HB 185

Enrolled Copy  H.B. 185
1Carbon Credit Amendments
  2026 GENERAL SESSION
  STATE OF UTAH
  Chief Sponsor: Troy Shelley
  Senate Sponsor: Derrin R. Owens
2
3  LONG TITLE
4  General Description:
5     This bill addresses requirements related to the sale of a carbon credit.
6  Highlighted Provisions:
7     This bill:
8     ▸ defines and modifies terms;
9     ▸ creates the Carbon Credit Litigation Fund and specifies the purpose of the fund;
10     ▸ establishes reporting requirements for a state entity that sells or exchanges a carbon credit;
11     ▸ requires the state auditor to report on the sale of carbon credits by state entities to the
12  Natural Resources, Agriculture, and Environmental Quality Appropriations
13  Subcommittee; and
14     ▸ makes technical and conforming changes.
15  Money Appropriated in this Bill:
16     None
17  Other Special Clauses:
18     None
19  Utah Code Sections Affected:
20  AMENDS:
21     67-3-1, as last amended by Laws of Utah 2025, First Special Session, Chapter 17
22     79-6-1301, as enacted by Laws of Utah 2025, Chapters 146, 375
23     79-6-1302, as enacted by Laws of Utah 2025, Chapters 146, 375
24     79-6-1303, as enacted by Laws of Utah 2025, Chapters 146, 375
25  ENACTS:
26     67-5-41, Utah Code Annotated 1953
27
H.B. 185  Enrolled Copy
28   Be it enacted by the Legislature of the state of Utah:
29Section 1. Section 67-3-1 is amended to read:
3067-3-1 . Functions and duties.
31   (1)(a) The state auditor is the auditor of public accounts and is independent of any
32executive or administrative officers of the state.
33(b) The state auditor is not limited in the selection of personnel or in the determination
34of the reasonable and necessary expenses of the state auditor's office.
35   (2) The state auditor shall examine and certify annually in respect to each fiscal year,
36financial statements showing:
37(a) the condition of the state's finances;
38(b) the revenues received or accrued;
39(c) expenditures paid or accrued;
40(d) the amount of unexpended or unencumbered balances of the appropriations to the
41agencies, departments, divisions, commissions, and institutions; and
42(e) the cash balances of the funds in the custody of the state treasurer.
43   (3)(a) The state auditor shall:
44(i) audit each permanent fund, each special fund, the General Fund, and the accounts
45of any department of state government or any independent agency or public
46corporation as the law requires, as the auditor determines is necessary, or upon
47request of the governor or the Legislature;
48(ii) perform the audits in accordance with generally accepted auditing standards and
49other auditing procedures as promulgated by recognized authoritative bodies; and
50(iii) as the auditor determines is necessary, conduct the audits to determine:
51(A) honesty and integrity in fiscal affairs;
52(B) accuracy and reliability of financial statements;
53(C) effectiveness and adequacy of financial controls; and
54(D) compliance with the law.
55(b) If any state entity receives federal funding, the state auditor shall ensure that the
56audit is performed in accordance with federal audit requirements.
57(c)(i) The costs of the federal compliance portion of the audit may be paid from an
58appropriation to the state auditor from the General Fund.
59(ii) If an appropriation is not provided, or if the federal government does not
60specifically provide for payment of audit costs, the costs of the federal compliance
61portions of the audit shall be allocated on the basis of the percentage that each
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62state entity's federal funding bears to the total federal funds received by the state.
63(iii) The allocation shall be adjusted to reflect any reduced audit time required to
64audit funds passed through the state to local governments and to reflect any
65reduction in audit time obtained through the use of internal auditors working
66under the direction of the state auditor.
67  (4)(a) Except as provided in Subsection (4)(b), the state auditor shall, in addition to
68      financial audits, and as the auditor determines is necessary, conduct performance and
69      special purpose audits, examinations, and reviews of any entity that receives public
70      funds, including a determination of any or all of the following:
71(i) the honesty and integrity of all the entity's fiscal affairs;
72(ii) whether the entity's administrators have faithfully complied with legislative intent;
73(iii) whether the entity's operations have been conducted in an efficient, effective, and
74cost-efficient manner;
75(iv) whether the entity's programs have been effective in accomplishing the intended
76objectives; and
77(v) whether the entity's management, control, and information systems are adequate,
78effective, and secure.
79      (b) The auditor may not conduct performance and special purpose audits, examinations,
80and reviews of any entity that receives public funds if the entity:
81(i) has an elected auditor; and
82(ii) has, within the entity's last budget year, had the entity's financial statements or
83performance formally reviewed by another outside auditor.
84  (5) The state auditor:
85      (a) shall administer any oath or affirmation necessary to the performance of the duties of
86the auditor's office; and
87      (b) may:
88(i) subpoena witnesses and documents, whether electronic or otherwise; and
89(ii) examine into any matter that the auditor considers necessary.
90  (6) The state auditor may require all persons who have had the disposition or management
91      of any property of this state or its political subdivisions to submit statements regarding
92      the property at the time and in the form that the auditor requires.
93  (7) The state auditor shall:
94      (a) except where otherwise provided by law, institute suits in Salt Lake County in
95relation to the assessment, collection, and payment of revenues against:
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96(i) persons who by any means have become entrusted with public money or property
97and have failed to pay over or deliver the money or property; and
98(ii) all debtors of the state;
99(b) collect and pay into the state treasury all fees received by the state auditor;
100(c) perform the duties of a member of all boards of which the state auditor is a member
101by the constitution or laws of the state, and any other duties that are prescribed by the
102constitution and by law;
103(d) stop the payment of the salary of any state official or state employee who:
104(i) refuses to settle accounts or provide required statements about the custody and
105disposition of public funds or other state property;
106(ii) refuses, neglects, or ignores the instruction of the state auditor or any controlling
107board or department head with respect to the manner of keeping prescribed
108accounts or funds; or
109(iii) fails to correct any delinquencies, improper procedures, and errors brought to the
110official's or employee's attention;
111(e) establish accounting systems, methods, and forms for public accounts in all taxing or
112fee-assessing units of the state in the interest of uniformity, efficiency, and economy;
113(f) superintend the contractual auditing of all state accounts;
114(g) subject to Subsection (8)(a), withhold state allocated funds or the disbursement of
115property taxes from a state or local taxing or fee-assessing unit, if necessary, to
116ensure that officials and employees in those taxing units comply with state laws and
117procedures in the budgeting, expenditures, and financial reporting of public funds;
118(h) subject to Subsection (9), withhold the disbursement of tax money from any county,
119if necessary, to ensure that officials and employees in the county comply with
120Section 59-2-303.1; and
121(i) withhold state allocated funds or the disbursement of property taxes from a local
122government entity or a limited purpose entity, as those terms are defined in Section
12367-1a-15 if the state auditor finds the withholding necessary to ensure that the entity
124registers and maintains the entity's registration with the lieutenant governor, in
125accordance with Section 67-1a-15.
126   (8)(a) Except as otherwise provided by law, the state auditor may not withhold funds
127under Subsection (7)(g) until a state or local taxing or fee-assessing unit has received
128formal written notice of noncompliance from the auditor and has been given 60 days
129to make the specified corrections.
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130      (b) If, after receiving notice under Subsection (8)(a), a state or independent local
131fee-assessing unit that exclusively assesses fees has not made corrections to comply
132with state laws and procedures in the budgeting, expenditures, and financial reporting
133of public funds, the state auditor:
134(i) shall provide a recommended timeline for corrective actions;
135(ii) may prohibit the state or local fee-assessing unit from accessing money held by
136the state; and
137(iii) may prohibit a state or local fee-assessing unit from accessing money held in an
138account of a financial institution by filing an action in a court with jurisdiction
139under Title 78A, Judiciary and Judicial Administration, requesting an order of the
140court to prohibit a financial institution from providing the fee-assessing unit
141access to an account.
142      (c) The state auditor shall remove a limitation on accessing funds under Subsection (8)(b)
143upon compliance with state laws and procedures in the budgeting, expenditures, and
144financial reporting of public funds.
145      (d) If a local taxing or fee-assessing unit has not adopted a budget in compliance with
146state law, the state auditor:
147(i) shall provide notice to the taxing or fee-assessing unit of the unit's failure to
148comply;
149(ii) may prohibit the taxing or fee-assessing unit from accessing money held by the
150state; and
151(iii) may prohibit a taxing or fee-assessing unit from accessing money held in an
152account of a financial institution by:
153(A) contacting the taxing or fee-assessing unit's financial institution and
154requesting that the institution prohibit access to the account; or
155(B) filing an action in a court with jurisdiction under Title 78A, Judiciary and
156Judicial Administration, requesting an order of the court to prohibit a financial
157institution from providing the taxing or fee-assessing unit access to an account.
158      (e) If the local taxing or fee-assessing unit adopts a budget in compliance with state law,
159the state auditor shall eliminate a limitation on accessing funds described in
160Subsection (8)(d).
161  (9) The state auditor may not withhold funds under Subsection (7)(h) until a county has
162      received formal written notice of noncompliance from the auditor and has been given 60
163      days to make the specified corrections.
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164   (10)(a) The state auditor may not withhold funds under Subsection (7)(i) until the state
165auditor receives a notice of non-registration, as that term is defined in Section
16667-1a-15.
167(b) If the state auditor receives a notice of non-registration, the state auditor may
168prohibit the local government entity or limited purpose entity, as those terms are
169defined in Section 67-1a-15, from accessing:
170(i) money held by the state; and
171(ii) money held in an account of a financial institution by:
172(A) contacting the entity's financial institution and requesting that the institution
173prohibit access to the account; or
174(B) filing an action in a court with jurisdiction under Title 78A, Judiciary and
175Judicial Administration, requesting an order of the court to prohibit a financial
176institution from providing the entity access to an account.
177(c) The state auditor shall remove the prohibition on accessing funds described in
178Subsection (10)(b) if the state auditor received a notice of registration, as that term is
179defined in Section 67-1a-15, from the lieutenant governor.
180   (11) Notwithstanding Subsection (7)(g), (7)(h), (7)(i), (8)(b), (8)(d), or (10)(b), the state
181auditor:
182(a) shall authorize a disbursement by a local government entity or limited purpose entity,
183as those terms are defined in Section 67-1a-15, or a state or local taxing or
184fee-assessing unit if the disbursement is necessary to:
185(i) avoid a major disruption in the operations of the local government entity, limited
186purpose entity, or state or local taxing or fee-assessing unit; or
187(ii) meet debt service obligations; and
188(b) may authorize a disbursement by a local government entity, limited purpose entity,
189or state or local taxing or fee-assessing unit as the state auditor determines is
190appropriate.
191   (12)(a) The state auditor may seek relief under the Utah Rules of Civil Procedure to take
192temporary custody of public funds if an action is necessary to protect public funds
193from being improperly diverted from their intended public purpose.
194(b) If the state auditor seeks relief under Subsection (12)(a):
195(i) the state auditor is not required to exhaust the procedures in Subsection (7) or (8);
196and
197(ii) the state treasurer may hold the public funds in accordance with Section 67-4-1 if
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198a court orders the public funds to be protected from improper diversion from their
199public purpose.
200  (13) The state auditor shall:
201      (a) establish audit guidelines and procedures for audits of local mental health and
202substance abuse authorities and their contract providers, conducted [pursuant to] in
203accordance with Title 17, Chapter 77, Local Health and Human [Services] Service,
204Title 26B, Chapter 5, Health Care - Substance Use and Mental Health, and Title 51,
205Chapter 2a, Accounting Reports from Political Subdivisions, Interlocal
206Organizations, and Other Local Entities Act; and
207      (b) ensure that those guidelines and procedures provide assurances to the state that:
208(i) state and federal funds appropriated to local mental health authorities are used for
209mental health purposes;
210(ii) a private provider under an annual or otherwise ongoing contract to provide
211comprehensive mental health programs or services for a local mental health
212authority is in compliance with state and local contract requirements and state and
213federal law;
214(iii) state and federal funds appropriated to local substance abuse authorities are used
215for substance abuse programs and services; and
216(iv) a private provider under an annual or otherwise ongoing contract to provide
217comprehensive substance abuse programs or services for a local substance abuse
218authority is in compliance with state and local contract requirements, and state and
219federal law.
220  (14)(a) The state auditor may, in accordance with the auditor's responsibilities for
221      political subdivisions of the state as provided in Title 51, Chapter 2a, Accounting
222      Reports from Political Subdivisions, Interlocal Organizations, and Other Local
223      Entities Act, initiate audits or investigations of any political subdivision that are
224      necessary to determine honesty and integrity in fiscal affairs, accuracy and reliability
225      of financial statements, effectiveness, and adequacy of financial controls and
226      compliance with the law.
227      (b) If the state auditor receives notice under Subsection 11-41-104(7) from the
228Governor's Office of Economic Opportunity on or after July 1, 2024, the state auditor
229may initiate an audit or investigation of the public entity subject to the notice to
230determine compliance with Section 11-41-103.
231  (15)(a) The state auditor may not audit work that the state auditor performed before
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232becoming state auditor.
233(b) If the state auditor has previously been a responsible official in state government
234whose work has not yet been audited, the Legislature shall:
235(i) designate how that work shall be audited; and
236(ii) provide additional funding for those audits, if necessary.
237   (16) The state auditor shall:
238(a) with the assistance, advice, and recommendations of an advisory committee
239appointed by the state auditor from among special district boards of trustees, officers,
240and employees and special service district boards, officers, and employees:
241(i) prepare a Uniform Accounting Manual for Special Districts that:
242(A) prescribes a uniform system of accounting and uniform budgeting and
243reporting procedures for special districts under Title 17B, Limited Purpose
244Local Government Entities - Special Districts, and special service districts
245under Title 17D, Chapter 1, Special Service District Act;
246(B) conforms with generally accepted accounting principles; and
247(C) prescribes reasonable exceptions and modifications for smaller districts to the
248uniform system of accounting, budgeting, and reporting;
249(ii) maintain the manual under this Subsection (16)(a) so that the manual continues to
250reflect generally accepted accounting principles;
251(iii) conduct a continuing review and modification of procedures in order to improve
252them;
253(iv) prepare and supply each district with suitable budget and reporting forms; and
254(v)(A) prepare instructional materials, conduct training programs, and render other
255services considered necessary to assist special districts and special service
256districts in implementing the uniform accounting, budgeting, and reporting
257procedures; and
258(B) ensure that any training described in Subsection (16)(a)(v)(A) complies with
259Title 63G, Chapter 22, State Training and Certification Requirements; and
260(b) continually analyze and evaluate the accounting, budgeting, and reporting practices
261and experiences of specific special districts and special service districts selected by
262the state auditor and make the information available to all districts.
263   (17)(a) The following records in the custody or control of the state auditor are protected
264records under Title 63G, Chapter 2, Government Records Access and Management
265Act:
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266(i) records that would disclose information relating to allegations of personal
267misconduct, gross mismanagement, or illegal activity of a past or present
268governmental employee if the information or allegation cannot be corroborated by
269the state auditor through other documents or evidence, and the records relating to
270the allegation are not relied upon by the state auditor in preparing a final audit
271report;
272(ii) records and audit workpapers to the extent the workpapers would disclose the
273identity of an individual who during the course of an audit, communicated the
274existence of any waste of public funds, property, or manpower, or a violation or
275suspected violation of a law, rule, or regulation adopted under the laws of this
276state, a political subdivision of the state, or any recognized entity of the United
277States, if the information was disclosed on the condition that the identity of the
278individual be protected;
279(iii) before an audit is completed and the final audit report is released, records or
280drafts circulated to an individual who is not an employee or head of a
281governmental entity for the individual's response or information;
282(iv) records that would disclose an outline or part of any audit survey plans or audit
283program; and
284(v) requests for audits, if disclosure would risk circumvention of an audit.
285      (b) The provisions of Subsections (17)(a)(i), (ii), and (iii) do not prohibit the disclosure
286of records or information that relate to a violation of the law by a governmental entity
287or employee to a government prosecutor or peace officer.
288      (c) The provisions of this Subsection (17) do not limit the authority otherwise given to
289the state auditor to classify a document as public, private, controlled, or protected
290under Title 63G, Chapter 2, Government Records Access and Management Act.
291      (d)(i) As used in this Subsection (17)(d), "record dispute" means a dispute between
292the state auditor and the subject of an audit performed by the state auditor as to
293whether the state auditor may release a record, as defined in Section 63G-2-103,
294to the public that the state auditor gained access to in the course of the state
295auditor's audit but which the subject of the audit claims is not subject to disclosure
296under Title 63G, Chapter 2, Government Records Access and Management Act.
297(ii) The state auditor may submit a record dispute to the director of the Government
298Records Office, created in Section 63A-12-202, for a determination of whether the
299state auditor may, in conjunction with the state auditor's release of an audit report,
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300release to the public the record that is the subject of the record dispute.
301(iii) The state auditor or the subject of the audit may seek judicial review of the
302director's determination, described in Subsection (17)(d)(ii), as provided in
303Section 63G-2-404.
304   (18) If the state auditor conducts an audit of an entity that the state auditor has previously
305audited and finds that the entity has not implemented a recommendation made by the
306state auditor in a previous audit, the state auditor shall notify the Legislative
307Management Committee through the Legislative Management Committee's Audit
308Subcommittee that the entity has not implemented that recommendation.
309   (19) The state auditor shall, with the advice and consent of the Senate, appoint the state
310privacy auditor described in Section 67-3-13.
311   (20) Except as provided in Subsection (21), the state auditor shall report, or ensure that
312another government entity reports, on the financial, operational, and performance
313metrics for the state system of higher education and the state system of public education,
314including metrics in relation to students, programs, and schools within those systems.
315   (21)(a) Notwithstanding Subsection (20), the state auditor shall conduct regular audits of:
316(i) the scholarship granting organization for the Carson Smith Opportunity
317Scholarship Program, created in Section 53E-7-402;
318(ii) the State Board of Education for the Carson Smith Scholarship Program, created
319in Section 53F-4-302; and
320(iii) the scholarship program manager for the Utah Fits All Scholarship Program,
321created in Section 53F-6-402, including an analysis of the cost effectiveness of the
322program, taking into consideration the amount of the scholarship and the amount
323of state and local funds dedicated on a per-student basis within the traditional
324public education system.
325(b) Nothing in this subsection limits or impairs the authority of the State Board of
326Education to administer the programs described in Subsection (21)(a).
327   (22) The state auditor shall, based on the information posted by the Office of Legislative
328Research and General Counsel under Subsection 36-12-12.1(2), for each policy, track
329and post the following information on the state auditor's website:
330(a) the information posted under Subsections 36-12-12.1(2)(a) through (e);
331(b) an indication regarding whether the policy is timely adopted, adopted late, or not
332adopted;
333(c) an indication regarding whether the policy complies with the requirements
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334established by law for the policy; and
335      (d) a link to the policy.
336  (23)(a) A legislator may request that the state auditor conduct an inquiry to determine
337      whether a government entity, government official, or government employee has
338      complied with a legal obligation directly imposed, by statute, on the government
339      entity, government official, or government employee.
340      (b) The state auditor may, upon receiving a request under Subsection (23)(a), conduct
341the inquiry requested.
342      (c) If the state auditor conducts the inquiry described in Subsection (23)(b), the state
343auditor shall post the results of the inquiry on the state auditor's website.
344      (d) The state auditor may limit the inquiry described in this Subsection (23) to a simple
345determination, without conducting an audit, regarding whether the obligation was
346fulfilled.
347  (24) The state auditor shall:
348      (a) ensure compliance with Title 63G, Chapter 31, Distinctions on the Basis of Sex, in
349accordance with Section 63G-31-401; and
350      (b) report to the Legislative Management Committee, upon request, regarding the state
351auditor's actions under this Subsection (24).
352  (25) The state auditor shall report compliance with Sections 67-27-107, 67-27-108, and
353      67-27-109 by:
354      (a) establishing a process to receive and audit each alleged violation; and
355      (b) reporting to the Legislative Management Committee, upon request, regarding the
356state auditor's findings and recommendations under this Subsection (25).
357  (26) The state auditor shall ensure compliance with Section 63G-1-704 regarding the
358      display of flags in or on government property.
359  (27)(a) On or before January 31 each year, the state auditor shall prepare a report that
360      states, for each entity that holds public funds as defined in Section 51-7-3, the entity's
361      total balance, as of the last day of the immediately preceding fiscal year, of cash, cash
362      equivalents, and investments, as those terms are defined under the standards
363      established by the Governmental Accounting Standards Board.
364      (b) The state auditor shall make the report described in Subsection (27)(a) publicly
365available on a website that the state auditor maintains.
366  (28) The state auditor shall:
367      (a) maintain a list of carbon credit transaction information reported to the state auditor
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368under Subsection 79-6-1302(1); and
369(b) report carbon credit transaction information to the Natural Resources, Agriculture,
370and Environmental Quality Appropriations Subcommittee in accordance with
371Subsection 79-6-1302(2).
372Section 2. Section 67-5-41 is enacted to read:
37367-5-41 . Carbon Credit Litigation Fund -- Report.
374   (1) As used in this section:
375(a) "Carbon credit" means the same as that term is defined in Section 79-6-1301.
376(b) "Fund" means the Carbon Credit Litigation Fund created in Subsection (2).
377(c) "Greenhouse gas" means the same as that term is defined in Section 79-6-1301.
378   (2) There is created an expendable special revenue account called the Carbon Credit
379Litigation Fund.
380   (3) The fund consists of:
381(a) money deposited into the fund as a result of any judgment, settlement, or
382compromise of claims under Subsection (5);
383(b) interest and dividends earned on money in the fund; and
384(c) money appropriated to the fund by the Legislature.
385   (4) The state treasurer shall:
386(a) invest money in the fund in accordance with Title 51, Chapter 7, State Money
387Management Act; and
388(b) deposit interest or other earnings derived from investment of fund money into the
389fund.
390   (5) Notwithstanding Section 67-5-40, the following shall be deposited into the fund after
391reimbursement to the attorney general for expenses related to the litigation described in
392Subsection (5)(a) or (b):
393(a) all money received by the attorney general as a result of any judgment, settlement, or
394compromise of claims pertaining to alleged violations of law related to the sale or
395marketing of carbon credits; and
396(b) all money received by the attorney general as a result of any judgment, settlement, or
397compromise of claims pertaining to alleged violations of law under Title 79, Chapter
3986, Part 13, Carbon Credit Transactions.
399   (6)(a) The attorney general or the attorney general's designee shall authorize the
400expenditure of fund money in accordance with this section.
401(b) The money in the fund may not be used for an administrative expense of the Office
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402of the Attorney General, unless the administrative expense is directly related to a
403purpose described in Subsection (7).
404  (7) The attorney general may use money in the fund to:
405      (a) prevent a federal requirement for the state to adopt or participate in:
406(i) a cap and trade program for carbon credits;
407(ii) mandatory carbon emissions reporting;
408(iii) a claim against the state related to greenhouse gas emissions; or
409(iv) a climate remediation program; and
410      (b) recover a carbon credit or the profit of a carbon credit transferred out of the state in a
411fraudulent sale.
412  (8)(a) By November 30 of each year, the attorney general shall submit an annual report
413      to the Natural Resources, Agriculture, and Environmental Quality Appropriations
414      Subcommittee regarding the status of the fund.
415      (b) The report shall include:
416(i) contributions received, expenditures made, and programs and services funded; and
417(ii) if the attorney general establishes a task force to study an issue related to this
418section, activities and programs initiated through the task force.
419Section 3. Section 79-6-1301 is amended to read:
420Part 13. Carbon Credit Transactions
42179-6-1301 . Definitions.
422     As used in this part:
423  (1)(a) "Carbon credit" means a payment or offer of payment, or other financial
424      compensation or benefit, for a carbon emission offset.
425      (b) "Carbon credit" includes a natural asset credit.
426      (c) "Carbon credit" does not include a payment or offer of payment related to:
427(i) a right or interest associated with a regulated pollutant, as that term is defined in
428Title V of the 1990 Clean Air Act; or
429(ii) an industrial or commercial use of liquefied carbon dioxide.
430  (2) "Carbon emission offset" means:
431      (a) a reduction in the amount of greenhouse gas present in the atmosphere; or
432      (b) an amount of greenhouse gas prevented from entering the atmosphere.
433  [(1)] (3) "Digital identification number" means an identification number assigned to [an
434      environmental commodity] a carbon credit by a governmental or accredited third-party
435      verification entity that certifies or registers [an environmental commodity] a carbon credit
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436for sale or exchange.
437   [(2)(a) "Environmental commodity" means a representation of the financial value of:]
438[(i) a reduction in the amount of greenhouse gas present in the atmosphere; or]
439[(ii) an amount of greenhouse gas prevented from entering the atmosphere.]
440[(b) "Environmental commodity" does not include a right or interest associated with a
441regulated pollutant, as that term is defined in Title V of the 1990 Clean Air Act.]
442   [(3)] (4) "Greenhouse gas" means:
443(a) carbon dioxide or a gas emission converted into a carbon dioxide equivalent; or
444(b) methane.
445   (5) "Natural asset company" means the same as that term is defined in Section 63L-13-101.
446   (6)(a) "Natural asset credit" means a payment or offer of payment, or other financial
447compensation or benefit:
448(i) for the preservation of a natural and biological process on a parcel of land; or
449(ii) by a natural asset company for an activity described in Section 63L-13-203.
450(b) "Natural asset credit" does not include:
451(i) the commercial extraction, production, or sale of a natural or agricultural resource;
452or
453(ii) a right or interest associated with the beneficial use or appropriation of water.
454   [(4)] (7) "State entity" means a department, commission, board, council, agency, institution
455of higher education, officer, corporation, fund, division, office, committee, authority,
456laboratory, library, unit, bureau, panel, or other administrative unit of the state.
457   [(5)] (8)(a) "State funds" means:
458(i) money appropriated by the Legislature[.] ; and
459(ii) a bond issued by a state entity that creates a carbon emission offset.
460(b) "State funds" does not include money or financial benefit in the form of:
461(i) a tax incentive;
462(ii) a permit or an activity related to the development of a permit issued by a state
463entity; or
464(iii) a federal grant administered by a state entity.
465Section 4. Section 79-6-1302 is amended to read:
46679-6-1302 . Requirements for sale by state entity -- Administration by state
467   auditor -- Report.
468   [(1) Except as provided in Subsection (2), before a state entity may sell or exchange an
469environmental commodity, the state entity shall:]
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470      [(a) obtain a digital identification number for the environmental commodity;]
471      [(b) report a digital identification number for the environmental commodity to the office;
472and]
473      [(c) report to the office any state funds that the state entity used for the creation of the
474environmental commodity.]
475  (1) Before a state entity may sell or exchange a carbon credit, the state entity shall:
476      (a) obtain a digital identification number for the carbon credit; and
477      (b) report to the state auditor, in a form and manner approved by the state auditor:
478(i) a digital identification number for the carbon credit;
479(ii) a description of the carbon emission offset, including the source of the carbon
480emission offset, that is the subject of the carbon credit; and
481(iii) the terms of a negotiated sale or exchange of the carbon credit with an attempted
482buyer.
483  (2) Before November 30 of each year, the state auditor shall report to the Natural
484      Resources, Agriculture, and Environmental Quality Appropriations Subcommittee:
485      (a) the revenue generated from the sale of carbon credits by state entities reported under
486Subsection (1)(b); and
487      (b) a summary of the carbon credit transactions reported to the state auditor under
488Subsection (1)(b).
489  [(2) This section does not apply to an environmental commodity created from an activity on
490      school and institutional trust lands, as that term is defined in Section 53C-1-103.]
491Section 5. Section 79-6-1303 is amended to read:
49279-6-1303 . Management.
493  [(1) If the state or a state entity appropriates or expends state funds for the creation of an
494      environmental commodity, the state owns a portion of an environmental commodity that
495      is proportional to the amount of state funds appropriated or expended for the creation of
496      the environmental commodity.]
497  [(2)(a) Except as provided in Subsection (3), the state treasurer may sell, exchange, or
498      hold an environmental commodity, or any portion thereof, owned by the state in
499      accordance with Subsection (2)(b).]
500      [(b) The state treasurer shall ensure that an environmental commodity owned by the
501state is sold, exchanged, or held:]
502[(i) for the benefit of the citizens of the state;]
503[(ii) to promote energy independence for the state;]
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504[(iii) to maximize the natural resources of the state; and]
505[(iv) consistent with Part 3, State Energy Policy.]
506   [(3) An environmental commodity] A carbon credit created or purchased by a state entity
507shall remain under the control of the state entity.
508Section 6. Effective Date.
509   This bill takes effect on May 6, 2026.
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