestration of, or maintain sequestration of,carbon dioxide, and shall include but not be limited to the following:
1. Description of the project including the estimated total volume of carbon dioxide to be sequestered by the project during the year for which an offset will be requested;
2. Capacity and integrity of the geologic confinement system indicating what percentage of the amount injected can reasonably be expected to remain out of the atmosphere for a specified period of time;
3. Expert opinion (e.g., geologic, geophysical, or petroleum geology expert opinion) that the project will not degrade water supplies or generate project-negating emissions;
4. Legal location of the individual injection areas;
5. Start date of the project;
6. Estimated dates and amounts of each injection;
7. Aerial photo of the land area overlaying the geologic confinement area; and
8. Proof or written assurances of the obtainment of any required permits, licenses, exemptions, rights, or registrations required by law that must be acquired from any person or governmental entity other than the Commission.

155:30-7-2. Commission action on geologic applications

The Commission shall either approve or deny an application for certification of a carbon sink and shall notify the applicant in writing of the Commission’s determination. A denial shall advise the applicant of their right of appeal and of the procedures necessary to exercise those appeal rights.

155:30-7-3. Geologic sink certification

The purpose of a geologic sequestration application is to obtain state certification of a potential carbon sink.
A person applying for certification of a carbon sink shall:
1. obtain and complete the certification packet as prescribed by the Commission;
2. obtain necessary permits from the UIC agency.
3. develop a Resource Management Plan.
After receipt of the completed certification packet, the Commission shall:
1. evaluate and review the completed application based on criteria established by the Commission;
2. estimate the offsets achievable by each carbon sink; and
3. grant or deny in writing the certification of the potential carbon sink.
Only after a carbon sink is recognized as a state certified carbon sink may a person request state verified offset issuance for the carbon dioxide sequestered by the sink and claim the carbon dioxide sequestered by the sink as a state verified offset.

155-30-7-4. State Verified Offset issuance

Request. A request for state verified offset may be filed anytime during the calendar year immediately following the calendar year (or portion thereof) in which offsets occurred (i.e. applications must be filed on or before December 31, 2011 with respect to any offsets for any portion of the calendar year of 2010). Notwithstanding the foregoing, requests for verification of offsets associated with carbon dioxide sequestered or stored prior to the effective date of these rules, but after the effective date of the Act, shall be made on or before December 31, 2009. After final verification is conducted, the Commission shall issue a denial or certificate of state verified offsets to the applicant.
Verification. Prior to receiving a certificate for state verified offsets resulting from a geologic sequestration project, the applicant shall submit a summary report from an approved third-party verifier. The report and the report’s supporting documents shall include the total amount of carbon dioxide sequestered and the following information:
1. Volumes and Pressures. An applicant shall measure the carbon dioxide volumes and pressures associated with operation of the project for the relevant time period. For verification purposes the volumes and pressures shall be reported to the Commission in the form and at intervals required by the Commission, and the Commission may accept certified copies of reports filed by the operator with the UIC agency with respect to the project.
2. Mechanical Integrity. An applicant must demonstrate that the injection wells associated with the project have sufficient mechanical integrity. Submission of the most recent acceptable Mechanical Integrity Test (MIT) report, performed before or during the calendar year for which offsets are requested, shall be deemed sufficient demonstration of mechanical integrity for the injection well. The Commission at its discretion may conduct additional testing or request additional information before approving an application.
3. Monitoring. Applicants shall provide proof of adequate monitoring of the project operation so as to demonstrate actual storage of carbon dioxide under the surface of the ground. Proof shall be provided in the manner and at intervals determined by the Commission.
Vintage. Any request for a state verified offset shall only include offsets that have occurred during a single calendar year, and any state verified offsets granted to an applicant hereunder shall only encompass offsets for the calendar year identified in the request.