United States - Dedicated legislation on CO2 pipelines
Overview
In the United States, CO2 pipelines have been used for decades for Enhanced Oil Recovery (EOR). This technique increases the amount to crude oil that can be extracted from an oil field through the injection of CO2 or other gases and substances. Nowadays, approximately 3,600 miles (5,800 km) of CO2 pipelines operate in the US, mainly in western states, where the population density is relatively low. However, this figure is very modest in comparison with the approximately 2.3 million miles of natural gas and hazardous liquid pipelines operating in the country.
In the event of greater development of CCS in the US, the current legislation regulating CO2 transmission for EOR would be applicable to transport infrastructures for CCS.
What follows is an overview of the main legislation at federal and state level concerning CO2 pipelines.
Federal
Siting requirements
Onshore
In the US there is no federal legislation concerning the conditions for siting CO2 pipelines onshore, except for the need to acquire the right-of-way over federally-owned land (ROW, see below). Therefore, operators are not required to obtain approval under federal law to construct a CO2 pipeline, unless the proposed pipeline would cross federally-owned land. Relevant permitting conditions for onshore pipelines are set at state level.
Similarly, there is no possibility under federal law to obtain compulsory purchase or expropriation of land for public use ('eminent domain') . Federal statutes cannot therefore be relied upon to obtain access to private real or personal property for the construction of CO2 transport networks. At present, such networks are constructed through varying combinations of private negotiation with landowners, purchase of rights to use existing right of way corridors (for example, from existing natural gas or oil pipelines) and the invocation of various state laws allowing expropriation through a judicial proceeding.
Offshore
The US Department of Transportation (DOT)'s Office of Pipeline Safety (OPS) (see details below) sets and enforces safety standards for interstate CO2 pipelines. The Minerals Management Service (MMS), which is an organ of the US Department of the Interior, is responsible for managing the resources under federally-owned property. Federal ownership of offshore property begins beyond the limit of state ownership (typically 3 nautical miles, except for Texas where the limit generally is 9 nautical miles). Carbon dioxide pipelines on state seabed would be subject to state jurisdiction. Under federal law, the permitting process for siting offshore pipelines must also guarantee the safety of navigation.
Jurisdiction
Over time - excepting matters relating to pipeline safety which are acknowledged to be within the jurisdiction of the Department of Transport - issues have arisen concerning whether any agency has jurisdiction and regulatory power over CO2 pipelines at federal level.
In 1979, the Federal Energy Regulatory Commission (FERC), an independent federal agency charged with the regulation of interstate transmission of electricity, and interstate natural gas and oil pipelines, determined that Congress had not granted it jurisdiction over CO2 pipelines under the Natural Gas Act of 1938 (as amended). The declaratory order was based on the grounds that CO2 is not a 'natural gas' as defined in the applicable statute. The FERC reaffirmed its jurisdictional decision in 2006 when approving the sale of a jurisdictional natural gas pipeline for conversion to non-jurisdictional CO2 transportation.
Similarly, the Interstate Commerce Commission (ICC), established under the 1887 Interstate Commerce Act (ICA) and substituted for certain functions since 1995 by the Surface Transportation Board (see below), also ruled in 1980 and 1981 that Congress had not given it jurisdiction over CO2 pipelines, on the grounds that CO2 is not a gas within the meaning of the ICA and is therefore expressly excluded from the scope of the ICA, which does not cover 'artificial and natural gases'.
In 1995, the ICC was replaced by the Surface Transportation Board (STB), an independent federal administrative agency with responsibility for economic regulation of railroad transportation, including disputes over tariffs and facilities. The STB also regulates transport by pipeline of commodities 'other than water, gas or oil'; these are therefore outside the authority of STB.
The 'savings' clause of the 1995 statute that abolished the ICC and created the STB provides that the STB is bound by the prior rulings of the ICC, unless and until those rulings change in accordance with law.
No case has ever been brought before the ICC, the STB or the FERC asking the agency to reverse its prior jurisdictional decisions. However, in the event that the number of CO2 pipelines in the US increases, either agency could be asked to revisit the jurisdictional question under existing statutes. Similarly, Congress might decide to enact legislation subjecting interstate CO2 pipelines to some regulatory regime.
Consequently, two elements are worth noting:
As noted, the STB is legally bound to implement the prior rulings of the ICC, unless and until duly modified. Hence the STB is bound to follow the precedent of the ICC, unless determined to overrule the 1981 decision and such reversal was affirmed by a reviewing court (assuming that such a jurisdictional reversal was contested, which appears likely given the thousands of miles of infrastructure that has been built over the last three decades relying upon established law).
The STB's jurisdiction would in any case be limited to issues concerning tariffs and facilities, without covering siting or 'eminent domain' with respect to the pipeline routes, which would remain under state regulation as it is today.
Right-of-Way
The operator of a pipeline crossing federal land needs to obtain a right-of-way (ROW),
which provides the right to lay a pipeline on someone else's land. Where the land is owned by the federal government, the US Department of the Interior - Bureau of Land Management (BLM) may grant ROW authorisations on federal lands under two federal statutes: the Mineral Leasing Act (MLA) of 1920, as amended (30 U.S.C. 185) and the Federal Land Policy and Management Act of 1976 (FLPMA) (43 U.S.C. 1701).
The MLA requires that the pipeline act as a 'common carrier', which means that the pipeline operator must 'accept, convey, transport or purchase without discrimination all oil and gas produced on federal and non-federal lands'. Therefore, if a permit for a CO2 pipeline to cross federal land was issued under the MLA, then the CO2 pipeline operator would be required to transport CO2 from CCS plants owned by different operators to the storage site, without discrimination. Such a ruling could constitute a major barrier to the construction of CO2 pipelines to serve CCS plants if it required capacity to be shared proportionately among all CO2 suppliers - with newer CO2 sources able to force existing shippers to reduce their shipments pro rata to make space for more recently constructed facilities. Such proportional distribution of capacity is typically required for common carrier oil pipelines under the ICA and would generally preclude the CCS plant from being able to have the assurance of adequate, contracted, firm, take-away capacity prior to construction. The need to secure contractual assurance of a guaranteed transport service for all of the CO2 output of a project could pose a major regulatory problem for the financing of the capture project as well as the proposed CO2 pipeline.
The FLPMA does not require the pipeline operator to 'act as a common carrier'. At present, the BLM normally grants ROW to CO2 pipelines for EOR under the MLA. Utilities planning to construct facilities to capture CO2 will want to make sure that the regulatory framework allows them to contract for adequate firm offtake capacity, which would appear to be precluded under prorationing practices applicable to common carriers.
Safety Requirements
Within the US Department of Transportation (DOT), the Pipeline and Hazardous Materials Safety Administration (PHMSA) is responsible for pipeline safety regulations under the 1979 Hazardous Liquid Pipeline Safety Act (HLPSA), as amended in 2002 (49 U.S.C. 601). This Act provides the DOT with the authority to regulate - for safety purposes - interstate pipelines transporting CO2 as well as hazardous liquids, such as crude oil and petroleum. The PHMSA acts through the Office of Pipeline Safety (OPS) to ensure the safe transport of natural gas, petroleum and other hazardous materials, as well as CO2. The OPS administers Pipeline Safety Regulatory Programmes, in collaboration with other federal, state and local agencies.
The key federal regulation for pipeline safety is the Transportation Title of the US Code of Federal Regulation (49 U.S.C 190-198.39). Dedicated rules applicable to CO2 transmission are set out in the section on Transportation of Hazardous Liquids by Pipelines (49 U.S.C. 195-198.39). This code also includes provisions applicable to transportation of CO2 by road, ship, and rail (49 U.S.C. 172.101; 172.176 and 174 respectively).
Under the section on Transportation of Hazardous Liquids by Pipeline, the DOT is provided with the authority to regulate the design, construction, operation and maintenance requirements, as well as spill response planning, for CO2 pipelines.
CO2 is classified as 'a fluid consisting of more than 90 percent carbon dioxide molecules compressed to a supercritical state' (Class 2.2 - Non-flammable gas). As a result, this code only applies to CO2 transported in a supercritical state; it does not consider CO2 transported in any other forms. That means that in the US there is no federal legislation applicable to CO2 transported in a liquid or gaseous state.
This code allows the use of pipelines previously used for other purposes and then converted for CO2 transportation, provided that they meet specific technical conditions, and conversions of this kind have already taken place.
Pipeline operators are required to report annually to the DOT about the location, capacity and inspection of their pipelines. In the event of failures causing a 'release of the hazardous liquid or carbon dioxide transported', an accident report must be transmitted to the DOT.
This regulation also addresses pressure testing methods, operations and maintenance guidelines, and the training of the pipeline personnel. Consideration is given to areas which are particularly vulnerable to environmental damage arising from the release of hazardous liquid from pipelines, known as Unusually Sensitive Areas (USAs) and High Consequence Areas (HCAs).
States are bound by federal regulations on pipeline safety as a minimum level of protection, but they have the right to apply more stringent standards. Specific agreements with the DOT are needed to apply such stricter provisions at state level.
Any leakage from CO2 transport activities is dealt with primarily by the Occupational Safety and Health Administration (OSHA) under the US Department of Labor (USDL).
This chapter establishes the jurisdiction of the Railroad Commission of Texas, its powers and duties with respect to pipelines, including CO2 pipelines. It sets rules, standards and enforcement measures. Under Texas law, CO2 pipelines may elect to be either private contract carriers or to become common carriers. Only those that opt to become common carrier may invoke State eminent domain powers to acquire ROW.
This code also applies to CO2. It provides a mechanism for recording and reporting to the Railroad Commission of Texas any failure or accident involving a CO2 pipeline. Operators are required to comply with particular design and construction requirements as well as monitoring and inspection conditions, including right-of-way-inspections. The code also requires all operators to communicate and liaise with the local emergency authorities and local community.
This statute regulates transport tariffs and only applies to CO2 pipelines which are 'common carriers' operating within the territory of New Mexico. It does not regulate the transport tariffs of intrastate CO2 pipelines. The statute also establishes eminent domain powers, allowing an operator to take and acquire the necessary right of way, including facilities for conveying CO2 gas, 'for the construction, maintenance, and operation of pipelines'.
Safety provisions
Following an agreement with the US DOT, the New Mexico Pipeline Safety Bureau is responsible for the implementation of the federal legislation on safe transport of hazardous liquids, including CO2 (see federal legislation on safety above), including safety compliance, inspections and accident response measures for the state's hazardous liquid pipelines and CO2 pipelines.
Wyoming
Wyoming Statute - Title 35: Public Health and Safety
The Industrial Siting Act regulates the construction and development of all major industrial facilities in Wyoming. However, 'the construction, operation, and maintenance of all pipelines, except coal slurry pipelines' is exempted from the Act (35.12.119 (c) (iii). Consequently, no specific permit is required under this act in order to construct pipelines, including those transporting CO2.
Wyoming Statute - Title 37: Public Utilities, Chapter 5: Wyoming Pipeline Authority
This act establishes a Wyoming Pipeline Authority responsible for planning, financing, constructing, developing, acquiring, maintaining and operating pipeline systems. It aim is to facilitate the 'production, transportation, distribution and delivery of natural gas and associated natural substances'. 'Associated natural substances' are defined as 'any substance, element or compound, either gaseous, liquid or solid, associated with the production, refining or processing of crude oil, natural gas, coal or coal by-products'. Carbon dioxide is expressly covered by this definition.
The Wyoming Public Service Commission is authorised by the US DOT- Office for Pipeline Safety to carry out inspections and other safety investigations of the states natural gas pipelines and associated facilities.
Montana
HB 338 (2009) Montana code title 69 Public Utilities and Carriers Chapter 13. Pipeline carriers s.101
By recognising a 'public interest' in CO2 transport, this law attributes the status of 'common carrier' to pipelines moving carbon dioxide produced in the combustion or gasification of fossil fuels., This means that, in order to construct a CO2 pipeline, an operator has expressly to accept the responsibility of being a common carrier. Such a status provides the operator with the power of eminent domain, but also with various duties, such as the duty to publish its tariffs, allow any shipper to use the pipeline to convey CO2 and not to discriminate between or against shippers with respect to the facilities furnished, rates and service. By stating that CO2 pipelines are common carriers, this act treats CO2 transport networks in the same way as oil and gas pipelines.
The CCLP is grateful to Mr Philip Marston, of Marston Law, for his advice on this section. More information on legislation governing transport of CO2 in the US can be found on Marston Law.