ColoradoHB25-11652025 Regular SessionHouse

Geologic Storage Enterprise & Geothermal Resources

Sponsored By: Amy Paschal (Democratic), Cathy Kipp (Democratic), Cleave Simpson (Republican), Matt Soper (Republican)

Signed by Governor

EnergyNatural Resources & Environment

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Bill Overview

Analyzed Economic Effects

16 provisions identified: 1 benefits, 2 costs, 13 mixed.

Contractor fines rise with procedural safeguards

The board can fine covered violations at least $50 each; the old $1,000 maximum is removed without a replacement ceiling. Fine revenue goes to the well inspection fund. License discipline covers knowingly unpermitted heat-exchanger installation, fee fraud, improper use of a license by others, and missing required reports. Withholding, denying, suspending, or revoking a license requires proof of a legal ground and four of six board votes. Heat-exchanger complaints must be filed within two years after the completion report, or discovery of the defect if no report exists.

Contractors pay licensing and rig fees

Resident contractor applicants pay $20 to apply and $50 after passing; nonresidents pay $50 and then $400. Required financial backing is $10,000 for residents and $20,000 for nonresidents, through approved deposits, credit, or bonds. Ground heat exchanger contractors must maintain that backing; a lapse requires current proof and a $100 fee to seek reinstatement. Renewal costs $50 per year for terms up to three years, with training proof and replacement bonds or credit when required. Each ground heat exchanger installation rig costs $10 annually to register. The board cannot set renewal or rig fees so total program collections exceed direct and indirect administrative costs.

Heat-exchanger contractors need licenses and training

People contracting to install ground heat exchangers need the proper board license and must register rigs they operate or lease. Applicants generally need two years of experience and an exam; approved education or a well-construction license can replace experience. Licensees need eight hours of approved training each year, supported by a board program maintained with a contractor association. Existing State Engineer permit holders can continue under state rules until the experienced board member is appointed and licensing rules take effect. Those permit holders then need an oral exam, but no experience proof or written exam. Employees directly employed or supervised by licensed contractors do not need separate licenses.

Storage operators pay fees with caps

Carbon storage operators must pay a board-set fee for each ton injected in Colorado. Payments are due April 30, 2026, and each April 30 afterward. Total stewardship-fee deposits are capped at $100 million during the enterprise's first five years; that cap is repealed July 1, 2031. An added cleanup fee requires findings that orphaned sites are likely, operator financial assurance is insufficient, and existing fees cannot cover both purposes. Fees must reasonably match the costs they fund.

Existing fees help fund well inspections

The law directs $40 from each covered statutory fee to the well inspection fund. The Board of Examiners can change that allocation by rule. The State Engineer can use fund money without a new annual appropriation for the fund's legal purposes. Unspent money and interest stay in the fund. This allocation does not itself increase the total fee paid.

Storage claims face state immunity limits

The law preserves governmental immunity for public entities involved in geologic carbon storage. Storage sites, stored carbon dioxide, and related facilities do not count as gas facilities under the cited immunity waiver. People bringing covered claims cannot rely on that waiver to sue Colorado public entities.

Geothermal operators face reinjection requirements

Regulators can require geothermal fluid or water to be put back underground to maintain pressure, prevent sinking land, or dispose of brine. When an operator holds both operations and use permits, the agencies must decide where use and reinjection records go. Records can go to the commission, the State Engineer, or both. The law does not guarantee a single reporting destination.

Groundwater transfers carry geothermal rights too

For transfers, reservations, or severances after September 1, 2025, nontributary groundwater presumptively includes its related geothermal resources, and vice versa. The document can expressly rebut those presumptions, but related geothermal resources cannot be transferred separately from the groundwater. Owners can use the water for nongeothermal purposes only without materially harming an earlier geothermal operation. Geothermal ownership and rights acquired before July 1, 2023, remain protected.

Heat-exchanger repairs required, older systems protected

The board oversees ground heat exchanger construction and abandonment and can order investigations, repairs, or closure to correct violations. Orders must protect groundwater and public health, and owners or operators can face costs. Systems that met the rules when built generally do not need upgrades to current standards. For those systems, repair or abandonment requires an imminent public-health or groundwater-contamination threat. Required work must be the minimum needed to remove that threat.

Cleanup wells covered, above-groundwater basins exempt

An excavation intended for groundwater cleanup now counts as a monitoring and observation well and faces the applicable oversight rules. A recharge or infiltration basin is not a well when designed to stay above groundwater. That exclusion does not cover basins designed to reach or extend below groundwater.

Geothermal developers face revised resource boundaries

Denver Basin groundwater does not count as an allocated geothermal resource. Neither does groundwater in nontributary aquifers located entirely shallower than 2,500 feet. For oil and gas operations, the deep-geothermal exclusion for heat from produced fluids is narrower. It applies only when using that heat is not economically feasible as a separate geothermal project.

Geothermal permits expand with heat-only relief

Operations using allocated geothermal resources need a use permit even when they do not consume the resource. Beneficial uses also face the groundwater-use requirements in section 37-90-137(4), except the specified deep-geothermal operations. A permitted deep-geothermal operation needs no State Engineer withdrawal permit for nontributary groundwater used only for heat. Other beneficial water uses still require a well permit. The commission handles covered deep-operation permits; the State Engineer or contractor board handles shallow operations and specified deep-fluid uses. Distributed-resource use permits follow the applicable state water-permit laws.

Geothermal safeguards add notice and spacing

Outside designated groundwater basins, well permits must protect existing water rights and earlier geothermal operations from material harm. Wells generally need more than one-fourth mile from an earlier geothermal operation using the same aquifer, with notice-based or water-court exceptions. New geothermal wells pumping more than 50 gallons of tributary groundwater per minute require electronic notice and a 35-day harm-claim period. Applicants must show no material harm when a well could harm a qualifying registered historic hot spring. Deep-geothermal applicants must notify registered earlier operations within one-fourth mile, and regulators must find no material harm. Earlier operators and qualifying government entities must register locations and contacts for the notification list.

Groundwater users face revised classification rules

The law revises which groundwater counts as nontributary groundwater and excludes designated groundwater. It removes the former boundary rule tied to designated groundwater basins existing on January 1, 1985. The test asks whether continuous pumping reduces natural-stream flow within 100 years by more than 0.1% of annual withdrawals. Classification uses aquifer conditions at permit application. Special pressure assumptions apply to the Dawson, Denver, Arapahoe, and Laramie-Fox Hills aquifers; low pressure alone cannot establish Denver Basin nontributary status.

State funds long-term carbon storage care

The law creates a state enterprise and dedicated fund to care for underground carbon storage sites. A five-member board runs the enterprise, which can issue revenue bonds and accept gifts, grants, and donations. Operator fees also support the fund, and money remains available without a new annual appropriation. Orphaned-site cleanup requires the commission director's request and a finding, after notice and a hearing, that financial assurance is insufficient. The fund also pays reasonable and necessary operating costs.

State takes closed carbon storage sites

Storage operators must keep required financial assurance until closure approval and contribute enough to fund long-term care before approval. At approved closure, the state takes the stored carbon dioxide and remaining facilities without paying compensation. The enterprise takes over long-term care, and operators generally gain release from further regulatory liability. Liability or financial assurance can remain or return for material uncorrected violations, material misstatements or omissions, or dangerous fluid migration for which the operator is responsible. Such decisions require notice and a hearing.

Sponsors & Cosponsors

Cosponsors

Alex Valdez
Democratic • House
Brianna Titone
Democratic • House
Julie McCluskie
Democratic • House
Karen McCormick
Democratic • House
Monica Duran
Democratic • House
Mandy Lindsay
Democratic • House
Rep. S. Bird
Affiliation unavailable
Sen. F. Winter
Affiliation unavailable
Kyle Mullica
Democratic • Senate
Katie Wallace
Democratic • Senate
Lisa Cutter
Democratic • Senate
Marc Snyder
Democratic • Senate
Tony Exum
Democratic • Senate

Roll Call Votes

All Roll Calls

Yes: 182 • No: 75

House vote • 4/11/2025

Senate amendments: Repass

Yes: 41 • No: 21

House vote • 4/11/2025

Senate amendments: Concur

Yes: 44 • No: 18

Senate vote • 4/4/2025

Third reading: Bill

Yes: 28 • No: 6

Senate vote • 3/31/2025

Refer House Bill 25-1165, as amended, to the Committee of the Whole.

Yes: 8 • No: 1

House vote • 3/14/2025

Third reading: Bill

Yes: 42 • No: 22

House vote • 2/27/2025