Recent Legal Developments in Carbon Sequestration

Abstract Carbon sequestration is the process of capturing carbon dioxide ("CO2") emissions, which would otherwise be released into the atmosphere, and permanently storing them in geologic formations. A number of technical and legal issues must be resolved before carbon sequestration can become a viable means to reduce carbon emissions. Recently the Interstate Oil and Gas Compact Commission ("IOGCC") set forth a model statute and model rules and regulations, and the United States Environmental Protection Agency ("EPA") set forth a proposed rule for CO2 injection that could resolve some of these issues and make large-scale carbon sequestration projects a reality. The IOGCC model treats CO2 as a resource and covers the areas of permitting, property ownership, storage operations, and long-term monitoring and liability. Certain parts of the IOGCC model rules were a basis for the EPA proposed rule governing carbon sequestration that was published for public comment on July 25, 2008. This EPA proposed rule creates a new class of underground injection wells regulated as part of the Underground Injection Control program under the Safe Drinking Water Act. Both the IOGCC model statute and the EPA proposed rule provide specific guidance on construction and permit application submittals tailored toward the long-term nature of carbon storage. Carbon sequestration has also recently been addressed on a broader scale as a component of CO2 reduction in other federal proposals. The FutureGen project was recently modified by the Department of Energy ("DOE") from a $1.8 billion research and development facility to multiple operations that would utilize carbon sequestration technology in coal-fired power plants. Congress has been bombarded with proposed climate change legislation, such as the Lieberman-Warner bill that proposed a cap and trade program. All of the legislation provides methods for reducing emissions thereby increasing incentives to develop carbon sequestration. Also, carbon sequestration is being encouraged through the use of small-scale experimental projects set in motion by the DOE carbon sequestration partnerships. New rules and regulations addressing the technical and legal aspects of sequestration must be adopted. Until this regulatory framework is available, development of sequestration projects most likely will be hindered or delayed.