HB 185: Carbon Credit Amendments - Utah

Substitute #4 → Enrolled · 4 edits · Mar 25, 2026

MODERATE

The bill was updated to streamline carbon credit reporting by removing the requirement for state entities to report funds used to create credits and simplifying the reporting format to a single approved form. Additionally, the bill now explicitly states that carbon credits remain under the control of the state entity that created or purchased them, rather than being sold by the state treasurer. The effective date of the legislation was also adjusted from March 2, 2026, to May 6, 2026.

Scope change

The scope of reporting requirements was narrowed by removing the obligation to report creation costs, and the management authority for carbon credits was clarified to exclude them from the state treasurer's general sale authority.

REQUIREMENT

Removed the requirement for state entities to report state funds used to create environmental commodities.

Simplified reporting requirements for carbon credits to a single form approved by the state auditor, removing the need for separate line items for identification, description, and sale terms.

Added a specific provision stating that carbon credits created or purchased by a state entity remain under the control of that entity.

TIMELINE

Changed the bill's effective date from March 2, 2026, to May 6, 2026.

Substitute #3 → Substitute #4 · 4 edits

MODERATE

The bill was revised to change the reporting authority for carbon credit transactions from the Attorney General to the State Auditor. Additionally, the Senate sponsor was updated, and the effective date section was renumbered from Section 5 to Section 6.

Scope change

The bill's scope regarding carbon credit oversight shifted from the Attorney General to the State Auditor, altering which agency collects transaction data and reports to the legislative subcommittee.

ENFORCEMENT

The agency responsible for receiving carbon credit transaction reports and reporting to the Appropriations Subcommittee changed from the Attorney General to the State Auditor.

TECHNICAL

The Senate Sponsor name was updated from 'LONG TITLE' to 'Derrin R. Owens'.

The effective date section was renumbered from Section 5 to Section 6.

The section number for the Carbon Credit Litigation Fund was changed from Section 2 to Section 67-5-41 in the Utah Code Annotated 1953 citation list, though the text of the fund section itself remained identical.

Substitute #2 → Substitute #3 · 7 edits

MODERATE

The bill was streamlined to remove the creation of the Carbon Credit Investment Fund and the associated assessment fee, shifting focus entirely to regulating state entities and establishing a litigation fund. The scope was narrowed by removing requirements for private brokers and general reporting, while adding a specific reporting requirement for state entities to the Appropriations Subcommittee. Definitions were updated to include 'natural asset credits' and clarify that carbon credits do not include liquefied carbon dioxide.

Scope change

The bill's scope was significantly reduced by removing provisions for private carbon credit brokers, licensing requirements, and an assessment fee on sales. Applicability was narrowed to focus primarily on state entities selling credits and the Attorney General's litigation fund.

FISCAL

Eliminated the creation of the Carbon Credit Investment Fund and the Carbon Credit Litigation Fund's funding source derived from that investment fund.

REQUIREMENT

Removed the requirement for private individuals to obtain a carbon credit broker license and the associated $200 fee.

Removed the 10-year right of first refusal for the Office of Energy Development to purchase in-state carbon credits.

Changed reporting requirements so that only state entities must report sales to the Office of Energy Development, removing the 45-day waiting period and negotiation details previously required.

DEFINITION

Added the definition of 'natural asset credit' and clarified that carbon credits do not include liquefied carbon dioxide.

ENFORCEMENT

Removed the criminal penalty (class B misdemeanor) for selling carbon credits without a broker license.

TIMELINE

Removed the assessment effective date of July 1, 2027, as the assessment fee itself was deleted.

Substitute #1 → Substitute #2 · 9 edits

MAJOR

Substitute #2 significantly modifies the carbon credit bill by shifting administrative authority from the State Tax Commission to the Office of Energy Development, adjusting assessment rates based on contract length, and adding exemptions for short-term agreements. The bill also expands the list of exempt state funds and clarifies reporting deadlines.

Scope change

The scope of administrative authority changed from the State Tax Commission to the Office of Energy Development, and the applicability of the carbon credit assessment now depends on the length of the purchase agreement.

REQUIREMENT

The carbon credit assessment rate changed from a flat 19% to a tiered system: 5% for agreements under 10 years and 10% for agreements of 10 years or longer.

Reporting deadlines for carbon credit assessments were changed to require submission of notices by January 31 of each year.

ENFORCEMENT

Administrative authority over carbon credit assessments and broker licensing was transferred from the State Tax Commission to the Office of Energy Development.

SCOPE

A new exemption was added for carbon credit sales on school and institutional trust lands if the purchase agreement is for less than 10 years.

The list of state funds exempt from investment chapter rules was expanded to include the Carbon Credit Investment Fund and the Opioid Litigation Proceeds Fund.

ELIGIBILITY

The definition of 'Principal' in the Carbon Credit Investment Fund was modified to explicitly exclude asset appreciation.

FISCAL

The distribution of funds to degree-granting institutions was modified to require a 50% rural student enrollment composition instead of the previous 45%.

TIMELINE

The effective date for the carbon credit assessment was delayed from July 1, 2026, to July 1, 2027.

DEFINITION

The definition of 'State funds' was modified to explicitly exclude tax incentives and permits.

Introduced → Substitute #1 · 8 edits

MODERATE

The bill was significantly revised to shift the regulatory authority for carbon credits from the State Tax Commission to the Office of Energy Development. The tax rate on carbon credit sales was reduced from 25% to a 19% assessment, and the revenue structure was altered to create a new Carbon Credit Investment Fund that supports rural education and litigation, rather than depositing all revenue into the General Fund. Additionally, the waiting period for selling in-state carbon credits was shortened from 90 to 45 days, and the proposal for purchasing state-owned credits was redirected to a different legislative subcommittee.

Scope change

The bill's scope expanded to include new funds for litigation and rural education, while the applicability of the tax regime shifted from the State Tax Commission to the Office of Energy Development, which now handles licensing and assessment administration.

FISCAL

A new Carbon Credit Investment Fund was created to receive assessment revenue, with distributions designated for rural degree-granting institutions and a new Carbon Credit Litigation Fund.

The tax on carbon credit sales was reduced from 25% to a 19% assessment.

REQUIREMENT

The mandatory waiting period before selling an in-state carbon credit was shortened from 90 days to 45 days.

The proposal for purchasing state-owned carbon credits must now be submitted to the Natural Resources, Agriculture, and Environmental Quality Appropriations Subcommittee instead of the Legislative Management Committee.

State entities selling carbon credits are now required to deposit sale proceeds into the General Fund, whereas previously they were only required to report valuation data.

ENFORCEMENT

Regulatory authority for licensing and assessment administration was transferred from the State Tax Commission to the Office of Energy Development.

The Attorney General is authorized to establish a volunteer task force to investigate carbon credit violations and prevent the state from being forced into federal climate programs.

DEFINITION

The definition of 'carbon credit' was expanded to include an 'offer of payment,' and 'state funds' was updated to include bonds issued by state entities.

Carbon Credit Amendments

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