A provision buried in Indiana's HB1368 significantly raises financial penalties for carbon storage violations—and some service businesses may be affected.
Most auto service owners in Indiana don't realize that a provision in HB1368 could directly affect their legal and financial exposure if they operate or participate in carbon sequestration projects or carbon storage operations. The change takes effect July 1, 2026, and it's substantial.
HB1368 amended Indiana Code 14-39-2-15 (Section 77, page 45) to increase penalties for violations of the state's carbon sequestration article. Specifically:
First-violation civil penalties doubled: The daily civil penalty for a first violation jumped from $1,000 per day to $2,500 per day. For a business operating a carbon storage facility or sequestration project, even a brief compliance lapse now costs significantly more.
New criminal tier created: The law also established a new Class A misdemeanor for knowing or intentional violations. This carries a minimum assessed penalty of $5,000 per day—moving beyond civil fines into criminal territory. This distinction matters: criminal charges carry reputational, licensing, and insurance consequences that civil penalties alone do not.
Not all auto service businesses will be impacted. However, if your operation:
—then these penalty changes apply directly to you.
Even if you don't currently operate such a project, understanding this change matters if you're considering leasing unused land or partnering with carbon credit companies, which has become more common in recent years.
The 150% increase in daily civil penalties ($1,000 to $2,500) means compliance costs money. A violation that persists for even 10 days now costs $25,000 instead of $10,000. For small businesses, that's real cash flow impact.
The criminal misdemeanor layer is equally important. "Knowing or intentional" violations—which could include operating without a required permit, failing to maintain required records, or continuing a violation after notice—now carry criminal liability. This is a higher legal bar than civil negligence, but it's a risk worth understanding if you operate in this space.
The penalties become law on July 1, 2026. That gives you time to audit any carbon storage or sequestration activities your business conducts and ensure full compliance with Indiana's carbon sequestration article before the deadline.
If you operate a carbon storage or sequestration project, review your current permits and compliance procedures. If you're considering such a partnership, factor these increased penalties into your risk assessment. Indiana's Department of Environmental Management can clarify whether your specific operation falls under these rules.
Source: HB1368, Section 77, IC 14-39-2-15, page 45; effective July 1, 2026.