On May 28, 2025, Colorado Governor Jared Polis signed HB-1165 into law. HB-1165 creates the Geologic Storage Stewardship Enterprise within the Department of Natural Resources to fund the state’s long-term stewardship of geologic storage facilities in the state and provides clarification for geothermal resource projects.
I. The Geologic Storage Enterprise
What is long-term stewardship of a geologic storage facility?
A geologic storage facility is a Class VI well that is used for long-term underground storage of carbon dioxide (CO2) in deep rock formations. Sources of CO2 vary and can include CO2 captured from point sources before the CO2 is emitted to the atmosphere or CO2 captured from the atmosphere. As of the date of this publication, no Class VI wells are permitted in Colorado. The Governor’s GHG roadmap identifies geologic storage facilities as an essential tool for Colorado to achieve its statewide emission targets to reduce greenhouse gas emissions.[1] This legislation may attract geologic storage operators to Colorado while remaining protective of the state’s resources.
Long-term stewardship occurs after a site is closed and includes monitoring and integrity maintenance of geologic storage facilities as well as the ability to take any associated action necessary to protect public health, safety, welfare, the environment, or wildlife resources.[2]
A site is closed after an operator permanently ceases injection of CO2. Site closure requires an operator to properly plug the well, remove unnecessary equipment for long-term stewardship and install monitoring equipment for long-term monitoring, and reclaim the land.[3] A plan for site closure is included in an operator’s Class VI permit application, which is approved by the appropriate agency before injection [4]
Once the site is properly closed and such closure is approved by the appropriate agency, operators must continue to monitor the facility to show the position of the CO2 plume and the pressure front and demonstrate that there is no endangerment to underground sources of drinking water.[5] This monitoring must occur for at least 50 years under Colorado rules, unless an alternative timeframe is approved by the appropriate regulatory authority.[6],[7] Under HB-1165, Colorado can take over this long-term monitoring.[8]
How is the Enterprise funded?
The Enterprise is funded primarily by payment of stewardship fees, which are assessed against geologic storage operators. [9] The Enterprise can also receive money from revenue bonds, gifts/grants/donations, and appropriated money from the General Assembly.[10]
What does the Enterprise have authority to do?
The Enterprise has the authority to hold title to property, including ownership of injection CO2, hire professionals or contractors necessary for long-term site stewardship, collect money, and assess an orphaned geologic storage facility fee.[11]
The Enterprise can only collect an orphaned geologic storage facility fee if the Enterprise finds that geologic storage operations in the state are likely to create orphaned facilities in the future.[12] There are currently no orphaned geologic storage operations in the entire country and stringent financial assurance requirements are in place to prevent facilities from actually becoming orphaned.
Will HB25-1165 encourage geologic storage operations in Colorado?
There are many factors an operator may consider before pursuing a geologic storage operation in Colorado. Such factors include geologic suitability for long-term storage of CO2, consent from pore space owners, and the political and regulatory climate for this industry. HB-1165 provides incentives to geologic storage operators to bring projects to Colorado because these operators can move on from a project after closure, freeing up capital for the operator to pursue new ventures.
II. Geothermal Resources
HB 25-1165 also makes several updates relating to geothermal resources. It also implements new notice requirements relating to proposed well applications for Deep geothermal operations and simplifies the jurisdictional division between ECMC and the State Engineer.
What notice is required for Deep geothermal operations?
As part of the permit issuance process for Deep geothermal operations, ECMC is now required to decide, based on available data, that such operations will not materially injure Prior geothermal operations.[13] Before ECMC can make this decision, the applicant must provide notice to all registered designated individuals of Prior geothermal operations within a quarter mile of the proposed Deep geothermal operations.[14]
Despite the more burdensome notice requirement, the revisions offer some protection for applicants from unknown operations because the owners or operators of Prior geothermal operations are required to register the location and designated individuals of such operations.[15] “Prior geothermal operation” is defined as “a geothermal well, operation, district, or unit authorized by [the State engineer or ECMC] pursuant to [] Article 90.5 or [] a historic hot spring.”[16]
Do I need to talk to the ECMC or State Engineer regarding a geothermal resource project?
Because the former law created overlapping jurisdiction with respect to some Deep geothermal operations, the revisions clarify that a well permit is not required from the State Engineer if the operator withdraws nontributary groundwater as part of Deep geothermal operations unless the operator will use such water for additional, unrelated beneficial uses.[17] “Deep geothermal operations” includes exploration for or production of (i) geothermal resources associated with nontributary groundwater or (ii) geothermal resources deeper than 2,500’ below the surface, in each case excluding withdrawal of groundwater in the Denver basin aquifers.[18]
If you have any questions, please contact John Jacus, Brian Annes, or Natalie Boldt.
[1] See H.B. 25-1165 §§ 1(a), (c).
[2] Colo. Rev. Stat. § 34-60-144(2)(e).
[3] Id. at § 34-60-103(40.5)(a)(II)(b).
[4] ECMC Rule 1423(b)(1).
[5] ECMC Rule 1423(b).
[6] Id.
[7] ECMC has promulgated rules for Class VI wells and is currently seeking primacy for the Class VI program from EPA. EPA has jurisdiction over Class VI well permits in Colorado until primacy is granted.
[8] C.R.S. § 34-60-106(9.4)(c)(II).
[9] Id. at § 34-60-144(7)(a).
[10] Id.
[11] Id. at § 34-60-144(5).
[12] Id.
[13] CRS 37-90.5-106(1)(b)(III)(B).
[14] CRS 37-90.5-106(1)(b)(III)(C).
[15] CRS 37-90.5-106(7).
[16] CRS 37-90.5-103(14.5).
[17] CRS 37-90-137(7.5).
[18] CRS 37-90.5-103(3).