Global Warming – The Broad Legal Reach of Initiatives to Reduce Carbon Emissions Worldwide Legal Issues Associated with Carbon Capture and Geologic Storage Hal J. Pos Parsons Behle & Latimer

Legal and Regulatory Framework: Key to technology’s adoption and success Unique liability issues Must encourage private investment Align known risks with appropriate legal and regulatory structure

Risks – Generally Well Identified and Understood Harm human and ecological populations Compromise global CO2 reduction efforts Risk to groundwater quality Damage hydrocarbon resources Induce earthquakes Moral risk

Existing Regulatory Structure (in the United States): Current regulatory programs –Underground Injection and Control Program –Safe Drinking Water Act

Existing Regulatory Structure (in the United States): Manage large quantities of injectate –Disposal of produced waters from oil and gas extraction –Floridian municipal wastewater disposal

Existing Regulatory Structure (in the United States): Manage long term storage –Injection of hazardous waste (10,000 years) –Nuclear waste disposal

Existing Regulatory Structure (in the United States): Transport, Handling and Injection –Enhanced oil recovery –Transport of natural gas and crude oil via pipelines

Managing Potential Liabilities Limited understanding of technology and science Liabilities not currently quantifiable Involve capture, transportation, injection and long-term storage

Managing Potential Liabilities Best management practices Monitoring Regulatory program Insurance Other forms of financial assurance

Managing Potential Liabilities Longer-term liability includes two major components: –Release into the atmosphere or emissions exceedance if regulated –Harm to human health, the environment or property

Managing Potential Liabilities Liability issues could include environmental harms caused by –Release into air or ground water –Contamination of drinking water aquifers –Induced seismic activity

Managing Potential Liabilities Key issues if CO2 released from storage: –Who is responsible for emissions from release? –Who is responsible for long-term storage and monitoring? –Is there an acceptable maximum release rate from a technical and safety perspective?

Managing Potential Liabilities Current legal liability schemes – places all liability on private sector under existing theories of: –Contract law –Tort law –Certain environmental liability laws Private entities reluctant to invest in technology until risks can be quantified and financially managed

Legal or Regulatory Framework Issues to be Considered: Should storage facility and sequestered CO2 be transferred into public ownership after injection is completed? Should a statute be enacted that imposes enforceable land use restrictions on the storage site to protect the integrity of the storage site in perpetuity? Should risks be allocated among private sector operators and public sector? Can long-term liabilities be quantified? What measures should be taken to minimize the long-term risks?

Potential framework to address long- term liabilities –State assumption of liability –State indemnification of private owners or operators –Statutory immunity from tort liability –Statutory limitations on potential liabilities –Funds for long-term monitoring and/or maintenance or storage facilities (e.g., Superfund) Legal or Regulatory Framework Issues to be Considered:

Property Ownership and Eminent Domain Large-scale storage may entail jigsaw pattern of property rights: –Federal land –State land –Private party surface rights –Private party mineral rights –Fractionalized interests –Water rights

Property Ownership and Eminent Domain In some instances, most appropriate storage site may be located: –On land partially owned by parties who will not voluntarily authorize use of their property for storage or –Demand exorbitant compensation for the right to use that property

Potential for unforeseen migration or release of the CO2 raises possibility of liability for trespass claims Migration possibility raises need for offsite access rights to monitor and, perhaps, remediate the release Raises questions over ownership of CO2 if it migrates from storage confines Most suitable sites for carbon storage may require pipeline construction over many miles of privately owned surface Property Ownership and Eminent Domain

These scenarios raise a number of issues that may require legislative action, if large- scale CO2 storage is to become a reality Should storage owners or operators be given condemnation power and, if so, in what circumstances? Requires careful balance of the public’s need to address CO2 issues in a safe and economical manner and the need to protect private property rights Property Ownership and Eminent Domain

Storage and Transportation Issues Assess whether condemnation authority is necessary for: –Pilot CCS projects or –Defer until large-scale storage projects are planned and property needs of those projects are better understood

Storage and Transportation Issues Who should be granted the power of eminent domain for storage facilities? –State agency or –Private CCS owner or operator? Should eminent domain power be limited to: –Subsurface storage rights or –Extend right to take property to construct surface facilities necessary to operate and maintain an underground storage facility?

Storage and Transportation Issues What showing should be required before a private CCS owner or operator may exercise eminent domain powers: –Safety assurances –Financial ability –Environmental protection assurances –Authorization to conduct operations by a state agency?

Assess what kind of property rights may be taken by eminent domain: –Easement or –Fee interest Storage and Transportation Issues

Assess current understanding of probable location of suitable repositories – will CO2 storage occur: –Near the site of its production or –Will centralized storage be required necessitating construction of a large network of CO2 pipelines? Storage and Transportation Issues

What measures need to be taken to ensure that federal and state lands are available for CO2 storage and transportation? Should condemnation authority for pipelines extend to CO2 pipelines? Storage and Transportation Issues

Migration Issues Are eminent domain powers necessary to address off-site migration? Assess risks associated with off-site migration to determine whether risks are likely to be de minimis or significant

Migration Issues If de minimis, is the solution: –Tort or trespass immunity (i.e., no liability for technical trespasses that cause no harm) rather than –Eminent domain power to acquire the right to address released CO2 on adjoining property

Migration Issues Consider types of offsite access rights necessary to monitor the migration and implement remediation activities Analyze existing law regarding: –Who would be the owner of CO2 that has released from a storage facility? –What are the consequences of ownership? –How is liability handled over the hundreds to thousands of years?

Measurement, Monitoring and Verification Assure CO2 remains underground for hundreds to thousands of years Monitor for environmental, health and safety considerations Measure and verify CO2 reductions for trading and credit purposes