Carbon dioxide (CO2) is used to carbonate beverages and enhance plant growth. It has also been used for decades in enhanced oil recovery, in which CO2 is injected into oil- or gas-bearing formations to help extract oil and gas. Of course, many say that CO2 causes or contributes to climate change / global warming. In 2009, EPA issued its ‘endangerment finding’ in which EPA determined that current and projected concentrations of CO2 and other greenhouse gases in the atmosphere threaten the public health and welfare of current and future generations.
The idea of capturing CO2 before it enters the atmosphere and using it or injecting it for perpetual storage, or sequestration, came about as a way to mitigate the anticipated impacts of climate change. To facilitate carbon capture, use, and storage (CCUS), Congress created the 45Q tax credit in the US Tax Code. Additionally, the Biden Administration touted CCUS as an important tool to address climate change. Even the prior Governor of Louisiana included it as a centerpiece of his climate strategy.
EPA is reviewing the endangerment finding and is anticipated to rescind it. That action would undermine the legal basis for a host of regulations designed to reduce emissions of greenhouse gases and would also seem to negate the stated need for CCUS. Louisiana, though, seems to have already moved on from CCUS. Not only has the current Governor dropped climate change as a rallying cry, but the Louisiana Legislature has also enacted multiple provisions over the last two to three years that create roadblocks for a successful CCUS project.
Originally, the legislature believed that “geologic storage of carbon dioxide will benefit the citizens of the state and the state’s environment by reducing greenhouse gas emissions.” This year, however, that language was stripped from the statute.
Multiple requirements have been added over the last two years. For example, an applicant for a CO2 injection permit must submit an environmental analysis to address whether the potential and real adverse environmental effects of the proposed permit activity have been avoided to the maximum extent possible and to perform a cost-benefit analysis weighing the environmental impact costs versus the social and economic benefits of the proposed activities. Additionally, the storage facility must prepare an emergency and remedial response plan and provide a copy of the plan to the local government, provide continuing training programs for personnel regarding potential hazards, risk scenarios, and response actions, and conduct at least one tabletop exercise prior to the commencement of injection. Further, a storage operator must conduct groundwater monitoring above the confining zone.
The power to exercise eminent domain has also been made a bit more burdensome. For example, the right to use eminent domain for “the expropriation of reservoir storage rights for geologic storage” was recently removed.
Further, as to pipelines, eminent domain was available after receiving a certificate of public convenience and necessity. Previously, the Secretary of the Department of Conservation and Energy “shall” issue the certificate if the required showing was made. Now, the Secretary “may” issue the certificate if the required showing is made.
Additionally, the requirements for the required showing to obtain the certificate were revised. Now, in addition to showing that the certification is or will be in the present or future public interest, the Secretary must also find either the use of expropriation is required solely because absentee owners cannot be located after a reasonable attempt or the applicant is or intends to operate as a common carrier.
The common carrier requirement is also new and could also be burdensome. A common carrier now includes “a transporter of carbon dioxide by pipeline for storage where there exists a reasonable probability that the pipeline will serve the public by transporting carbon dioxide for storage for one or more third parties.” With a common carrier pipeline, a new slate of delays becomes possible.
When a complaint or application concerning the classification of a pipeline as a common carrier is filed with the Public Service Commission, the PSC or a party to the matter may request a ‘secretarial review’ with the Secretary. The Secretary can decline or accept the request. If the Secretary accepts the request, there could be discovery, various filings, and a hearing. In that administrative process, the Secretary must consider such matters as connectivity, necessity, operational characteristics, and alternative routes and then issue findings to the PSC. This will certainly slow down pipeline approval proceedings.
The bottom line is that applicants for CO2 injection related permits face ever-increasing regulatory hurdles. While 45Q credits may still exist and potentially be available, getting to the point where those credits can actually be obtained seems more and more difficult with each legislative session.
BSW Environmental Blog 